Evening star., 1914-11-24
TO RETIRE $175,OO0,0Oo
OF EMERGENCY MONEY
Local Bankers Take Action in Ad-
vance of Increase in Penalty
on Circulation.
Will Fight to Retain Tax Money in
District Banks-Hill on Situa-
Hon-6ossip.
BY I. A. FLEMING.

Washington Currency Association de-
cided to retire s175.000 of emergency
currency circulation taken out shortly
after the breaking out of the war. All
national banks are represented in the
association.
This action does not indicate that the
entire emergency currency circulation
| taken out by Washington bankers has
! been retired. Some of the banks have
this money well employed at rate of
interest that yields good returns, de-
spite the tax on the circulation.
Immediately on issuance this currency
become subject to tax of per cent
per annum. This continues for three
months, when the rate is advanced to
31s pei cent, and thereafter an addi-
tional half of l per cent for each
month that the circulation remains
outstanding. Eventually there will be
no profit in it and retirement will fol-
low.
with discount rates of the reserve
banks where they are today, the emer-
gency currency can be used very profit
ably, rather than rediscounting Of COM
mercial paper.
An End of Government Deposits.
The Inauguration of the federal re-
serve system will mean an end to gov
eminent deposits in national banks-in
time. The public funds will then go.
when the Treasury Department SO de-
cides, to the reserve banks at the die
tation and will of the Secretary of the
Treasury, unless an amendment shall
be made to the existing law.
1t Is not likely that the entire de-
! posits of government money with the
! banks will be called in in the ne/
future. 1t being the disposition of lie
officials to go slow and gradual in or
der that no disturbances may result.
To Fight for Tax Money.
| While it is eminently proper under
the new monetary system that the sur
plus funds of the government should
be deposited in the regional banks of
the federal reserve system, Washing
| ton bankers will make a hard fight to
prevent this disposition of the tax
money of the District when it Is next
collected.
The contention will be made that this
is purely local money: that it has for
years been deposited in the national
banks Of the city. easing up any
stringency caused by the payment or
the millions Of taxes; that the govern,
can afford to leave 1t in the banks for
the usual periods pending requirements
for it's use.
By withdrawing and refraining from
further deposits of funds in the national
banks the government is the loser or
. Der cent per annum interest Ihe
| regional banks will probably not be called
upon to pay interest, although no ruling
has been made on the matter.
No payments Of tax money to the gov
ernment were made by local banks this
| month. The usual payment the 18th In
slant was postponed until the 18th OF
December. Some of the banks did not
| make their October payments. and double
payment will be expected from them.
Executive Council Meeting.
| President Fleming has called the execu-
tive council of the District Bankers As
sociation to meet at the Union Trust Com
pany Friday afternoon at 3:15 for
/ the transaction of such business as may
| be presented.
Ruling on War Tax on Banks.
| l When returns on form 457 are to
| be made.-Bankers are required to
make, under oath. returns in duplicate
on form 457, which can be secured
from the collector of internal revenue,
covering the tax period from Novems
ber /. 1914. to June 80. 1915, and have
the same in the collectors hands be-
fore the close of the month of Novem-
ber. Failure to do so will cause SO
per cent penalty to attach.
! g. Determination of amount on which
the tax is to be computed-In de-
termining the amount of taxable cap
ital (including surplus and undivided
prof1ts) for the present fiscal year. the
operations of the bank for the period
between July l. 1913. and June 80. 1914.
! will be taken as the basis. Where the
items of capital, surplus and undivided
profits fluctuate. the same will be
averaged: and when such averages are
made, separate sheet showing how
this average is arrived at should be
attached to each return.
| 3. Method of computing the amount
of tax due.-As the tax begins on No
vember !. eight months only Of the
present fiscal year remain. the tax for
which period will be SIP or 2-3 Of
what would be due for the entire year.
For convenience, the tax is computed
and undivided profits in even thou
, sands. for example: Capital, $4,000;
surplus, s12.500: undivided profits. $5,-
909: total, s43.409: amount computed
1915. 2-s of $4,000. $2s.s66.66: amount
of tax at 81 for each $1,000, S2S.67
4. Disposition OF returns.-Returns
in duplicate. properly sworn to in per-
son De1OTe All OflCeT duLnOElZcQ al
minister oaths, who must attach his
seal thereto. must be forwarded to the
collector of the district within which
the bank is located.
Hill Has His Own Views.
James J. Hill. who is in New York
on one Of his customary visits Is not
inclined to take for granted the rep-rt
that prosperity is rampant throughout
the country. He says: Business IS
quiet. II is hesitating, and is not. and
cannot be, sure o. the future.
Rainfall in a watershed is reflected
by the rise and fall of the streams. The
volume of the country's business is re-
f1ected in the commodities moved by the
railroads. With earnings Of the rail-
roads steadily decreasing. the talk of
prosperity is simply not true No bet
ter barometer on the state of the coun-
try's business than railroad earnings can
be taken"
Mr.. Hill is not willing to blame the
quiet state OF business altogether on
the European war. Think OF the lesiS-
iatio:l enacted against business in the
, aga nst the railroads. but against all
business
He characterized conditions in the
northwest as quiet but healthy" and
remarked: There are no new projects
under way. No che is putting up new
buildings, new business blocks, or aiding
to their plants This, of course. is i'll
med .ate!y reflected IN railway earnings