Evening star., 1914-12-09
Secretary McAdoo, in Report
to Congress, Wants All Banks
Under Federal Control.
CALLS PRESENT METHOD
OF OPERATION DEFECTIVE
Refers to Steps Taken by Treasury
Department to Restore Confidence
Shaken by European War.

A financial system for the United
States that will unite under one federal
direction and supervision all the banks
of the nation-national and state banks
and other banking institutions-is pro-
posed as a proper and desirable national
financial ideal. and is predicted as the
natural evolution Of the federal reserve
system by William G. McAdoo, Secre-
tary of the Treasury. His views are con-
tained in his annual report to Congress
of the state Of the federal finances. made
public today.
'"The federal reserve act has also pro-
vided a means" his report sets forth,
by which state banks may more readily
become national banks and thus secure
the benefits of the federal reserve sys-
TEN or by which they may retain their
state charters and still become members
Of the federal reserve system and Sc
cure its benefits 1t will be of great ad-
vantage to the country to bring more
thoroughly under the supervision OF the
national government than heretofore the
entire banking system of the country.
'It is a serious defect in our financial
structure to have so many state panRS
operating under forty-eight different
through wise legislation and manage
ment, be brought ultimately into the
federal reserve system. SO as to make
the banking system Of the country
administered. regulated and super
viSed under the authority of the
national government, a great and lasting
benefit will be secured to the American
people.
This may be and it is to be hoped
will be the natural evolution OF the fed
eraI reserve system
In spite of drains from Europe, where
the nation owed about s450.000.000 at
the outbreak of the war, Secretary Nc
Adoo says that the Treasury's gold
holdings show a reduction of only $685.
656.219 October 81, 1914, compared with
holdings of s1,25s. .21s.357 June 30. 1913.
Makes Several Recommendations.
The Secretary makes several rec
gress that the war revenue tax law
should not expire December 81, 1915,
but that it's operation should be ex-
tended until the end of the European
war. by proclamation Of the Presi-
dent.
Discussing the income tax law, the
Secretary advocates a change in the
law SO that persons having a gross
income of $4,000 be required to make a
return instead of those persons with
a net income of that amount or over.
Such an amendment" he says.
would simplify the administration Of
the law, assure more complete returns
and materially increase the income tax
revenue, and save an immense amount
of expense to which the government
3 now subjected in maintaining a suf-
1cient corps of inspectors and investi-
gators to hunt out the people who have
failed to make returns" He recon-
.nends also the repeal of the provision
by which taxes do not accrue until
zen days after the close of the fiscal
ear. and would make them accrue
fuly / each year.
Although the law did not produce the
~evenue expected, the Secretary says,
II has proved satisfactory. and explains
hat the administration Of a law Of that
character has many obstacles to over
come at the outset and that folk are
unaccustoued and must be educated to
It. Taking the tables Of returns. Mr..
McAdoo infers that there must be many
who failed to pay the tax.
Mr.. McAdoo again recommends to
Congress the consolidation of the rev.
enue cutter and life-saving services,
TO bear the name coast guard service"
He urged the building of two more rev.
enue cutters and the appropriation for
a leprosarium for the use Of the public
health service.