The spectator., 1920-12-17

W
 marked improvement during the past
 year. The total ordinary receipts of
 $6,694,000,000 for the fiscal year 1920 exceeded those for 1919 by $1,542, 2,000.-
 GOO, while the total net ordinary ex. penditures decreased from S1S,514, ,000,. 900 to s6,403, 100000 The gross public debt, which reached its highest point on August 31, 1919, when it was S26,- 596,000,000, had dropped on November 30, 1920, to $24,f75, 100000. There all so has been a marked decrease in holdings of government war securities by the banking institutions of the country, as we'll as in the amounts of bills held by the federal reserve banks secured by government war obliga- tions. This fortunate result has re- lieved the banks and left them free to finance the needs of agriculture, in. dustry and commerce. It has been due in large part to the reduction of the public debt, especially of the floating debt, but more particularly to the improved distribution of govern. ment securities among permanent in- vestors. The cessation of the govern ments borrowings except through short term certificates of indebted. ness, has been a matter of great con- sequence to the people of the country at large. as we'll as to the holders of Liberty bonds and Victory notes, and has had an important bearing on the matter of effective credit control. The year has been characterized by the progressive withdrawal of the treas. ury from the domestic credit market and from a position of dominant in- fiuence in that market The future course will necessarily depend upon the extent to which economics are practieed and upon the burdens placed upon the treasury, as wei as upon In. dustrial developments and the main. tenance of tax receipts at a sufficient high level
 "The fundamental fact which at present dominates the governments financial situation is that seven and a half billions of it's war indebtedness mature within the next two and half years. Of this amount, two and half billions are floating debt and five billions victory notes and war savings certificates. The fiscal program of the government must be determined with reference to these maturities. Sound policy demands that govern. ment expenditures be reduced to tho lowest amount which will permit the various services to operate efficiently and that government receipts from taxes and salvage be maintained suf- fieiently high to provide for present requirements. including interest and sinking fund charges on the public debt and at the same time retire the floating debt and part of the victory loan before maturity. With rigid economy, vigorous salvage operations and adequate revenues from taxation, a surplus of current receipts over cur rent expenditures can be realized and should be applied to the floating debt. All branches of the government should cooperate to see that this pro- gram is realized.
 'I cannot over emphasize the neces- sity of economy in government appro. priafons and expenditures and the avoidance by the congress of prac. tices which take money from the treasury by indefinite or revolving fund appropriations. The estimates for the present year show that over a billion dollars of expenditures were authorized by the last congress in ad- dition to the amounts shown in the usual compiled statements of appro. priations. This strikingly illustrates the importance of direct and specific appropriations. The relation between the current receipts and current ex- penditures of the government during the present fiscal year, as well as dur ing the last half of the last fiscal year. has been disturbed by the extraordi. nary burdens thrown upon the treas. ury by the transportation act, in con. nection with the return of the rail. roads to private control. Over $600.- 000.000 has already been paid to the railroads under this act-s350, ,000 ,000 during the present fiscal year; and 1t is estimated that further payments aggregating s650. 0.000,000 must still bs made to the railroads during the cur. rent year It is obvious that these large payments have already seriously limited the governments progress in retiring the floating debt.
 Closely connected with this, 1t seems to me. Is the necessity for an immediate consideration of the revis- ion of our tax laws Simpliflcation of the income and profits taxes has be. come an immediate necessity. These taxes performed an indispensable service during the war. The need for their simplihcation, however, is very great, in order to save the taxpayer inconvenience and expense and in order to make his liability more cer- tain and definite. Other and more det-.ied recommendations with regaro to taxes will no doubt be laid before you by the secretary of the treasury