The St. Joseph observer., 1920-12-11

highest point on Aug. 81. 1919. when
it was S2G,596.O0O 900. had dropped
on Nov. 80, 1899. 10 ,OOO.
There also has been a marked de-
crease In holdings Of government war
securities by the banking institutions
OF the country as well as in the
amount OF bills held by the federal
reserve banks secured by government
war obligations. This fortunate result
has relieved the banks and left them
freer to finance the needs of agricul-
ture, industry and commerce. 1t has
been due in large part to the reduc-
tion Of the public debt, especially Of
the floating debt, but more particu-
larly to tho improved distribution of
government securities among perma-
nent investors. The cessation of
the governments borrowing except
through short term certificates of in
debtedness has been a matter OF great
consequence to the people OF the
country at large, as woll as 10 the
holders of liberty bonds and victory
notes and has had an important boar
Ing on the matter OF effective credit
control. The year has been char
acterized by the progressive withdraw
al OF the treasury from the domestic
credit market, and from a position OF
dominant influence in that market.
The future course will necessarily de-
pend upon the extent to which eco
nomics are practiced and upon the
burdens placed upon the treasury, as
well as upon industrial developments
and the maintenance of tax receipts
at a sufficiently high level.
Must Practice Economy
The fundamental fact which at
present dominates the governments
financial situation is that seven and
a half billions of its war indebtedness
mature within the next two and half
years. OF this amount two and a half
billion are floating debt and five bill
lions victory notes and war savings
certificates. The fiscal program of
the government must be determined
with reference to these maturities.
Sound policy demands that the gov
ernment expenditures be reduced to
the lowest amount which will permit
the various services to operate effic-
iently and that government receipts
from taxes and salvage be maintained
sufficiently high to provide for cur
rent requirements. including interest
and sinking fund charges on the pub
lie debt. and at the same time retire
the floating debt and part OF the vic
tory loan before maturity. With rigid
economy, vigorous salvage operations
and adequate revenue for 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
program is realized.
l cannot overemphasize the neces-
sty of economy in government appro-
priations and the avoidance by the
congress Of practices 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 expendi-
lures were authorized by the last con-
gress in addition to the amounts
shown in the usual compiled state
ments Of appropriations.
Urges Revision Of Taxes
This strikingly illustrates the i'm
portance of making direct and specific
appropriations. The relations between
the current receipts and current ex-
pendltures OF the government during
the present fiscal year, as well as dur
ing the last half OF the last fiscal
year, have been disturbed by the ex-
traordinary burdens thrown upon the
treasury by the transportation act. in
connection with the return of the rail-
roads to private control. over $780,
900, 900 has already been paid to the
railroads under this act-335O. 900, 900
during the present fiscal year; and it
is estimated that further payments
aggregaing possibly s650.0OO,OO0
must still be made to the railroads
during the current year. 1t is obvious
that these large payments have al
ready seriously limited the govern
ment's progress in retiring the float
ing debt.
Closely connected with this, Il seems
to me, is the necessity for an immed-
late consideration of the revision Of
our tax laws
Simplification OF the income and
profits taxes has become an immed-
late necessity. These taxes performed
an indispensable service during the