The Washington herald., 1920-12-08
TEXT OF WI SONS MESSAGE

tA31t aFaN lt5 INCOME rtloC-
tantly vetoed the budget bill
passed by the last session of the
Congress because Of con-
stitutionsl objection. The House
OF Representatives subsequentiy |
modified the bill in order TO meet /
this objection. In the revised form |
believe that the bill. coupled |
with action already taken by the !
Congress TO revise its rules and /!
procedure, furnishes the founda- 4
tion for an effective national |
budget system. I earnestly hope, /;
therefore, that one OF the first |
steps taken by the present ses-
sion OF the Congress will be TO
pass the budget bill.
Ffaanees' Inprsvesert Marked.
The nations finances haye
shown mafked Improvement dur
Ing the past year. The total or
dinary receipts Of ss,ssl.oeo.oo for
the fiscal year 1890 exceeded those
for 1919 by 81 ,542. .eoe. eco. while
the total net ordinary erpendi-
lures decreased from t1S.5lI.00o.-
ooo, to ss.to3.oeo.o o.oeo. The gross
public debt, which reached its
highest point. on August 81 1913.
when Il was S26,59s ,oeo, ,eee. hHo
dropped on November 80. 1870. TO
S2I,l15, ,0e0 geo. There has also
been a marked decrease in hold
ings OF government war securi-
ties by the banking institutions
OF the country as well as in the
amount Of bills held by the Fed
erai Reserve banks secured by
government war obligations. This
fortunate result has relieved the
banks and left them freer 10
finance the needs OF agriculture,
- industry ana commerce, II has
been due in large part TO the re-
dnction Of the public debt. espe-
ciaily OF the floating debt but
more particularly TO the. improved
distribution Of government Sc
curities among permanent invest
ors. The cessation OF the gov
ernment's borrowings. except
through short-term certificates OF
indebtedness. has been a matter
OF great consequence TO the peo-
pie of the country at large, as
well 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 O.
the Treasury from the domestic
credit market and from q posi-
tion of dominant influence in that
market. The future course Will
necessarily depend upon the eK-
tent to which economies are pr&c-
t!ced and upon the burdens placed
upon the Treasury. as well as
upon Industrial Developments aud
the maintenance of tax receipts
at a sufficiently high level
Must Reduce Expenses.
The fundamental fact which At
present dominates the govern
nent's financial situation is that
$1,000, ,oO0 900 Of its war Indebted
ness mature within the next two
and a half years. o fthis amount
ss.see, ,Oee. 900 are floating debt
and ss.ee.o0o. 600 Victory notes and
War Savings certificates The fis-
cal program of the government
must be determined with refer
eace to these maturtties. sound
: policy -ds,Sands that goyarnr1ent
eXpGuQlluEGtW UE LtlANSo ~ -
lowest .aunount which will permit
the various services TO operate
e:ficfently and that government
receipts from taxes and salvage
be maintained sufficiently high TO
provide for current requirements.
including interest and sinking
fund charges on the public debt
and at the same time retire tho
floating debt and part OF the Vic
tory loan before maturity. With
rigid economy. vigorous salvage
operations and adequate revenues
from taxation a surplus Of cur
rent receipts over current eNpen-
ditures can be realized and shosld
be applIed TO the ohating debt.
All branches OF the government
should cooperate to see that this
program is realized.
] cannot ovcremphasize tho ne
cessity of economy in government
appropriations and expenditures
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 $1,000. 100000 Of
expenditures were authorized by
the last Congress in addition 10
the amounts shown in the usual
compiled statements OF sppronri-
atoms. This strlkingly illustrates
the Importance Of making direct
and specific appropriations.
Extraordinary Disturbsrees.
The relation between the cur
rent receipts and current expendi-
lures Of the government during
the present fiscal year. as well
as during the last half OF the last
fiscal year. has been disturbed By
the extraordinary burdens thrown
upon the Treasury by the trans
portation act, in connection with
the return of the railroads to pri-
vate control. over s600.o00, ,OeO
has already been paid 10 the rail
roads under this act-S350.o ooO. .Oet
during the present fiscal year
and II Is estimated that further
payments aggreCsting possibly
$3.50. 600. 900 must still be made
to the railroads during the cur
rent year. II is, obvious thai
these large payments have al
ready seriously limited the gov
ernment's progress in retiring tho
floating debt.
Closely connected with this, 81
seems to me. Is the necessity fol
an immediate consideration OF tbs
revision OF our tax laws. Simpli'
fication Of the income and profits
taxes has become an immediate
necessity. These taxes performed
an Indispensable service during
the war. The need for their sim'
rlifieation, however, Is very great
IN order to save the taxpayer In