New Britain herald., 1927-12-07
BUSINESS BETTER,
 MELLON DECLARES
Treasury Report to Congress
 Views Prosperity

Washington. Dec. : GPl-Although business showed a recession during the last year. it now Is approach | ing a normal expectancy with sound underlying Fundamentals, Secretary ! Mellon said today in his annual re-
 port to congress.
 Under the heading of the pres ent situation of business" the treas ury secretary asserted that business activity began in the spring months of this year to fall below the totals ot last year. AS a result of this re- ! cession, he said, business is now being conducted on basis that con- forms more nearly to the normal expectancy as judged from the reg ular rate of growth of the country that has prevailed on the average for some years"
 Business Not Subnormal While business Is not as active as in most of 1926. it can hardly be said 10 be subnormal, and the underlying fundamentals appear to be sound" he added. Another in- dcation of healthy business condi- tions is the recent recovery in com modity prices due in the main to the rise in agricultural prices" Credit conditions were described as sound, as indicated by the han ding Of the peak load of crop financing without strain and with interest rates easing in the middle of October,
 Explaining that the treasury ac- cumulated vast amounts of informa- ton on business and finance, Secre- tary Mellon said a survey Of this data suggested the following con- clusions as to business in the past year:
 "A large volume of business was done simultaneously with declining commodity prices-an unusual com- bination of circumstances. The volume of new construction remained large. as engineering, in- dustrial and public works projects were In sufficient volume practically to offset a decline in construction of dwellings.
 High wages. due 10 increased average productivity per worker, and lower living costs, due to de- clining prices, resulted in a sustain ed purchasing power for a large variety of consumers commodities. Cautious Spirit Prevails
 Business was free from the ac- emulation of excessive inventories, advance ordering subject to can cellations and unreasonable specula- ton in commodities. and a spirit of caution prevailed generally among l business men.
 Automobile production continued at a pace somewhat reduced from the year before, and dangers of serious slump have been lessened as demands for replacements are now sufficient to absorb about half of the years output.
 Competitor became more in- tense and the largest profits were made by those concerns capable of introducing economies or capturing the market by adaptation of their products to the demand. Charges for the use of fixed cap ital were reduced both on industrial and government securities and on farm loans.
 Banks in the United States in creased their loans and investments about s2,000. 0.000,0 900 at the same time that they reduced somewhat reserve system, due mainly 10 gold imports and a decline in require ments for currency"
 Although internal revenue collec- lions showed an increase of only $31,774965 during the last fiscal year over the previous twelve months Secretary Mellon declared that a "closer analysis of the col
 ections shows more definitely that tax changes were responsible for the failure of such receipts to increase Receipts from internal revenue to- tailed s2,S69,414342. while inconr from customs and other miscellane- ous sources amounted to sl,25o, ,9So,- O99 or an increase of Sl34, 4,S63,7S6 over the previous year.
 Government Costs Less
 The 3,584,519 total expendi- lures of the government for the last fiscal year, the report said, repre- sented q decrease of S124.000, 900 over the preceding year. while re- ccipts totaled s4,129,%94.441, which left a surplus of sG35, ,S09,922. Of this margin SGl1,754.53S was ap- piled 10 retirement of the public debt, which was s25S, S,000.00O more than was applied to the debt in the previous year. This left q total debt at the close of the fiscal year last June 30 of S.51O1T4.266.1 after normal retircments Of s519, 563, S44.- 7S had been effected.
 In an analysis of the distribution of expenditures. the report showed that payments 10 the public debt in the last fiscal year absorbed 51,1 per c'HL ot IHc 'oldI, 4H'i''h'H lut'- tiOns SIS per cent and ordinary civil functions Ill. mphasizing that the cost of past wars occupies an important place in government finance the secretary estimated that the World war cost the United States $35,1l9,622144.
 Asks Surtay Cut
 Rciterating his recommendations