The Waterbury Democrat., 1937-06-30


 land and the Netherlands announced they would adhere to the agree ment as associates"
 2-Borrowing of approximately g, ,250 100000 in new money, lowest for any fiscal year since the Roose- welt administrations advent.
 &Inauguration of the gold "steri- lization" program, under which the treasury buys up all imported and newly-mined domestic gold and freezes" it in an inactive fund to keep the gold from entering the nations credit structure.
 4Failure of income taxes to provide anticipated revenue, result ing in an economy drive among government departments by Pres ident Roosevelt.
 5-Allegations by President Roose- welt and Secretary of the Treasury Henry Morgenthau, Jr., of wide- spread tax evasion and avoidance by "a minority of wealthy indivi- dualS," resulting in a legislative drive to plug loopholes in the revenue laws.
 Lowest Deficit Since 1881
 The deficit was the lowest since 1881, when the government spent $901 ,959, ,000 more than its income. The 1886 fiscal year witnessed the highest deficit incurred by the New Deal administration, $4,763, ,841, ,643.
 One, of the reasons for the smaller deficit was an increase of more than $1,0OO, 100000 in revenue, due largely to the new undistributed corporate profits tax and the social security levies. The social security taxes, however, did not start coming in until after Jan. 1. In addition, there was a decrease of almost $700, 100000 in spending as compared with the 1886 fiscal year.
 Although receipts failed by al- most 100000 to achive the $, 1928, ,150,719 estimated in the Jan- uary budget, they were almost $500, ,000, 900 in excess of income in the previous fiscal period.
 Income taxes, miscellaneous in- ternal revenue and customs receipts surpassed the entire 1886 totals early this month.
 Relief Outlay Reduced
 Sharply reduced expenditures for both relief and recovery and general governmental purposes accounted for the decrease in government spend- ing, which was almost $700O0O,00 under last years outgo. Relief and recovery spending amounted to ap- proximately $2,750,000,00O, as com pared with $3,290, ,927 ,869 in the 1886 fiscal year. General expenditures were held around $500, 100000 against $5,588, ,87O, 1888 in 1886. The treasury engaged in five major borrowing operations in the fiscal year. The government went to the money markets in fresh funds an din December borrowed $700,- 100000 more, due primarily to the loss of revenue resulting from in- validation of the A. A. A. taxes.
 In the last half of the fiscal year, the treasury borrowed $1,650, ,00O, 900 of new money, including $300,000, 900 in March, $350,000. .00O in April-May and $500, 0,000,000 in June. This bor- rowing was neceSsitated almost en- tirely by the drain imposed on the treasury's working balance by the gold buying program.
 The fiscal year ended with ap- proximately $1,000,OO0,000 worth of sterilized gold on hand-an accumu- lation of just over six months. At the same time, the nations gold stocks aggregated about 12,225, ,000,- 900, almost 53 per cent of the worlds visible supply of monetary gold.
 Bank Reserves Reduced
 The gold sterilization program was initiated last Dec. A as one of the steps in the administrations policy to trim down the volume of excess bank reserves, which, it was feared, might serve as the basis for undue credit imitation. The federal reserve board, mean while, sought to accomplish the same end by ordering its member banks to increase the amount of their re- quired reserve, which had the effect of reducing their idle funds.
 Toward the end of the fiscal year. there was a series of rumors-all emanating from Europe-that the United States was on the verge of lowering it's gold price of $35 an ounce. These rumors were discredit- ed by President Roosevelt, but, nev- ertheless, they resulted in an &C., celeration of gold movements to the United States. One of the uses of the tripartite monetary agreement was demonstrated during this period when the British equalization fund cooperated with the United States by purchasing large quantities of gold offered on the London market, which ordinarily would have been shipped to this country.