21.
FIRST BUDGET TRANSMITTED TO CONGRESS BY PRESIDENT HARDING
9 ' . . -
Figures Submitted by Director Dawes Show Estimated Saving in Fiscal Year 1923 of More Than Two Billion Dollars Over 1921 Expenditures.
THE MORNING OREGONTAN, WEDNESDAY, DECEMBER T, 1021
WASHINGTON. D. C, Dec. 5.
President Harding transmitted
to congress today the first
budget of the United States in the
following message:
To the Congress of the United States:
I submit herewith the budget of the
United States for the fiscal year end
ing Juno 30, 1923. It will be noted
that the estimated ordinary expendi
tures for 1922 show a reduction of
11,513, 537.6S2.20, compared with the
actual ordinary expenditures for 1921;
and that the estimated ordinary ex
penditures for 1923 show a reduction
of $447,704,239 under 1922, making the
estimated ordinary expenditures un
der the budget for 1923 $1,961,241,
921.20 less than the actual ordlnary
exponditures for 1921. Including
transactions in tne principal of the
public debt and investments of trust in the affairs of the government busl
funds, the total estimated expend!- , nes corporation such as exists in
tures for 1922 show a reduction under lcverv well-managed private corpo-
of $1,570,118,323.30. and the total es
timated expenditures for 1923 show a
reduction of $462,167,639 under the
total estimated expenditures for 1922
maKing a reduction in total expendi
tures In tho estimated budget for
1923, as compared with the total ac
tual expenditures for 1921, of $2,032.
285,962.30. It will also be noted that
tho total estimated receipts for 1922
are in approximate balance with the
total estimated expenditures, includ
ing reduction in the principal of the
public debt, and that the total esti
mated receipts for 1923 are within ap
proximately $150,000,000 of a balance
SW-V1 &t.?2BAI"r7:
of that year. Such a discrepancy is
unavoidable, when authorizations of
expenditure are being enacted during
the process of budget closing, but
ways aro provided for relatively easy
adjustment without added taxation.
8100,000,000 Cut from Nnval Supplies.
For the purpose of providing a por
tion of tho fund" necessary to bal
ance the budget for 1923. in which
tho estimated expenditures exceed the
estimated receipts by the sum of ap
proximately $150,000,000, I recommend
the following legislation in connec
tion with tho naval appropriation bill
for 1923, which would result in the
eventual automatic release of $100,
000.000 now held In the naval supply
account of the navy department:
"Hereafter, until tho naval supply
account shall have been reduced to
a maximum sum of $150,600,000. which
shall not thereafter bo exceeded, one
half of ail reimbursements otherwise
due to the naval supply account,
whether from current Issues or from
gales, shall be covered into the treas
ury as miscellaneous receipts, and
only one-half shall he credited to the
naval supply account."
With continued pressure for econ
omy in all departments and the pas
sage of such legislation, the balancing
of total receipts and total expendi
tures for the fiscal years 1922 and
1923 should be accomplished.
I also transmit herewith the report
of the director of the bureau of the
budget on the budget of the United
States and the operations of tho bu
reau of the budget.
The details of tho budget are shown
in the accompanying statements, and
may be briefly summarized as follows:
Budget Summary.
(Exclusive of postal revenues and poeta. expenditures paid from postal revenues.)
1923. estimated. 1922. estimated. 1921. actual.
Total receipts 13.338,182,730 $3,943,493,603 $5,624,932,960.01
Total expenditures. Including- reduction
In principal of public debt 3.50.1,7.14.727 3.067,922,366 5.3.18,040.680.30
!;' . of expenditures
Cxccas of receipts
Tho Whlto House, December
1921.
DIRECTOR DAWKS REPORTS
I tl mutes I'repnred I'nder i:eciMlve
Prunure for Retrenchment.
Director Dawes' report follows:
The President.
Sir: I transmit herewith a report
on tho budget, of the United States
for tho fiscal year ending June 30,
1923, In accordance with section 209
of the budget and accounting act, and
a general report on the operations of
the bureau of the budget.
Budget Summary.
(Exclusive of postal revenues and postal expenditures paid from postal revenues.)
19:13. estimated. 1822. estimated. 1921. actual.
Total receipts $3,338,182,750 13,943.453,063 1.1. 024.932.900.91
Total expenditures (including- reduction ,
In principal of public debt) . . 3,505.754,727 3.967.922.366 .1.538.040.089.30
Excess of expenditures ' 167, 571,977 24.46S.703
Excess of receipts 86,892.271.61
See note 1.
Note 1 By continued pressure for econ
omy and If tho recommended legislation
in connection with tho naval appropria
tion bill for 1923. directing the reduction
of the naval supply account In the sum
of $100,000,000. Is enacted. It Is estimated
that funds will bo provided to balance
the budget for 1923 as above.
Note 2 In 1923 war savings certificates
of tho par valuo of $585,000,000 will be
come due. It Is assumed that these ma
turities will be met by refunding. Since
these . notes were discounted at the time
they were sold, by prepayment of Interest,
the government did not realize par upon
tho aamo to the extent of 125,000.000. It
would bo consistent, therefore, with con
servative business principles It the amount
of the discount should not be permanently
funded but should be retired us soon as
possible out of surplus Income.
Note 3 To reconcile these totals with
those shown in tho treasury report It is
necessary to add to tho above figures for
both receipts and expenditures for the fis
cal year 1922 the sum of J25.000.000. and
for tho fiscal year 1023, $7,000,000. on ac
count of reduction of capital stock of the
United States Grain corporation. This
transaction occurred after the preparation
of the statemont of estimated expenditures
for the fiscal year 1922, made by the
secretary of tho treasury August 4. 1921,
amounting to tho sum of $4,550,000,000.
Retrenchment Continually Urged.
The total estimates or appropria
tions for the fiscal year 1623 were
prepared under executive pressure,
continually exerted for retrenchment
wherever consistent with efficiency,
and as originally presented to the
bureau of tho budget amounted to
$3,923,919,970.48. which includes $586,
532,950 payable from postal receipts.
The final revision by the bureau of
tho budget, after impartial examin
ation and consideratlcn of the items,
led to a further reduction of $122,
806,310.93. which was accepted by the
dopartmcits, leaving the estimates as
finally determined upon and contained
in the budget at $3,801,113,659.53.
These figures include sinking lund
other reductions of the public debt, , fiscal year 1922, Is most important If
interest on the debt, and postal serv-'he had not taken this position and
ice payable from postal revenue. . action, the expenditures for 192' and
Tho estimates of appropriations as. the budget herewith presented for
contained In tho budget for the fiscal) 1923 would have been far different as
year 1923 are exhibited in detail, by 'regards the majority of their items
departments, as follows: For the first time In the history of
Comparative Statement of Estimates of
Legislative
Executive nfrico
State department
Treasury department
War department
Panama canal
Navy -!' i . t: ru
Interior department
Indian service
Pensions r
Postofflce department
Department of agriculture
Department of commerce
Department of labor
Department of Justice
Shipping board and fleet corporation
United States veterans bureau and corresponding
appropriations in 1921
Other independent offices
District of Columbia -.
Incrcaso of compensation
Ordinary
Reduction in principal of the public debt:
Sinking fund 2H3.838.S00 00
Purchase of liberty bonds from foreign repayments. 30.300,000.00
Redemption 0f bonds and notes from estate taxes.. 25,000.000.00
jledemptlou of securities from Federal Reserve
bank franchise tax receipts 30.000.0oo 00
Principal of the public debt 369. 33s. hoi) oo
Interest on the public debt
Total, exclusive ot postal service payable
postal revenue
Postal service payable from postal revenue
Total, Including postal service
.resident Takes ItcsponfnibllHy.
Concurrently with the establish
ment of the bureau of the budget the
president announced his determlna-
tlon to assume his full responsibility
as the head of the governmental dusi
ness organization, and directed the
director of the bureau, in accordance
with the provisions of the budget law,
to immediately suggest to him such
Improvements in existing govern
mental business methods as could be
legally inaugurated by him through
executive orders. Upon the submis
sion to him of information revealing
certain defects the president decided
to use the bureau of the budget as his
first agency for imposing the pressure
of an executive plan for the unified
conduct of governmental routine busi
ness and for retrenchment in govern
mental expenditure where consistent
with efficiency. Coincident with this
also came his consideration of the
principles, customs and precedents
which should accompany the creation
k- . v & t ; ..,-,.. nf nnnmnrlate ma
chinery designed to create a situation
ration where the head can transmit
with the minimum of obstruction and
delay a unified plan of routine busi
ness to be carried out by his sub-
'ordinates.
Tho president then followed the
only possible course by which, as in a
private corporation, all those in au
thoritative relation to expenditures
of government could be impressed
with an executive plan, and on June
29 1921 called them en masse lor
instruction. At this meeting, attend
ed by the cabinet and some 500 de
nartment heads, heads of establish
ments and bureau chiefs, he outlined
! hUUtion.Sr under 'his instruc
tions and in his presence the director
of the budget explained the methods
to be followed in carrying out his
nurnose. As a result of this meeting
at the end of 30 days a reduction in
expenditures for the present nscal
year (1922) was promised the execu
tive by the business organization in
the amount of $112,512,628.32. A part
of this sum was expected to be real
ized by actual economies and part by
the deferring of expenditures to sub
sequent years. In this connection It
should be stated that there will never
be expended during a fiscal year all
of the moneys appropriated lor that
year. A limited percentage is expend
ed during subsequent years and a
much smaller percentage is never ex
pended, but is subsequently covereel
Into the treasury or reapproprlatea
for similar or new purposes. As a
result of the executive pressure upon
the departments this percentage has
been largely increased, as will be ap
parent from the amounts here stated.
Reductions Made In M Expense.
On August 4, 1921. the secretary of
the treasury stated to tho committee
on ways and means that "according to
the latest advices received from the
spending departments and after tak
ing into account ail estimated reduc
tions in expenditure reported to date
the treasury estimates that the toal
expenditure for the fiscal year 192!.
for which provision should be made,
out of the current revenues of the
government will be about $4,550,000.
000. This in itself would mean a sub
stantial reduction in current reve
nues and expenditures below the
fiscal year 1921."
At the time that this statement wa3
107,571.977
24.46S.703
80,892.271.61
HARDING.
WARREN G.
made by the secretary of the treasury
the results of the imposition of execu
tive pressure upon the spending de
partments, inaugurated at the meet
ing called by the president of the
body of the business organization of
government, had not been fully de
veloped. On August 10. 1921. after a
conference, announcement was made
through the secretary of the treasury
that the administration, in co-operation
with the committee on ways and
means, had determined to reduce the
ordinary expenditures of the govern
ment for the fiscal year 1922 by at
least $350,000,000 below the revised
estimates presented by the treasury
on August 4. to-wit, about $235,000,000
in addition to the $112,512,628.32 above
mentioned. It was also announced
that the treasury would provide for
two items of estimated public debt
expenditure for the fiscal year 1922
out of other public debt receipts dur
ing the year to the extent of $170,000,
000. Thus tho expected aggregate
reduction in expenditure for the fiscal
year on the above basis was an
nounced as $520,000,000. leaving the
estimated total expenditure for the
fiscal year 1922 as of date August 10,
1921, about $4,034,0P0,000. It will be
noted from the foregoing statements
that the present estimated expendi
tures for 1922. Including sinking fund,
are $3,967,922,366. thus Indicating that
the $520,000,000 reduction in ordinary
expenditures determined upon August
10 will be exceeded by the sum of
$62,000,000, making the total reduc
tion $582,000,000. As compared with
the actual total expenditures for 1921
of $5,538,040,689.30. the total expendi
tures for the government for the
present fiscal year 1922 of $3,967,922.
366 involve a net reduction from all
causes of $1,570,118,323.30. Further
more, continued executive pressure,
affecting also the estimates for 1923,
enables the budget for that fiscal year
to be based upon an estimated total
expenditure of $3,505,754,727, which !s
a till further reduction of $462,167 -639
under the estimated expenditures
for 1922.
The attitude and determination of
tho president of the United States in
relation to the use of the budget
bureau as an agency for the imposi
tion of his policy for the reduction of
governmental expenditures not only
as regards the expenditures for the
fiscal year 1923 but for the .present
Appropriations for 1923 and Appropriations
Estimates of
Appropriations,
1923.
10.493.843.05
22H.HH0.0O
10.380.001.10
161, 06.1. .MI7.S2
300.500. U23. 47
4.241,174.00
423,0.12.307.13
3:!.33(.S6.VO0
32.358,077.00
302, 100 ,00.00
8,412.000 1)0
40. SCO. OIIH. 00
20.67.1,326.23
6.3(14. 632.00
18. .103.3.1(1. 00
50.301,500.00
38.1,1)21.702.00
22,0117.001.00
27.103.470.73
Appropriations,
1922.
3 17.190.203.39
, 228.880.00
I0.637.7UD.O9
164.892.941.29
388, .136. 062.41
9.000.000.00
425,848.079.37
40.4O0.2O.1.OO
33.517.354.67
283. .-,00.000 OO
3. 241. 703. 55
4H. 340. .130.00
17.20.1,080.00
4,904.8.1.1.75
15.779,238.50
73.939,000.00
230.573.620.00
21.673.333.00
22.5.19, 712. 99
35,000,000 .00
. 1,880.536.703 5b
1. 834, M13, 762.01
272.442,200.00
30.500.000.00
23.000,000.00
60.flOO.000.OQ
3S7.942.20O.OH
975,000,ooi) oo
from
3,224,875,503 .13
370.23H 086 00
8.801. 113.63t)!s3
3.197.807.962.01
374.092.352.00
3.771,900.314.01
our country a national budget has
been prepared based on estimates
from the spending departments acting
under a strong and continued execu
tive pressure for economy and effi
ciency. In presenting the budget of the
United States for the fiscal year 1923,
covering the sum of $3,505,754,757, in
compliance with the requirements of
the budget act, the director Of 'he
budget has prepared it upon the basis
of the amount of cash which must
actually be withdrawn from the treas
ury during the fiscal year 1923.
The method of appropriation of
money heretolore followed has re
sulted in a condition of things unde
which it is almost Impossible lor
either the executive, congress or the
secretary of the treasury to have be
fore them a true picture of the fiscal
condition of the government at any
particular time. Although congress
has by stringent penal law prohibited
the creation of deficiencies and clear
ly indicated that its annual appro
priations were Intended to limit the
amount to be expended for such
period, yet millions of dollars have,
been annually spent by the depart
ments above the estimates submitted
at the beginning of the fiscal year,
and in recent years, due to the great
sums appropriated in connection with
the War. hundreds of millions of dol
lars have been so expended by the de
partments, a course made possible by
deficiency and supplemental appro
priations, the existence ot revumui,
funds, and unexpended balances.
The distinction between the appro
priations for a given year and the ac
tual expenditures for that year should
be clearly borne In mind. Appropria
tions for any given year do not repre
sent the money actually spent during
that year, but are intended to cover
the obligations which are incurred in
that period, part of which are paid
currently and a part of which mature
and are discharged in subsequent
years. Consequently the expenditures
of a year must be composed of the
amounts maturing in it, some of
which were appropriated In previous
years and some of which are covered
by the current appropriations. In ad
dition to this should be added the use
of permanent and indefinite appro
priations which require no annual ac
tion by congress and funds from other
sources.
While the director of the budget
presents with the estimates the in
formation necessary to enable con
gress to make Its appropriations in
the former way. it is urged that if it
will pass the budget providing simply
for the amount actually to bo expend
ed during the fiscal year, with execu
tive pressure now being exerted to
keep the departments within the lim
its of this expenditure, a continuanc3
of the method will automatically
largely eliminate the indefinite cash
demands currently made in the past
by departments on account of unex
pended balances in addition to their
current appropriations. A system by
which requests for appropriations are
based upon the actual need of money
for disbursement during the fiscal
year for which the appropriation is
made will thus tend to prevent here
after the wide, Indefinite, and fluc
tuating margin between the expendi
tures for any given year and the ap
propriations requested of congress to
cover the same period.
Busineits Methods Urged.
Again, If congress will follow this
method. It will at the end of each
fiscal year of necessity direct Its at
tention to the relative Importance of
existing work ana projects, consider
ing the then state of tho government
and public business, thus promoting
a more intelligent consideration of
appropriations. Under the old sys
tem, where after the authorization of
a project a continuous appropriation
was made In an amount estimated as
necessary to complete it, it passed,
for all practical purposes, outside the
ken of congress. It is inconceivable
that as the fiscal condition of the
government changes and as business
conditions in the country change, to
say nothing or the particular condi
tions which surround any given gov
ernmental project, this annual re-examination
the project or activity
In connection with the advisability of
passing the enabling appropriation
will not be beneficial In tending to
ward the elimination of useless ex
penditure and waste.
The fact that contracts are let by
the government which, of necessity,
can not be completed within the fiscal
year during which they are let does
not Imply the necessity of immedi
ately making available to the con
tracting department the entire sum
of money eventually to be expended
on the contract. While in many in
stances the amount appropriated has
been only that which could properly
be expended during the year for
which the appropriation was made,
there have been other instances In
which the total amount called for by
the project was appropriated at one
time, without regard to the need for
expenditure during the current year.
No properly organized private cor
poration would handle its business in
this way. The head of a private or
ganization In charge of policy would
have in mind, as a matter of course,
his sources 0f revenue at the time
the contract is let, and also the de
mands upon them which will result
from the carrying out of the contract.
But he would not complicate his en
tire business system by announcing
to the subordinate in charge of a cer
tain contract that he could draw In
definitely, and without notice to the
I head of the corporation, whatever
money was necessary in carrying out
its terms. On the contrary, in order
to Insure the best attention on the
part of the subordinate to the con
tract, and to Insure that he himself
, would be properly informed as to the
work being done under it, he would
"require the one in charge of the con
tract to report to him periodically his
need of cash to complete payments
under It. It is a fallacious argument,
therefore, to maintain that a continu
ing appropriation must accompany
any contract extended beyond a single
fiscal year.
Old System Sniffles.
The whole habit of making contin
uous appropriations to which the gov
ernment has been committed In the
past is only an encouragement to a
lack of scrutiny of public work by
the head of the department under
which it Is carried on. and an en
couragement to shiftlessness ' and
carelessness on the part of tho sub
ordinates more directly concerned in
it. The- more rigid the system under
which continuous attention to the
conduct of the business of govern
ment Is made mandatory on the part
of congress and he business admin
istration the more efficient will be
the conduct of government.
Finally, this system of preparing
the budget will confine the attention
of the executive, of congress, and of
the public to the one great Important
question, towit. the relation of the
money actually to be spent bv the
government to the money actually to
be received by the government In any
given year, all its outstanding obliga
tions and indefinite commitments,
projects, and enterprises considered.
This vAll enable congress, with more
intelligence, to determine at anv time
both the necessity for retrenchment
and the ability of the government to
engage in additional projects to be
initiated by congress outside of the
budgetary provisions.
There exists such a mass of unde
termined liabilities arising out of un
expended, appropriations of former
years, and so much resulting uncer
tainty as to the trucmount of ex
pected receipts and expenditures, that
it would seem that congress should
recognize the situation and Imme
diately repeal all outstanding con
tinuous appropriations and "revolv
ing funds," save in those cases. If
any. where the particular character
of governmental activity may require
a limited fund as working capital,
giving, of course, proper recognition
to legally enforceable obligations
standing against them. Thus again
the relative Importance of projects
may have the consideration by con
gress and the executive alone made
possible by this course. By such an
act there will be uncovered for recon
sideration a number of practically
forgotten projects which are eating
up money that would not be devoted
to such a purpose If the present sit
uation nad been in the mind of the
appropriating power when It first
acted.
Naval Supply Fund Hit.
The naval supply account fund Is
a conspicuous example of one as to
which (because of intensive study
IMPORTANT FACTS SET FORTH BY DIRECTOR DAWES IN
BUDGET FOR FISCAL YEAR ENDING JUNE 30, 1923.
Estimated expenditures for 1923, $3,505,746,727.
Estimated receipts, $3,338,182,750.
Estimated deficit of $167,571,977 to be wiped out by legislation
recommended by the president.
Of this amount $100,000,000 will be withheld from the naval sup
ply account.
Economy In other departments to take care of the balance.
Total estimated saving in 1923 over the actual expenditure In
1921 to be more than $2,000,000,000.
Ways provided for taking care of revenue deficit without added
taxation.
Continued pressure for economy in all departments will be
exerted.
Budget for 1923 based on the amount of cash which must actu
ally be withdrawn from the treasury during that year.
'Largest single Item in budget is fund for interest on public
debt, $975,000,000, lacking only $25,000,000 of the total expenses of
the federal establishment before the world war.
Estimate of $369,338,800 included for the war debt sinking fund.
Development and maintenance of air service to be given $31,
964,000. Naval building programme to get $99,198,000; navy pay $143.
754.000. Army maintenance calls for $154,448,400; national guard; $28,
946,600. Expenditures on public works. Including rivers and harbors,
$57,943,900.
Estimate for veterans bureau. $455,232,702.
Internal revenue expenses. $66,206,190,
Prohibition enforcement, $10,000,000.
given it) an immediate specific
change can be recommended.
This fund is the outgrowth of sev
eral acts of congress,, the latest being
the act of March 1. 1921 (41 Stat.,
1169). It constitutes a "revolving
fund" or permanent working capital
for procuring and issuing standard
supplies, and under the legislative
provision last mentioned It stood at
Summary of budget expenditures for 1923. estimated expenditures for 1922 and
actual expenditures for 1021. exclusive of postal servlco expenditures paid from postal
revenues:
Estimated
budget Estimated Actual
expenditures expenditures expenditures
1923 1922. 1921.
Legislative $ 16,265.213 $ 15.984.446 $ 18,994.36.1.17
Executive office 227.04.1 227,043 197.341.68
State department 10.4t2.C24 11,408,032 8.780,796.84
Treasury department 108,0117,160 169,871,163 478.352.192.21
War department 369.902.107 389.091.406 1.101,015,013.32
Panama canal 7.8.1S.839 7.219.849 16.461.409.47
Navy department 431.7.14.O0O 478.850,000 050.373.S35 58
Interior department 41.790,022 3.1.00.1. S2: 3D,6S7,OD4.86
Indian servlco 31.883.000 33. 13.1.000 41.470.807.60
Pensions 252.330.000 238,400,000 260,611,418.13
Postofflce department 8,357,092 3.276,4.14 .1,230.6.10.1.1
Deficiencies In postal revenues 21,509.666 48,172.270 130.128,458.02
Department of agriculture ., 47,497.530 48.637.100 62,385,702.9.1
Expenditures for good roads "12.1.700.000 M0S.0O0.000 57.452.0.16.48
Department of commerce 19.939,970 20,131.800 30.828,761.55
Department of labor 6.301.8.15 4,796.916 8.502. 500. 5.1
Department of Justice and Judicial 16,415.681 18,82.1.568 17,206,418.03
Shipping board and fleet corporation.... 50,49.1.73.1 73.911,081 130,723,268.28
United States veterans' bureau 453,232,702 438,122.400
R. It. admin, and transportation act 337.679.23.1 730.7tl.6iio.os
Federal board for vocational education... 5.329,244 4,756.344 104,671.772.62
Other Independent offices. Including war
finance and grain corporation 17.0S4.5U 16.983,16.1 83.596.418.52
District of Columbia 2.1.070.877 22,275.063 22,358,264.16
Increase of compensation 36.000,000 '.
Purchase of obligations of foreign Govs i 73.896,697.44
Purchase of farm loan bonds 16,781.320.79
Deduct unclassified repayments, etc 922.393.14
Ordinary expenditures 32,127.053.927 32,574. 7.1H.166 $4088, 295.84h.20
Reduction in principal of the public debt
Sinking fund $ 283.K38.S00 $ 272.442,200 $ 261.100,2.10 00
Purchase of liberty bonds from foreign
repayments 30.300,000 30,500,000 73.939,300.00
Redemption of bonds and notes from es
tate taxes 23,000,000 2.1.000.000 26,348.930.00
Redemption of securities from federal re
serve b,ank franchise tax receipts 30.QQQ. OOP oo.ooo.noo 60.724, 5QQ 00
Total net reduction In principal of
.public debt 3 369.338.800 $ 387.942,200 $ 422,113,000.00
Investments of trust funds
Government life Insurance fund $ 26,162,000 $ 22,022,000 $ 20,323.132.88
Civil service retirement fund and District
of Columbia teachers' retirement fund. 8,200.000 8,200.000 8.161.9,16.87
Trust fund investments 3 .14.362.000 j 3Q.222.ikio 3 28.4S7.109. 7.1
Interest on public debt 3 073.ooo.ooo 3 07.1.ooo,ooo uon.144.731.3.1
Total expenditures 33,505,734.727 33.967,922.366 $5.538. 010. OS'.' 30
The above table Includes estimates of additional expenditures during 1923 and
1922 for good roads, authorized by the act of November 9, 1921.
Excess of estimated expenditures over ordinary reeeripts, fiscal year 192.1.. $167,571, 977. 00
Excess of estimated expenditures over ordinary receipts, fiscal year 1922. 24,468,703 00
Excess of ord. receipts over expend, payable therefrom, fiscal year 1921.. 86,892,271.01
Summary of estimated ordinary receipts by sources of revenue for the fiscal years
1923 and 1922 and of actual receipts for the fiscal year 1921. exclusive of postal
revenues.
Source. Estimated Estimated Actual receipts
receipts 1923. receipts 1922. 1921.
Internal revenue receipts
Income and profits tax $1,715,000,000 32,110,000.000 33.206.046 1.17 74
Miscellaneous
Total Internal revenue
Customs receipts 3
Miscellaneous receipts: Interest, premium
Interest on loans to foreign governments
interest on imscuiiaiieuua uu.ij.iiiuii3 ui
foreign governments
Dividend on capital stock of United States
sugar equalization board
Discount on bonds and notes purchased..
Interest on public deposits, etc
Total Interest, premium and discount. ,3
Sale of government property
Sale of war supplies 3
Miscellaneous govennment property..
Total sale of government property. I
Public domain receipts
Sale of public lands $
Land fees (registers' and receivers')..
Receipts under oil leasing acts
Forest reserve fund '
Other
Total public domain receipts 3
Net earnings, federal reserve banks
(franchise tax J
Profits on coinage, bullion deposits,
etc. ..' -
Excess profits of licenses of food ad
ministration Rent of public buildings and grounds.
'Fees, fines, penalties, forfeitures, etc
Consular and passport fees $
Tax on circulation of national bagiks..
Customs service
Navy' fines and forfeitures
Naturalization fees
Immigration head tax
Judicial
Other
Total fees, fines, penalties, etc...
Gifts and contributions
For river and harbor Improvements. .
For forest service co-operative work.
Other
Total contributions
Sale of sealskins
Naval hospital fund receipts
Miscellaneous unclassified receipts...
Repayments of investments
Principal of loans made to foreign gov
ernments $
Liquidation of capital stock, United
Grain corporation
Liquidation of capital stock, federal
land banks
Return of advances made to reclama
tion tljnd
Principal loans made by Cnlted States
Housing corporation
Total repayments of Investments.!
Assessments and reimbursements
Salaries and expenses, national bank
examiners $
Expenses of national currency
Reimbursement, cost of maintaining
American army on the Rhine
Work done for Individuals, corpora
tions, et al
Other
Total assessments and relmburse-
mentis
District of Columbia
Revenues of the District of Colum
bia $ 15,063,415 $ 13.386,981
United States receipts. District of
Columbia sources 490.000 448.000
Total District of Columbia $
Panama Canal receipts
. .3
Trust fund receipts
Government life Insurance fund
Premiums on converted Insurance. $
Interest
Total government life Insurance
fund 3
Clvll-servlce retirement and disabil
ity fund $ 835,600 $ 582.990 I
I treasury statement, over receipts
Total ordinary receipts,' exclu-
Soldlers' Home permanent fund 840,000 840.000
Army, Navy and Marine corps de
posit funds 1,730.000 1.600.000
Indian moneys
Proceeds of labor $ 19,000,000 $ 20.000,000 $
Proceeds of sale of Indian lands and
lumber 2.000.000 2,000.00(1
Other
Total Indian moneys 3
Miscellaneous trust funds 3
District of Columbia trust funds . . . .8
T6tal trust fund receipts 3
Total miscellaneous receipts 8 897.182
Add excess of cash receipts, as per
Treasury statement, over receipts
.by warrants, as above
Total ordinary receipts, exclu
sive of postal revenues . -.
a total on June 30. 1921, or $255,476 -277.54.
The existence of such a fund. In
some reasonable amount, is undoubt
edly advantageous to the navy in
many ways In permitting supplies to
be purchased through one central au
thority at times of low prices. In
eliminating competition through bids
by different purchasing argents
SHB.oop.iHm 1.104.5OO.Q0O 1.390. .ISO. 823.
.32.811.000.0.10 $3, 2 14.300.000 34.596.426.981.0(1
3 33O.OIHI.OU0 3 27.1.0(10.000 $ .108.564. 301. 00
and discount
(
18,327.306.01
12.813,673.60
30.000.000.00
10,675,194.55
15.887.868.95
2.1.000,000
23,000.000
20.62.1.379
16.313.370
54.625.379 3 41.313,371) 3
705,4.16.01
100,500.000 141.200.000 3 183 092 848 69
6.372.97Q 6. 30s. 716 11 114 617 65
108. 872.070 t 147.708. Tin j 104.8O7.46fi 34
1.. 100, 000 1.500,000
1.500,000 1,300,000
5.000,000 5.000,000
4.300,000 4,000. OOO
1.630.370 1.8110.312
1.530,439.42
J. 731.022. 44
9.723.716.24
2.591.207.9.1
1.410. 881.01)
14.l39.37u 1 13.600,31::
10,989,157.12
30,000,000
12.408.000
i. 002. 200
60,000,000
18.498,000
i.'oof.ibb
60.724,742.27
12,610,210.05
7,078,988.5.1
1,151.162.83
9,373.800
3,870,032
1,300,000
1,000,000
1,000,000
3,834.364
7.700.000
10,464,492
4,406,840
1.450,000
2,200.000
700.000
8.000.000
7,123.000
6,849.5.16.25
4,799.615.73
1.178,283.68
1.508,628.13
912,601.16
5,767,803.69
4. .1.17.006. 4 1
8.649.84!!
.3 36,9.17.03.'. 3.1.408.002 2D,300,UOo7ki
.3 3.00O.O00 3.300.000 J 3 774 947 88
2,000.600 2,000,000 1,940 041 18
I15.'"" 120.000 871,870.80
.$ 5,11.-.. OOO i .1.6211.000 S 6.592.86S6ti
851,372 851.372 1,024,886.81
323.000 1,82.1.000 032 53" 78
.1.103.702 5.2.12.084 3.385.988.88
30,500,000 $ 30,500,000 $
83,678,223.38
100,000.000.00
054,835.00
1,000,000.00
97.082.33
1,250,000
1.000.000
100.000
1.2.10.000
1,000.000
100.000
32.850.000 8
32,8.10.000 3 185.730,0110.71
1. 900.000
788.341
2,400,000
718,836
1.236.470
1,900,000
976,446
1.08.1,037.11
886,777.01
11.154.467.22
854.737.95
' 5,050.923.07
2,400,000
7.18.731
1.201,470
7.043.687 $
7.326.887 3 10.529.042.36
14.439.985.93
561.106.29
16.453,415 $ 13.834,061 $ 15,001.092.22
13.813.0OO S 11.760.000 3 12,280,741.79
31,170,000 $ 26,717,000 $ 22051 778 15
2.000,000 1,000,000 l,O.1S,Y,,12.'02
3,1,170.000 3 27.717.000 3 23.110.480.77
821.009 01
359.924.47
20,443,157.66
2.016,001.90
85.702.49
21.ihio.ooo 3 22.000,000 3 22..144.P.11.!,1
011.040 5 5H1.O40 3 683.895 23
1.821.000 3 1.821.000 3 1.333.331.10
00.028,440 3
54.942,930 3
48,048.045 47
433.9.13.663 1 703,800.412.9,1
16,141.175.94 !
$3,338,182,750 $3,943,453,663 $5,624,932,960.91
against each other. In avoiding mid
dlemen's profits, and in preventing
waste through deterioration. It alBO
permits a reserve to be created and
maintained, particularly of Imported
materials necessary in the event of
war. The fund is kept Intact in
actual operation by charging against
the proper appropriation the cost of
siiDDlies as and when Issued to ships.
etc., and at the same time crediting
the fund with the same amount. .
The report of Colonel John Stephen
Sewell to the bureau of the budget,
prepared after careful study, Indi
cates that If the present inventory
of supplies were properly balanced
$150,000,000 would be a suitable
amount for this fund. The present
inventory, however. Is not so balanced
that each item bears the same pro
portion to the total of all items in
stock as its annual consumption
bears to the total consumption of all
items. To the extent that the account
is used for procurement abroad of
standard commercial supplies, he rec
ommends $90,000,000 as a reasonable
amount, and $60,000,000 for the bal
ancing of the inventory and procure
ment of standard supplies originating
in this country, a total of $150,000,000.
If this limit were to be placed upon
the fund, then in three to five years
$100,000,000 would be automatically
released and made available for other
uses. This reduction would require
action by congress.
Kased upon Colonel Sewelrs recom
mendation, and with the concurrence
of the secretary of the navy, I there
fore recommend legislation in con
nection with the naval appropriation
bill for 1923 embracing substantially
the following provision:
"Hereafter, until the naval supply
account shall have been reduced to a
maximum sum of $150,000,000. which
shall not thereafter be exceeded, one
half of all reimbursements otherwise
due to the naval supply account,
whether from current issues or from
sales, shall be covered into the treas
ury, as miscellaneous receipts, and
only one-half shall be credited to the
naval supply account."
Principle Involved Outlined.
In preparing the budget the direc
tor has availed himself of advice and
experience from every available
source, both inside and outside the
government agencies. He has received
generous and valuable assistance
from both the bureau of efficiency
and the Institute for government re
search. The aim has been to submit
the facts required In the different
portions of the act in the most sim
ple, condensed and easily understood
form consistent with full and accur
ate information.
The statements include all ordinary
expenses of the governmental opera
tions proper and so much of the public-debt
expenditures as is required to
be made in the year out of the cur
rent revenue; that is to soy. tho sink
ing fund and debt expenditures out
of receipts especially earmarked for
the purpose. The statements do not
include public-debt obligations in
tended to provide for maturing obli
gations by new loans or refunding
operations. This information appears
later in the balance statements of
treasury operations furnished under
other subsections or paragraphs of
section 201. The attempt is made in
this table onlv to reach a comparison
In-summary form between the ordi
nary receipts and the grand total of
the expenditures which have to be
met out of ordinary receipts.
This summary statement Is followed
by detailed statements of expendi
tures arranged, first, in the order and
amounts of expenditures by depart
ments, and. second, with relation to
the objects of expenditure; and these
in turn are followed by a detailed an
alysis of the revenues from the va
rious sources of government income.
The budget concludes with a state
ment In detail of appropriations re
quested by the several departments
for the fiscal year 1923 as revised by
the bureau. This takes tho place of
the fonrner book of estimates.
Companion Mnde Kssj.
In the budget the estimates follow
the same order and arrangement as
the appropriation acts for the fiscal
ve.li 1922. m orde.r to enable a OMM
ready and accurate comparison by
congress between the appropriations
for the two years. This fonn and
order are changed in the alternative
budget so that all appropriations for
any given department may appear to
gether in one appropriation bill or
chapter of the bill.' It is understood
that the committees of congress have
been rearranged for the purpose pf
considering the alternative budget in
this form. This rearrangement, to
gether with a continual revision of
the wording of the estimates elim -natlng
useless duplication, is in Itself
a decided step in advance, and will
gradually reduce Into a more work
able document the departpiental esti
mates. Between the period of September
15. at which date he receives the de
tails of the desired appropriations for
1923 and December 1. the director of
tho budget was expected, under the
provisions and spirit of the budget
act, to so pass upon the appropria
tions requested as to enable him to
express an intelligent opinion In con
nection therewith to the president of
the United States. The mere state
ment of the fact that there are sub
mitted to him the items of desired
expenditures on the part of 41 der
partments and independent establish
ments of government, each with Its
perplexing problems and many sepa
rate items of requests Requiring in
vestigation and discussion, will indi
cate tho difficulties of the situation.
Under the provisions of the law the
budget officers are appointed by the
heads of the respective departments
and independent establishments of the
government. The assumption under
lying the law probably is that through
officers acquainted by contact with
the business of their respective or
ganizations, and acting under the
supervision of their chiefs, the di
rector of the budget could secure that
information upon which it would be
come possible for him to base intelli
gent recommendations to the presi
dent In connection with the adjust
ment, increase or curtailment of de
partmental demands. At the same
time the law recognizes the desira
bility and necessity for impartiality
In connection with the consideration
of the requests of each department.
In fact, the whole law is based upon
such an assumption, and the recogni
tion of the necessity for this by con
gress has resulted in the creation of
the budget bureau.
Investigations Arc Impartial.
As he found It necessary, it was,
therefore, In accordance with the
spirit of the law that the director or
the budget, In considering the re
quests made by the departments and
establishments for appropriations, and
the reports of the respective budget
officers of the departments, interject
ed wherever possible a consideration
by an impartial mind. Tho recom
mendations made in tho present bud
get, herewith submitted, are not,
therefore, those of the director of the
hndeet. following simply the Inter
pretation of departmental needs made!
by the department head and a ouaget
officer responsible to him, but they
are also made after approval of Im
partial Investigators representing the
director of the budget and acting un
der his authority.
Even If the, director of tho budget had
not done this, still the machinery of
the budget law, used as .in agency for
executive pressure, would have pro
duced a great improvement over the
old system in connection with appro
priations, for It must be remembered
that, for the first time in our history,
departmental heads and budget offi
cers have been making estimates of
their necessities after a strong im
position of an executive policy of re
trenchment preceding the preparation
of the estimates. The importance of
this cannot be overstated. The reduc
tions in expenditures outlined in the
budget herewith presented are largely
due to the proper interpretation of the
president's policy by the heads of
departments and the budget officers.
Under the budget law as it now
stands the work of intelligent busi
ness revision of appropriations In
volving the expenditure of over
$3,000,000,000 must be done by the
director of tho budget, the assistant
director, four advisers of the direc
tor's selection, to be compensated at
the rate of $6000 per year, the balance
of the organization being secured un
der civil service rules at salaries not
exceeding $5000 per year. The director
of the budget has no hesitation in
stating that this could not have been
done this year, and in the future It
cannot be bo accomplished, without
recourse to personnel already in the
government employ, no matter to what
extent the appropriations or salary
limitations involved in the law might
be increased. The director of the
budget was fortunate In being able
to call in a bodv of business men who.
at a time of emergency in tho gov
ernment's business affairs, responded
to that patriotic Instinct characteris
tic of every good American and left
their business to become federal em
ployes at $1 per vear. The director of
the budget has also been assisted by
members of congress and. others
whose connection with governmental
business affairs in the past enabled
them to give invaluable practical ad
vice In connection with the estimates.
As a result of this experience the
director of the budget is satisfied
that the solution of the problem of
Intelligent revision of appropriations
is to be found, as usual. In the princi
ples recognized in a successful private
enterprise.
Director Presidents Adviser.
The director of the budget, as the
adviser of the president, who is the
head of the government business cor
poration, must have the advice of
those who are experienced in the con
duct of the business, bv practical and
continuous contact with it. Their ad
vice, however, should be impartial and
given ire terms of the president's pol
icy, distinguished from the necessa-
Jy Dart'a' viewpoint of one connect
ed authoritatively with the given
activity. This must be accomplished
by drawing upon the personnel of the
different departments In building up
the organization of the bureau of the
budget, selecting such men as have
shown in tho preparation and revision
of the estimates for 1923 their quali
fications for this important work. It
is necessary that all connected with
the bureau of the budget realize fullv
the fact that they are responsible,
under the director of the budget,
solely and alone to executive author
ity, so that the president of the United
.Mates, through the director of the
budget, may have truly Impartial as
well as accurate and authoritative In
formation upon which to base execu
tive policy. This principle must' also
be recognized and its necessity under
stood by the heads of the departments
trom which such personnel is drawn.
VJnay be necessary in some cases to
obraln thiH personnel bv detail for a
probationary period, in order fully to
confirm the qualifications of the man
in question before transferring him
'"mJ16 bureau of the budget.
Ihe director of the budget, becom
ing acquainted progressively with tho
business of the government and with
the men carrying it on, will thus have
built up an organization of experi
enced assistants, which organization
could not be duplicated In any other
way. even with greatly increased ap
propriations by congress. Selection
for this work, responsible as it Is di
rectly to the president of the United
States, should be looked upon by the
body of the organization as a high
appreciation on the part of the execu
tive of the ability, character, and
competence of the men selected. Such
a plan Is that pursued in all success
ful business organizations . of calling
into contact with the executive and
his agents the Impartial minds from
the business organizations best quali
fied to aid in thinking in terms of
policy for the entire institution as
distinguished from any particular por
tion of it.
IIUHlnr Mind llrnftrd.
The temporary service so splendid
ly rendered In this formative period
by minds drafted from among the
leading business men of the country
is being gradually taken up by men
selected from the various depart
ments who have been found qualified
to continue the work. The director of
tho budget states without hesitation
that the government has at its com
mand among the existing staff of its
business organization men of the high
ability demanded who, because of
their large experience. It would be
impossible to match, whatever the
compensation Involved, by recourse to
outside employment.
These men In the office will be as
signed particular department.", be
tween which and the budget bureau
they will function continuously as
liaison officers. Charged with the
duty of thinking in terms of the pres
ident's policy, they will bring to the
heads of the departments and the
chiefs of bureaus with whom they
will be in continual contact a better
realization of how the plan of their
particular department can be made to
better accord with the plan which tho
president has established for the gov
ernment as a whole. Continued con
tact with the departments, moreover,
will enable them the more Intelligent
ly to advise the executive, through
the budget bureau, upon the Irreduci
ble minimum of expenditures beyond
which, with a due regard for ef
ficiency, tho executive will not desire
to go. With the passage of time this
body of practical advisers will improve
in efficiency and effectiveness, and the
estimates of the budget bureau in con
sequence will be received with con
tinually increasing confidence by the
executive and by congress. The fact
that these men will not be political
employes, coupled with the fact that
the administration of the bureau of
the budget must be entirely non
partisan, will tend to establish in the
minds of all that the budget bureau is
only an agent of ordinary routine
business, working alone for economy
and efficiency, and not at all as an
adjunct of party or administration.
The director of tho budget desires
to express his sincere appreciation of
the Invaluable service in connection
with revision of the estimates of the
first budget rendered by tho follow
ing gentlemen, who, at tho nominal
compensation of $1 per year, accepted
appointment as advisers and g-.ivo un
stintlngly of their time and labor.
They have had a most Important part
in the work of the bureau: A. R.
Barnes. Chandler B. Beach. B. Floyd
Clinch. Henry M. Dawes. Rufus C.
Dawes. A. J. Karling, Samuel If. Fel
ton, Floyd Charles Furlow. K. F.
Mack, Alexander H. Revell. Colonel
John S. Sewell.. Honorable Lawrence
Y. Sherman. Ernest J. Stevens.
Ilureau'i PBMttaU Set forth.
There is a tendency on the part of
many to assume that the bureau of
the budget is established primarily
for the sake of reducing expenses.
The bureau of the budget is designed,
through its facilities for securing in
formation, to bo in a position to give
impartial advice to the president and
to congress in all matters regarding
the proper business functioning of
government. Because at the time of
tho establishment of tho budget bu
reau there was a great necessity ex
isting for the reduction of govern
mental expenses, and since under the
old decentralized system of govern
mental business great extravagance
existed, the activities of the bureau
which became most prominent were
those where it acted as an agent for
the imposition of executive pressure
in forcing down expenditures where
not in contravention of congressional
mandate and efficiency. This is but
one function or tne nuutiei uureuu.
It must be as willing to advise n
increase in appropriations where the
same is clearly in the Interest of gov
ernmental efficiency and true econo
my as it is to advise reductions In ex
penses, which at the present time are
so necessary. It is only by thlj
method, under which it gives an Im
partial business Judgment as to the
necessitv for expenditures and the
functioning of government, that it
can In the long run. maintain Its
proper influence with the executive
and with congress and Justify Its ex
istence. Dudget Supervised by Congress.
In possession, under tho constitu
tion, of the solo power of appropria
tion, congress. In passing tho budget
law, has created an agency to assist
in securing for its benefit importla.1
information from proper sources in
connection with its intelligent con
sideration of appropriations. In th
complete supervision of the budget
which congress of necessity must ex
ercise in connection with tho appro
priating power the budget bureau
will bo of assistance In proportion as
Its work Is in accord with the prin
ciples of common sense and correct
business. It should bo nonpartisan,
Impartial, and impersonal, and so op
erated as to create that Impression
upon the mind of congress. To the
extent that It can, through the main
tenance of the necessary machinery
for accurate preliminary investiga
tion, make proper recommendations
concerning the estimates to the presi
dent It will deserve and doubtless re
ceive the approval of tho congress.
Tho presentation by the president
of the budget to congress, as revised
by him after receipt from the director
of tho budget, should creato in any
given matter of appropriations moro
than a prima facte case In the mtna
of congress. Provided the bureau
functions properly It should creato a
strong presumption that any particu
lar case had been properly investl
gated and all th. reductions recom
mended in connection with the ex
penditure Involved which arc possible
without muterial interference with
governmental efficiency. It Is to bo
expected that since the preliminary
estimates have been made under pres
sure by the executive for proper re
trenchment, where consistent with ef
ficiency, it will not l- necessary, as
heretofore, for congress to make radi
cal cuts upon the estimates of tho
budget with any uncertainty as to
what will be the result as it affects
efficiency. The president of the
United States, when he sends the
budget to congress, is presumed to
send It with all the reductions In ex
penditures which can be effected
without undue Impairment of gov
ernmental business processes. In tho
preparation of the budget ho has had
at work an authorized agency In tho
bureau not only in ascertaining the
reasonableness of desired appropria
tions but in continually imposing
pressure upon the departments for
reduction in the estimates wherever
proper and possible. Tho examination
by congress of tho Items of the bud
get as recommended by the president
in the same Rpirlt In which he pre
sents them will make Impossible tho
recrudescence of tho former condi
tion of things. In which departmental
officers have habitually made their
estimates for a greater sum than they
expected to receive from congress.
The courso of congress in tho past
In nfaking radical reductions In th
estimates presented has been the only
protection which the public has had
against departmental extravagance.
There is now the protection afforded
by executive supervision oC estimate
making. The bureau of tho budget
is simply a business organization
whose activities aro devoted con
stantly to the consideration of how
money appropriated by congress can
be made to go as far as possible
toward the accomplishment of the ob
jects of legislation. If it functions
properly. It has not nnd can never
have any purpose but that of tho
executive and congress in seeking the
imposition, throughout the govern
ment administration, of correct busi
ness principles in routine business
administration. Tho Investigations of
congress, made In connection with
Its constitutional power over appro
priations, are an invaluable nnd in
dispensable protection to the public.
Nothing but a wicked Interposing of
partisan motives Into the discussion
of that which Is fundamentally a
business question can make congres
sional investigations Into public ex
penditures anything but beneficial.
By a proper functioning the budget
bureau In time should create such a
feeling of confidence In its effective
ness as to mnke it continually of
greater assistance to congress In
their consideration of appropriations.
I .miIi- to He Corrected.
Herotoforo our government. In
routine business administration, has
labored under eHfficultles analogous
to those of a private corporation in
which . .
First, the president of the corpora
tion gave practically no attention to
Its ordinary routine business. Ho
avoided his responsibility for tho
proper conduct of tho business of
the corporation, and neither assumed
nor delgated active control over It.
Second, the ad ni 1 ii I st ru t : v e vice
presidents of tho corporation were al
lowed to run their several depart
ments without any enforced contact
in the discussion of routine business
matters of tho corporation and as If
each separate department was an in
dependent authority in all matters of
routine business.
Third, because of tho lack of any
outlined business plan, rcsultinu; from
the absence of executive pressure
and supervision, the several depart
ments operated with almost an . ntlre
lack or co-ordination. No system ex
isted for making purchases or In sell
ing material along business lines un
der a unified policy. A lock of ma
terial or facilities on tho part of any
,i..i, i - i -ii. in resulted In no ade-
quate search being mado for the ex
istence of such supplies or facilities
! ,i. k.n. f imniher ilenart ment.
which might bo available. In almost
every case recourse was had to the
open market.
Fourth The corporation was not
operated for profit, and its princi
pal funds for operating expense!
were obtained bv a levy upon stock
holders (an appeal to congress for
an appropriation, involving ii collec
tion through taxes or Imposts).
Fifth No balanco sheet of tho cor
poration as a whole was ever pre
pared. No complete Inventories of its
properties existed. No statement of its
current assets, such as salable mate
rial and current supplies, had ever
been made, nor was thero any easy
method existing of securing it.
Sixth When cash was placed by the
stockholders at tho disposal of tho
corporation for Its purposes, the cus
tom was to notify the different de
partments that a certain amount of
credit was available with tho treas
urer of tho corporation, to be drawn
upon as might bo necessary to meet
any estimated expenditure involved.
Each department would then enter
upon its books the amount of cash
allotted to It with which to pay for
its projects, against which it had the
right to currently draw. The treas
urer, however, kept no accurate ac
count of these contingent obligations,
which eventually crystallized Into
cash demands upon him. thus result
ing In money being drawn from him
continually in excess of tho estimated
annual running expenses. Nothing
but very rough estimates could be
secured at anv time by tho treasurer
as to what tho cash demands upon
him in anv given year would be, slnco
to tho estimates for annual running
expenses was to bo added an Indef
inite amount of money demands aris
ing out of former commitments.
Seventh As a result of all this, the
corporation. In effect, seldom recon
sidered an unwise project entered Into
by any department. The custom grew
up among tho departments of the cor
poration to regard It us an obligation
upon tho part of each to spend any
levy made for its benofit without re
porting to the president of tho corpo
ration, to its directors, or to tho stock
holders as to whether continued ex
penditure upon the project was wiso
under any given new eet of circum
stances. Independence of Executive Felt,
Eighth So firmly embedded in the
minds nnd In tho affections of the
administrative heads of the depart
ments became the feeling of inde
pendence of an executive control, ow
ing to its complete lack of exercise,
that conferences looking toward the
correction of evils arising out of a
lack of co-ordination In the business
wero apparently avoided, :est out ot
that contact Information would de
velop which might stimulate the head
of the corporation to an invasion of
the independent control of tho de
partments. , -
Ninth Tho administrative heads of
the departments of tho corporation
were selected, as a rule, with less ref
erence to their business qualifications
than to their qualifications as ad
visers to tho president of the corpo
ration along other lines than routine
business administration. At tho In
ception of their appointment they
were introduced to a-business with,
which they wore generally unfamiliar
and were compelled to rely largely
upon the advice of subordinates who
wero wedded to tho theory of the
right of independent operation of a
department. The tenure of their ad
ministration was often less than four
years. As a rule, they became the
earnest advocates of departmental
plans which their inexperience In
departmental business prevented thera
from fully comprehending In all their
aspects. Being hold to no responsi
bility by tho executive head to oper
ate their departments along a unified
corporation policy In routine business,
they became, therefore, in general,
only a shelter and protection for the
independent operation of departments.
Instead of becoming conduits, aa in
the properly run corporation, for the
Imposition of an executive plan, made
In tho Interests of the orpo.atlon aa
a whole, upon tho body of the busi
ness administration, they became of
necessity, more or less of an obstruc
tion to the occasional flow of execu
tive authority In routine business.
Their general position was, of neces
sity, determined by tho advice of those
operating the department undor the
(Continued on I'aas 12.)