menting of vessels and the recording of bills of sale, mortgage, and other documents affecting the title to vessels. They enter and grant clearance to all vessels in the foreign trade and to those in the coastwise trade required by the navigation laws to enter and clear upon arrival and departure. They compile the statistics of imports and of exports and of shipments between the United States and its insular possessions and also prepare the statistics of traffic on the Great Lakes.

The customs officers act for the Department of Commerce in the enforcement of the motor-boat and navigation laws, the collection of all navigation fees, fines, and penalties, and the accounting for the same to the Department of Commerce, for which department the customs officers also act as shipping commissioners at all ports for which no shipping commissioner has been appointed. For the Department of Labor they collect, refund, and account for the head tax of immigrants and immigration fines. They enforce the statutes relating to the examination of imported teas in respect of their purity, quality, and fitness for consumption, and assist the Department of Agriculture in the enforcement of the food and drugs act and the meat-inspection laws. They also act as disbursing officers for the Coast Guard Service and as custodians of public buildings.

War emergencies transformed the customs service from one primarily concerned in collecting the revenue to one for the control of shipping and seamen, with the assistance of the Coast Guard and the Navy.

A plan was evolved at a conference of representatives of the various departments interested in the control and anchorage and movements of vessels and the supervision and control of seamen and travelers while in the territorial waters of the United States, for the enforcement of various statutes and Executive orders, including the "espionage act" and the "trading with the enemy act," relating to the control and supervision of vessels and their cargoes and the seamen and travelers on them, and the customs division of the Treasury Department was chosen to act as a clearing house on those questions which might arise from overlapping or conflicting jurisdiction. Detailed instructions were issued to the customs officers on the Atlantic, Pacific, and Gulf coasts outlining the procedure to be followed, which covered the following points: (1) The guarding of vessels arriving from and departing to foreign ports; (2) the search of vessels for prohibited articles and communications; (3) precautions to be taken to prevent illegal exportations of gold and currency; (4) the examination of outgoing passengers and baggage; (5) the visé of passports; (6) the issuance of certificates of citizenship and identification cards to seamen; (7) the censorship of communications brought into or carried out of the United States otherwise than in the regular course of the mails.

On account of the licensing of imports and exports by the War Trade Board, declarations for both imports and exports had to be checked by the customs officers, the total value of merchandise passing through their hands being, in the fiscal year ending June 30, 1916, $8,874,360,316, as against the total value of imports checked in the fiscal year ending June 30, 1914, amounting to $1,893,925,657, about four times as great a value, no examination of exports being necessary at that time.

The statistical work relating to exports and imports was reorganized in 1916, and by July, 1918, current reports were being sent every ten days to the Department of Commerce, to the Shipping Board, and to the War Trade Board, all the statistics of imports and exports for the entire country being compiled by a force of eighty-six employees of the Customs Statistical Bureau at New York.

The following publications are issued by the Customs Service: The Treasury Decisions are issued weekly in pamphlet form, and contain the regulations and decisions in regard to customs laws and procedure. They are obtainable by subscription, $1.75 yearly, from the Superintendent of Documents.

Reappraisements of Merchandise, issued weekly, obtainable from the Superintendent of Documents; 5 cents the copy, 60 cents yearly.

THE BUREAU OF INTERNAL REVENUE.

In 1917 the whole plan of collecting internal revenue was changed to meet the war emergency. Previously, the chief sources of internal revenue were the excise taxes on distilled and fermented liquors, and tobacco, with which we have long been familiar as the background for romantic tales of adventure, courage, and danger, laid among the hardy inhabitants of the mountains.

The war revenue act of October 3, 1917, provided for lower exemptions and increased rates of tax on individual and corporation incomes, an excess-profits tax, an estate tax, and various excise and special taxes. This meant the collection of a personal income tax from a large portion of our earning population. In addition, war taxes to be collected by the Internal-Revenue Service were imposed on railroad tickets, freight bills of lading, telephone and telegraph messages, and other public utilities, insurance policies, dues, admissions, and all sorts of personal conveniences and trades. Under the "special tax" section, taxes were levied on many kinds of business, such as pawnbrokers, shooting galleries, and theaters, and upon business, papers, bonds, shares of stock, etc. The American spirit of "pay-as-you-go," as far as possible, in preference to a burdensome mortgage on future prosperity made it possible for the United States to raise vast sums of money by direct taxes, and it is greatly to the credit of our people that the collections from internal revenue for the fiscal year 1918 exceeded the estimate set by nearly $300,000,000, the estimate being $3,400,000,000 and the amount actually collected being $3,694,619,638.72.

It is invariably the policy of the Internal Revenue Bureau to endeavor to be fair and equitable in administering the law, thereby gaining the confidence and cooperation of taxpayers in the collection of war funds. Business men, accountants, lawyers, and technical men in all lines of business have given and are giving their services as advisers in the collection of the income and excess-profits taxes. The revenue act of 1918, approved February 24, 1919, effected revisions in the law of 1917 in administrative procedure, extended the list of taxable articles, and increased the rates generally of those in the 1917 law.

Title XII of this new law levies an additional tax, in addition to all other taxes, of 10 per cent of the net profits derived by employers of child labor under certain conditions.

The collection of all these different taxes involves the exercise of certain police powers by the revenue officers. It is to them we owe the firm control of the sale of distilled spirits, narcotics, and drugs, and the suppression of the illicit traffic in these commodities, as well as the protection of children under the section of the law mentioned above.

A comparison of the number of employees in the Internal Revenue Service in 1916 and in 1918, and the total collections and expenditures of the Internal Revenue for those years is the most vivid presentation of the tremendous increase of direct taxation made necessary by the war, and the additional burden placed on the Internal Revenue. Service in making the collections:

Total number of employees in Washington and in the field

service May 15, 1919.

Total number of employees in Washington and in the field

service June 30, 1916.

Total collections of the bureau for the fiscal year 1916.

Total collections of the bureau for the fiscal year 1918.

Total expenditures for the fiscal year 1916_

Total expenditures for the fiscal year 1918

Collections from income tax for the fiscal year 1916.. Collections from income and excess profits taxes for the fiscal year 1918

13, 807

4, 738 $512, 723, 287. 77 3,694, 619, 638. 72

7, 242, 501. 00

12, 003, 214. 07 124, 916, 315, 51

2, 838, 999, 894. 28

Clear and concise answers to questions relating to the application of the income-tax law of 1918 are given in the Income Tax Primer, of which two editions have been printed, one for the special use of business and professional people and the other to fit the needs of farmers. Copies may be obtained on application to the Commissioner of Internal Revenue, Washington, D. C.

Copies of the income-tax law and of the regulations covering various phases of its application may also be obtained from the Commissioner on application. The following regulations are now available for distribution:

37-Regulations Relating to Estate Tax.

41-Part 1, Regulations Relating to Tax on Admissions.

43-Part 2, Regulations Relating to the Tax on Dues (Sees. 502, 801, 802, 1308, 1309, 1310 (a), 1316 (a), 1317),

45-Regulations Relating to the Income Tax and War Profits and Excess Profits Tax.

46-Regulations Relating to Tax on Employment of Child Labor (Secs. 12001207 inclusive).

47-Regulations Relating to Excise Taxes on Sales by the Manufacturer (See.

900).

48-Regulations Relating to Excise Taxes on Works of Art and Jewelry (Sees, 902 and 905).

49-Regulations Relating to Collection of Tax on Transportation and Other Facilities (Secs. 500, 501, and 502).

50-Regulations Relating to Capital Stock Tax (Sec. 1000).

51-Regulations Relating to Excise Taxes on Toilet and Medicinal Articles (Sec. 907).

52-Regulations Relating to Tax on Soft Drinks and Other Beverages Bottled (Sees, 620 and 629).

53. Regulations Relating to Tax on Soft Drinks, Ice Cream, and Similar Articles of Food and Drink (Sec. 630).

54. Regulations Relating to Excise Taxes on Sales by the Dealer, Wearing Apparel, etc. (Sec. 904).

55-Regulations Relating to Stamp Taxes (Secs. 1100-1107 Inclusive).

FISCAL BUREAUS.

THE SIX AUDITORS FOR THE GOVERNMENT.

All Government accounts, payable or receivable, and all claims relating to public money, must be audited. Appeal may be made to the Comptroller of the Treasury for revision of settlements made by the auditors.

The First Auditor receives and settles all accounts of the Treasury Department.

The Second Auditor receives and settles all accounts and claims of the War Department.

The Third, the Interior Department.

The Fourth, the Navy Department.

The Fifth, the White House; the two Houses of Congress; the Supreme Court; the Department of State, including the expenses of the Diplomatic and Consular Service; Justice, covering expenses of United States courts; Agriculture, including its field service; Commerce; Labor; also the accounts of the following governmental establishments: Government Printing Office; Interstate Commerce Commission; Smithsonian Institution and National Museum; District of Columbia; Civil Service Commission; the Federal Reserve Board; the Federal. Trade Commission; United States Shipping Board; Food and Fuel Administrations; Council of National Defense; Federal Board for Vocational Education; National Advisory Committee for Aeronautics; Eight-Hour Commission; United States Tariff Commission; United States Employees' Compensation Commission; War Trade Board; and Alien Property Custodian; and all boards, commissions, and establishments of the Government not under the administration of any executive department. The Sixth, the Post Office Department.

THE COMPTROLLER OF THE CURRENCY.

The organization and supervision of our national banks, the resources of which were in March, 1919, $20,017,760,000; the appointment, with the approval of the Secretary of the Treasury, of nationalbank examiners; the appointment of receivers of national banks; the issue of national bank and of Federal Reserve notes, and the execution of all laws relating to the issue and regulations of the national currency are under the control of the office of the Comptroller of the Currency. The comptroller is also ex officio member of the Federal Reserve Board. By his order the national banks make reports to him not less than five times a year.

Says the 1918 report of the Comptroller of the Currency:

The financial strain of the past two years would have wrecked and crumbled any financial system not founded on sound economic laws and governed by conservative and established principles of finance; and no system, however, meritorious, could have survived such strain had not its component parts been operated and directed by men of character and experience, willing and able to rise to the supreme demands of the hour.

But one national bank in nearly 8,000 failed in the calendar year

So soundly administered has been the banking business of the United States under the national bank and Federal Reserve acts that the growth in the assets of the national banks in the last five years has been greater than the increase that took place in the preceding 25 years.

In the crisis of 1893 the proportion of liabilities of suspended national banks to the total liabilities of all active national banks in operation during that year was 2.39 per cent. In the crisis of 1907 the proportion was one-half of 1 per cent. But during the unprecedented financial strain from April 1, 1917, to April 1, 1918, the percentage of suspended national bank liabilities was only fourthousandths of 1 per cent. The ratio of liabilities of suspended national banks in the crisis of 1893 to total liabilities of all national banks was 500 times greater than in the year following our entrance into the great war. The reports made by the national banks to the Comptroller of the Currency show that the immunity from failure is steadily increasing.

An earnest effort is being made by the Comptroller of the Currency to impress upon the officers and directors of national banks the necessitiy of observing strictly the provisions of the national-bank act, and of conforming closely to the rules and regulations prescribed by the office of the Comptroller of the Currency, and of keeping alive a keen sense of the moral and legal responsibility of the officers and directors of national banks for the correct management of the banks. This is done by direct communications from the comptroller's office and by conferences of the bank officers and directors (held at the times of the periodical examinations by national bank examiners).

The increase in net earnings for the 12 months ended July 1, 1918, exceeded by $63,062,000 the net earnings for the 12 months ended July 1, 1914. The increase in net earnings in these four years, despite the abatement of excessive interest rates, the expenses attendant upon the sale of Liberty bonds, and other costs and losses of the war period, has been 42.2 per cent.

The stock of money in the United States increased from $5,408,000,000 on June 30, 1917, to $6,741,000,000 on June 30, 1918, an increase during the year of $1,333,000,000, or 24.65 per cent.

For the date nearest June 30, 1918, for which information is available, coin and other money in national banks and other reporting hanks (exclusive of those in the island possessions) aggregated $882,700,000, and cash in Federal Reserve banks amounted to $2.006,200,000. The total amount of cash in all banks in the United States was therefore $2,888,900,000, or 42.86 per cent of the total stock of money. The remaining $2,190,500,000, or 36.94 per cent, was outside of the Treasury and banks and presumably in the pockets of the people. The total amount of money in circulation, exclusive of coin and other money in the Treasury as assets, was $5,379,400,000, or $50.81 per capita. The monthly statement. April 1, 1919, of the Division of Loans and Currency shows that the per capita distribution of money in circulation has increased to $54.56.

COMPTROLLER OF THE TREASURY.

The Comptroller of the Treasury renders the final decision in regard to the payment of claims against the United States. All war

137339°-19- -3