Monday, Jul. 14, 1924

Apology for Good Tidings

Secretary Mellon rendered his accounting for the fiscal year ending June 30. For those who like to see an improving balance sheet, the report was a pleasure. It showed a surplus of $505,366,986.31. Never before has the U. S. piled up so great an annual surplus.

Of course, this surplus of receipts over expenditures was not lying in the Treasury vaults. It was used in retiring the public debt--as an addition to the regular sinking fund provided for that purpose. The result of this application of the sinking fund and the surplus furnishes another pleasing bit of arithmetic.

PUBLIC DEBT

June 30, 1923 $22,349,707,365.36

June 30, 1924 21,250,812,989.49

Reduction $1,098,894,375.87

But a peculiar state of affairs had arisen on account of the recent controversy over the soldier bonus. In October, 1923, Mr. Mellon issued less favorable figures; the Democrats accused the Treasury of "juggling figures" in order to forestall the bonus. Hence, when Mr. Mellon issued last week the glad news of the greatest surplus of history, he issued it with an apology:

"In dealing with figures as large as those of the Government, a small percentage change [in the receipts or the expenditures] makes a very material change in the surplus. For example, an increase of 3% in receipts and a decrease of 3% in expenditures would add over $200,000,000 to the surplus, and a similar decrease in receipts and increase in expenditures would take over $200,000,000 from the surplus.

"Comparing the estimates made in October with the actual results from the fiscal year, receipts were over-estimated $32,000,000 and expenditures overestimated $208,000,000. . . . The change in the money market since the first of the calendar year was perhaps the most material factor in bringing about the increase in the actual surplus over the surplus estimated in October.

"Liberty bonds went above par and were not used in payment of foreign obligations for interest; the railroad securities heretofore acquired by the Government could be refunded at lower interest rates by the railroads and were, therefore, paid off or purchased, and instead of a net cash outgo in the railroad account there was a net cash income, making a difference of some $120,000,000 over the earlier estimate. The above, with some other minor items, gave a net increase of actual overestimated surplus of $175,727,326.31."