Treasury Surplus

Secretary Mellon sat in his office. An underling in an outer office handed newspaper correspondents four mimeographed sheets of paper. At the head of the first sheet were the words "Secretary Mellon made the following announcement . . . " It was a brief accounting of the results of the Treasury Department's activities during the last fiscal year (July 1, 1924-June 30, 1925).

The most important part of it was a simple example in subtraction:

U. S. receipts 1924-25..... .$3,780,148,684.42

U. S. expenditures 1924-25. . 3,529,643,446.09

Surplus 1924-25 $250,505,238.33

The Surplus. The estimated surplus last October was $67,000,000-- $183,000,000 below the actual surplus this June. Last year, the Treasury was criticized because the surplus proved considerably larger than the estimates (TIME, July 14). "Incompetence or willful concealment of the truth!" cried critics. This year, to forestall such a cry, Mr. Mellon, in his mimeographed sheets, told how the surplus had arisen: Customs receipts ($548,000,000), were within 1/2% of the estimates. Other internal revenue ($829,000,000), was practically the same as the estimate. Income tax receipts ($1,760,000,000) were 6% ($100,000,000) greater than the estimate. Miscellaneous receipts ($643,000,000) included a number of items not foreseen or predictable--$34,000,000 from railroads, $15,000,000 from "Army costs" receipts, $6,400,000 from the sale of surplus Navy stores, etc. In addition, the expenditures fell about $4,500,000 below expectations. These items made the difference.

Reduction of the Debt. The public debt at the close of the year was $20,516,193,887, showing a reduction of nearly $735,000,000. This reduction of the debt was brought about in three ways: 1) By using the sum set aside by Congress ($466,000,000) for debt retirement; 2) by using the entire surplus of $250,000,000;* 3) by taking $18,000,000 out of the Government's cash ("General Fund balance").

During the year, $2,307,041,400 of U. S. bonds, notes and Treasury certificates fell due. Because of debt retirements, only $1,882,167,000 had to be sold to pay off those falling due; and, in issuing the new securities, the Government lowered the average rate of interest from 4.446% to 3.557%--which of itself will produce an annual saving of nearly $17,000,000.

* Mr. Mellon's mimeographed sheets called special attention to this fact. "The surplus for the fiscal year 1925, therefore, has already been used in reduction of the debt and is not available for tax reduction. Since tax reduction means a loss of revenue annually, it is only the annual surplus to be expected in future years which is the margin available for tax reduction and should be so used."