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The purpose of statement No. 4 is to show the manner in which expenditures corresponding to the estimates would affect the Treasury surplus in case there were no change in revenue laws. This statement shows that in case Congress grants the full amount of appropriations requested in the Book of Estimates, without a change in revenue laws, and, further, if the drafts against past appropriations are as estimated, the result will be, ignoring sinking-fund requirements as well as deficiencies, that an accumulated Treasury surplus of $206,182,254.91, as of the end of the first year, June 30, 1912, will have been reduced by the end of the next fiscal year (June 30, 1914) to $67,303,263.47. This will be an inadequate balance of general-fund cash, for the reason that the customary working balance which is carried by disbursing officers, plus the needed working balance in the Treasury proper, is largely in excess of this amount. Subtracting the estimated pension deficiencies of $30,000,000, which were not included in the statement, even though all canal expenditures for 1914 are against borrowings and all sinking-fund requirements are ignored, advances of the usual amounts carried by disbursing officers would leave not a penny in the Treasury available for the meeting of current governmental demands.



From all these data it is apparent that the estimates submitted by departments and establishments on the one hand and the probable revenues on the other, should receive serious consideration; that as officers of the Government we should not go ahead blindly, passing and signing one appropriation bill after another without knowing where the money is coming from or how the obligations of the Government are to be met. Such a condition as this obtained in 1893, when a newly elected President found it necessary to go into a very unfavorable money market and borrow over $260,000,000 in order to meet the Treasury needs of the Government and protect the currency obligations, with the result that his whole administration was handicapped, and the credit system of the country was seriously impaired.


A second set of summaries has been prepared for the purpose of considering questions of future policy. This is made up of analyses of estimates and actual revenues and expenditures.


In order that a basis may be laid for determining where adjustments may be made to obtain the revenue needed, as well as for considering the result on the finances of the Government of making any proposed change in revenue law, each class of receipts has been separately shown, with a reference to the law which governs its accrual. There has also been prepared a summary of revenues by departments or establishments to enable officers to compare revenues and expenditures in any project which should be regarded as selfsupporting

ESTIMATED AND ACTUAL EXPENDITURES. The summaries presented herewith cover the estimates submitted by departments. This has been thought desirable because under the act of March 9, 1909, it is my duty to submit recommendations, with respect to the departmental estimates transmitted by the Secretary of the Treasury, rather than to present estimates such as would have been submitted to Congress if there had been opportunity for Executive review. Is shown by the list of budget statements (pp. 6 and 7), the estimates have been summarized in such manner as to show expenditures in four different relations, namely: (a) The cost and estimated cost of the business done by each organization unit (statement No. 7); (b) the cost and estimated cost of each general class of work performed (statement No. 8); (c) the cost and estimated cost of each class of expenditures, such as operating expenses, fixed charges, capital outlay, etc. (statement No. 9); (d) the cost and estimated cost classified by acts of appropriation in which authorizations to spend customarily appear (statement No. 10). The remaining statements (11 to 16) show the same facts arranged in such manner as to reflect results which bear on questions of policy.

Such inaccuracies as may obtain in the summaries are due to the fact that this is the first time that a systematic statement pertaining to the business of the Government has been attempted; that it is the first time that a statement has been prepared and submitted in the form of a budget; that since its figures have been prepared as a result of a special investigation, rather than from direct accounting results, there has been no means of verification. If every other reason were wanting, the present lack of facilities for obtaining information pertaining to subjects that are essential to any intelligent consideration of the business of the Government and for knowing that the in formation when obtained is accurate, would be sufficient to make an annual budget desirable. Had accounts been kept in a form that would permit their use in the preparation of a budget, complete and accurate information would have been available for administrative and executive consideration some months before Congress assembled.

Instead, I have been put to the necessity of going out with a dragnet for the essential facts, and then of being required to wait until after January 1 before all of the subjects concerning which data were asked could be reported on—in the end also being required to accept statements sent in without proof and knowing that, in some instances at least, they were incomplete. I do not wish to be understood as criticizing or intending to criticize the heads of departments in whose transactions and in whose books of accounts the material to be used in such a budget must be found. The truth is that they have all been laboring as much as possible, during the last four years, to improve the method of keeping and stating their several department accounts; but the confusion and unbusinesslike condition that have prevented a thorough reform and simplifying of our financial and operating statements have been the result of a century of neglect.


NO. 7). In most summary form the analysis of the data reported by organization units through which expenditures are made is as follows:

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In the figures representing appropriations for 1913 and estimates for 1914 for the Congress it will be noted that there is a decrease indicated. This, however, is to be accepted with qualifications, for the reason that not all of the customary items are shown in the estimates for 1914 and no deficiencies are included for either year. Moreover, it is to be noted that for the year 1914 no estimate has been made for outlays for buildings and grounds. The appropriation for the Superintendent of Capitol Building and Grounds was $951,757 for 1913, whereas only $178,900 are estimated for 1914.

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