That would make a total of upward of $19,000,000,000 appropriated and estimated to be appropriated before the close of this session of Congress. I want to ask you if that estimate is substantially correct, as you understand the situation? Mr. COOKSEY. I would have to examine that before I could say. think it is substantially correct. I The CHAIRMAN. Let me make this statement: The first page of the statement from which you read, Mr. Moore, shows that the appropriations made up to date amount to $9,134,433.107.11. That includes the authorized loan of $3,000,000,000 to the allies. The second page from which you read shows possible additional appropriations amounting to $9,976,150,000. The statement with reference to possible appropriations yet to be made was made up by Mr. Walker, the chief clerk of the Ways and Means Committee, after conferring with Mr. Shield, the clerk of the Appropriations Committee. The statement with reference to appropriation already made was prepared by the clerks of the House and Senate Appropriations Committees. Mr. MOORE. Will you put those statements in the record? The CHAIRMAN. Yes. (The statements referred to are as follows:) Statement showing the appropriations for the fiscal year 1918, made during the Sixty-fourth Congress, second session (including appropriations made by the Army, Military Academy, sundry civil, and general defficiency acts passed during the Sixty-fifth Congress, first session). Increased compensation of 5 and 10 per cent to certain employees (estimated) _. Appropriations for the fiscal year 1918, Expenses incident to the Sixty-fifth By act to issue bonds and extend War-Risk Insurance Bureau__. $68, 020. 00 3, 007, 063, 945. 46 45, 150, 000. 00 $1,962, 210, 200. 05 25, 000, 000. 00 1 This sum includes an appropriation of $10,000,000 for the War-Risk Insurance Bureau, which has been repealed by subsequent legislation. Mr. MOORE. I will not ask anything about the $9,134,433,107.11 already appropriated, but will Secretary MCADOO (interposing). You mean appropriations actually made? Mr. MOORE. Yes, sir. They are behind us. I do desire to ask you about the possible additional appropriations included in that statement. The first is the general deficiency bill, which will probably carry $4,500,000,000. Secretary McÁDOO. Of course I have no knowledge of that. That is a matter that the Secretary of the Treasury has nothing to do with. Mr. MOORE. That is largely for the Army, is it not? Secretary McADOO. I presume so. I have no control over the appropriatitons made for other departments, except to transmit the estimates to Congress, but I presume that that is largely for the Army and Navy. The Army and Navy appropriations undoubtedly constitute the bulk of it. Mr. MOORE. The estimates come from the Secretary of the Treasury? Secretary McADOO. Yes. I put in the record yesterday this statement of estimates in detail. Mr. MOORE. That is the information that I am seeking. Now, the additional loan to the allies of $4,000,000,000 has already been fully explained. There is an estimate of $1,000,000,000 for the Shipping Board. Is it your judgment that $1,000,000,000 will be sufficient for the purposes of the Shipping Board? Secretary McADOO. I really can not answer that, because I have not gone into that question at all. It does not come within the jurisdiction of the Treasury Department in any way. I have not had any occasion to investigate their estimates, and I do not know what their program is. Mr. MOORE. I am informed that the Shipping Board will require more than $1,000,000,000. Mr. COOKSEY. It is estimated that their expenditures will be $1,375,000,000. Secretary McADOO. Let me say, with regard to the shipping question, as you gentlemen know, ships are a vital thing in this situation. They are probably going to be the determining factor during the war, and it is the one spot in which we are weakest. Of course, the more we can do to help turn out tonnage the more we are going to make certain our ultimate success in the war. Mr. MOORE. Are you able to say how far this $1,000,000,000 will go toward putting us on an equality in shipping with the best of our allies? Secretary McADOO. No, sir. I was rather familiar with the shipping situation in 1914 when I was trying very hard to put a ship bill through providing for a Government merchant marine; but that did not go. Mr. GARNER. If it had gone, we would probably have been in better shape. Secretary McADOO. Oh, yes; in much better shape, of course, but that is behind us. Since the passage of the shipping bill establishing the Shipping Board, I have not been able to follow the subject. Mr. MOORE. Is it your judgment, or do you care to say whether the expenditure of this amount of $1,000,000,000 by the Shipping Board will put us on our feet, at least in mercantile competition with foreign countries? Secretary McADOO. I do not know what is contemplated in detail, and I can not express an opinion on what it is to cover, but I know that we ought to build the ships. Mr. MOORE. The insurance bill appropriation of $176,150,000 is referred to, but that is a matter pending and will be the subject of full discussion in Congress. The interest on the public debt is fixed at $300,000,000. Mr. COOKSEY. That undoubtedly includes interest on the loans which will be paid by the foreign governments. Mr. MOORE. Then there should be a deduction made. What is the estimate of that amount? Secretary MCADOO. We have made a tentative estimate of the interest here. Mr. MOORE. Is it in such shape that it would help us as a matter of information? Mr. COOKSEY. The total estimate is $93,454,000. Mr. MOORE. I think it would be important to give the committee a more accurate estimate, because the statement that we are to pay $300,000,000 interest on the public debt at the close of this fiscal year is going to have a serious effect upon the public mind. Secretary MCADOO. I do not know where they got that. Mr. MOORE. The aggregate is about $19,000,000,000. That includes money already appropriated and money to be provided as necessary for our war expenses and for our loans. That is substantially correct, is it not? Secretary MCADOO. Yes, sir; that is substantially correct. Mr. HULL. If there is no objection, I want to insert in the record a copy of the first English war-loan act so as to contrast it with ours. It is only about 15 lines long. 10137-17-6 The CHAIRMAN. There is no objection to that. (The matter referred to is as follows:) An act to provide for raising money for the present war [28th August, 1914]. 1. (1) Any money required for raising the supply granted to His Majesty for the service of the year ending the 31st day of March, 1915, may be raised in such manner as the treasury think fit, and for that purpose they may create and issue any securities by means of which any public loan has been raised or may be raised, or such other securities bearing such rate of interest and subject to such conditions as to repayment, redemption, or otherwise, as they think fit. (2) The principal and interest of any sums so raised (including any annuities created for the purpose) and any sums required for defraying any expenses incurred in connection with the raising of those sums shall be charged on the consolidated fund of the United Kingdom or the growing produce thereof. (3) The powers given to the treasury under this act shall be in addition to, and not in derogation of, any other powers of the treasury for the time being to borrow. 2. This act may be cited as the war-loan act, 1914. Mr. GREEN. Mr. Secretary, as I understand it, some controversy has arisen as to the terms of conversion upon which holders of the 31 per cent bonds will convert their bonds into the bonds provided for by this bill, in the event of their being issued. Now, what is your position in reference to that, Mr. Secretary? Secretary MCADOO. As to the existing right of conversion? Secretary McADOO. If you will read my statement, which is in the record here Mr. GREEN (interposing). That applies only to this particular bill. I am going a little further back. I am going back to the other bill. The other bill provides for conversion and also provides that the terms of conversion, etc., may be fixed by the Secretary of the Treasury, and for that reason, as I understand it, some parties are complaining that even though taxes be provided for by this bill, they could make the conversions entirely independent of this tax provision. Secretary MCADOO. Do you mean to say Mr. GREEN (interposing). I do not think so. I do not think they can, but they base that, as I understand it, upon some statements sent out by the Treasury Department. I do not know what they were. Secretary MCADOO. The proposition of the Treasury is simply this: The holder of the present 31 per cent bonds would have the right, if this bill passes, to convert the 3 per cent bonds into 4 per cent bonds with the modified tax exemption. He can not have both, but he can take one or the other. He is given the option or privilege of saying whether he prefers to keep his 33 per cent bond wholly exempt from taxes, or to take the 4 per cent bond with the modified exemption. The CHAIRMAN. That is, he can convert his 3 per cent bond into one of the bonds authorized by this act? Secretary MCADOO. Yes, sir. Mr. GREEN. Was anything said by the Treasury Department to authorize any different conclusion than that? Secretary McADOO. There was not. You will find in the third paragraph of the circular on the 14th of May, 1917, the following language: If any subsequent series of bonds (not including Treasury certificates of indebtedness and other short-term obligations) shall be issued by the United States at a higher rate of interest than 3 per cent per annum before the termination of the war between the United States of America and the Imperial German Government (the date of such termination to be fixed by a proclamation of the President of the United States), the holders of any of the bonds of the present issue shall have the privilege of converting the same, within such period and upon such further terms and conditions covering matters of detail as the Secretary of the Treasury may prescribe, into an equal par amount of bonds bearing such higher rate of interest and substantially identical with the bonds of such new series, except that the bonds issued upon such conversion are to be identical with the bonds of the present series as to maturity of principal and interest and terms of redemption. Now, it was perfectly clear from that statement, it seems to me, that all that the holders of the present bonds could expect was the privilege of conversion into this new issue at a higher rate of interest, containing terms and conditions which may be imposed by Congress, or by the Secretary of the Treasury acting in pursuance of any authority conferred on him by Congress. I will submit this circular for the record. (The circular referred to is as follows:) LIBERTY LOAN. [1917-Department Circulár No. 78-Loans and Currency.] TREASURY DEPARTMENT, The Secretary of the Treasury invites subscriptions at par and accrued interest from the people of the United States of America for $2,000,000,000 of the 15/30 year 3 per cent gold bonds of an issue authorized by act of Congress approved April 24, 1917. DESCRIPTION OF BONDS. Bearer bonds, with interest coupons attached, will be issued in denominations of $50, $100, $500, and $1,000. Bonds registered as to principal and interest will be issued in denominations of $100, $500, $1,000, $5,000, $10,000, $50,000, and $100,000. Provisions will be made for the interchange of bonds of different denominations and of coupon and registered bonds upon payment, if the Secretary of the Treasury shall require, of a charge not exceeding $1 for each new bond issued upon such exchange. Transfers of registered bonds and exchanges of registered and coupon bonds and of bonds of different denominations will not be made until October 1, 1917, or such later date as may be designated by the Secretary of the Treasury. The bonds will be dated June 15, 1917, and will bear interest at the rate of 3 per cent per annum from that date, payable semiannually on December 15 and June 15. The bonds will mature June 15, 1947, but the issue may be redeemed on or after June 15, 1932, in whole or in part, at par and accrued interest, on three months' published notice, on any interest day; in case of partial redemption the bonds to be redeemed to be determined by lot by such method as may be prescribed by the Secretary of the Treasury. The principal and interest of the bonds will be payable in United States gold coin of the present standard of value, and the bonds will be exempt, both as to principal and interest, from all taxation, except estate or inheritance taxes, imposed by authority of the United States or its possessions, or by any State or local taxing authorities. The bonds will not bear the circulation privilege, but will be receivable as security for deposits of public money. If any subsequent series of bonds (not including Treasury certificates of indebtedness and other short-term obligations) shall be issued by the United States at a higher rate of interest than 3 per cent per annum before the termination of the war between the United States of America and the Imperial German Government (the date of such termination to be fixed by a proclamation of the President of the United States), the holders of any of the bonds of the present issue shall have the privilege of converting the same, within such period and upon such further terms and conditions covering matters of detail as the Secretary of the Treasury may prescribe, into an equal par amount of |