But the taxes of 1917, revolutionary as they were, were not sufficient for governmental needs. In the summer of 1918 Congress began the preparation of a bill to raise $8,000,000,000, but after the armistice in November the goal was set at $6,000,000,000. The chief increases were again in taxes on income, both of in dividuals and corporations, and on excess profits. The adoption of the constitutional amendment in favor of prohibition reduced the amount expected from the tax on beverages.
i Taxes on transportation, including railways, telephones and telegraphs, previously intro duced in 1917, were continued and luxury taxes were added. But chief reliance was placed on the income and excess profits taxes. The act of February 1919 expects to raise more than three-fourths of the $6,000,000,000 from this source. For residents the normal rate is 6 per cent on the first $4,000 of net income above exemptions and 12 per cent on the remainder. In addition there are progressive surtaxes, reaching 65 per cent on incomes over a million dollars. The exemptions established in the act of October 1917, $1,000 for single persons and $2,000 for married persons and heads of fami lies remained the same. The income tax as ap plied to corporations was expected to yield over $3,000,000,000 or about one-third of this total inccme.
In addition to taxation the government has made enormous loans. In 1917 and 1918 four Liberty loans were placed as follows: The rate of interest has gradually increased and for the Fifth Victory Loan (April 1919) the rate was advanced to 434 per cent. The issues vary in tax-exempt privileges, the first being practically free from all taxes, while the others, though free from the normal income tax, are sometimes taxable for super-taxes and excess profits taxes. In placing these loans an extraordinary effort was made to give them wide distribution. Allotments were made to the different sections, States and towns, the bonds were issued in small denominations and popular appeals were made to incite sacrifice and patriotic support. In this huge undertak
ing the Federal Reserve banks played an im portant part. Member banks have been able to rediscount loans secured by Liberty bonds.
Considering the enormous task suddenly im posed upon the government there is reason for satisfaction in the results accomplished. The government, however, has entered upon new fields of finance which will require new methods of financial operation. It is believed that peace budgets in the immediate future will not be less than $4,000,000,000 or four times that previously maintained.
Since 1861 there have been 24 secretaries of the treasury; the most distinguished among these are as follows: Chase, notwithstanding his lack of experience with fiscal affairs, dis played political shrewdness, devotion and in tegrity at a time when ordinary methods of finance had to be laid aside; Fessenden, his successor, during the closing months of the war, inspired confidence; McCulloch earnestly contended for an early resumption of specie payments and the retirement of the greenbacks; outwell in Grant's first administration carried through the refunding of the debt; Bristow in Grant's second administration attacked corrup tion in the internal revenue service and placed new insistence upon resumption; Sherman left a brilliant record in making resumption success ful notwithstanding the opposing forces of in flation; Manning in 'Cleveland's first term strongly urged a moderation of the tariff and the repeal of the Bland Act; Carlisle in Cleve land's second administration upheld the credit of the government in the issue of bonds; Gage executed the provisions of the Currency Act of 1900; Shaw reorganized the details of the cus toms administration; and McAdoo showed en ergy and resourcefulness in managing the enormous loans of 1917 and 1918. As a whole, the treasury administration has been free from scandal. See also BANKS AND BANKING;