struction and Development. The Association is to make loans for sound development purposes on more flexible terms than are possible for the parent institution. The other economically more advanced countries are providing a larger aggregate amount of the Association's capital than is the United States.

In addition to its efforts toward creation of the IDA as a multilateral channel for financing development, the United States also took the lead in the establishment of the Development Assistance Group (DAG) to discuss means of coordinating and expanding the bilateral efforts of the DAG's participating members in the field of assistance for economic development. The DAG is to become part of the proposed Organization for Economic Cooperation and Development (OECD). The OECD, in which the United States is expected to become a full member, replaces the Organization for European Economic Cooperation (OEEC), with which the United States has long been associated.

Our special interest in the economic advance of Latin America was demonstrated by our participation in the foundation of the InterAmerican Development Bank (IDB) which began operations this year. In addition to its resources for conventional development loans, the IDB has a Fund for Special Operations to finance projects which could not be financed on conventional terms, either because of the nature of the project or the economic position of the borrowing country. It is hoped that the Bank will be an important factor not only in accelerating the pace of economic development in the American Republics, but also in strengthening our historic hemispheric ties.

In 1960 the Organization of American States adopted the Act of Bogota dealing with cooperative action among the American Republics to further social and economic advance in Latin America. The act welcomed the decision of the United States to establish a special fund for social development in Latin America. Subject to congressional appropriation, the United States proposed to make available over a period of years $500 million to assist Latin American countries seeking improvements in such fields as rural development, housing, education, and health. It is expected that administration of this program will in large part be assigned to the Inter-American Development Bank by agreement between the United States and the Bank.

Because of its interest in improving economic conditions abroad, these new endeavors in the field of economic development were undertaken by the United States despite the substantial deficit in the U.S. balance of payments. Outwardly, this deficit was symbolized by foreign accumulation of large holdings of liquid dollars and by net foreign purchases of U.S. gold under the international gold bullion

Despite

standard which the United States has maintained since 1934. substantial improvement in the U.S. merchandise export surplus in 1960, that surplus along with net earnings from various kinds of service transactions with foreigners has not been sufficient to cover our foreign military expenditures plus public and private capital outflows, including economic assistance in the form of grants.

During the year intensified efforts were made by the United States directly and through international organizations to bring about the reduction of trade restrictions by foreign countries which hamper U.S. exports. Continuing efforts in this direction are being made. Other important steps were taken during the year for assistance to U.S. exports through promotional activities and a new program of guaranties covering noncommercial risks involved in short-term exporter credits.

As the year was drawing to a close, additional direct measures were adopted. On November 16 the President issued a directive to Government agencies to take steps to reduce the adverse balance-ofpayments effect of their operations. The Department of Defense was instructed to initiate measures to reduce the number of dependents of personnel overseas, and to shift procurement expenditures to U.S. sources insofar as possible. The Development Loan Fund and the International Cooperation Administration were directed to take additional measures to confine their operations largely to those which finance the direct procurement of U.S. goods and services, and to adopt measures to minimize the balance-of-payments effect of operations which do not result in such procurement. Other departments of the Government were also directed to take appropriate steps. The President directed that interagency meetings should be continued. under the chairmanship of the Secretary, and within the framework of the National Advisory Council on International Monetary and Financial Problems, to consider the balance-of-payments position and to determine whether additional measures should be taken.

As a further step toward the attainment of the objectives of the President's directive, and in view of the fact that Western Germany's very large balance-of-payments surplus currently represents the counterpart of up to half of the deficit of the United States, a special mission of the Secretary of the Treasury and the Under Secretary of State discussed with the Government of the Federal Republic of Germany measures which that Government could take to help relieve the balance-of-payments problem of the United States. These discussions are continuing in the hope of bringing about further reductions in the burden on the U.S. balance of payments.

Budget Receipts and Expenditures

Budget receipts in 1960

Net budget receipts in the fiscal year 1960 amounted to $77.8 billion, an alltime high. This represented an increase of $9.8 billion or almost 15 percent over receipts of $67.9 billion in fiscal 1959.

The increase in receipts in fiscal 1960 resulted mainly from the increase in corporate profits between the calendar years 1958 and 1959 and a continued expansion in personal income.

A comparison of net receipts after refunds and transfers by major sources for the fiscal years 1959 and 1960 is shown below. Additional data for 1960 on a gross basis are presented in table 12.

Individual income taxes.-About 60 percent of the increase in individual income taxes in 1960 was accounted for by withheld taxes reflecting the higher level of salaries and wages, and the remainder by increased payments on declarations and final returns.

Corporation income taxes.-The increase of 24 percent in the 1960 corporation income taxes reflected the rise in profits which occurred in calendar 1959, the liability year primarily determining tax receipts in fiscal 1960.

Excise taxes. Receipts from this source are shown in the following table.

Gross receipts from excise taxes in 1960 were $1,105 million higher than in 1959 mainly because of expanded business activity and consumer expenditures on taxed items. Improved automotive industry sales accounted for more than half the increase in the gross receipts from the manufacturers' excise taxes. Another major factor in the rise in receipts of manufacturers' taxes, and the correspondingly larger transfer to the highway trust fund, was the increase of one cent a gallon in the rates on gasoline and diesel fuel which became effective on October 1, 1959. The repeal of taxes, effective August 1, 1958, on the transportation of property and the transportation of oil by pipeline materially reduced the total 1960 miscellaneous excise tax collections; specific miscellaneous excise tax receipts, in most instances, were higher in 1960. Net excise tax receipts in 1960 were $633 million higher than in 1959.

Employment taxes.-Receipts from the various employment taxes were as follows:

The increase of $2,206 million in receipts from the Federal Insurance Contributions Act and the Self-Employment Contributions Act reflected the full year effect of the one-quarter percent increase in rates on employers and employees, effective January 1, 1959, and the increase of one-half percent effective January 1, 1960, as well as the continuing rise in taxable wages. Receipts from the Railroad Retirement Act rose $82 million principally as a result of the rate increase effective June 1, 1959, of one-half percent on employers and employees. Receipts from the Federal Unemployment Tax Act increased $17 million in fiscal 1960 as a result of higher taxable wages.

After transfers to the trust accounts, net budget receipts were affected only to the extent of the small increase in Federal Unemployment Tax Act collections.

Estate and gift taxes.-Receipts from estate and gift taxes amounted to $1,606 million in fiscal 1960, an increase of $273 million over receipts of $1,333 million in 1959.

Customs. Customs receipts rose $179 million, or slightly over 19 percent, to $1,105 million in fiscal 1960.

Miscellaneous receipts.-Miscellaneous receipts amounted to $4,062 million in 1960. The increase of $908 million over receipts in 1959 was accounted for principally by larger deposits of earnings by the Federal Reserve Banks, and to a smaller extent by a rise in interest on commodity credit loans, and an increase in rentals for offshore oil leases.

Estimates of receipts in 1961 and 1962

The Secretary of the Treasury is required each year to prepare and submit in his annual report to Congress estimates of the public revenue for the current fiscal year and for the fiscal year next ensuing (act of February 26, 1907 (5 U.S.C. 265)).

The estimates of receipts from taxes and customs for the current and coming fiscal years are prepared by the Treasury Department. In general, the estimates of miscellaneous receipts are prepared by the agencies depositing these receipts in the Treasury.

The revenue estimates assume for the fiscal year 1962 that proposed legislation will be enacted extending present corporation income and excise tax rates for a year beyond June 30, 1961; that the pending diversion of general fund receipts to the highway trust fund will be repealed and replaced by an increase in highway motor fuel taxes; that aviation gas taxes will be increased and a new tax imposed on jet fuels, with receipts from these taxes credited to the general