Dead Hand of the Treasury

In 1934, Secretary Morgenthau inaugurated a new Treasury policy in a directive (T.D.4422) governing the treatment of capital assets in U.S. business accounting. The purpose was to carry out a drastic reduction of depreciation charges. Today, after 25 years of unrelenting effort, the Treasury has reduced the over-all weighted average of the rates allowed on depreciable assets to a figure between 4 and 5 per cent a year.

In 1942, under the characteristically aggressive direction of the Secretary and his chief assistant, Harry Dexter White, the present revised edition of Bulletin F was issued. Essentially, this is a collection of tables prescribing the “useful lives”—from a tax standpoint—of capital assets. Hotel drapery, for example, is allotted a useful life of twelve years. A machine tool that will be obsolete in five years may have a useful life, by the Morgenthau accounting, of 25 years. Urban residential property that may, conservatively, have an actual economic life of 25 years or less without major renovation, is considered as having a 40-year life expectancy (a 1919 kitchen, for example, is now ending its useful life).

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Department of the Treasury

In 1934, Secretary Morgenthau inaugurated a new Treasury policy in a directive (T.D.4422) governing the treatment of capital assets in U.S. business accounting. The purpose was to carry out a drastic reduction of depreciation charges. Today, after 25 years of unrelenting effort, the Treasury has reduced the over-all weighted average of the rates allowed on depreciable assets to a figure between 4 and 5 per cent a year.

In 1942, under the characteristically aggressive direction of the Secretary and his chief assistant, Harry Dexter White, the present revised edition of Bulletin F was issued. Essentially, this is a collection of tables prescribing the “useful lives”—from a tax standpoint—of capital assets. Hotel drapery, for example, is allotted a useful life of twelve years. A machine tool that will be obsolete in five years may have a useful life, by the Morgenthau accounting, of 25 years. Urban residential property that may, conservatively, have an actual economic life of 25 years or less without major renovation, is considered as having a 40-year life expectancy (a 1919 kitchen, for example, is now ending its useful life).