The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1919-09-23
TOPEKA STATE JOURNAL
INFORM ALTON
BUREAU
FREDERIC J. HAEK1N. pdrsceor.
Washane4sn. D. C
MEETING THE WAR DEBT.

hdsnlISloH, II. ~ sept gu ne
United States treasury department an
nounces the dawn of a new financial
day. 1t states that Uncle Sam is now
solvent; that he is no longer running
behind in his obligations day by day;
that he pays as he goes and has more
money coming in than he spends.
This is a condition which has not
existed since this nation plunged into
the great war back in the spring of
1917. The unprecedented expenditures
necessary in carrying on that war
were far beyond the power of the ma
ton to finance without going in debt.
AS n matter of fact the United States
went in debt, piled up obligations,
pyramided the war burden at a dizzy
ing speed never equalled by any other
agency since time began. Neither
many. spent money as fast as did
America. once she was started.
The period of debt accumulation
amounted roughly to twenty-seven
months, which lasted from April 1917.
to the end of June. 1919. In that
States spent thirty-two and a half bill
lion dollars. The maximum of ex-
penditure was reached two months
after the armistice was signed. In the
single month of December. 1918. this
government paid out two billion dol
lars. There the expenditure reached
the high water mark and began to de-
cline. until for the month of June.
1919. the outflow amounted to eight
hundred million dollars. Such was the
drift back toward normal
All the time the studendous war ex-
pense was piling up the treasury de-
partment and the congress were de-
vising means for borrowing the
amount needed to meet the emergency
and for increasing the income from
ia ration. that the government might
pay as much of the expenses as was
dominating device in the whole pro-
gram was the liberty and victory
loans. Thru these the government
piled up over twenty-one billion dol
lars and from this fund, plus its in
come and incidental short term certifi-
Gates. it paid it's way.
At this time, when the~spending sea-
son is past, it is of interest to attempt
to determine just what this war VEN
ture of ours has cost. We have the
figure of thirty-two and half bill
lions as the item of expenditure up to
June 80. last. Had the war not been
in existence our expenditures thru
that time would probably have been
about a billion dollars a year, or two
and a quarter billions for the period.
Deducting these normal expenditures
from the thirty-two and a half bill
lions. we have thirty billions. roughly.
which should be charged up against
the war. Another credit item which
we may deduct from that thirty bill
lion is the nine billions which is owed
US by the nations of Europe and
which. in all probability. we will get
back. So the sum total of net loss
due to the war seems to be about
twehty-one billion dollars.
A few months ago the treasury de-
~
Indebtedness when our war obligations
were met. as from twenty to twenty
four billion dollars. Fortune favored
us in n number of ways. however. and
it is now evident that the debt will not
be that large. We expected a loss of
billion dollars thru the guarantee of
$2.20 for wheat. while as a matter of
fact we have had no loss at all on that
score. The loss on the ship building
program of the nation has not been
as great as was anticipated for the
reason that the market on ships has
been excellent and it has been possible
to sell many of them in such a way as
to avoid loss and sometimes even at q
profit. So the debt has been whitfield
down, and it is now evident that 1t will
not amount to more than eighteen bill
lion dollars and that it will probably
stay under that figure.
This debt of eighteen billion dollars
to be sure, is a nice little burden to
carry thru the decades that are to
come. In the first place the mere an
nual interest on it comes to approx
mately eight hundred million dollars
A measure of this amount may be
gained by comparing IL with billion
dollar expenditure before the war
which was adequate to run the gov
eminent for a year.
In addition to this annual Interest
charge which the tax-paying public
must face, it is of course advisable to
arrange for the ultimate payment of
the national debt. 1t is not generally
appreciated by the public that ar
for the discharge of this
debt has already been made. When
congress passed the victory loan bill
1t provided sinking fund which will
eventually wipe out our whole war
debt.
Section six of the Victory loan act
lays the foundation for taking care
OF this huge item. The experts of the
treasury department worked out a
very neat little problem in mathe-
MATES which is to serve the ultimate
purpose of sponging the slate. These
experts show how any debt may be
discharged in a period OF twenty-three
years by a very simple procedure. The
plan is as follows;
Whatever the amount of the debt.
appropriate 2 u per cent of that debt
each year and put 1t in the sinking
fund. This money so appropriated is
then invested in AZ per cent bonds.
This annual appropriation. plus the
interest which it accumulates, will
wipe out the debt in twenty-three
years. This is true IL the debt is a
thousand dollars. a million dollars, or
billion dollars. 1t is true of the
eighteen billion dollar debt which the
United States has accumulated. The
positive elimination of that debt has
been provided for by law in this sink
ing fund section of the Victory bond
act.
Two and one-half per cent of eigh-
teen billion dollars is fourteen hun
bred and fifty million dollars. This
four hundred and fifty million dollars,
or nearly half as much money as was
necessary to run the government for n
year before the war is for a period of
twenty-three years. to go annually into
the war debt sinking fund. The tax
payers have got to provide that