The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1921-09-12
GOVERNMENT FINANCING.


GOVERNMENT FINANCING.
The secretary of the treasury con-
tinues to borrow money at 5M to 6
per cent interest. The funds so OBJ
tanned are used to retire Victory notes
not yet due, bearing "a to AZ per
cent interest. Were a private business
concern to do a thing like that the
public would regard the manager as
crazy. 1t is well nigh an act of bank
ruptcy for governments to borrow for
current purposes other than in antic-.
ipation of tax receipts. What shall
be said of the policy of borrowing at
a high rate of interest to liquidate
debts not yet due, bearing a lower
rate of interest?
The operations of the treasury for
the first two months of the current
fiscal year show big deficit, and no
wonder. Owing to slack business, tax
receipts are declining while there has
been little reduction in expenditures.
During the period of war, heavy ana
even burdensome taxes were in the
main cheerfully borne. and during the
period Of postwar prosperity they
were regarded as an inconvenient but
temporary incident of successful bust
ness. Now, however there can be no
doubt that business plans are held in
allegiance at least in part because it is
felt that present taxes would in the
event of success leave too little net
income to compensate the risk Of loss.
In the five fiscal years just proceed
ing the Civil war, ordinary expendi-
lures of the United States government
averaged $7s,0O0,0O0 per annum: in
the two years Immediately following
that conflict, they averaged s448,0OO,-
900, or $50 per cent of the pre-war
average. Ordinary expenditures from
1925 were at the rate of S1,o07,-
10000 per year; in the fiscal years
1920 and 1921 ordinary expenditures
averaged $500, 100000 or 5T2 per
cent of the prewar average Imme-
diateIy after the Civil war, annual ex-
penditures of the federal government
were about SIS per cent of estimated
national income; at present they rep
resent perhaps IL per cent of such in
come. If account be taken also Of
state and local expenditures. the ex-
traordinary burden of public expendi-
lures upon private income may be
realized.
Altho it is commonly believed that
expenditures of the federal govern
ment are now excessive, legislation
has from time to time been urged
which would vastly increase these ex-
penditures. If not pressed now, many
measures merely await a relaxation in
the watchfulness of those who are
guarding against additional outlay. It
is essential that these measures do
not become law, for however merf-
torious they may be, the condition of
the treasury, the public debt, and the
tax burden do not permit of further
governmental commitments.
Expenditures for the fiscal year
1s21-22 were estimated by the secre-
tary of the treasury on August 3 at
$4,554, 100000, of which approximate
ly $4,000, 100000 were to cover ordi-
nary expenses. These estimates indi-
Gated a large deficit, but in seeking
to apply the pruning knife, estimates
for such fixed charges as interest on
the public debt. sinking fund, and
pensions and war risk insurance could
scarcely be touched. These aggregat-
ed more than one and three-quarter
billions. Estimated payments on the
principal of the public debt out of re-
ceipts specially earInarked for that
purpose and liabilities to railroads
growing out of wartime control
amounted to 100000. These OBJ
legations could at most be postponed
by refunding or extension.