Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-03-31
MELLON FORESEES
END OF U. S. DEBTS
Treasury Chief Declares Fur
ther Tax Cuts Possible
Under Present Policies.
- Continued From, First Page.)

over the previous methods where float
ing bond issue of only 5000 ,000, 900
was heset with difficulty. He described
the Treasury'S fiscal operations which
last year, he said, involved $4,000, $780,
600, with the least possible disturbance
to the business life of the country" He
praised the part the Federal Reserve
System plays in this machinery to carry
on the Governments financing.
The Treasury's financial policies
fundamentally, he declared still con-
form, as you see, to the traditions
established when the Government was
first founded. We cannot do better"
he concluded, than to follow those ira
ditions, and to make sure that, in fund
amental matters, our actions square
with those great, immutable principles
which our forefathers, with. such con-
sCmmate wisdom, made part of the
very structure Of our Government"
Tradition Guides Government.
Mr.. Melons speech follows:
In this country tradition plays an
important part in government. In the
conduct Of business, on the other hand,
we are singularly free as a people from
being hampered by precedent. If a
bridge must be built or new process
developed or an industry established,
We find the best and quickest way to
do 1t and gre not concerned because 1t
was never done that way before. 1t is
this initiative in blazing new trails, this
enterprise In overcoming difficulties,
that have made America great.
But in the conduct of government
we have been slow. and rightly so, in
introducing innovations. We have
changed somewhat and can still i'm
prove the structure of governmental
machinery, especially in the co-ordina-
ton of related or overlapping activities.
In so far, however, as fundamental
policies are concerned, they have been
based, and are based today. on certain
guiding principles, which, with the pass
age of time. have assumed the force Of
great traditions.
This is particularly true as regards
our financial policies. These policies
are few in number and may be easily
enumerated. One is the keeping Of ex-
penditures always within the revenues.
Another is the payment of the public
debt. A third is the levy of the lowest
taxes consistent with the Government s
needs; and still another is the support
of the public credit so that the financial
integrity of the Government shall be a
rock amidst the fluctuations Of internal
and world finance.
1T is Of these policies that wish to
speak. They are Of general interest
because the business of government has
become so vast in extent and Is so far
reaching in its influence that the man
ner in which 1t is conducted is of ital
concern to every man, woman and child
in the country.
I'm so far as keeping down expendi-
lures is concerned, we have always be-
lieved that they should be kept within
our revenues, and that the piling up of
debts for current expenses, except in
time of war, is strictly to be avoided.
But before the establishment OF the
budget system eight years ago there
was no way of knowing what our ex-
penditures would be. Each department
went to Congress and secured whatever
it could in the way of appropriations.
Since the budget system was estab-
lished, however. Congress has recog-
nized the importance Of a balanced
budget and has adhered strictly to the
policy Of keeping appropriations well
within the budget estimates.
Debt Paid Promptly.
Turning now to the question of debt
payment: No other part Of our finan-
cial policy has been more consistently
maintained than that providing for
the prompt payment of the public debt.
Even in the early days, after the Revo-
lutionary War, when debt Of so mil
lion dollars with an interest charge Of
less than million dollars year con-
stituted problem Of the first nlagni-
tude, the newly formed government,
with its slender resources and made
quate financial machinery, set about
paying its debts. The same thing was
true after the Civil War. After the
World War this policy was continued
and has been responsible for much Of
the progress made in paying OF the
debt.
To-day that debt has been reduced
to manageable proportions and about
300 million dollars year saved in In
terest charges. Eventually, as the debt
Is paid of entirely, this drain on our
revenues will be removed and we can
look forward then to very great reduc-
ton in taxes.
Already taxes have been restored to
a peace-time level. Over 100000 in
dividuals In the lowest brackets have
been relieved of all liability for Fed
eral income taxes, and the substitution
of moderate rates for excessive ones has
benefited all along the line. Productive
business, by being relieved of oppres-
Sive rates, has found 1t possible to ex-
pand in an orderly manner. AS result,
prosperity has become more general, the
national income has increased, and,
during the year 1928, which set a new
record for prosperity, the Government
received revenues adequate for its needs,
even with lower rates and fewer tax
payers.
Further Progress Possible.
"'The fairness of taxing more lightly
ton. There is still much that can be
done and should be done when revenues
show sufficient permanent increase. At
present there is a growing demand for
further reductions in taxes on earned
income It is a position with which I
have always been In sympathy, as is
evidenced by the recommendation
which the Treasury made to Congress
as long ago as November, 1928. At
that time the Treasury said:
THE fairness of taxing more lightly
income from wages, salaries and profess
sional services than the income from
a business or from investment is be-
yond question. In the first case, the
income is uncertain and limited In du-
ration; sickness or death destroys it and
old age diminishes it. In the other the
source of income continues; it may be
disposed Of during mans life and it
deScends to his heirs
THE Treasury is still of this opinion
and will be glad to see these principles
still further carried into law whenever
revenues justify such action. s
Another place where progress can
be made is In the administration of the
a. L., A. k,,~f
how the average man and woman
throughout the country view these laws.
know with what impotence you face
the long and tedious business of making
out your income tax return each year.
The form which you must I'LL out doubt
less seems unduly long and complicated:
and it is not unreasonable that you
should ask, first. why the law cannot
be simplified, and secondly, why the re-