The Bismarck tribune., 1931-10-12

nations.
England's troubles, an authority on
the subject writes, began when size
attempted to fulfill her traditional
role of banker to the world. Several
banks failed in Austria ard a crisis
loomed there. The Bank of England
loaned $21,OO0000 to the Austrian
government to avert it. England par
ticipated in the German stabiliza-
ton loan to the extent of $25,000, 600
and. in addition, much credit was
extended through private banking
channels. England, however, was
known to have large commitments in
Germany and with the closing down
of the German banks apprehension
was felt as to the possible effect of
this fact on English finances. Al
most overnight, London found it's for
eign creditors clamoring at its door
step for a return of the funds en-
trusted to British keeping.
That marked the battle to save the
pound which failed, temporarily,
when the gold standard went by the
boards Between mid-July and Au-
gust l, the gold holdings of the coun-
try decreased by $160,00O000 and left
the Bank of England with only $751;
100000 in gold, the lowest amount
since November, 1929. The discount
rate was raised from two and one
half to four and one-half per cent
and a credit of $25O,0Oo,OOO was ar
ranged with France and the United
States. This failed to alter the situ-
alton and the flight of gold contin-
ued.
A parliamentary committee brand
ed as unsound the current practice
of borrowing to meet government ex-
penditures and emphasis of this fact
increased the movement of investors
to take their money home. They felt
it unsafe to leave their funds in a
country which was living beyond its
income. Upon formation of the new
government, which has since bal
anced the budget by both increasing
taxes and reducing expenditures,
France and the United States guar
anteed u $40O,oOo0oO credit and the
battle to save the pound sterling still
RACES.
Turn to the United States and we
see some points of marked dissilni-
larity. This country holds the larg-
est gold reserve ever known, more
than five and half billion dollars
Much foreign money has been with
drawn to meet pressing strains at
home and the nation is remarkably
self-contained from a financial stand
point. The dollar has displaced the
pound in many foreign countries as
the standard of exchange. The rest
of the world is not suspicious of u.s.
On the contrary, it envies ,;s, despite
the urgency of our domestic trou-
bles.
But the government of the United
States Is living beyond it's income to
the extent of billion dollars a year.
The 5000 100000 deficit whic!. wrecked
British finances is less than half Of
our government deficit.
The tendency of many citizens to
regard the government as all mex
haustible money bag, from which
funds should be taken for any and
every purpose, is liable to be accel-
Grated rather than diminished by
present conditions. Already the cry
Is being raised in many quarters for
government appropriations as large
or larger than the 10 billion dollars
voted by the last congress. The fig
ure was roughly $4,000, 100000.
This is the reason for the trepida-
ton of Mr.. Hoover. He knows that
the slope will grow sleeper and the
speed will grow greater the longer
we coast. This is the necessity which
spurs him to attempt to speed up the
wheels of business and, at the same
time, put the government on a basis
where it is living within its income.
Two. major policies are open to
choice: One Is to increase the taxes
in order that the government may
continue spending on its present
scale. The other Is to leave the taxes
where they are and reduce the cost
of government.
A third policy would be to combine
the first two by both increasing taxes
and cutting expenditures and a fourth,
would be to continue as at present
living partly on income and partly
on the accumulated financial fat OF
the nations credit.
The decision will rest in the hands
of congress. The manner in which
our lawmakers meet the emergency
will be of Importance to us all.