Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-24

Il washington Star and broadcast
over a Nationwide network Of
the Columbia Broadcasting System, fol-
lows:
During the last two years the Treas
ury has faced a variety of problems.
The Governments financial position
has changed from one of great ease to
one Of increasing difhculty, due to the
widespread business depression which
has afflicted the world.
Revenues, particularly those derived
from income taxes, have abruptly de-
clined, and at the same time expendi-
lures have increased, owing largely to
measures undertaken 10 alleviate the
oppression In agriculture and industry
As q result we shall close the current
FISCAL year with large deficit. We
face the prospect of a deficit again
next year, although we do not yet
know tnSt how great that deficit may be.
When the time comes, we shall be
able better to assess the situation and
% determine what may be necessary
Tor meeting our immediate needs
Meanwhile it Is well to remember that
the financial position in which the
Government now finds itself Is not I'M
favorable for dealing with the present
emergency and that it is due largely
70 the fact that since the war, and
particularly in the two years since the
present administration began, the Gov
eminent has overlooked no opportunity
20 set its financial house in order and,
In q manner of speaking. to prepare
for the rainy day that was sure to
come.
: First and foremost, we have pursued
sound policy CT debt retirement, with
beneficial results that are clearly APP
parent. On June 80, 1919, our total in
kerest-bearing debt outstanding amount
a. RwEI-
interest rate was 418 per cent, and the
annual interest charge came to $1,054,-
100000, which constituted a heavy
burden even for so rich country as
this. On June 80, 1880, the total
Understanding debt stood at $15,922,-
100000, showing reduction during the
period Of over $9,3I3, 000, OO0 OF this
latter amount $1.l32 ,00o, 900 was re-
tired since the beginning Of the present
administration. The average interest
rate had been reduced to 381 per cent
at the end of the 11-year period, and
the saving in annual interest charges
accomplished by reduction and re-
funding OF the debt amounted to
$448, 100000.
Must Look TO Two Sources.
In the future We must lock mostly to
two sources Of debt retirement-the
6IlQ lOTelSn QSUL repay
ments. In view of the interest which
discussion Of this subject has aroused
1t Is well to bear in mind the provisions
Of law governing the payment of the
public debt. In the war loan acts
authorizing advances to foreign gov
ernments 1t was provided that repay
ments Of principal made by foreign
governments on account Of such loans
should be applied to reduction Of our
r. he .&e
sequently entered into it was stipulated
that foreign governments may, IL they
50 desire, pay both principal and in
terest on their debt In certain interest,"
bearing obligations Of the United
States, and such obligations as have
been delivered to this Government have
been immediately retired and our pub
lie debt reduced by corresponding
amounts. Interest paid by foreign gov
ernments in cash, as has been done
during the past year, automatically
becomes available fer current expendi-
lures.
During the fiscal year 1880 the
Treasury received from all foreign gov
ernmentS the sum of S239, 565, 900 on
account of principal and interest. OF
this amount the sum of $3.50, 185, 900
was paid by Great Britain, s5T, PSI 900
by France, $5,000.000 by Italy, and the
remainder of S17,129,000 was paid by
Belgium. Poland, Rumania and nine
other debtor nations.
The other basic provision for retire.
rnent of the debt is the sinking fund,
established on July /. 1920. That fund
consists Of a permanent appropriation
Of amounts fixed by law and made
annually from the general revenues
for the purpose of debt reduction. For
the current fiscal year, ending June 80
next. the expenditures for this pur-
pose will amount to 1891 100000.
The deficit for the current year will
be such that for this year there will
be no net reduction in the debt. There
will. on the contrary. be an increase.
But in bad times, as in good, like the
man who tightens his belt and keeps
up payments on the mortgage. We shall
continue to make the payments pro-
vided by the sinking fund as author
lied by law. BY not deviating from
that program we have already light
ened the burden Of the debt BY reduc-
ing the annual interest charges by
nearly half billion dollars, the effect
OF which is now felt at a time when
such saving Is most welcome.
1t Is not to be expected, Of course,
that reductions can be made in the fu-
ture at such rapid rate as In recent
years, when surplus revenues have been
available TO be applied on the debt in
addition 10 the regular payment from
the sinking fund The amounts to be
provided from the sinking fund are not
so large as TO be unduly burdensome,
and by adhering strictly TO the sinking
fund program, we shall maintain the
principle OF ord.rly debt retirement
and will in time eliminate the great
drain which the debt now makes on
the revenues.
Tax Cut Program Pursued.
Along with debt retirement, the Gov
eminent has pursued a steady program
OF tax reduction during periods OF
prosperity, so that today. when adversely
has come upon us, the burden OF Fed
eral taxes has been reduced TO mini
mum. In l0-year period there have
been four continuing reductions in
taxes and one temporary reduction for
the 1929 returns. An elaborate war
time system with heavy taxes on many
commodities and activities, has been
gradually converted 10 peace-time
basis, with the result that we have at
the present time an internal revenue
system Of few and relatively light taxes.
Lower rates have been substituted for
excessive ones and, true TO sound tax
principles, have proved more productive
in revenue than were the higher rates.
BY raising exemptions and credits and
allowing credit for earned income, the
small taxpayer has been almost en-
tirely relieved of the burden Of Federal
taxes. Both normal rates and surfaces
have been reduced: the war and excess
profits tax on corporations has been
removed the estate tax has been low
cred and excise taxes on the sale prices
OF many articles have been eliminated.
In the successive reyisions Of the rev.
enue law, the Federal Government has
not only relieved the taxpayers OF very
large part OF the burden Of taxation,