Evening star., 1931-12-27
Bond Issue Is Explained
By Senator La Toilette
CONTINUED From Third Page.)

|
| The workers employed directly and
indirectly as result of the public
works program will be once more en-
abled to buy shoes, clothing, food and
! other necessaries of life which tI.ay
have been able to buy during the de-
preston only in limited amounts or not
at all. Restored purchasing power, ris-
ing commodity and security prices will
enable consumers once more to purch-
ase automobiles, radios, furniture and
other products. It will enable millions
to resume payments on their outstand-
| ing obligations.
Farmers will benefit both through the
restoration of demand for food and
other products, through the rise in
agricultural commodity prices, and, like
all otter debtors, they will benefit from
a decrease in the purchasing power of
the dollar resulting from rising COM
modify prices. thus enabling them to
pay off their obligations in dollars more
nearly approximating the value of the
dollar at the time their debts were in
Cured.
A five and one-half billion bond issue
or 80 much thereof as NAV be neces-
sary will restore to circulation and put
to work a large part of the funds now
lying idle because of the reluctance of
those who have savings and capital to
invest In corporate securities under pre-
| vailing conditions.
In loaning money to the Federal
| Government large and small investors
are not required to take the hazards to
which private enterprise Is subject in
a disorganized security market. They
can be certain that the bonds which
/ they buy will be redeemed at par.
| The circulation Of such huge sums
| OF money through the channels of pro-
! duction and consuOption will multiply
i several times the effect of the expen-
dItures provided for in the bill.
Diversified Program.
| In order to assure the maximum
economic effectiveness and soundness
OF the program, the bill provides that
| the money shall be available for a
diversified program of public works
In inaugurating this program the di-
! rector Of public works created under
the bill, shall take into consideration:
/. The facility with which projects
may be gotten under way at the
earliest possible date;
| 2. The amount of labor that will be
employed directly or indirectly;
3. The number and diversity of the
| industries which will be affected, di-
rectly or indirectly, by the projects;
A. The value Of the projects to the
economic and social welfare of the
country; and,
S. Economical administration of the
work.
The bill divides the emergency fund
| into four parts.
| approximately tenth. or not over
| $3.50 O00, 900, is to be used to expand
| construction by Federal agencies. in
| Guiding river, harbor and flood control
works, Federal public buildings, forest
roads and trails and irrigation and
reclamation works.
One billion dollars is set aside for
additional grants to aid State public
works construction. The bill provides
that the existing Federal-aid high
way program shall be largely expanded.
In addition, it extends during the pres
ent emergency the principle of Federal
aid in three important directions-the
construction of all highway bridges. the
elimination of railroad grade crossings
and the elimination of important high
way grade crossings.
The greatest part of the emergency
fund-up to s3.7500 0000 000-is made
available for loans to State and local
authorities. They have in the past
carried on 80 per cent of public con-
struction in the United States. and
their public works contain the greatest
promise of expansion. because so many
OF their projects are in the "blue-p print
stage. The burden which these au-
thorities are already carrying not only
makes it difficult for them to enlarge
their existing programs, but threat
ems to curtail the programs now under
! way. Credit conditions are so adverse
! issues.
The bill provides for loans to States
and municipalities, both to match the
Federal-aid grants and to carry on other
types Of construction. The purposes
for which the money thus made avail
able may be used include % construc-
tion of Federal-aid highways, (2) con-
struction Of other State, county and
municipal highways, streets and pave
| ments, go construction of bridges, a.
water supply and sewerage works, 80
building of flying fields, (6) establish
ment of parks and Fairgrounds, 90
construction of schools and other public
buildings, (8) elimination of grade
crossings and t9) building of fire pre-
vention lanes and other forestry con-
struction work
The bill provides that loans to States
and municipalities may be made for
periods OF not over 10 years. and at a
rate OF interest slightly higher than
paid out by the Federal Government,
but not higher than 5 per cent.
| most important feature of this
measure Is the control device which it
contains. Under the terms of the bill
the sale of bonds is to be stopped and
no further emergency construction is
TO be undertaken as soon as industrial
production as measured by the Federal
Reserve Board index reaches a more
normal point.
Surtax for Retirement.
The $500 900, 900 issue of prosperity
ponds to create the emergency con-
structlon fund are to be issued in de-
nominations of $50 and upward The
Dill contemplates that the 10-year
bonds shall be sold by popular sub
scription, much as the Liberty loan
issues were floated during the war.
Their retirement is provided for
through the establishment of a special
fund into which are to be paid the pro-
ceeds from an additional surtax, set
tentatively in the bill at 2 per cent of
the net income of all persons receiving
an annual income of $4,000 and over
except that persons with incomes of
from $4,000 to $10,000-who are not
now subject to surtaxes-are permitted
to deduct $4,000 from their taxable
income If married, and $1,000 if un-
j married
The measures proposed by the admin
! Stration are merely devices to hos
pltalize the economic casualties of the
depression. They are rescue agencies
designed to absorb frozen assets Their
weakness lies in the fact that basic
conditions are the cause Of frozen as
sets. They may postpone failures but
| tfey do not attark the eronornjc eitlla -