Evening star., 1932-10-20


unit in the United States is to blame.
But when we come to consider prodi-
gality and extravaganza in the Federal
Government-as distinguished from
State or local government-we are talk
ing about something even more danger
GUS For upon the financial stability of
the United States Government depends
the stability of trade and employment,
and of the entire banking, saving and
insurance system of the country.
To make things clear-to explain the
exact nature of the present condition of
the Federal pocketbooH, must go back
! to 1929
Many people have believed the story
which has been painstakingly circulated
| by this administration that the routine
spending of our Federal Government
has been kept on fairly even keel dur
| ing these past five years. It was per-
haps easy to give this impression be-
cause the total outlay each year up to
the emergency appropriations of this
year did not increase alarmingly. But
| the joker IN this is that total outlay in
cludes interest and sinking fund on the
! public debt-a fixed. charge which was
declining during the days Of national
debt reduction and lower interest rates
thereon. On the plain question of fru-
! gality of management, if we want to
compare routine government outlay of
! 1927 with that for 1881 for example, we
must subtract this so-cclled debt serv-
! ice charge" from the total budget tor
/ both years If we Go this we find that
! the expenditure for the business of Gcv-
/ ernmert in 1927 was 100000 and
in 1851. s3,1e3, 100000. That, my friends,
/ represents an increase Of actual admin
: ictrativc spending in those four years O.
: @o1- t,iil I@i1
roughly so per cent: and that, 1 may
add is the most reckless and extrava-
! CANT pace l have been able to discover
in the statistical record of any peace
time government anywhere, any time.
/ Increase Is Shown.
1t is an ultimate fact which is the
exact reverse of the thing announced as
! fact by Republican leaders.
! Let me repeat those figures so that
the whole country can get them clearly
IN mind. Leaving out debt service
charges in both instances, the cost Of
carrying on the Governments business
was S2,187.0 100000 in 1927; S2,166 ,000.-
900 in 193l-an increase in four years
of one billion dollars.
That is the story on the spending side
of the budget; but it is less than half
of the whole appalling story.
On the income side of the budget, the
record is worse. Unlike other taxing
agencies. the Federal Government does
not levy direct tax on property.
| Therefore, you don't have to be an ex-
pert to know that when anything hap
pens that violently contracts sales and
| incomes and the prices of securities and
commodities, there is sure to be simI-
! lar violent contraction of Federal in
come and that Government charged
With maintaining the financial stability
! Of the United States under ell conditions
is under very solemn duty. in such an
event, to take immediate steps to avoid
deficit
! Estimates Held Awry.
Although six weeks had elapsed since
| the worst economic crash in history.
| the Federal budget of December. 1929,
/ Gid not even refer to it. 1t estimated
! receipts for the year ending June 80,
/ 1881, at AZ billions, actually more than
they had been in the preceding year OF
economic fantaSy-a figure which OBJ
yiously could not possibly be alta ned
without immediate return to the exag-
gerated speculations of 1929. The ad-
miniStration. advised no economy. On
the contrary, it proposed a reduction CT
taxes, and it b!andly remarked, "our
! finances are in sound condition - our
estimated expenditures are well within
our expected receipts
| Against those estimated receipts
| placed at AZ billions by Secretary Mel
| len. the sad fact is that actual revenue
! turned out to be 80 billion5-nine hun
dred million dollars les than the esti-
! mate-a cool billion Of ver-estimating.
/ I recite the 1929 Federal incident to
clarity what happened at Washington
| in 1880 and 1881. In December Of 1880
new budget appeared. Vast declines
| in every form of business activity were
now crystallized and certain. The ma
tional income was in a nose dive, and
! 1t was therefore certain that Federal
income was on the verge of catas-
trophe. But that new budget of De-
cember 1880, recommended neither in
creased taxes nor decreased expendl-
| ture, although, upon that recomTnen-
| this country. The budget message OF
the President asserted that the deficit
for 1851 would be only $3.50 100000,
and contained the statements: Nor do
I look with great concern upon this
moderate deficit" and. "our Govern
ment finances are in a sound condi-
ton surplus of S30000,O0O was
estimated for 1882; that is to say, the
ret deficit for the two years together
was estimated at sl50,000,000. Now at
this time the President and the Sec
retary of the Treasury had plenty of
experience with falling tax receipts.
Budget Called Gamble.
The astonishing and inescapable fact
is that no such results as those esti-
mated could nave been achieved with
out an immediate and complete busi-
ness recovery from the practical paraly-
sis then existing
In other words, this 1880 budget
cannot fairly be called an estimate at
| all. 1t Wss an extreme hazard en- the
hope of an economic miracle-a gam
BILE, if you p-ease-on a highly improb-
able assumption, gamble with your
money and mine.
There is something much more than
mere error in this kind of thing. Our
people and the world are entitled to
reasonable accuracy and reasonable
prudence, and above all they are en-
titled to complete frankness. They have
right and duty to place in retire
nlent those who conceal realities and
abuse confidence.
Remember these simple facts. On
/ December 3, 1880, the administration
of President Hoover estimated that on
The following June 80 the Government
would have a total deficit OF $780,
100000, but that during the following
fiscal year. in othe- words on juno 60,
1882, it would have had profit Of
S30G00000. thus reducing the total
Geficit by June 80, 1882, TO $3.50, 100000.
Now, my friends, 1 am going to give
you a real shock. Instead of the esti-
mated deficit of $150,0 100000, the deficit
on June so, 1882, was for the two
years three and three-quarters billion
dollars.
1881 Was Worst Year.
No, I fear VIC cannot call this budget
an estimate-nor even a fair gamble
1 don't know what to call this kind OF
representation of that kind of fact, but
the name certainly IS rot candor.
Nineteen -thirty-one proved to be thc
worst year yet experienced in the de-
preston. For M distinguished op-
pcnent it was the year when all his oi7.
t.s.- TO- oc