Montana labor news., 1932-12-08
III BILLIONS OF
DEBT STRANCLE
u. S. BUSINESS
Tremendous Interest Drain
age on National Income
PER CAPITA is $1,400
By COLSTON E. WARNE.

A II r I, MASS.-(F. P.)-
Americans are struggling under a
debt burden of I'll billions, mourning
an interest payment which could not
be earned by all our unemployed if
they were paid at the rate of a steel
or textile worker-a liability largely
figured at 1929 levels while prices
have dropped about a third. With
the national income cut from 80 bill
lions to so billions, a desperate stu
alton is being reached. If you
work five and one-half days a week,
one days income goes to the interest
burden alone, allowing nothing for
reduction of debt.
Calculations by DR.. Royal Meeker
place the total debt burden of the
American people at I'll billions in
March, 1922 per capita debt of
$1,400. This means that at an in
terest rate of 5 per cent, the sum of
1881, 000, 900 would annually be due
in interest on this debt. Figured for
every man, woman and child in the
United States, this would mean an
annual burden of approximately $40,
Or for a family of five the annual
absorption by interest alone would be
$3.50. DR.. Meeker's figures follow:
Brokers' loans to spectators, $780,
100000; commercial bank loans,
largely to business men and farm
ers), $780, OO,0 900, 900; consumers
credits ("easy payment" purchases),
$4,000, 900, 900; loans on life insur-
ance, $4,000, 100000; corporation
debts (long and short term), 1884,
$4,000 900; farm mortgages, $780,
100000; other agricultural loans, ST.
300 ,000, 900; non farm mortgages
largely city real estate), S26,000,-
10000; state and local debts, &c.
100000, 900; federal debt, $18,508,-
100000 total of S171, 020, 900 900
To be sure, certain of these obliga-
tions will probably never be paid
Still, this debt load represents a ire
mendous interest drainage out of the
American national income. Prof
Irving Fisher, employing these fig
ures, estimates that this total in
~debtedness of 1882 is equivalent to 9
debt of 302 billions at the 1929 price
level. Steel workers received a week
ly average wage in September, 1882
of $11.99. Textile workers obtained
$1O.96. This means that the obi
cation to pay interest would annually
absorb the equivalent of the income
of 16,318,710 workers paid at the
present weekly rate of steel workers
The total of corporate funds upor
which interest and dividends are tt
be paid was 1888 billions at the close
of 1929, F. c.. Mills estimates in
recent study of the National Bureau
of Economic Research. Out of thi:
total, the direct corporate indebted.
ness (bonds and notes. equals g.
billions, to which must be added {
considerable share Of the ommer
cial bank loans of 80 billions. With
the continued drainage of interest
payments and the lowering of the
profit-earning capacity of industry
after three years of depression, the
margin Of safety behind the bonded
indebtedness of corporations becomes
exceedingly narrow.
The farmers plight has been ever
worse. The value of American farm.
was 43 billions in 1929, according t.
the U. S. Department of Agriculture
The drastic deflation (63 per cent? il
farm prices has brought farm val
ues sharply downward making it i'm,
possible for many farmers to NEE
interest on mortgages which total il
all $7,6OO,OOO,OO
Mention should be made of thu
urban real estate situation. Burden
ed by mortgages approximating q
billions, the equity of many property
owners has entirely vanished. The
banks and insurance companies which
hold 81 billions of this mortgage
total stand to lose a c~onsiderabl,
portion of their equity as the pres
ent wave of foreclosures proceeds
In all, indebtedness Of the United
States is estimated to total rs PEI
cent of the present national wealth
according to DR.. George F. War
rem. He concludes that much O.
fhis oou uoxyo~ ho ool1ookoJ Mosu