Evening star., 1932-03-29

our power to make any economies on
expenses Of that character. Neverthe-
less, as I said before, it is the duty Of
Congress to economic at every posi-
BILE point. When that is done. how
ever there remains the question of
what We are going to do with this huge
deficit 1t is a tough problem that is
to be decided, and it is not pleasant to
contemplate what is going to happen to
YOU and to me If we decide wrong.
Everybody who knows the facts is
vividly aware that something has to be
done, and done quickly.
There are three sorts of remedies
suggested. One group says We can let
things slide and borrow money to make
lid the shortage. But the plain truth
IS that we can't sell Government bonds
in sufficient amount. Furthermore,
Congress is talking about putting out
So 600 O0O.O0 of bonds to pay in ad-
vance the balance of the soldiers bonus,
and there seems to be a very real dan
ger that this bill will pass. l want to
tell you solemnly that if we try to float
50 600 100000 of bonds for that pur-
pose and another $4,000 000.000 to pay
this years deficit, We are going to meet
the disaster of our lifetime. Who will
buy these bonds? I can't. I venture to
think that you can't. My bank can't,
and I don't believe that your bank can.
What is worse is that the effort to sell
these bonds will knock the bottom out
of the market for the bonds now out
standing We have passed the panic
stage of this slump, but We must take
care that we Go not bring on another
by unwise action. If we try to keep
this Government going by constantly
increased borrowing, We are going onto
I,a he sfNrt lNn nv q
person who tries that course.
The next group says, Don't go on
borrowing; that's fatal. Don't put up
taxes; that's hateful. Cut down ex-
penses: that's the way out" Well. let's
look at 1t. Since 1923, when President
Coolidge was here. when economy was
stylish. our expenses have risen about
$3.50, 100000. But in that time Congress
has increased the amounts payable to
veterans by S250O00.000. and on top of
that has ordered some $3l6,000,000 to
be put into public buildings this year
to relieve unemployment. In other
words. our ordinary Government is
costing us about $500 100000 less than
in the last year of President Coolidge'S
administration. Row, I'm not arguing
against governmental economy think
that there are a whole lot of savings
that We still can make-but it's very
evident to me that the utmost savings
that we can make won't cover more
than about quarter Of the present
shortage. The plain truth is that our
trouble comes from the terrific decline
in our tax revenue: not from reckless
spending, but from drying up Of in
come.
The third group is that one that says,
Let US save every penny, ecCnomize at
every possible point, and then tax our
selves to balance the income with the
outgo." It's an unpleasant prospect.
The foreign economists say that we
haven't the courage to do it, and that
we will be driven to the last resort Of
an insolvent government, which Is to
start the printing presses and to put
out great amounts of money unsecured
by gold reserve. We have seen that
done by practically every country in
Europe during the last 10 years, and
we did it ourselves to some extent dur
ing the Civil War, so that We don't
need to resort to guessing in order to
tell what the effect would be. The first
effect would be flight of capital from
America, for every foreigner who had
money here would try to get it back,
and many Americans would try to put
their capital in other countries. That
JIld6 We WUuIu AlhNC W
gold exports, just as England has done
since last September. The dollar would
decline in the foreign exchange market,
and consequently We would have to pay
more for everything we import from
abroad. For example, the prices of
rubber, Of coffee and of tea would in
stantly rise throughout America. Pres
emily the prices Of all other objects
would begin to rise in the same way,
and we would begin to talk OF the ter
rible rise in the cost of living. The
faster our printing presses worked the
faster the imitation of our currency
went on, just so much faster would the
dollar sink in its buying power. We
saw all that happened in Germany, in
France, in Italy, in Great Britain, in
practically every country in Europe.
Now. what happens to you and me
in all this? If we are working for
money wages, as most of us are. we
find that we have suffered an invisible