Evening star., 1932-05-27
MILLS HITS SMITH
BOND RELIEF PLAN
Declares Public Works Pro.
gram Would Destroy Bal
anced Budget.

| Urging a balanced budget as a pri-
mary necessity for business recovery
and advising Congress to put an end
to governmental borrowing, Secretary
of the Treasury Mills in a statement
last night answered the recent proposal
OF former Gov Alfred E Smith of New
York for a public works program
! financed by bonds.
Mills said such program as recon-
mended by Smith would destroy a bal
anced budget and thus outweigh any
benefits from the public works program.
| The Secretary made no reference to
/ the Garner program as such.
| Mills paid tribute to Smiths "cour-
age in recent public statements and his
valuable support by his outspoken
declaration in favor of the rest of the
Presidents program"
He asserted the former Governor
! himself advocated a balanced budget,
| but at the same time destroyed such a
/ plan through his advocacy of a vast
public program to be financed from the
Federal Treasury.
Budget Balancing Put First.
Public works. then, mean public
borrowing, an unbalanced budget and
]
said, ''for the country has relied on the
definite assurance of the administration
and Of the congressional leaders that
| the budget would be balanced.
| The Cnly wise and sound course to
/ pursue is to balance the budget and
put an end to borrowing.
! Gov. Smith says business cannot get
under way on its own initiative. / be-
lieve he is wrong. Business can and
! will get under way" =.
! The Secretary said that Mr., Smith
profeSSed to be unable to distinguish
between so-called productive and an
Unproductive loan, the funds to be OBJ
! tanned in the first case by the sale of
reconstruction finance securities and
! in the second by the sale of Treasury
obligations.
/ In both cases, he continued. the
money must be obtained from the pub
lie. In the case of the productive loans
! Federal credit was only indirectly in
voked through sale of reconstruction
| finance securities, and first and last the
loan would not constitute a charge on
public funds
Any loss, he said, would be charge
against the resources of the Recon-
struction Finance Corporation and per-
haps ultimately against its capital,
which already has been fully paid and
included IN the current years budget
Beer Tax Defeats Cited.
In the second case, Mills said. an
unproductive loan made by the Treas
ury would require the initial loan to
be paid out of the general fund and the
funds must be obtained through sale
Of Treasury obligations. the interest Gil
which and the redemption of which
must be secured from taxes and re-
| f1ected in the 1888 budget.
i Mills said that the former Governor
spoke vaguely of a beer tax and d
general manufacturers sales tax to
cover the cost of public works"
| He said the first had twice been de-
cisively beaten, and as to the manu-
| facturers' sales tax. no one has sug-
gested superimposing it on the selective
sales or excise taxes proposed in the
pending revenue bill land it would be
| unfair to do So" He added that the
manufacturers sales tax would not fur
nish the additional revenue for public
works.
| Mills said a public works program
such as proposed by the former Gov
ernor could put comparatively few un-
employed to work during the next IL
months.
THE only way to give real relief to
the American people is to restore conf
dence and get business going" Mills
said