Evening star., 1932-05-13
RELIEF PROGRAM
BRINGS NEW HOPE
Writer Finds Immediate Re-
action When Plans Are
Announced.
BY DAVID LAWRENCE.


adopted after conferences between
Democratic and Republican leaders and
President Hoover.
For when the program is adopted, as
It inevitably must be, it means that
the United States has been saved from
cancerous growth that threatened this
/ Summer the stability of some of the
, larger industrial communities.
Two billions for relief, not in the
| form Of a dole but in created work
| as loans to cities and States, as loans
to building and construction enterprises
that can be made sustaining and
can repay the money borrowed-this
| is the second major step in a recon-
struction program that began early this
year with the steadying Of the credit
structure and the bolstering up of the
Nations railway systems against re-
ceiverships.
When this correspondent left Wash
ington a few days ago the plan was
under consideration as q preventive of
a crisis, the proportions of which could
not be estimated. 1t was because many
cities we're adding to their unemployed
, while relief funds were nearing eX
haustion. 1t was because made work"
enterprises were vainly seking money
in accustomd channels to do self
productive work.
Loans to People.
How can this be reconciled with the
demand for a balanced budget? The
first prerequisite is that current operat-
ing expenses shall equal current re-
ceipts. The loans made for the Recon-
struction Finance Corporation and to
be made in the new emergency, work
arc capital expenses or capital loans.
The Government of the United States
borrowed SGT 900, 900 during the
World War and has paid of $4,000
00C, 900 since 1t is strong enough to
borrow again, but 1t is to lend this time
not to foreign governments, with 81
years In which to repay, but to the
American people, who will pay back in
a much shorter period.
If private industry borrows money
to make Improvements, the sum bor-
rowed is not charged against a single
years operations. Indeed, it is not re-
garded as a current operating expense
The Federal Government has been
Jumping all expenditures together Thus,
public roads and public buildings might
be used for 20 years. Instead Of amor
tizing the debt each year and paying
annually q sum equal to interest, the
Government pays for 1t all in a single
year.
When 1t comes to the question Of how
to regard the s50o, ,000, 900 appropriated
for the Reconstruction Finance Cor
poration and the authority to borrow
81 500, 900 900 more In debentures. Con-
gress last January specifically said these
loans were to be regarded as public
Iakf A,-,. .o&s -
classification of the new loans for con-
struction and public works. They are
capital loans in which the credit of the
Government of the United States is en-
ployed to keep people at work until the
emergency through which the world
now is passing can come to an end.
Brief Reaction Certain.
Undoubtedly for time there will be
weakening in the prices of Govern
ment securities, but this will not be for
long. The Federal Reserve Board is
pumping credit into the security market
by offering to buy Government bonds,
and this in turn is piling up excess re-
serves in the banks, which must find
their way into the purchase Of bonds
generally. With the knowledge that
two billions are to be spent for public
works. many corporations whose securi-
ties are intrinsically sound, but whose
future earnings have been in doubt, will
look more attractive to security buy
ers, and wave of real confidence may
set In as the Summer-the best time
Tor building-approaches
The loans to the States and cities
come just in the nick of time. Not
many millions of dollars will be needed,
but the knowledge that the Federal
Government Is ready to use its lending
power to aid those local governments
which need credit will enable States
and cities to undertake capital i'm
provements separate and distinct from
their regular budgets 1t Is a return
to the policy of 1880, when industry
was urged to build and spend. 1t is a
recognition of the fact that def1ation
has gone to extremes and that counter
policy must be introduced to prevent
the disintegration of American morale
The program will be criticized by the
school of thought which believes in
absolute deflation and a reduction in
Government expense. no matter what
the consequences, but the cry of those
in distress and the appalling unemploy-
ment situation have brushed aside
theory and doctrine. 1t is an emergency
worse than America faced in the war
Boost Politically.
Looking at 1t politically, the Repub-
lican administration has been criticized
as aiding the railroads and the banks
but not the unemployed, as supporting
credit and stopping bank failures, but
not putting men to work. The mo-
ment the Democrats offered two
billiondollar program the Republicans
could not veto it and go before the
country. The challenge was accepted,
but it would not be fair to either party
to say that politics was deciding
factor The truth is that situation was
drifting Into such a condition that
something had to be done to stimulate
employment and save many businesses
from catastrophe.
While the new program will mean
much to communities already on the
edge of the precipice, it will also mean
much to cities like st. Louis, which
Here the unemployed are only about
&C, 900 and the figures next Winter are
expected to rise to $4,000, which is in
contrast to Philadelphia's 100000 and /
Chicago's $4,000.
Missouri with its agricultural lands
has absorbed some of the hungry. The
movement back to the farm has saved
many lives. st. Louis has diversified
industries. She has not been as hard
hit as other places. She has given
generously to her unemployed and has
insisted that the relief work be handed
apart from the city government, though
the latter contributes equal sums on the
matching principle.
st Louis has had a cheerful aspect
And the news from Washington makes
folks here even more cheerful, as they
see the leaders rising above party in
answer to the plea of terror stricken
mass of unemployed that was estimated
at 5000 900, but which in recent weeks
has been gradually growing larger The
turn in the tide may come with the
stimulus given by the new reconstruc-
ton program.
(Copyright, 1881
FREED OF RUM CHARGE