Evening star., 1933-12-17
BY OWEN L. SCOTT.

The Federal Government is just now
on the verge Of staging national santa
Claus act that will dwarf the previous
spending periods in this countrys peace
time history.
AS much as $4,000, 100000 in gifts
has been promised and the Government
| is geared up at this time to make de-
J livery. But, in typical Yankee fashlon
nearly all of these billions have strings
tied to them. This is scarcely expected
to temper the glee with which the pres
ents are received, or to lessen their ef-
fectiveneSS when put to use. 1t does,
however. give some protection to Uncle
! Sans pocketbook.
Up until now various branches OF
the emergency set-up here have been
preparing feverishly for this vast giving
! and loaning effort. Enough OF the
money, though, has already gone out
and has reacted sufficiently to convince
the President and members Of the cabi-
net that this can be the merriest
| Christmas in four years.
On every side in Washington conf
dence is expressed about the coming
year. officials say that they can see the
vast new program taking hold. They
think it is a good omen that the i'm
provement they can detect Is coming
I
at Christmas time.
OF the $4,000, 900 900 that may be
poured out between now and next July
! /. only about $1,000 100000 is in the
Treasury now. Another billion and more
| is expected to come in through taxa
| ton. AS much as SO 900 900 900 may
have to be raised through new borrow
| ing during the next six months. Ihere
is a 81, 900 ,000,000 variation in estimates,
but that gap rapidly is being closed by
studies now being made.
| How the money may flow during the
| next few months is indicated by allot-
mentS of funds authorized and by estl-
mates made in official quarters. Ex-
penditures now are at the rate OF ABOUT
$23,000,G00 a day, having risen from
$4,000. 900 a day in october.
There is $3.50, 100000 that will go
| to pay for the ordinary operating
expenses of the Government. Then
another billion is expected to go to
depositors in closed banks and to SOL
vent banks through purchases OF tneH
preferred stock. The civil works pro-
gram, to be wound up May If possible,
will take a total of about S750,0O0,O00.
! On top of that public works expenol-
lures will exceed 81, 900 900 900 If plans
are carried out Another 100000 O0o
will be going out in bounty payments to
| farmers. with the total of these grants
over the next IA months set at about
| 81 200, ,OOo, 900. Around 100000 600 re.
mains to be spent on direct relief out OF
a $500, 100000 fund.
x X x
| The year may see $1,000 0000 in
/ farm MORTGAGES refinanced with Gov
ernment credit and another 81 900 ,OO0,- :
900 in home loans refinanced IN much
the same way This will unfreeze a
vast amount of credit. 1t may aid IN
| opening many banks that otherwise
! would be inSolvent.
| When all of the spending and giving
and loaning have been done, the ma
tional debt is expected to be higher
than it was at its peak in August, 1919:
At that time the Government Owed
about $26. 500 900 900. Now it owes S23,-
over SIT ,OOo, 600 900, according to all in
dicationS.
But that does not worry officials here.
They point out that the country Is much
| richer fundamentally than it was when
| the big war debt was piled up
| Then, too, the money being used now
is not being blown up in shot and shell.
1t is going into tangible improvement.
And what's more, so the officials en-
4 D0dSlZ6, IuDSG VI blAC A1dbAOAAd4 NCSO 49,
crease represents merely an accumula-
| ton of debts of other units of Govern
ment.
Thus the National Government bor-
rows 81. 900 1000, 900 to lend to States and
| cities for public works. The money
| doesn't evaporate. 1t goes into projects
| that in themselves are expected to pay
a return on the capital, and the local
governments pledge their credit back
Of the loan. A public official who sug-
gested that the Federal Government
might not expect repayment quickly
found himself out of job.
| X X \
I The civil works program is pretty
| much of a gift, but loans to closed
banks are made only on good collateral
| and purchases of bank preferred stock
bring a return of 5 per cent on a cumu-
llatiye basis. Either that interest is paid
| or the Government gets control of the
bank. As an example Of the prospects
| of repayment, the Reconstruction FL
nance Corporation In one recent month
| took in more money than 1t paid out.
Even the loans on city homes and on
| farms are backed by first mortgages,
| and in most instances these mortgages
| are smaller than those formerly held by
private investors, because they have
been scaled down before the Govern
ment corporation would loan.
The way many high Government ofh-
cials see the Treasury situation is this:
| The Federal operating budget-the
money spent to carry on the ordinary
activities of the Federal machine-is
nearly in balance now. 1t will show q
deficit of less than $200,000,000 for the
present year, in all probability. For
the next year, according to the most
conservative estimates, the surplus above
expenditures will be about one billion
dollars on the basis of anticipated taxes
and an improvement in business.
The Federal emergency budget-the
money spent on the farm program, the
home loan refinancing program, public
works, relief and other programs-will
be billions out of balance. but these
grants largely represent loans that will