Evening star., 1933-02-12


invited it. President Hoover and Secre-
tary of the Treasury Mills both recon-
mended a sales tax. The Democrats
could have said, in effect, I'VE don't
like the sales tax; we don't like any new
form of taxation-but the Republican
President and Republican Secretary OF
the Treasury recommended 1t and we
are patriotically enacting It,"
Urged Federal Cost Cut.
Similarly the Republican President, in
his first message, recommended reduc-
tion of Government expenditures, rec
commended it in two of its most un-
popular forms: a cut of about 10 per
cent in the wages of Government en-
ployes and a cut in veterans compen-
sation. Here again the Democrats had
the opportunity to say, in effect. to the
disgruntled Government employees and
the disgruntled veterans: I'VE don't
| like to make these cuts, but the Re-
publican President said 1t was neces-
sary and recommended 1t, and we are
patriotically enacting It,"
In short, and rather ominously: The
Democratic leadership, by failing to ball
ance the budget when it would have
been easier, has created suspicion
about their doing it when it will be
more difhcult There is certain
amount Of uneasy doubt whether the
Democrats, in the session of Congress
which they will completely control after
March 4, and In the administration Of
Franklin Roosevelt, will actually balance
the budget.
This doubt Is the largest one cause
of the pause and hesitancy which is the
characteristic Of the present phase Of
business. Leaders Of business. bankers.
lenders Of money. men who have credit
to put to work reason thus: Unless the
budget is balanced there must be in
hation of the currency and until We
/ to be imitation Of currency we don't
want to act. What We want is merely
/ to know-to know surely-which is 60
| ing to happen If there Is not to be
imitation Of currency We will act one
way. II there is to be imitation. we
will act another wav. But we must
know which, before we act at all"
You may tell one Of these troubled
bankers or business men, one OF these
skeptics. that there Is no doubt about
the Democrats balancing the budget.
You may tell him the reason there is
no doubt. The Democratic platform
promised It, President-elect Roosevelt
in his campaign promised 1t again and
again. Mr.. Roosevelt, since the elec-
tion, has repeated the promise in many
private conversations. to business men
who have visited him and to other
leaders Of the party. There is no one
literally no one, to whom Mr.. Roosevelt
has shown any faintest disposition to
recede frcm his promise to balance the
budget
You may tell all this to one Of the
| skeptics-but he continues a skeptic.
| He says 1t is inherent in politics. In the
very nature Of politics, that there should
be doubt whether the Democrats will
really balance the budget. Balancing
the budget includes at least three un-
popular steps
Dismissing some Government en-
ployes.
Further reducing the pay Of others.
And-this is particularly unpopular
reducing the compensation Of veterans.
And the skeptics just plainly insist on
waiting to be shown that the Demo-
Gratis Cor the Republicans If they were
the ones in power) will do things as
unpopular as that.
Veterans Aid Is Questioned.
Pretty near the whole answer to
whether the Democrats will balance the
budget and, therefore. the whole answer
to whether there viii be inflation-the
answer to most that Is important in the
near future of the United States-hangs
on one question: viii Mr.. Roosevelt and
the Democrats be willing to reduce the
compensation Of veterans?
Veterans compensation IS, roughly,
$966, 900 900. That is the largest one
item Of Government expense. 1t Is more
than a fourth of the whole. If that
cannot be cut, then the budget cannot
be balanced, and if the budget cannot
be balanced. there must be imitation.
We may state this another way. for
there Is much need Of understand
ing it:
Veterans compensation, the various
laws giving it, were enacted during the
boom. They were enacted when the
dollar had its former value, when wheat
was over dollar bushel, and all 9TH
er prices Of goods in proportion.
Since the dollar has changed in value
the Government cannot pay this COM
pensation The Government, with re-
spect to veterans compensation, Is in
the same position as the farmer with a
mortgage given when wheat was over
dollar a bushel Now, with wheat
at less than half dollar bushel, the
farmer cannot-literally cannot-pay
his mortgage. Neither can the Govern
ment pay the amount of veterans COM
pensation that was fixed when the
dollar had its former value. The Gov
ernment only pays it now by borrow
ing-and the inevitable end of borrowing
is imitation of the currency.
Out of this situation there are two
paths, and two only. They are:
l. To reduce veterans compensa-
tion.
2. To leave veterans compensation
as it is-but to cut each dollar IN two,
and pay the veteran, SO to speak, in So
cent pieces. That. Of course, means
imitation of the currency.
Prefer Latter Course.
; Now, of these two courses, it is true
, that politicians will always prefer the
latter. The coming Congress will take
the latter course unless Mr.. Roosevelt S
, leadership drives them to take the
first course
' To take the latter course, to cut the
value of the dollar, is the natural way
Of politicians. A veteran in a Con-
gressman's State or district is receiv-
ing, let us say, compensation of 500
month. or $40, or whatever. II the
: Congressman tells the veteran. Il am
I going to vote to reduce your compen-
Sation to $75 a month";" the veteran is
resentful-and the Congressman loses
D the vote of that veteran, and of that
veterans wife, and father and mother
: and his brothers and his sisters and his
aunts, and his local organization of
fellow veterans
But II the veteran continues to get,
nominally 500 a month, and If the
value of each dollar is cut in two, the
veteran will not realize what has hap
, penei to him That Is the wav the
. Congressman would prefer to meet the
dilemma That is the reason why, as
between the two courses, reducing vet
erans' compensation and initiating the
, currency, a politician in Congress will
always prefer to initiate the currency
: That, compactly stated is the prin-