Evening star., 1933-11-26
MONETARY POLICY
REVERSAL IS SEEN
Douglas Speech, if Backed
by President, Regarded
as Reassuring.
BY DAVID LAWRENCE.

If Budget Director Douglas represents
President Roosevelt and speaks for him.
then the speech delivered in Boston
may be regarded as turning point In
the policy of the administration-from
imitation to sound money.
There is no reason to suppose Mr.
Douglas would deliver speech with so
r,any significant statements in 1t with
cut consulting the President in advance,
ana there is every reason to believe that
Mr.. Roosevelt at this ting would want
MIR. Douglas to say what he did by way
OF reinsurance to capital
Here are five significant things that
Mr. Douglas said, as well as implied
with such defniteness that there could
be no mistaking his meaning:
First, the budget for the present fiscal
year ending next June will be out OF
balance by many billions. but of this
sum we must regard at least $780,
o0o 900 as due to loans for the emer-
gency.
Second. it is the Governments inten-
ton to balance both budgets-operating
ana eXtraordinary-in the fiscal year
ending June 30. 1885. and to take care
of some debt retirement.
Third, the Recon~tt-u -tion Finance
Corporation is to wind up its work with
this fiscal year and no additional
emergency obligations are to be under
taken. This is the objective. the hoped
for result, but of course Congress has
final say on what shall be spent.
Fourth, there would then be bal
ance of a billion dollars in revenue
over and above the normal budget to
help take care of emergency eXpendi-
Tbt1c ovnpndi-
lures or deficit will be taken care of in
part by surplus revenues in the sue
Ceeding year. so that the total national
debt will not be increased during the
fiscal year beginning July /, 1884, and
running to July l. 1885.
Fifth, increased revenues are directly
dependent on business recovery, and
this in turn depends upon free flow
OF capital into legitimate business en-
terprises."
The last may be regarded as the most
significant statement Of all, for 1t i'm
plies there will be some modification of
the seCurI,ic3 act, which has checked the
channe5 c. invc5tment banking. Mr..
Douglas st-2C-e5 the Importance of capi-
tai for the heavier industries. where. he
says, 81 per cent of our unemployment
is now concentrated.
The figures thus far compiled indi-
cate a large deficit for the present rs
cal year. running from $4,000, ,000, 900
upward, but this includes loans made
on account of the release of assets in
closed banks and similar emergency
items. Should this spending be spread
over the next fiscal year, even though
authorized now, the present years
showing will be better and in the end
the total amount spent in two years for
emergency purposes may not be mate
rally augmented. This is what Mr..
Douglas hopes for, and at the same time
he issues waning that higher taxes
will be necessary or at least a greater
amount of taxes must be paid by the
middle classes than heretofore II they
insist on more emergency spending.
The picture drawn by the budget di-
rector is one that would inspire the
country as the beginning of policy
of balanced budgets and sound credit
conditions, provided Mr.. Douglas has
the whole-hearted support Of President
Roosevelt on the curbing of expendi-
lures Splendid progress has been MADE
in cutting the operating budget, but the
large spending has been on the emer-
gency side. Mr.. Douglas now implies
the time has come to call halt on
this, too
Coming at a time when imitation Is
being discussed on every side because
of the difficulty Of balancing the budget
and when there is talk Of embarrass-
ment in floating future bond issues. Mr..
Douglas proclaims a policy that every
friend of sound money would like to
see adopted Again, it will be inquired,
does Mr.. Douglas speak for the Passi-
dent? He presumably does. From now
OIL Government finances will be pre-
sented to the public in more favor
abl, light in the hope that the Govern
ment credit will be improved. Mr..
Douglas has spoken the first warning to
the Forthcoming Congress.
Copyright. 1887