Evening star., 1933-03-05
ssNEW DEAL" OF ROOSEVELT
FACING NINE-MONTH TEST
Reorganization, New Taxes, Farming
and Rail Aid, Repeal and Job
Relief Are Principal Problems.


tween the price of commodities and the
price of manufactured articles, enable
the farmer to support a reasonable
burden Of debt and concentrate In his
hands q definite quantity Of purchas-
ing power with which to buy the prod
ucts of industry.
Concurrently with the attack on the
farm problem the new administration
IS under ccmpulsion to undertake at
once the rehabilitation of the railroads.
The railroad industry may be in no
worse plight than many other indus
tries. but it bears peculiarly vital
relationship to the credit structure
of the country. Its $l1 1,000, 100000 in
bonded indebtedness bearing interest
charges Of nearly 00,000,000 a year
forms one of the largest groups Of in
veStment for savings banks, insurance
companies, commercial banks and con-
servative private investors. It Is,
moreover, an industry for which the
Federal Government has assumed un-
usual responsibilities by an elaborate
regulatory system.
The railroads were already feeling
the competition of motor Transports
ton, inland waterways, airplanes and
pipe lines when the depression de-
Scended. BY dint of drastic economies
in operation the railroad system as
whole last year earned slightly more
than the interest on its bonded indebt-
edness. But individual railroads have
been kept going by advances from the
Reconstruction Finance Corporation
And the cost of railroad transportation
remains out of line with the current
price level.
Proposes to Aid Railroads.
The new administrations railroad
program has been outlined during the
campaign and since. On the financial
side Mr.. Roosevelt proposes that the
Government undertake for a specified
period to see the railroads through
their difficulties. Badly overcapitalized
roads will have to go through the
wringer," but the process Is to be ex-
pedited and simplifled.
On the regulatory side Mr. Roose-
welt proposes to create a single new
agency to control all kinds of trans
its coasts. It would assume the pres
ent powers Of the Interstate Commerce
Commission, control of inland water
ways, control Of aviation and steamboat
inspection, and it would be endowed
with the authority, which no Federal
body now has, to regulate interstate
bus and truck transportation. The OBJ
jective Of unified regulation Is the
creation of single co-ordinated trans
portation system, permitting the elini
nation of improbable railroad mileage
and the correction of the advantage
held at the present time by water
and motor transportation through the
use Of Government-built waterways and
highways.
simultaneously with immediate aid
for the farming and railroad industries
Mr.. Roosevelt must undertake the for
midable task Of putting the Nations
own finances in better order through
the balancing Of the Federal budget.
Many undoubtedly would put this first
on the list of the new administration s
problems, believing that it is the main
achievement needed to reassure the
country and stimulate the use in b'Hi-
ness enterprise Of the vast quantities Of
liquid credit built up during the last
year. Whether or not Mr. Roosevelt
shares this view, he is committed to the
balancing of the Federal budget and to
the reduction of current Federal ex-
penditures by at least Is per cent. Like
the burden Of debt the cost Of govern
ment weighs crushingly upon the con-
tracted economic life Of the country.
Budget Cut to Be Difficult.
Long experience has proved that q
Congress responsive to the pressure of
organized minorities and local constitu-
ents is incapable Of effecting drastic
economies. That fact makes the full
fillment of his pledges to reorganize the
Federal administration and to slash the
Federal budget one Of the greatest of
Mr. Roosevelt's difficulties and makes 1t
virtually necessary that he be tempor-
arily endowed with freedom to act
that would be unprecedented in peace
times In America.
Even If he attains his goal in economy
Mr. Roosevelt will remain under the un-
pleasant necessity Of finding additional
sources Of revenue. During the short
session of the last Congress he discour-
aged the sales tax and more or less def
nitely committed himself to increases in
the income tax and extension of the ex-
else taxes, to be supplemented, possibly,
by the taxation Of classes Of securities
which hitherto have been tax exempt,
with the dual aim Of obtaining revenue
and encouraging investment in produc-
tive enterprises.
The legalization Of beer and the re-
peal Of the eighteenth amendment are
inseparably linked with the revenue
problem. However great the revulsion
against the conditions existing under
the eighteenth amendment. it Is the
promise of passing on to the beer and
liquor business part Of the tremendous
burden Of taxation which offers the
most hope of the quick return Of alco-
holic beverages to legal standing. With
the passage OF the repeal resolution by
the last Congress, the prohibition battle
front shifted from Washington to the
individual States. Though the Presi-
dent has no legal authority in the pro-
cess. he can undoubtedly expedite the
ratification Of the repeating amendment
by the aggressive assertion Of his in
fluences as leader Of his party and chief
executive Of the Nation.
Faces Jobless Relief Demand.
While struggling to balance the Fed
eral budget Mr.. Roosevelt Is faced with
the necessity Of meeting the rising de-
mand on the Federal Government for
unemployment relief. The resources of
private individuals and local and State
governments have been stretched to
their capacity and beyond. 1t Is clear
that II the unemployed are to be fed,
clothed and sheltered the Federal Gov
eminent must assist In growing measure.
Mr.. Roosevelt has committed himself to
the use Of Fsderal funds for this pur-
pose in so far as it Is necessary.
He has indicated also that he intends
to use Federal funds for the stimula-
ton of employment through public
works Of the self -1iquidating OF "bank-
able" variety. Already he has outlined
his comprehensive scheme for the de-