Evening star., 1933-01-17

ize improvements of this character. But
there is this great difference between
business corporations and the Govern
ment. Capital improvements by busi-
ness corporations are productive In
character and are intended to produce
enough revenue to pay for the indebt-
edness over a given period of years.
Generally speaking, this is not true of
capital improvements made by the Gov
ernment. With very few exceptions
these new Government buildings repre-
sent liabilities rather than assets. They
require additional funds for repairs and
upkeep. The claim that has been SO
frequently made that the savings in
rental would be enough to cover fixed
charges, running expenses, repairs and
depreciation will not bear examination.
Under the present building program, of
the buildings completed up January
/. last, replacing leased quarters we
are spending on running expenses alone
81, 10000, as compared with the rental
for accommodations previously leased
Of $475, 900.
Cites Typical Example.
Let me illustrate. In the town Of x,
let us say. we are paying s2.400 to rent
the necessary accommodations for a
POob O4ASC 1IlC 10NSlll1Hc1ib CICCbo o
500, 900 building. Without figuring the
cost of land and interest on the in
vestment, the maintenance cost OF
that building amounts, together with
depreciation, to $500 per annum.
In other words, whatever the other
charges may be in dollars and
cents, the new post Office in this
particular town costs the United
States Government $4,000 more a year
than the rented quarters did. To say
that We should capitalize this new LA
bility and issue bonds against it because
it Is analogous to what manufactur-
ing corporation does when it erects
new building, or a railroad when it
builds new connecting link, which are
expected to pay for themselves, is, to
say the least, illogical.
Moreover. it should be pointed out
that in budgeting for Federal construc-
ton expenditures, we are dealing pri-
marily with relatively continuous op-
erations and not with isolated and nom
recurring expenditures. This is more
than a question of mere accounting.
Inevitably it has an important bearing
upon the effective control of expendi-
lures, which clearly is one of the most
pressing issues in the field of public
finance today.
Ever since the war practically every
State, every municipality, every county,
every school district, and every other
political subdivision in the United
States has listened to the alluring plea
that they were justified in capitalizing
'so-called permanent Improvements, with
a result that with few shining exam
Piles of wise financial management such
as are Afforded by the States of Mas
sachusetts and Connecticut, for in
stance, our States and municipalities
have piled up a mountain Of additional
debt in the course of the last IL years
amounting to nearly 10 billion dollars,
under which the unfortunate taxpayer
is struggling today, and which in many
cases has brought the communities 10
the verge Of bankruptcy. In the face
Of that record the Federal Government
is now being urged to abandon the pol
icy which it has followed ever since the
birth of our Government. and instead
Of doing what we have always done in
the past-reduce in peace-time the debt
piled up by the wars in which we have
been compelled to engage-to adopt the
practice of superimpoSing an unjusti-
fable peace-time debt on an enormous
war debt; to remove all of the safe
guards against extravaganza which the
'pay-aS-you-go" policy affords, and to
avoid our plain duty and the dictates
Of common sense by reSorting to a
tricky accounting decise, the ruinous
consequences of which are visible
throughout the United States today.