Evening star., 1933-06-13
BY ARTHUR CRAWFORD.

U y"
of the World Economic Conference.
There must be balancing OF bud
gets as one means of assuring stability
III monetary systems essential to free
dom OF movement of gold and commod'
tiles.
The bearing of the Disarmament Con.
ference at Geneva on the World Eco
noH1ic Conference lies in the fact that g
reduction in armaments will aid greatly
in solution of the budget problems, as
well as in the maintenance of politica
conditions essential to economic recov-
cry:
international action, however indis-
pensable, cannot restore normal eco
nomic situation unless the proper inter
nal measures have been TAKEN" said the
! preparatory commission of experts
Each individual country must there
fore be prepared to take the necessary
steps to achieve internal equilibrium in
the following matters:
81. Revenue and expenditures, not
! only Of the state budget proper, but also
of the budgets of public enterprises
| (railways, etc. and of local authorities
should be balanced.
20. It will be necessary to create and
maintain healthy conditions in the in
/ ternal money and capital market and
at all costs to avoid any inflationary in
crease of the note circulation in order
to meet government deficits.
| SO. 1t is necessary to give that suff1-
! cient degree of f1exibility to the national
economy without which an interna-
tional monetary standard, however i'm
proved, cannot function properly"
War Disturbed Budgets.
Aside from this burden of interpoy-
erninental debts, all the countries which
| figured in the World War have had a
precarious budget situation. Financial
obligations which were a legacy of the
war have played large part in recent
economic disturbances
Jus. before the depression spread
over the world the debt service for the
Federal, State and local governments in
the United States was taking 36 per
cent of the national income and 20 per
cent of the total public expenditures.
) The figures were much higher in Eu-
ropean nations. In the United Kingdom
debt service took 83 per cent of the
national income and 35.4 per cent of
total public expenditures. Since the
depression national incomes have
shrunk, which has greatly increased the
percentage for debt service.
The cost of preparation for possible
war Is a heavy burden on national
budgets. A comparison with pre-war
levels Of expenditure, even allowing for
the higher level of prices ruling before
the present depression, shows that with
the exception of Germany current arma-
ment expenditure in most cases tends
to reach, and in some cases to exceed,
the pre-war rate.
The increasing cost of social services,
q Gov
protection land compensation of work.
ers, old age, invalid and widows pen-
sions, family allowances, unemploy-
ment, health and accident insurance
ana poor relief, has been a substantial
cause of budgetary difficulties in many
countries. In France, Belgium, Italy
and the United States the proportion or
public expenditure and of national in
come devoted to social services is much
less than in Germany or Great Britain.
but has tended to increase during the
depression period.
Strain Aggravated.
When prices fell the strain on ma
tlonal budgets was greatly aggravated.
The dlsorgantzation of production and
trade has reduced revenue from income
and excise taxes and customs duties.
New taxes necessary to meet the deficits
have been an obstacle to recovery. The
depression has led to pressure for in
creased governmental expenditure, es-
peciaily for social services. The cost
OF debt service and other forms Of ex-
penditure which are fixed by contract
Ia terms OF money have remained un-
changed.
What was happening in the fiscal
year 1891, for which complete figures
are available, Is shown by a tabulation
OF revenue and expenditures of 27 coun:
tries, all but four of which had budget
deficits. These four were Denmark.
Spain, Portugal and Switzerland. The
countries with budget deficits included
the United States, the United Kingdom,
France, Germany and Italy.
In the previous fiscal year of 1890
II OF the ~ countries, including the
United States, had budget surplus.
The showing in the fiscal year 1892 was
much worse than in 1881.
Budget weaknesses contribute to the
difficulty Of transferring payments in
international accounts. Therefore, from
the standpoint of the questions to come
before the World Economic Conference,
it Is essential that there should be a
reduction in public expenditures. The
United States has made headway in ac-
ton of this character. The British
budget situation has been much better
than 1t was two or three years ago.
France is having trouble with its budget.
Europe Worse OF.
Most European countries are in a
| vastly worse budget situation than the
United States. All public expenditures
in the United States increased from 8.5
per cent of the national income in 1918
to 1853 per cent in 1929. Since then,
with a very great decrease in the ma
tional income, the percentage has arisen
to more than one-fourth. In Germany
public expenditures were as high as 15.7
| per cent of the national income in 1913
| and had scared to 276 per cent by
| 1929. In Sweden the increase was from
| 15.5 to 21.8 per cent.
Of expenditures of the Federal Gov
ernment in the United States, close to
| three-fourths of the total Is accounted
for by military activities, including
| charges on the war debt and payments
| to veterans. In Great Britain 81 per
cent went for these purposes in 1928.
In France the percentage In 1928
was 78.
In the case of the Euroupean nations
| which are debtors to the United States
these debts are an important part of
their budget problems. Great Britain
and France would be able to meet these
debt payments If Germany would con-
tinue the payment of reparations. Re-
gardless of the attitude of the United
| States, there seems no chance of re-
vival of reparations payments. These
debts also enter into the budget problem
of the United States, as this country
has counted on more than quarter OF
billion dollars annually from this