Evening star., 1934-07-01


in the bankruptcy bills enacted by
the recent Congress and even more
particularly in the new housing bill
and the plans for putting it into op-
Grafton.
As for the bankruptcy bills, they
were very naturally a profound scan
dal to that answering progressive
and so-called inflationist, Senator
Henrik Shipstead, Farmer -Laborite
and super new dealer. Of Minnesota
Mr.. Shipstead'S remarks on this sub
ject on the floor of the Senate, when
translated into the language of the
less as follows:
Facilitate Bankruptcies.
my stars! 1 was told that we were
going to have more money. I was told
that We were going to have higher
prices. I was told that We were going
to have prices so high that they would
be just like 1925 and would be enough
to enable us to pay off our debts at
their face value. And now what do
I see? see bills for fastening and
promoting and facilitating bankrupt
cies for railroads and for corporations
in general and for individuals and for
municipalities and for just about
every other sort, if any. of debtor.
see bills all over the shop for putting
debts through the wringer and making
them smaller. Instead of vigorous
measures for price enhancement, see
vigorous measures for debt reduction.
In a word, instead Of imitation, see
def1ation. more deflation. I ask you:
Have been tricked? Or have l been
tricked?"
The Senator is hardly to be blamed.
The washing out of excess debt dur
ing depression was a central feature
Of the Oldest old deal in Bible times
in the Orient. 1t remained a feature
of it till the present depression began.
Then President Hoover, though fair
| ly orthodox economist, and, therefore
essentially a def1ationist, invented the
theory of "cushioning" defiation and
began to lend public money to private
institutions to keep them solvent and
| to keep them out of the bankruptcy
| courts.
Mr.. Hoover was a denationist who
hesitated TO debate. Now we have Mr.
Roosevelt who is an inflationist. but
who quails before imitation and gives
us bankruptcy laws. No wonder that
Senator Shipstead is amazed and in
| dignant. In the new deal Eden he
sees the beginnings now of the same
old process of restoring health to the
apple trees namely, looping off the
dead branches. 1t saddens him.
AS for the new housing bill, think
it the best bill that the new deal has
produced. But what is it? Some in
veterate wisecrackers around Wash
ington say that it means that the
Roosevelt revolution. like so many
other revolutions in the past, has now
come to its nter-revolutionary
,, stage. This, think. is misinterpre-
tation. The new housing bill is not a
| contradiction of the Roosevelt revolu-
| ton. 1t is a sort of start toward the
| real consummation of it. And that
consummation-I do not hesitate to
SAYS a restored and morally and
economically strengthened capitalism
| This bill retains the new deal prin-
ciple of social governmental leader
ship. but it abandons in a large de-
gree the principle of recovery through
expansion of public credit and also
the principle of recovery through
higher prices and higher costs. II
embraces instead the basically old dea
principles of recovery through the re-
sumption of the flow of private credit
and of recovery through reductions oi
prices and of costs.
Will Risk Minor Sum.
In only minor manner will the
Government under the new housinl
bill, risk its own credit. The bill con-
templates an expenditure, for instance
Of at least 81 ,000, 900 900 for the reno.
vating-or for what is now more mod.
ernisticaly called the "renovizing"
OF homes. But the Government will
underwrite only one-fifth of that 81. :.
600 100000. Its risk, its liability. i
limited to 5000 900 900. The risk anc
liability involved in the remaining
$500 200, 600 is to be borne by banks
trust companies, mortgage companies
building and loan associations anC
~S~% @<AA<AAA~AnA AAAotAtdlAOllo
Moreover. when the bill takes ur
the problem of making home mort.
cages once more become attractive
investments and when it resorts to the
device of mortgage insurance" il
makes that device a mutual" one
That is, it organizes the private lend.
erS into a cooperative insurance o.
themselves against losses. The Gov.
ernment administers the "mortgag,
insurance fund.-" but the fund itsel
is derived from the lenders and tht
firm intention is that the fund shal
be self-supporting.
1t thereupon becomes possible foI
an industrial dignitary like Mr.. Levi.
H. Brown, president of the Johns
Manville Corporation and chairman
OF the asbestos industry code author
ity, to have a sigh of relief and ever
OF admiration. He says:
1T Is true that the Government
under this bill is going to organize
mutual insurance corporation. but tn
plan IS worked out on an actuaria
basis SO that this mutual insuranc
corporation could, at some later date
be taken over as a private institution
and operated in the same way that
mutual life or mutual fire insuranc
company is operated now. And thi
plan does not provide for the appro
priation Of vast sums of Government
money and the further unbalancing o
the budget. Nor does it put the Gov
ernment into the construction bust
ness or into subsidizing the buildinl
of uneconomical housing projects
The bill is designed to induce tn,
building of homes with private capita
and the payment for them out of fu
ture private savings. In my belief, /
is the greatest single step that can b.
taken toward recovery"
Very well, then. Here is a bill tha
begins to reverse the tendency-ini
tiated by Mr.. Hoover and accelerate,
for a long time by Mr.. Roosevelt
toward recovery by more and NOR
public finance. Here is a bill tina
endeavors-with, Of course, a govern