The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1934-11-26
BALANCED BUDGET
HELD ANSWER TO
! INITIATION THREAT
Economist Declares No One
Wants Il But That Action
May Be Forced

Wants It But That Action
May Be Forced
BY WILLFORD 1. KING
Professor Of Economics
New York University
Are we at present menaced by
wave Of initiation which, If it occurs
will wipe out the holdings of all cred
itors, wreck our industries. reduce tn
salaried class to perjury, and, in short
play havoc similar to that wrought
decade ago in Poland, Austria, ane
Germany? This is a question which
today, is in the mind of the typica
serious minded American. What art
the facts?
One thing seems to stand out clear.
~. Practically no one in position
of authority desires initiation of the
type described. Certainly President
Roosevelt is strongly against it. His
advisers have the same attitude or
the question. It would be hard to find
q single member Of either house OF
congress who is not bitterly opposed
to anything of the sort.
OF course, many members, perhaps
a majority, favor reflation-that Is
raising the price index to the 1926
level There is nothing radical in
this idea. It represents merely an
attempt to secure equity between deb
tors and creditors. The closest ap-
proach to this ideal would be attained
II prices were restored to the weighted
average level at which existing debts
were contracted. Whether or not the
1926 level approximates this ideal can
be determined only by a careful sta
tistical investigation. One thing Is
certain. namely, that If - and this
Is very large if-prices Of finished
products could be raised materially
without changing wage rates per hour
or per piece, employers would find it
profitable to hire labor and unem-
ployment would largely disappear
Some Of the advocates OF relation
probably favor it because they believe
it will help restore employment. More
Of them presumably think mainly OF
aiding unfortunate debtors. Few,
indeed, of the reflationists are infla-
tionists. It is, therefore. safe to say
that initiation, If it comes, will not be
due to the actions Of persons seeking
monetary changes.
Growing Debt Is Menace
Wherein, then, lies the menace Of
initiation? The answer Is: In the
unbalanced budget. Each month the
nation Is spending far more than it
receives in taxes. Each month, there
fore, the national debt is growing
larger. The spenders at Washington
now talk of billions as unconcerned-
ly as their predecessors of a few years
ago talked of millions. For example
q question now being seriously dis
cussed is whether to spend twelve OF
sixteen billions in house building
program. As yet, the nations credit
Is unimpaired. The advocates OF
spending contend that its credit will
be equally strong when the national
debt climbs to fifty billions. Perhaps
Who knowS7 What we do know is
that, In the past, nation after nation
has gaily pursued the course OF allow
Ing expenses to run far ahead of in
come and that history records but
few such instances In which the end
has not been bankruptcy. Are We i'm
mune to the forces which have
dragged down the credit of other ma
lions?
Suppose that we are not. What
will be the result? The answer is
that. some day, the market for Unit
ed States securities will collapse to
such an extent that neither cajolery
nor threats will induce buyers to take
the bonds offered. At this time the
government will presumably have out
standing vast commitments for build
ing, for relief, for salaries, and fol-
other purposes. What will It dot
viii 1t levy more taxes? The con-
gressmen that vote for such q pro-
gram will see certain defeat staring
them In the face. Will the govern.
ment cut salaries. stop its disburse-
ments for relief, cancel its contracts
To take this course will mean to In.
cur the deadly enmity of millions Of
voters. Will It, instead, do what
other governments have so often done
in the past under similar circum.
stances. print money to pay its bills
Time alone can tell.
Printing Il No Solution
Past experience indicates that The
printing Of money rarely, If ever
solves the fiscal problems Of govern
ment. AS more money Is printed
prices and wages rise, thus making
necessary increased government ex.
penses. But larger expenses call fol
still more money. and the presse!
are speeded up. The end Is too vel
known to require comment.
Many Of those who fear initiation
feel that the best way to avoid it Il
to return at once to the old wobbly
depression breeding gold standard
This proposal seems to be based upor
tho assumption that initiation will b.
undertaken acknowledgements
which, g has been shown, IS highl!
Improbable. In reality. initiation, 1
It comes, viii probably be in respons,
to an emergency most unwelcome ane
not really expected. To resolve tina
We will, under such circumstances
adhere rigidly to gold standard,
about as helpful as deciding upon tn
kind Of dress to wear and the Ell
quette to be followed when an earth.
quake occurs:
Now let US return to the origina
query: Are We menaced by infla'
ton? There can be but one answer
We decidedly are and will continue
to be until the budget IS balanced
When that feat Is accomplished, thu
menace will disappear. The funda'
mental question therefore. is: WheY