The Washington times., 1934-01-05
ROOSEVELT HAS
ACE IF MONEY
|SREFUSED
Reneging of Bankers May
Mean President Will
DeVaIue Dollar
By GEORGE r. HOLMES

BY GEORGE r. HOLMES
Congress was still half-stunned
today by the revelation that the
Federal budget is over $1,000, ,000,- =
900 "in the red," that Federal ex-
penditures this year will exceed
SIC, 1000, ,000,0 900, and that the ma
tional debt in 1885 will reach an
an-time high record Of nearly
1000, ,000, 900.
This "brutally frank" picture of
Federal finances was placed be-
fore Congress by President Roose-
welt in submittire the greatest
time budget in the coun-
try's history. The phrase "brutally
frank" is his own. It staggered
Democrat and 1epublican alike.
Coming From Where?
After the first shock Of surprise
and it was a surprise to most
MEMBERSHIP Democrats were in
clined to be philosophical about 1t
They shrugged it off by saying 1t
we5 the cost of national recovery
and they stoutly asserted the
country is recovering.
At the same time, the Republi-
cans felt that President Roosevelt
has at last given them an issue
upon which they can go to the
country in the approaching con-
greSsional elections-the issue OF
Democratic spending.
| m ~ niInn Tho r1JJncfiNNo
"Where is the money coming
frOm?"
To that question there were
various replies, depending upon
the particular slant of whoever
was replying.
Borrowing Needed
President Roosevelt frankly in
formed the Congress that in the
next six months the Government
must borrow approximately $10,-
900 ,000,0 900, of which $4,000, ,000, 200
is new money and $4,000 ,000.-
900 to finance maturing securi-
ties.
The manner in which this is to
be accomplished was not dis
closed, but there was no intima'
ton that other than the usual
methods will be pursued. e.,
public offerings of Government
securities.
Many Republicans privately ex.
pressed doubt that the public.
even though business is getting
better, is in position to absorb
ten billions in new Government
obligations during the next six
months. Some Democrats were
inclined to agree with that view.
Ace in the Hole
However, it was pointed out
that the President still has a cou-
pie Of aces in the hole. If the
bankers hold back in the re-
finance program, if they insist
upon interest rates which the Ad-
mln1stration considers unjustifi-
ably high, or, in short. if there is
any attempt at "gouging," the
Administration has an unused
weapon at its command.
This weapon is the so-called
Thomas amendment, under which
the President can, if he chooses,
oeValue the dollar down to so
cents gold and issue $4,000, ,00O, ZOO
IN new currency. Thus far he
has not used this power.
r3,6OO,OOO,OOO Profit
BY impounding in the Treasury
all the gold now held in the Fed
eral Reserve Banks and devaluing
the gold content Of the dollar so
per cent, the Government would
net !. clear profit of about thirty.
six hundred million dollars in
terms Ct the revalued gold,
Should this procedure be
adopted, it was pointed out, and
should Mr.. Roosevelt use this pre-.
rogative of issuing $4,000, ,OOO, 200
In new currency, it would provide
the Treasury with nearly the 81,
0OO, 100000 which the budget is
l.. the red.
That it would constitute infla
ton is conceded, but those who
favor this course assert it would
be sound and modest initiation
and not Of the type to seriously
disturb the country.
Some believe the President al.
ready has the power to order the
1mpounding of gold in the Treas.
ury without resort to Congress for
additional authority.
Sales Tax Grows
In any event, a bill giving him
explicit powers in this respect will
be introduced in Congress shortly
and it can be passed whenever
the word is given by the White
House.
Meanwhile, the true picture of
the Governments finances has
centered interest more than ever
upon the question of taxes.
Liquor taxes are now before the
House and will speedily be en-
acted. Revision Of the income tax
law is to follow. with increases in
all brackets almost certain, and
substantial increases in inherit
! ance taxes.
Advocates Of a general manu-
1acturers' sales tax found some
comfort in the thought that the
Governments desperate need for
revenue is inevitably advancing
their cause.
More and more people in Con-
gress, Democrat and Republican
alike, are coming to the view that
eventually the Government is 60
| ing to have to come to the general