Evening star., 1935-12-02
More Borrowing.

4 On the heels Of President Roosevelt's
statement that the Government says to
the people, You cannot borrow your
way out of debt" announcement is maoe
that the Government is to ask for loan
Of 5000, ,000,0 900. When this loan has been
accomplished, the public debt will have
reached a new and unprecedented high'
approximately s30,50O,000 900.
The new bond issue by the Govern
nent will bring the additions to the
public debt by the Roosevelt admins
tration up to s9, 500 900 900 in round num-
bers. When the President took over the
executive office the debt stood at about
s21, ,OOo, 900 900. most of it growing out
OF the World War.
The President in his Atlanta speech
insisted that the country had passed the
peak of appropriations. 1t may be; but
the peak of taxation is yet to come. The
administration has turned its back upon
q revision of taxes before the presidential
election next year. The President said
Of partisan politics. Taxes, however, have
q way of intruding upon partisan poll
tics. Why should they not? The Gov
ernment which saddles the people with
q heavy tax burden is bound to feel the
weight Of blame. 1t is responsibility
that, in the end, 1t cannot avoid.
Further Government borrowing may
be necessary to meet the running ex-
penses Of the Government-the expenses
Of the various relief agencies as we'll as
the more permanent Government agen-
cies A revival of business undoubtedly
will bring and is bringing in part al
ready, increased revenues to the Gov
ernment. The idea, however, that these
increased revenues will be sufficient to
meet the vast spending program OF the
administration is optimistic, to say the
least And yet that is the prospect held
out to the people in certain quarters.
The banks Of the country are the great
est holders of the new Government Sc
Tcurities. It is to the banks that the ad-
ministration must look for the absorption
OF very large part of the new issue.
The President has said that number
OF great bankers" back in 1888, told
him that the country could stand
5000, ,000, 900 to $4,000, ,OOO,0 900 public
debt. The implication seems to be that
II the bankers feel that way about it,
why should the Government worry and
why should the banks not absorb these
Government securities? OF course, the
money advanced to the Government by
the banks might be advanced to indus
try. 1t cannot be advanced to both.
The result of Government loans, it is re-
ported. has been to shift loans from pri-
vate to Federal agencies.
The banks at the close of the present
year will hold about $16 900 ,000, 900 of the
public debt. 1t will be represented in
Government bonds and notes. In addi-
ton, the banks hold large part Of the
Government guaranteed obligations,
which total $4,000, 900 900, including the
bonds Of the agencies set up by the Gov
ernment to finance home and farm loans.
These obligations of the Government
are held by the banks as assets behind
the deposits of the peoples money. The
maintenance Of the credit of the Govern
ment, 1t is clear, is vital to the banks and
to the people. The heights to which
Government financing may go without
disturbing that credit is a problem of
'<lrst importance. According to the Presi-
dent, great bankers" take the view that
1t may 60 on until the public debt has
doubled its present swollen size. Per-
haps it could, but in the end a pay day
must come. After payment has been
made, what will be left?