Evening star., 1935-10-30
TUGWEL[ BUDGET
SPEECH PUzzL|NG
Confident Estimates Fail to
Jibe With Old Deal
Arithmetic.
BY DAVID LAWRENCE.


Maybe the New Deal is about to
start a department Of official arithme-
tic and maybe it's just little lack
Of teamwork. But on the same day
that Henry Morgenthau, jr- who Is
supposed to be Secretary Of the Treas
ury, was telling the reporters as he
came out Of the White House that 1t
Is "the Presidents budget" and that
he could not, therefore, discuss 1t
and that nothing would be known till
January, the Hon. Rex Tugwell. who
is supposed to be Undersecretary of
Agriculture, was telling an audience
of enthusiastic Democrats at the OPP
posite end Of the country just how
the budget Is to be balanced by 1888.
This bit of confusion Of function
caused no end of gossip here today,
but If Mr.. Tugwell's figures are right,
much will be forgiven.
Mr.. Morgenthaus reticence, or
rather reluctance, to discuss figures has
been disappointing but understand
able, since he will be held accountable
for his predictions by an alert public
in explaining just how the fiscal posi-
ton of the Federal Government Is
going to, work out so that the debt
will be a mere trifle, comparatively
speaking would be the occasion today
for another breathing SPELL of con-
servative JOY were it not for the fact
that 1t is hard to puzzle out Just what
his arithmetic means if the ASsoci-
ated Press has correctly quoted his
speech.
A s6OO,OOO,OO Difference.
Mr.. Tugwell gives the deficit of the
New Deal until the balanced budget
era begins as about Sl1 500 900 900.
when his totals should have been sl2.-
200,oOoO00. He announced, for in
stance, that the ordinary expenses Of
the Government will add up to sl9,-
20o,0O0,000 and the expenses for relief
and recovery may add up to Sl5,000,-
600 900, which. according to Old Deal
arithmetic, should provide a total OF
s34,2OOO 100000 Then Mr.. Tugwell is
quoted as saying that the ordinary
receipts would be s2200o000 900
According to Old Deal arithmetic, this
would leave deficit of s12,200,000.-
600, instead of the Tugwell deficit Of
SI1,600 100000
There's a difference here somewhere
of about $500 100000. which is enough
to pay almost the entire electric light
bill of the American home for
year.
But, supposing Mr.. Tugwell has been
inaccurately reported and using his
deficit of sl1 900 100000, it is interest
ing to note that he promptly subtracts
what he calls the ''recoverables, :"
amounting to $500 100000. This
means that he expects all the loans
made during the supposedly ncom-
petent Hoover administration and the
selfish Old Deal to be repaid at 100
cents on the dollar and help pay for
the New Deal, and that he is also ex-
pecting all the New Deal loans of the
Reconstruction Finance Corp. to be
repaid also at par
Gold Write up" Subtracted.
Anyway. this would leave about
$4,000, 100000, and then Mr.. Tugwell
subtractS the "write-up' in gold, which
amounts to $4,000, 900, ,Oo0 and he re-
marks that from an apparent deficit
Of sll $780, 100000, realistic calcula-
ton comes down to real deficit of
$1,000. 600, o0O"
Now Mr.. Tugwell didn't explain what
this write-up really means or Just how
realistic" it is, for he just called it
"gold-devalution profit" and didn't say
any more about it. Actually, the
Treasury just decided one day that
gold was worth much more than it had
been valued and hence used the famous
'write-up'' system. for which various
public utility holding companies have
been castigated by the New Deal dur
Ing the last few years.
The utilities would decide that
certain property had enhanced in
value and they would justify their
"write-up" on the basis of alleged in
creases in valuation. Somewhere along
the line the investors had their Sc
curities devalued and the over-optl-
nlistic guesses as to true value have
now furnished us with drastic utility
law which restraints the utilities from
ever doing it again. Hence the action
OF the New Deal in writing up" gold
and calling it profits and then using
1t as means Of wiping out debt is a
bit inconsistent, ethically speaking.
Relief Trend Higher.
There is something far more signif-
cant in the Tugwell prophecies about
the size of the next two budgets. For,
taking his table Of figures as having
At least the authenticity which sucil
q prominent New Dealer would be ex-
pected to furnish, even though he
might be for the moment usurping
the powers of the Secretary of the
Treasury, the trend toward lower and
lower relief expenses is emphasized.
II one takes the estimate for the
two coming fiscal years and subtracts
the ordinary expenses. the remainder
would indicate, according to the Tug
well forecast, only $2,300,000,O 900 for
relief and recovery, or less than ST.
15o.oo0,0o0 year. which is very
splendid projection to anticipate.
The latest figures show that the ex-
penses for relief and recovery in 1885
have exceeded 1884 and are running
ahead even at this time when the
President has been announcing a very
heavy increase in Unemployment. Just
what it all means to the future Is i'm.
possible to say, but the Tugwell pre-
diction OF balanced budget in 1888
Is good news, even though it has not
yet been officially confirmed by Sec
retary Morgenthau. For the general
belief is that Mr.. Tugwell would not
have used the figures If the President
had not authorized them and that the
New Deal slogan of the 1886 campaign
Is going to be "a balanced budget by
193s-We planned it that way"
Copyright 1850