Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-07-07
New Deal Preparing
For Heavy Spending
By OtUen l.. Scott.

President Roosevelt has started to Shift
$500 900 persons from the dole to the
Federal pay roll To be prepared for
meeting the regular Saturday night pay
off, he needs big checking account.
The task of keeping the Federal bank
account we'll filled falls to Henry
Morgenthau, jr., Secretary Of the Treas
ury He has had it trimming through
out his tenure. His idea was to have
enough money always on hand to meet
any possible contingency. But the New
Deal, in the past, has consistently failed
to spend as much as planned. AS re-
suit the Treasury was forced to pay in
tereSt on money that 1t really did not
need.
Just about half the money raised by
the Secretary Of the Treasury comes
from taxes of various kinds. In the
fiscal year that just closed he took
in about $500, 100000 from these
sources. That was enough money to run
the regular Federal Government. pay
interest on the Federal debt and retire
nearly $500, 100000 Of Government bonds.
But besides that money he needed
another $4,000, 0O0, 900 to pay for what
now are known as emergency" Govern
ment expenditures. Mr.. Morgenthau
went out and borrowed these billions.
They are the billions that cause con-
Germ over New Deal spending policies.
During the fiscal year that ended July
l, 1884, Mr. Morgenthau had borrowed
over So, 800 100000. Now he has spent
another three billion more than he has
raised through taxes and Mr.. Roosevelt
thinks that four more billions will have
to be borrowed in the fiscal year just
starting. Uncle Sam is living beyond his
income to that eXtent-an amount that
will exceed $40 900 900 900 in three years.
Many people are worried about the
credit Of the Federal Government.
Treasury officials do not share that
worry. The reason is that they are del
uged with offers of money every time
they offer Federal promises to pay in
return for 1t.
Governor Eccles of the Federal Reserve
Board asserted not long ago that the
Treasury could borrow money for short
periods more cheaply than it could print
that money in the form Of dollar bills.
In other words, IL was cheaper TO borrow
money than to print money.
If market prices are any gauge. the
Federal credit today is the best in the
world.
But Mr.. Roosevelt frankly admits that
this credit will not always be so highly
regarded if the Government is forced
to continue to spend twice as much as
it takes in. The problem Of Mr., Morgen-
thau, so simple now, later might become
most difficult.
What, then, is the prospect for an end
l. . IaRpito Ioto
| in the future?
An answer to that frequently asked
| question is impossible to give Mr..
Roosevelt is just starting to spend four
billions to create 100000 jobs. Some Of
his leaders in Congress are saying that
year from now they will need to vote
! four more billions to continue the jobs
that are being created. What happens
the year after that is for the future to
| tell.
Before the New Deal came into Office.
| billions of dollars were on the way out
| through the Reconstruction Finance
| Corporation. This money largely was
! in the form of loans.
! When Mr. Roosevelt took over the
spending job, billions of dollars con-
tinued to flow out through r. F. c. loans,
| lions of direct spending for relief, and
new billions of loans for public work
projects.
But today the Reconstruction Finance
| Corporation, instead of being a net
lender, is paying money back to the
| Government, and P. w. A instead OF
| expanding its loans, is preparing to fold
! up gradually. In other words, more than
| billion dollars of the 1884 deficit was
! in the form of loans a large part of
which will be repaid reimburSing the
| Treasury. Another billion was in the
| form of loans through P. w. A, part of
which will come back.
| But in the 1855 fiscal year deficit, none
| of the deficit was attributable to r. F. C.
| loans and smaller amount to P. w. A.
| loans.
In the 1886 fiscal year deficit. just
| starting to accumulate, nearly all the
money that is being paid out is going
| for good. 1t is being spent, not lent.
There is something else that officials
consider significant. They point out that
| the New Deal farm program is just
| about paying for itself. The r. F. c. has
begun to earn money from its banking
operation and no longer is user of
| new money. The Home Owners Loan
| Corporation and the Farm Credit Ad-
| ministration are carrying their billions
of loans without much expense to the
Treasury N r. A. involves scarcely
drop in the bucket Of expenditures.
Public works are not to involve the
spending volume that they did.
Now that the New Deal experiments
have been tried and much of the shout
| ing has died down. there remain the mil
lions of persons without jobs, needing to
be cared for by the Federal Government.
| The most reliable figures available show
that there are more jobleSs individuals
in the United States today than there
were in November, 1888, and that there
has been a net increase in recent
months.
Relief rolls, normally declining sharply
| in the Spring and early Summer, this
year have remained stationary, or nearly
so. All the pressure that the admins
tration was able to apply in commun-
| tiles throughout the country was in
| effective in squeezing down the size Of
| the relief problem.
Billions have been spent, N. r. A. has
been tried, P. w. A. has been tried, the
farm experiment has been applied,
| money tinkering has had its fling. yet
relief rolls remain not far from their
depression peak. And the cost of caring
! for the people on those rolls soon is to
| he higher than at any time during the