The midland journal. (Rising Sun, Md.) 1885-1947, 1935-07-19


Mo,,rfe national debt which
was regarded as
large at that time. 1t was only 81
2OO,OOOOOO, but that was sufficient In
those days to cause concern.
y On the first of July, 1895, the trea-
'Sury started a new set of books. This
represented the beginning of new
financial year for the government. One
of the items it had to enter on those
books was a public debt of about $685.
(SOO,OO0,OOO. We of today think that
lis a huge debt and when 1t is COM
pared with the outstanding obligations
of the federal government score OF
years ago its magnitude seems titanic.
When the treasury closed the fiscal
year books on June 30 and counted the
cost Of the preceding IL months of
government 1t was found that there
had been expended roughly $7,3OO,OOO,-
600. In the same period it had col
lected through income and other forms
tof taxes, including duties laid at the
customs houses, total of approx
mately $3,SO0,0O0,000. This means that
IN the last IL months the government
Operated with a deficit of something
over $3,5OO,0O0,O00. In other words,
dts operating costs were virtually dou-
BILE the amount of revenue it received.
This deficit together with the deficit
that was created during the earlier
months of the Roosevelt administra
ton added something like $S,000,000,-
900 to the national debt. President
Hoover while in office added about $4,-
OO0,O00,O00 to the national debt through
deficits in the last two years Of his
administration. So there are two out
standing phases in the financial affairs
of the federal government as it starts
the fiscal year Of 1896, which began
July 1.
! There is bred these questions: How
long can the federal government con-
tinue to spend money like water and
thus increase its public debt, and how
long will the American people continue
to permit expenditures by their gov
eminent in excess of the revenues 1t
collects?
4ucy are TcldlCu QucSllOuS. NclLucT
can happen without the other. But it
seems to me that the time has come
for taxpayers and voters generally to
take note of the condition of the gov
ernment's finances.
Mr.. Roosevelt justifies these heavy
,outlays under the necessities of an
emergency. He contends that when
prosperity returns and business is nor
NAL, citizens will pay their taxes with
out complaint and that these taxes
will be sufficiently large in their total
production to white down the gigantic
outstanding debt. Hence there is at
this moment an urgent need for ex-
animation of the whole tax structure.
This is necessary to maintain the
credit of the United States. If people
doubt or lose faith in government
bonds, the credit Of the government
can be said to be impaired. No nation
of self-respecting people desires that
thing to happen. It has long been a
recognized truism that If a United
States government bond was not worth
its face value, the money we have and
the rights we exercise as citizens like
wise become impaired in value and
benefit.
Careful analysis of government
finances in the last II months shows
that federal revenues
Finances were sufficient to
AnoIvzed cover what Mr.
Roosevelt charac-
terizes as ordinary government costs.
He means by that the expenses of the
regular establishments of government
and excludes all of the so-called emer-
gency agencies, of which there are now
some sixty-odd. This condition reveals
that federal taxes are about the only
item in governmental affairs or in
private business that have completely
recovered from depression effects. Re-
covery has been sufficient to make the
total revenues virtually the same as
those received under the Hoover adj
ministration in the fiscal year of 1929
1880. 1t shows also that Mr.. Roose-
welt has not reduced the cost of ordi-
nary running expenses of the govern
ment as he had planned when he be-
came President.
mentioned earlier a comparison of
the public debt now and in 1916. Let
us take another date, namely, 1919.
At that time the outstanding debt was
94,000,000. The annual interest
charge on that debt was just short of
one billion dollars. Today with a
much larger outstanding debt, the an
nual interest charge amounts to only
$820,000,000 per year.
This seems almost paradoxical but
the answer lies in the interest rate the
government is paying. In 1921 the
average rate of interest calculated on
all different types of government Sc
curities outstanding was 4.34 per cent.
At the present time it is less than 3
per cent So credit must be accorded
the treasury for its gradual reduction
in interest rates. Ten years ago an
effort was made to market securities
at gradually lower interest rates. If