Evening star., 1935-10-15
The Spenders.

The flScal pollcy OF FreSIueii' i'oo''
welt and his revised budget statement
were last night taken to pieces by an
expert on the subject, Lewis w. Douglas.
Until year ago. Mr.. Douglas was dlrec-
tor of the budget for the President. The
spending policies OF the Administrators
however. became too much for Mr.
Douglas to stomach. He resigned.
Sneaklng in Philadelphia, Mr.. Douglas
declared that the Presidents revised
budget which undertook to show re-
duction in this years estimated Gov
ernment deficit by about $l,25O oO0,O0o'
did not in reality show that the Presl-
dent had abandoned his policy. That
policy, according to Mr.. Douglas, is such
as to drive the Nation into bankruptcy
or into wild currency imitation, or ooth.
Out of the revised budget, which
seemed to promise decreased denclt
ano reduction of current expenditures
for the present fiscal year by S75oOoo,-
900, as originally estimated, Mr. Douglas
dug the fact that the revised buoget
estimates, when compared with actual
exnenditures for the last fiscal year,
showed an increase in spending OF
s376 1000. The financing of the Gov
ernment deficits, the former budget oi-
rector asserted, was accomplished by
methods both insidious and deceptive.
The New Deal spenders may not be
inclined to take seriously the criticisms
of Mr.. Douglas. He probably made
similar criticisms before he finally took
himself out of the Roosevelt admins
tration because of its fiscal policies.
They are founded on such old-fashioned
ideas as that it is impossible for an
individual or a nation to spend itself
out of debt and that balanced budget,
with the expenditures equaled or very
nearly equaled by the receipts, is
prime necessity for stability either in
a family or in nation.
The spending advocates will regard
MIR. Douglas attack on them not at all.
It is better to spend with smile than
to save with long face. Or is it? The
manner in which the administration
has continued to finance its huge ex-
penditures, despite deficits running into
the billions of dollars, is laying the
basis for ultimate bankruptcy Of the
banks of the country. Involved IN this
method of financing deficits is the
boasted increase in bank deposits. AS
explained by Mr.. Douglas the process
scarcely seems to be admirable. The
former budget director pointed out that
OF the Government obligations issued
during the past two years approximately
eighty per cent have gone to CONNER
cial banks. And the increase in bank
deposits has paralleled almost exactly
the increase in bank holdings of Gov
eminent obligations. The process as
described by Mr.. Douglas, is both SIM
pie and insidious The Government
sells it's obligations to bank and re-
ceives deposit slip from the bank, out
of which the Government pays its bills.
The Government check used to pay the
bills comes back eventually for deposit
either in the original bank or in some
other No wonder, as Mr.. Douglas has
said, the bank deposits have increased.
Only by Tightening the Government
purse strings, in the opinion of Mr..
Douglas can disaster be averted. Once
determined effort has been made to
curtail expenditures and to bring the
budget into some semblance of a bal
ance, the threat of wild currency in
flation will be avoided. Mr.. Douglas
realizes that from New Deal throats
will go up chorus: will you let the
people starve?" That, of course, Is not
Mr.. Douglas idea. He would conserve
the Governments resources, which come
from the people, for direct relief and
cut Government expenditures for work
to those employed on works of value
With the threats against business and
the threats of currency imitation re-
moved, the country will advance, he de-
clares. 1t is more humane, according
to Mr.. Douglas, to adopt a sound fiscal
policy than it is to force people into
bankruptcy and imitation, with their
attendant evils.