Evening star., 1936-02-09
Revenue Requirements
and Initiation
BY Otuen L. Scott.


once more an answer to the questions
that some time must be answered: Who
is going to pay for the New Deal? And
when is the New Deal to be paid for?
The order from Congress to pass out
$4,000 ,000, 900 worth of Government bonds
to veterans and the order from the Su-
preme Court to give up $500,000,000
year in processing tax revenue combined
to give Congressman bad case Of polit-
ical jitters.
They thought that the President now
might crack down with a demand for
sweeping program of taxation to raise
enough dollars to meet the added bills.
Printing press enthusiasts took advan-
tage of the opportunity to jump in with
their currency expansion plans. Lines
began to be drawn for the eventual big
battle over the question of cutting ex-
penses or paying the bills.
But the President has acted quickly
to throw the main fight ahead for at
: least another year-until his second
term, or the first term of his successor.
He observed that actually the bonus
payment added only about 100000. 900
year to the Treasury burden as a result
of payment now instead of in 1915. EN-
phasis was placed on the only" A
relatively minor adjustment of taxes
could provide that revenue. Re-enact-
ment of processing taxes on a broader
base as "excises" would turn the trick to
meet the problem raised by the Supreme
Court.
This means that the country will float
along on borrowed money for the re-
NDSN, ,rlaV- @fk kI14 1-AA -
banks finance huge relief expenditures
and the billions for the bonus. Then
the real test could come in the 1887
session of Congress.
AS result, the following conclusions
can be drawn:
l. There will be no currency imitation
during this year at least. Inflationists
are active in both the Senate and the
House, but the chances are that there is
more noise than substance to their
clamor.
In the Senate, the Committee on Agri-
culture is suggesting that President
Roosevelt should, first, use the Federal
Reserve system to increase the currency
in use; second, use his power to print
So 900, ,000,000 worth of greenbackS; third,
devalue the dollar some more by cut
ting its gold content again; fourth, issue
100000 worth Of new currency
against silver bullion in the Treasury;
fifth, buy 100000 more ounces of
silver and then issue currency against it
at $129 an ounce.
y X \ X
About $8,000,0 ,00O, 900 worth of currency
expansion is wrapped up in that plan.
How would these Senators use the
money?
First, they want to pay all Govern
ment bills, including bond maturities, in
the printed cash, using about one billion
a month. Second, they want to pay the
soldiers bonus in new money. Third,
they want to pay bountieS to farmers in
the newly printed currency.
Mr.. Roosevelt could do all of the
things recommended by the Senate COM
mittee without getting new legislation.
The House inflationists are suggesting
that, in addition to the ideas of the Sem
ators, another should be added to print
So 600, 100000 worth of greenbacks to
reflnance farm mortgages. How many
more billions would be needed to re-
finance city mortgages has not been
revealed.
But in the face of the imitation drive,
1t can be said that the President will
stand out against the program getting
attention in Congress.
X X
Second, there will be no general tax
revision and no important tax increase
during the present session Of Congress.
Mr. Roosevelt wants taxes to take the
place of the now dead processing taxes
and he wants about 100000 900 more to
meet the bonus carrying charges, but he
is not intent at this time on finding new
revenue sources sufficiently broad to
bring the national budget nearer
balance.
However, for the future, the following
tax changes are under study:
First, lowered income tax exemptions
and higher normal and surtax rates.
Second, new inheritance taxes. Third,
general manufacturers sales tax.
Fourth, excise taxes on farm products.
More will be heard of these in 1887; not
so much in 1886.
Third, there will be no drastic curtail-
ment in any kind of spending during the
present year.
Rather, outpourings from the Federal
Treasury should reach an all-time peak
except for one war year-during the
next 10 or II months. Economy is not
in the lexicon of a campaign year.
Then why, if Mr.. Roosevelt is setting
his face against currency imitation, is
there continued concern about the future
of the dollar? What is there to make
impartial authorities on finance, both in
this country and abroad, say that the
President may not be able to get this
country back on an even keel financially
without first facing currency crisis?
The answer is that President Roosevelt.
in one of his experimental moods, played
with the fire of currency manipulation
and, like many others who have done
the same thing in the past, is unable
readily to combat the imitation flames
that result.
The President accepted the theories OF
currency manipulators and now finds it
difficult to argue effectively against
them.
On the first occasion, Mr.. Roosevelt
fell in with the gold magic OF Prof.
George F. Warren, farm economist OF
Cornell University. He engaged in the
hocus-pocus of gold buying in the ex-
pectation that prices would rise auto
matically as a result and the country
would emerge from the depression.
Today the President is completely un-
sold on this experiment.