Evening star., 1936-10-05

within it, income, but there are
periods when 1t Is far more necessary
to increase the sources Of that In
come than it Is to balance books. The
Governments position is not that Of
the small household on . hxed budget.
It u rather that Of . very great
business. And great businesses do not
attempt to balance their budgets an
nually, but to balance them over the
business cycle, which includes boom
and depression. In times Of prosperity
they retire their debts and build up
reserves. In times OF depression they
use UP their reserves, borrow money
to keep the plant going and very often
unbalance the books.
The Lesson From Abroad.
When the opposition attacks the
theory of Government spending in
time OF depression, it stands. it
seems to me. on very weak ground.
And it is positively misleading to
point to other countries and say that
America stands far down the list
among nations which have recov-
cred. For nowhere has recovery been
brought about, except by measures
very similar to those taken by PreSi-
dent Roosevelt-devaluation, debt ad-
justment, aid to the lower strata Of
income receivers, and increase by
Government policy Of the amount Of
bank credit in circulation. There Is
certainly some relationship between
the fact that the countries which
have remained to date In q state Of
defiation, and, therefore, depression.
are those which have stuck to gold
and which are now, universally, leav-
ing 1t. And that those countries
which have escaped the most serious
economic upsets are those where
social insurances and o generous re-
lief program have kept even the
lowest economic groups Of the popula-
ton consuming.
II the opposition abandons Its at
tack on the theory Of spending dur
ing depression, and concentrates on
how the money was spent, they will
stand on much firmer ground. II q
spending policy, designed to prime
the pump, results in five million vot-
ers coming to consider themselves as
permanent wards of Government; If
q relief policy operates to keep q large
part of the recipients out OF normal
employment even when work oppor-
tunities are opening up; II local gov
ernments are encouraged and enabled
to pass on to the central authority
the responsibilities which are their
own, with the consequent breakdown
Of the most essential Democratic
units: II huge bureaus are created,
additional to normal governmental
agencies, which have q vested inter-
est in their own growth and contin-
uanee, then the spending policy can
have extremely adverse social and
economic results.
Issue Now Is Imitation.
For there comes q time, and indeed
that time is already here. when the
pump-priming process has fulfilled
its function and must be checked.
There comes a time when not the
deficit but the surplus Is the issue.
That surplus can either be used to
begin retiring the debt and to reduce
taxes, or it can be used to maintain
and justify the present high level Of
expenditures.
Also. the great amount Of bank
money created by the Government Is
now pressing out into private spend
ing. 1t has been estimated that the
dividends distributed to avoid the
corporation tax will amount in the
first quarter to between 81 800 900 900
and $4,000, ,000, 900. That Is about as
much as the whole bonus. The issue
is no longer defiation: it Is imitation.
And the danger is . return to the
orgy Of 1929, greatly enhanced.
The Government can check this
tendency by its budgetary policy, and
by using the instruments which have
been created for the purpose. Let us
hope that 1t does. But it will not be
politically so popular to check an in
fiation as it has been to arrest the
opposite proceN.
tCopyrisht. 1881