The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1936-10-08

a Billion mately one billion
dollars. He asked
the banks and other people having
idle money to purchase four hun
dred millions in new government
bonds and at the same time asked
them to extend loans totalling about
$3.50, 600, 900 that matured on Sep
! TENDER Is. The maturing securi-
ties, of course, do not take new
money out of the money market,
but it is borrowing just the same
despite the technical name of re-
funding.
The Treasury's action in borrow
ing such a huge sum at this time
came as surprise. To many finan-
cial authorities, in fact to most
of them, there was no need for bor-
rowing additional funds at this time.
1t was circumstance in which, as
far as most observers could Sc, the
Treasury had idle money in suffi-
cient amount to meet the needs
for the next several months.
Aside from the fact that the Sec
retary's action results in an increase
in the public debt by the amount of
new money borrowed, it is a matter
deserving more than passing atten-
| ton - much more attention than
Treasury borrowings heretofore.
The reason is that the administra-
ton is again piling up in the Treas
ury huge amount of idle funds. AS
nearly as I can calculate the re-
suits of the September borrowings,
the Treasury will be left with a
mere 81, 100000 in unused cash. Of
course, to the Roosevelt admin
istration which has dealt only il bill
lions, this sum may not appear i'm
portant. Mr.. Morgenthau said it
was necessary to have these funds
available because of unsettled con-
ditions" abroad. But that answer,
to me, does not suffice.
I recognize that most people find
little interest in discussing Treas
ury financial policies. l know from
the type of letters that I get from
those who do me the honor to read
these reports that the subject of
Treasury finance seems far re-
moved from anything in which they
can possibly have an interest. But
Notwithstanding those facts, / feel
the matter should be discussed in
every section of the country because
it directly touches every taxpayer;
and that is of vital Importance.
Here is how it affects the taxpay-
er and when l refer to the taxpayer
I refer to every individual in this
country, because all of us are pay
ing taxes either directly or Indirect
ly: When the Treasury arranges
a cash balance. it provides funds
upon which the various government
agencies may draw in accordance
with congressional appropriations.
To that extent it is like money
you deposit in a bank. But other
wise it is quite different The cash
balance in the Treasury lies idle.
It brings no return, no profit to any,
body.
But it is important to remember
that there are only two ways in
which the Treasury can get money
for this cash balance, namely, by
borrowing or by taxing you and
me- During the Roosevelt admin
istration the Treasury has borrowed
about $2.12 for every dollar it has
collected in taxes. The result is
gigantic public debt.
There is another result, however,
that is not as apparent to individu-
ais. Since the Treasury is borrow
ing money it has to pay interest on
what it borrows. You and l are
paying this interest in the form of
additional taxes. So, therefore, not
alone are we being taxed for the
money that is spent and which must
be repaid, but we are being taxed
to pay the interest on idle funds.
1t is true that the government
interest rate is now probably as
low as it ever has been in history,
but the fact remains that every dol
lar that is borrowed still costs the
government about ga per cent in
interest. Multiply that amount by
the borrowings and you can see for
yourself how many dollars in taxes
are absorbed in the payment of in
terest alone. And when one thinks
that this is continuing process,
that these funds are being put to no
use whatsoever, the question gets
outside of the realm of politics. 1t
becomes a question of common
sense, or lack of it.
Mr.. Morgenthau's reference to I'M
settled conditions abroad directs at
tention to what is happening in Eu-
rope and Asia and the link that ex-
lists between those conditions and
our own.
President Roosevelt lately has
said on several occasions that he
did not like to be
Conditions away from Wash
Abroad ington more than
four or five days
at a time because of those unsettled
conditions. Every one knows that
our foreign friends are rearming.
believe every one realizes as
well, however, that each of those
foreign nations is in a position
where it cannot initiate hostilities.
At least, each one is in position
where very great provocation must
occur before it can justify the start
ing of war in the eyes of nations
like our own.
Any one who wishes to examine
those unsettled conditions will find
at the very bottom two types of
propaganda. One comes from Rus