Evening star., 1936-10-03
Figuring on the Debt.

lHe du, IHcSc udyS, ID luil oA "oAuo
about the national debt. In Pittsburgh
Thursday night Colonel Knox and the
President were at it nip and tuck, the
Colonel on the offensive, the President
in defense. To hear them talking one
might have concluded there were two
national debts Colonel Knox was talk
ing about one of them while the Presi-
dent was discussing the other. Their
deductions did not agree, nor did the
figures they used. Yet both were right.
The President spoke of an increase
Of the national debt under his admins
tration as being "the net amount Of about
So, 900 600, ,OoO' Colonel Knox referred
to "a Government deficit of about sl4,-
00,00000 since the advent of the
Roosevelt administration AS far as the
actual figures are concerned, they show
a national debt of about $21 600, ,000, 900
when President Hoover left office and
n present debt of about $4,000 ,OOO, ,O0O-
an increase of about $13, ,000, 900 900.
They will tell you," said the President,
that the increase in the national debt is
thirteen billions instead of eight. =
When you are told that the United States
Treasury has thirteen billion more of
liabilities than 1t had in 1893 you should
also be told that it has six billion of in
creased assets to set off those liabilities" i"
The President follows the style set by
other New Dealers in discussing the ma
tional debt, deducting the funds that
have been loaned. by the r. F. C. and
farm and home financing agencies, for
instance, to banks, railroads, insurance
companies, home owners, farmers and
other private individuals or enterprises.
This money, or good part of it, will
be repaid with interest if recovery con-
,tlnues. But the money so loaned still
represents an obligation of the Govern
ment and is part of the national debt
until 1t is repaid and the money is used
to hquidate the Government bonds by
which the money was obtained.
Liquidation of these Government loans
TO private enterprises has already begun.
But the money is not. at present, being
used to reduce the national debt. al
though that was the original plan 1t
Is being used to reduce the years deficit.
An individual who borrowed a thou
sand dollars from bank, using half of
IL TO meet current expenses and invest
ing the other half in sound securities.
might argue that his net Indebtedness
was only $500-although he would have
hard time getting the bank to agree
with him. But when his debtors begin
to repay the $500 and he uses the re-
ceipts to meet current expenses, instead
OF settling his own account at the bank.
MS argument loses whatever merit #
had. And at present that is what the
Government is doing. In this fiscal year
over half billion dollars are anticipated
IN net surpluses by Government lending
agencies. But the money is being used
TO reduce the deflcit-not to reduce the
national debt
Inc President spoke of the increase
from thirty-one billions in 1888 national
Income to f1fty-three billions in 1895. The
ngures are correct. But devaluation OF
the dollar in 1894 means that the ma
tional income today is reckoned in fifty-
innocent dollars (gold) whereas the
income of 1888 was reckoned in 1o0-cent
dollars gold. And a significant figure
In relation to national income is that
whereas Government contributed 8.5 per
cent to total realized income in 1929,
Government today is accounting for
about It's per cent
The Presidents reference to the SOL
diers bonus obligation was somewhat
confusing. THAT payment is now out of
the way and is no longer future obliga-
tion of the Government" he said. But
until the money borrowed to meet the
bonus payment-or to replace other
dollars used for the payments repaid,
the soldiers bonus continues to be a
future obligation of the Government, to
be liquidated only through taxation.
In one short month the momentous