Worcester Democrat and the ledger-enterprise. (Pocomoke City, Md.) 1921-1953, 1937-12-10
Expenditures OF The
Federal Government
Continued from Page ~

payment of about billion each wear
during the twenties. On November S
the direct gross debt of the Federal
Government was the startling and stu
pendous sum of $37,O19, GIT, 6S2.77. In
addition, our Government has guaran-
teed in full the obligations of Is who'll
ly owned Government corporations
and partially guaranteed the obliga-
tions of 10 semi-Government corpora
tions. This contingent liability is ap-
prOximately five billions, and all this
makes the total direct and contingent
obligations today approximately forty
two billions. It is true that this gross
debt is subject to such credits as may
come from recoverable assets and the
ultimate liquidation Of the S5 corpora
lions whose obligations have been
guaranteed by the Government. in
whole or in part. However, an ex-
animation of these numerous guaran-
teed Government corporations dis
closes a ranification of their iabii
ties and assets that confuses the most
experienced economic experts. Years
will pass before the recoverable value
can be appraised and the actual cred
it on the present forty-two billion
gross liability of our Government be
determined.
1 feel completely safe in saying that
the credits and recoverable assets
shown in the Government reports have
been grossly overestimated. Take,
for example, the Reconstruction FL
nance Corporation. The Government
purchased $5OO,OOO of stock and about
$4,000, 100000 of notes Of this Corpora
ton. The stock and the notes are
carried on the Government reports at
face value, leaving the impression that
the total assets represent sound val
ues and will ultimately be recovered
into the Treasury to reduce the public
confidence in the soundness and eff
cheney of the chairman, Mr.. Jones.
However, the Brookings Institution,
employed by the Senate Committee on
Reorganization, recently disclosed that
two and a half billions of the assets
of the r. F. C. was diverted for relief
expenditures and to pay the regular
expenses of other agencies and for
other expenditures, none of which is
recoverable. So today the stock of
the r. F. c. is valueless, and the
notes are not worth more than so
cents on the dollar in recoverable as
sets. Yet only recently the Corpora
ton issued financial statement show
ing and claiming a surplus of one
hundred and fifty millions as of De-
cember 81 last.
Why was this devious and mislead-
ing method adopted by the officials
responsible for recording appropria-
tons? An inquiry from me to high
Budget official brought the response
that the only reason he could assign
was the desire to avoid huge totals
in the regular appropriation bills. Mr..
Jesse Jones, the able Chairman of the
r. F. C. is not responsible for this
confusing statement. I happen to
know that he has been endeavoring to
have the balance sheet, as issued by
the United States Treasury Depart
ment, corrected in order that it may
reflect the true facts. But even Jesse
Jones. as able businessman as he is
cannot collect from Harry Hopkins
money already spent for relief. Eth
appropriated to maintain the integrity
er two and a half billions should be
of the r. F. c. assets or legislation
should be passed to write down the Sc
curities to true value.
The financial reports Of the Govern
ment should be an example of clear
and candid statements such as the
Government requires by law from pri-
vate business, and it Furnishes any
businessman who violates this proper
law by Imprisonment. The complex
ity of the contingent liability of the
Government and the difficulties of
liquidation cannot be discussed in the
limited time of my address, yet we
should realize that the losses in guar
anteed obligations and such losses
are certain to be large-must be met
some day as a Government expense
and either added to the direct debt or
paid by current taxes. The Federal
Government has endorsed with full re-
course the notes Of these numerous
corporations and, like any other en-
dotser, must pay If the maker Of the
obligation fails to pay.
The Twentieth Century Fund, an in
dependent fact-finding agency, says