Evening star., 1937-01-03
EccIes Calls for. Balanced
Budget to CurtaiI In
fIation Trend.
LELAND URGES WIDER
BASE FOR INCOME LEVY
Chicago Economist Also Favors
Strengthening Of Corporation
Surplus Provisions.
BY CHARLES s. sPEARE.

NEW 1S1Sh, Cdlludly CIV ID q
fair guess that, in his budget message
to. Congress next week. President
Roosevelt will make no reference to q
possible reduction in the Government
debt in the fiscal year 1878.
Chairman Mariner s. Eccles of the
Federal Reserve Board, speaking in
Boston last November, touched on the
subject. Il think" he said then, that
with the powers that are in the Fed
eral Reserve Board, coupled with the
right fiscal policy Of the Government,
first by balancing the budget and then
by using surplus income in times of
prosperity to reduce the Federal debt,
we can stop imitation"
Higher Taxes Advocated.
A more recent advocate of debt con-
traction is the Chicago University
economist, Prof. Simeon E. Leland,
who said in an address this week
The United States must have a period
Of genuine debt reduction before the
advent of the next severe depression
or next war. for which public loans
will be required" He would bring
about debt retirement by an extension
of the base on which income taxes are
calculated, higher taxes in the lower
and middle brackets and strengthen
ing Of the corporation surplus tax.
The prestige of Andrew w. Mellon
as Secretary Of the Treasury has been
dimmed by his concurrence in the rea-
sonableness of the 1929 boom in se-
curities and his failure to use the
powers of his Office to check its mo-
mentum. He will, however. occupy q
high place in history for his deter
mined and successful efforts to slice
of a substantial portion of the debt
Of the United States created during
the war years. Credit is also due his
aide and successor, Ogden L. Mills.
In the early months of 1919 the
debt was over s26 900 .00O, 900. At the
end of 1880 it had been whitfield down
to $4,000. 100000. 1t is certain that
this operation has aided the United
States Treasury in floating the depres-
sion-time loans by holding the debt to
q reasonable ratio with national wealth
and national income.
During the 1880 period Of debt
retirement national income per annum
rose from 1000 100000 to $83, 3,o00,-
600, 900 and dropped to $68 600, ,000, 900.
In 1892 it was below $40, ,000, 600, 900.
In 1886 it had recovered to above
$50 .O00, 900 900. A figure Of $67 ,000,-
600 900 is estimated for 1887.
Foreign Payments Cut Debt.
Mr.. Mellon took full advantage Of
the great period of prosperity in the
decade after the postwar collapse to
extend the area of income tax respon-
sibility and to raise the taxes. After
1924 the normal tax on the first $4,000
of taxable income was doubled. The
total income and profits taxes, 1919
80, were over $4,000. 100000, or the
equivalent of the debt reduction.
However, the sum of the one was not
required to effect the other. For. dur
ing this era, the foreign debtors to
the United States were making hand
some annual payments Of interest and
principal. These went q considerable
way to liquidate our Government debt.
The national income in 1919 was
approximately that estimated for 1887.
In the former year the income taxes
collected were 81 1,269 ,o00,o 900. In 1928
they were 81 ,2o4 900, 900. In 1885 the
amount was $685., 100000. For 1886
the greater portion of the anticipated
income increase will be from levies
that were non-existent In the earlier
period.
The first step toward a correction
of the present Government debt situ-
alton is a balancing Of the budget.
On this point, what President Roose-
welt says next week will be important.
The indications are that relief de-
mands. in spite of business recovery,
will defer such balance for another
year. Accordingly, in period Of ris-
ing national income the total gross
debt of the Government will probably
increase, if only slightly. and, for
political reasons, the new and possibly
transient prosperity will not be taken
advantage of to tax more people by
lowering exemptions and. as Prof. Le-
land has suggested, increasing the
unit Of taxes in those brackets which
include the largest number Of mod
erately prosperous American citizens.
Shifting Of Debt Expected.
There is likely to be q shifting OF
the debt in the next few years and
less concentration Of it in institu-
tional circles; also considerable alb
sorption Of it by new agencies Of the
Government. These changes, how
ever, are relatively unimportant COM
pared with the necessity for actual
and not bookkeeping reduction.
This IS the time to begin seriously
to map out q program by which pres
ent outstanding debt will be Cancelled
and provision for it made q definite
year-by-year obligation. There is .
disciplinary effect in this that Is also
desirable nationally.
(Copyrisht. 1887. by the North American
Newspaper Alliance, Inc.)