Evening star., 1937-11-11

t0ru of the Treasury Moroenthdu be-
fore the Academy of Political Science
In New York last night follotDs:
I welcome the opportunity to dis
cuss before the members and guests
of the Academy of Political Science
the subject of Federal spending and
| it's relation to the balancing of the
Federal budget.
Nineteen years ago tomorrow we
signed the armistice ending the
World War. That war was enor-
mously costly in human values, and
it was enormously costly In material
values. In the two years between the
middle Of 1917 and the middle of
1919. the Federal Government sus-
tained net deficit Of $22, ,000, 900 900.
During the past four years, this
country has been engaged in another
war. This time our enemy was a
great economic disaster. In this war,
we fought with jobs and with dollars
to save farmers from losing their
farms; to save home owners from los
ing their homes; to give not only
bread but work to the unemployed;
to increase the security OF jobs, prop
erty values, and business profits, and
to bring order out of chaos in our
economic system
This war, like that other war, re-
quired a many-sided campaign under
| intelligent and courageous leadership
"a leadership that was magniflcently
supplied by President Roosevelt.
War on Depression
Required Great Spending.
Finally, this war, like that other
war. required a large spending pro-
gram. This program. plus the spe-
cial needs arising out of the great
drought and the prepayment of the
soldiers bonus, necessitated net out
lays during the four years ended June
80, 1887, of some $4,000, 900 in
excess of our receipts.
Of course, it is easily possible to
criticize some of the detailed uses Of
the relief funds. Let us concede that
there was some waste. In any expen.
diture program of such magnitud
this is inevitable. But, contrasted
with the human and material values
at stake, such wastes as may have
occurred shrink into insignificance.
We deliberately used an unbalanced
Federal budget during the past four
years to meet a great emergency.
That policy has succeeded. The
emergency that we faced in 1888 no
longer exists.
am fully aware that many of our
problems remain unsolved. am aware
that there still remains a considerable
volume Of unemployment; that the
speculative markets have recently been
under severe pressure; and that our
business indexes have recently shown
a declining tendency. I am further
aware that some persons contend that
another great spending program is de-
slrable to ward off the risk of another
business depression.
Movement Toward
Balanced Budget Prescribed.
claim no prophetic insight into the
future. But, after giving serious and
careful consideration to all of these
and other factors, have reached the
firm conviction that the domestic
problems which face us today are es-
sentially different from those which
faced us four years ago. Many meas
ures are required for their solution.
One OF these measures, but only one,
in the present juncture is a deter
mined movement toward a balanced
budget
Early in 1888, after three years of
progressive deterioration, our whole
economic mechanism was demoralized.
Under these conditions, there was no
agency outside of the Federal Gov
ernment with the resources and the
courage to bring about business re-
vival.
Today the situation is greatly
changed. We are now nearing the
end of one of the most active years
in the business history of this coun-
try. On the whole, this high level
of activity has been of a healthy
character-not of the character that
usually marks an unhealthy boom
and precedes serious depression. The
present situation is not characterized
by the existence of huge inventories
high interest rates, over-extended
credit positions, or great surpluses of
housing and capital equipment. We
have not reached the stage of full.
employment of our productive re-
sources. On the contrary, from al
these standpoints, conditions are fa.
vorable for a continued increase in
the level Of business activity.
This stands in contrast to the un-
healthy excesses of 1929. 1t stand.
in even sharper contrast to the bank.
ing collapse, the bread lines, the bank.
ruptcies and the general demoraliza.
ton of 1888.
Government Credit
Unimpaired By Spending.
Despite the substantial increase ir
public debt during the past four years
the rror1it of the Fo6oroI Co,,nr,,v,,