Evening star., 1938-05-15
G. O. P. Report on Spending
Halls Early New Deal Theory
House Committee Minority Makes Valuable
Contribution in Analysis and Criticism
of Recovery Bill.
BY JOHN H. CLINE.


n VOW that the New Deal is about to
nj undertake another adventure in
pump-priming at an estimated cost
in all its phases of some $6,000,-
100000, it becomes highly pertinent to
examine the circumstances leading up to
the last experiment in purchased recovery
and the facts underlying its failure
To that end, the Republican members
OF the House Appropriations Committee
have made valuable contribution in their
minority report, which criticizes the pend
ing emergency relief and recovery bill on
several highly significant grounds. After
making due allowance for the fact that the
minority report is partisan document, one
cannot escape the conclusion that it pre-
sents an arresting analysis of pump printing
as means of stimulating prosperity and
challenges the maginations of those in
clined to wonder what the future holds in
store for our national finances
In fairness to the administration it should
be understood that the relief-recovery bill,
as passed by the House, calls for the ap-
preparation of about S25O0, 100000 and
not $4,000, 100000. The whole program. If
carried out as planned, however. will in
volve an outlay approximating the larger
figure
That assumption is based on the authori-
Eation to various agencies to use unex-
pended balances aggregating 5000 900,
Public Works loans of $500 900, ,000 the an
ticipated appropriation Of 5000, 900 900 to
finance the Works Progress Administration
from February to the end of the fiscal
year, which is not covered in the pending
bill; the authorization of business loans by
the Reconstruction Finance Corp aggre-
eating $l,500000,0 900. the proposed authori-
zation Of $300,00O0OO additional bonds for
the United States Housing Authority, an
additional s10O000,00o for highways s5O,-
10000 more for the Civilian Conservation
Corps and s3700o,000 for expanded flood
control work
Diminishing Returns
Those figures treated in detail NAV con-
vey little to the man who walks uptown
because he can't afford cab fare, but they
add up to about S6,0O0,0oO,00O.
A substantial portion of it, of course, is
to be disbursed in the form of loans. not
gifts Many of the loans no doubt will be
repaid, but the amount the Government
can reasonable expect to get back depends
on what the future holds for American
business and industry. The pump cannot
be primed indefinitely without point being
reached at which it ceases to yield any
returns
The present bill appropriates 81 25O .OOO.-
900 to be spent on work relief through the
w. P A. While that can be viewed as
pump prlmlng to the extent that it
creates additional purchasing power among
the unemployed it should be considered
in different light than P. w. A. expendi-
lures With some 10000 900 persons un-
employed, large appropriation for work
relief or direct relief would have to be
made in any event, and the former is
certainly preferably Undoubtedly there
Is waste in the disbursement of relief
money; undoubtedly the cost of relief
administration is boosted by political con-
siderations, but the unemployed cannot
be left to starve and the Federal Gov
ernment cannot heartlessly toss the prob
lem back into the laps of the States. They
would have to be provided for no matter
what administration was in power
The real economic issues raised by the
Republican minority report do not deal so
much with immediate relief appropriations
as with the other expenditures, designed
to stimulate business and industrial re-
covery.
Democrats and Republicans alike are
agreed that the Government cannot and
should not undertake to support per-
manent relief population of $4,000 900
persons. Such a policy would lead to
national bankruptcy in short order. The
President believes another pump priming
"shot in the arm" will provide the stimulus
for healthy business and industrial re-
vival that will absorb a large segment
OF the unemployed
The Republicans believe the opposite is
true and give their reasons for so think
Ing. They are worthy of serious considera-
tion.
During his first election campaign Mr..
Roosevelt advocated sound fiscal policies
and reduction in Government expendi-
lures. few days after taking Office he
sent a message to Congress urging reduce
tion IN governmental expenditures. In
that message he asserted that "for three
long years the Federal Government has
been on the road toward bankruptcy"
pointing to an accumulated deficit of
$4,000, 100000 for the early years of the
Hoover depression" Then he added:
with the utmost seriousness 1 point
out to the Congress the profound effect
Of this fact upon our national economy. It
has contributed to the recent collapse of
our banking structure. It has accentuated
the stagnation of the economic life of our
people. It has added to the ranks of the
unemployed. Too often in recent
history liberal governments have been
wrecked on rocks OF loose fiscal policy"
Change in Philosophy.
The Presidents adherence to orthodox
principles seemed to inspire confidence
throughout the country and industrial pro-
duction. which, according to the charts
Of the Board of Governors of the Federal
Reserve System, had fallen in March of
1888 to So points Of the 1s23-25 average
Of 100, rose again to 100 in July of that
year.
\ But during the late spring of 1888 Mr..
Roosevelts philosophy underwent radical
change. Under pressure from the White
House, Congress passed number of ex-
pensiye reform and regulatory hills. and