Evening star., 1938-04-09

balance and re-
sumo its inf1a-
tlonary spending is no longer a secret.
The new program will, to be sure,
eliminate subsidies and grants. though
the making of 50year loans without
interest would mean a substantial sub
sidy from the Federal Government to
States and municipalities. Lending"
rather than spending" is what is en-
phaSlzed, but the flaw in the admins
tratlon's reasoning is that lending to
carry out projects which are not them
selves productive Of revenue, and
which must be added to the taxpay-
ers burden is not sound economics.
Temporarily there would be a spurt
Some heavy goods, industries might
benefit again. as in the past. But
when the pump prrning" has run its
course, as inevitably \ must. there will
be another business recession of Sc
rlous proportions. The administra-
ton may shrug its shoulders and say
that the next business recession will
come after the autumn elections and
there may be some more pump prim-
ing to take care of the 1910 situation.
but eventually this process will lead
to such dangerous economic conse-
ouences as to arouse public opinion
against that sort of national policy.
As Old as World History.
What the Roosevelt administration
really is doing is as old as world his
tory. Monarchs have time and again
devalued currency or resorted to print
Ing presses to issue bonds or money.
The public debt will have to be in
creased by the administration as more
and more bonds are issued. Will the
public indefinitely have confidence in
the banks when more and more bonds
are forced into the hands of these
financial institutions in an enforced
exchange OF bonds for deposits of the
public?
1t has been more or less the tend
ency to say very little about this
aspect of Government financing, but
silence, on the other hand. has con-
tributed to the looSenesS of the whole
system Of unbalanced budgets. Had
the public long ago insisted on a
more prudent policy, alternative poll
cies might now be under serious con-
sideration.
In other words, pump prlming"
takes the mind of the public away
from the administration fiscal blum
ders and particularly from its refusal
to give business the announcement
1t needs today. Even the tax bill
Just adopted by the Senate will be
fought by the President and his allies,
The theory of radical reform seems
still to be uppermost irrespective of
the condition of the country.
Difference Of Opinion.
There are differences of opinion al
ready as 70 how much aid can be
expected from the pump printing"
program. Public works are SLOW 10
get into action. municipalities and
States have to get authority from the
citizens to borrow. Blueprints have
to be made and II takes a long time
for orders to be filled for raw ma
terlals before construction can be
begun. BY Autumn. however, the
effects of the pump primlng" might
begin to be felt
The administration has been hop
ing that loans to business would be
contributing factor to recovery move
ment. The R. F. c. has new au-
thority TO lend. but while the IDEA
OF furnishing capital for business by
helping banks and private institutions
to make loans of their own funds on
the insurance principle is sound, the
sad truth is that few business men
care 10 borrow in the face of the un-
certainties created by the President
himself
1t has been well said by Eleanor
Patterson, editor of the Washington
Herald, that the fear psychology of
the moment Is largely fear Of Mr.
Roosevelt and his policies. II might
also be added that no amount of
pump-primlng or lending is going to
be Of avail If the capitalistic system
is going to be sabotaged by the ad-
mlnlstration
Partner in Private Enterprise
1t doesn't take much Imagination
to realize that when the Federal Gov
eminent conf7scates virtually one fifth
Of the profits Of q corporation, as
proposed by the new tax legislation.
the Government IS in effect a sub
stantial partner IN private enterprise.
In the case Of individuals the per-
centage Is by no means as low as
that. Many holders Of securities see
no possible incentive IN tax S!tua-
ton in which from so to 80 per cent
must be gwen 10 the Government.
The customary course under those
circumstances for many men is TO
buy taX-eXempt securities and do
nothing to build up enterprise or en-
ployment There Is no way BY which
the Government can compel a man
or woman to invest his savings IN a
losing proposition or IN one which
has III 1t so many more risks of loss
than gain.
Pump priming" is like an opiate
1t Is temporary Stimulant, but when
the effects Of the initiation or ntox-
cation have worn off, the aftermath is
unhealthy. To print more bonds
when the taH-paylng capacity of the
country is not increased is to rely or
imaginary reimbursement Ultimately
such course leads TO Reputation
OF debt and a lack of confidence In
paper money, something that is re-
fected as a rule in higher and higher
prices and finally in the hardshlps
for the middle class
In Germany imitation produced 4
dictatorship because conditions were
so bad that the public was willing tC
accept almost any form of order a!
an alternative TO CommunlStic chaos
Unless the administration is willing
to give business a chance TO carr
money, the new pump prlming" vii
wind up some day and there will bt
worse depression than we have to.
day. This is the time for public
opinion TO manifest itself against tn,
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