Evening star., 1938-07-27


ent fiscal year, D.v,dI.w-s,c.
several important
| agencies, whose borrowings hitherto
have been included in the daily show
Ing of the public debt, have been pulled
out of both the Treasury statement
and the budget. The Reconstruction
Fhance Corp. and the Commodity
Credit Corp. are withdrawn from the
budget and now join the Home Own
ers' Loan Corp. and the Farm Credit
Administration as strictly banking
operations. Soon there will be with
drawn also the Tennessee Valley Au-
thority, the Rural Electriication Ad-
ministration and the banking opera
tions of the United States Housing
Authority.
.2hus, electric power, housing, home
and farm mortgages, and direct lend
ing to industries, businesses, utilities,
States and cities become a far-fiung
Federal function, separate and dis
tinct from the more or less temporary
sort OF operation of the past and
taking on a permanent kind of Gov
ernment participation in the field Of
private banking.
Earnings Cause Shift.
She scheme is a rather simple one,
/ from the standpoint of the admins
tration here Congress is merely
asked to supply capital, and in many
instances this has been done out of
past appropriations. Then, if the
earnings-yes, earnings-are ample to
cover expenses, and no further drain
in capital is needed, these units do
. not get a place at all in the public
debt or in the daily Treasury state
ment
Meanwhile. there is no audit to
determine which of these loans have
gone sour and what the assets
really are worth; certainly no audit is
required such as that to which the
banks have to submit periodically
So if a Government agency which
audits itself, likes to be optimistic and
feel that it will get its money back
from a certain group of loans some
} day, there is nobody to say the banks
nay nobody to evaluate the assets at
their true worth and hence the public
debt will never reflect what the Fed
sal Government really owes to the
American people.
True Picture Concealed.
Double systems of bookkeeping have
been frowned upon in private business,
but the New Tories perform with public
fvnds just the same as the Old Tories
did with private funds. Concealment
of material facts is denied by official
dom because every once in a while
the total Of contingent liabilities" is
p0blished as sop. but this does not
give true measure of assets because
It can very we'll be said that not all of
the contingent liabilities will prove to
be losses. Thus important items are
left up In the air
Another device just introduced in
order to conceal the administration
'socialistic adventures is the system
whereby the R. F. c. is permitted to
borrow from the public directly and
retire its debt to the Treasury This
will have the effect of seeming to di-
minish the $4,000, 100000 debt. about
which the New Tories have been in
clined of late to feel bit uncomfort-
able. BY moving the items around 1t
will shortly be possible for the Treas
ury to show actually reduction in the
public debt instead of an increase.
These manipulations ought to make
any Old Tory feel ashamed of his stu
pidity Indeed, President Roosevelt
will owe many apologies to Herbert
Hoover when the new system of book
keeping is fully established For Mr..
Roosevelt condemned the $4,000 ,000,0 900
Of deficits of the Hoover three years,
Unen it turns out that most of this
money was really loaned and has since
been repaid almost in entirety Only
$500 100000 of it, which represented
advances for capital, should really
have been charged against the Hoover
regime. Had this been done, the
Hoover administration would have
shown almost surplus each year. but
somehow or other the Hooverites with
all their faults, believed in honest
bookkeeping, and there is an old say
Ing that honesty is the best policy in
the long run, even if you lose an elec-
ton now and then.
- Might Hide Railroad Transaction.
The new machinery for handling |
he Federal books is such that, if Con-
Fress should create, for example, a |
ailroad administration, this agency
Iould take the railroads overnight and |
transfer such Indebtedness to itself |
In fact the r. F. c. could do it as a
routine financial operation and would |
not need. according to the New Tory
Han, to show it in the regular fiscal |
reports. 1t would merely be bank
ing operation involving an exchange
of securities with the public. Doubtless |
congressional approval would be
needed. but that's a detail of Tom
Corcoran's routine nowadays and
doubtless could easily be arranged |
with few telephone calls from the
] White House.
There's one little fly in the ointment
|