Evening star., 1938-04-17
Presidents Kitty Is Now
Attracting Attention.
BY OWEN L. SCOTT.


spending or lending that Congress may
now approve.
More than that
II todays depression is due to unwill-
ingness or inability Of business men to
borrow and to venture, the Government
possesses power and banking facilities to
| flll the gap left by retreat of private
| finance and industry.
These facts, and more too are appar-
ent from glance below the surface OF
affairs here as well as from close at
tention to the recommendations and the
advice that have been given to the
President.
There is found to be on hand what
Mr.. Roosevelt once referred to as his
kitty In 1t are potential billions of
spending power that could be used with
| out adding dollar to the public debt
Experience, in addition. is providing
| the Government with an improved
| ump-priming technique to take the
| place Of the crude and extravagant
| spending of recent years. This tech
nique calls for lending that will yield
| some return, to take the place of out
right spending.
Another official discovery Is the Gov
ernment's second budget"-a report of
| Government assets as well as liabilities
| that can be used to shunt new lending
around the regular budget, thereby tend
| ing to ease the public mind on the SUBJ
Ject Of spending or lending and debt.
X X
| But it is the Presidents kitty" that
| Is attracting special attention
That kitty" was filled rather full in
May, 1888, when Congress gave to Mr..
Roosevelt authority to print So, 900, 900 900
in Rreenbacks, if necessary. This au-
tforlty continues to exist 1t bulged
when. in January. 1884, Mr.. Roosevelt
clipped 40 per cent from the gold value
OF each dollar and realized nearly 50 O00.-
100000 in profit. Most of this profit re-
mains.
This same kitty" almost burst with
the purchase of half billion dollars
worth OF silver bullion that today could
be coined to yield more than a billion
and quarter dollars of currency An
other half billion dollars in profit al
ready realized from the coinage OF silver
Is adding to the strain.
Il
President Roosevelt's cash position was
| further strengthened when he had the
Treasury borrow 81 20o0oO.000 in order
| to keep gold imports out of the countrys
banking system. BY the simple process
| OF letting banks take this gold, he could
realize $1,000 000,0 900 cash for spending
| or lending without adding to the ma
| tional debt.
Here is total kitty amounting to
many billions of dollars.
The point is that Mr.. Roosevelt. Con-
| gress and the country accepted dollar
| clipping back in the early days of the
New Deal. and, since that time. they all
have shied away from letting that oper-
alton get IN its full effect. In Treasury
vaults and buried in Kentucky, are sl2-
| s74'3oo 900 in gold that some day could
get attention
Todays depression is leading the Pres
ldent Tor the first time really to toy with
| the idea OF using some of the billions Of
paper profits that are stored up unused
But that is not the only resource that
Mr.. Roosevelt could use to quiet public
concern over possible new Government
| ventures.
Planning at this stage largely revolves
around the idea OF using the Govern
ment's credit on a banking basis to
finance the activity of governmental or
private corporations through loans
rather than through direct expenditures.
The record OF repayment and of interest
payment on loans Of early New Deal
| years has been good. 1t permits a more
refined approach to the problem of in
| spired recovery than the mere dumping
| OF dollars into the hands of those who
will spend those dollars in a hurry
X 4
For example: Government, through
| the Public Works Administration, has
lent more than s700 100000 to local and
State governments for construction ac-
| tlvltles. In exchange it received prom
| lses to pay. These promises to pay, in
the amount of more than $400 900 900,
| have in turn been marketed by the Re-
construction Finance Corp. to private
| and institutional investors. More are
being sold all of the time. The Govern
| ment thus far has made profit of about
$35 100000 on his operation.
The idea is for the Government to
move in to take over territory vacated
| when private banking, for one reason or
| another, moves out.
Government moved into the home
| mortgage and farm mortgage field in
| big way during 1888 and 1884 It is mov-
| ing far into the field of lending on COM
| modities. 1t has machinery set up for
| moving into the low-cost housing field.
| Congress has just taken the bars down
| to permit the R. F. C. to move as far as
| its directors want to move into the field
of investment banking for industry.
BY selling to the public the guaran-
teed obligations of the Government
financing corporations, all of the vast
operations of these agencies can be car
| ried on without affecting directly the
Government cash budget or its reported
| direct debt.
In fact, there already is second
budget" about which the public has
known little.
| This second budget of the Federal
Government is called combined state
ment of assets and liabilities of govern
mental corporations and credit agencies
of the United States" and it appears
once each month. That budget shows
the loans, the cash, the investments, the
accounts receivable, the real estate and
the other assets of existing corporations.
It also shows the liabilities.
Here, in effect, is an operating balance
sheet for the widespread banking oper-
ations of the Federal Government It
reveals listed assets of $11, SOC, 900 900, in
cluding $7.608, 100000 of loans. Back of
these assets stand homes and farms and
school buildings and cotton and corn
and many other tangible things. Liza
l. fA: -