Evening star., 1938-10-30
National Credit Good
Despite Huge Debt
By FREDERIC J. HASKIN,

There Is an old garden In England
where stands sun dial around the Dor.
der Of which are chased the words: 1T Is
later than that" This may be said of
any timeLiece for in the instant required
to read the time 1t becomes later than
that!
The same may be said in these days Of
the American national debt with a trifiing
variation Of terms. OF the debt it may
be said: 1T is larger than that" For
with the passage Of every unit Of time
the amount the American people owe
grows.
The total of public Indebtedness in
the United States today is estimated
at $4,000 100000 Approximately two
thirds Of this fabulous sum represents
the debt of the Federal Government
while one-third represents the debts of
the States and the lesser political di-
visions such as counties and cities. There
are thousands Of these subordinate debt
ors. For example, there are some $4,000
municipalities. $4,000 school districts.
and a multiplicity Of debt-incurring dis
tricts, and so on.
A matter of major concern to the
American people is that while. through
out their past history, the fiscal policy
has called for the reduction of debt when
the emergencies for which debt was in
CURED have passed. a change now is
noticeable. All our wars which have
inevitably created public Federal debt
have been followed by remarkably
~f
owed. When the Civil War resulted in
Federal debt of nearly $4,000 900
there was the utmost haste to pay 1t off
and it was soon brought down to ST.
100000 which was easily manageable.
After the World War. which ran up the
largest war debt the United States ever
was at the rate of approximately 81 ,000,-
100000 year for decade. Each year
a sum was paid of equal to what the
whole principal had been before the
hostilities.
Today, for the first time in American
history, the policy has changed and the
latest official figure tas of September 80,
1889 shows Federal Indebtedness of
s38,392 725,250. The policy Of speedy re-
payment Of debts was not so sedulously
followed by States cities and counties.
but it was in the main On the eve OF
the World War the aggregate of these
local deots was $4,528 900 900. The Arm
istice saw them nearly doubled and since
then they have grown to the huge total
Of at least $l9,395 900 O00-almost cer-
tainly more because figures wholly up to
date are not officially available.
+*++
Any business organization, public or
private, has assets to place against its
liabilities, unless it is wholly bankrupt.
so account must be taken of what the
various governmental entities own. 1t
is not always possible to induce
bookkeepers and accountants to agree
on methods. but conservative CAL
culation reveals that the American gov
ernments. Federal and local, show an eX-
cess of liabilities over assets of $44,973.-
100000. OF this excess $29 400. 900 900 is
held chargeable to the Federal Govern
ment.
A difficulty Of accounting lies In the
fact that some Of the assets held by the
several governments cannot with Ger
tainty be evaluated. Apart from the
public debt figures represented in the
various totals given above there are.
for the Federal Government alone more
than $4,000, 900 900 OF Indebtedness di.
rectly guaranteed by the Federal Gov
ernment. This, it may be noted. is some
five times the total amount of the Fed
eral public debt just before the World
War; The Reconstruction Finance
Corp. has guaranteed some $500, 900 900;
the Commodity Credit Corp. more than
$500, 900 600; the Home owners Loan
Corp. nearly SO 900 900 900; the Federal
Housing Administration nearly 5000, ,000.-
900 and the Federal Farm Mortgage
Corp, $l.400 100000
There are advances which have been
either directly or indirectly guaranteed
by the Federal Government such as
those to banks for co-operatives. Federal
Land Banks, the Federal Deposit Insur-
ance Corp. production credit corpora
tions and the like. The daily Treasury
statement shows 80 Federal finances of
the Federal Government.
While the Federal Treasury has been
far and away the big leader. States and
municipalities also have made advances
on various accounts. Some of them have
established financing agencies and most
are in debt for Public Work Administra-
ton or other federally endowed projects.
Any business man knows that even a
small enterprise may not be conducted
without occasional losses. When trans
actions mount in the hundreds OF mil
liens. and especially where an element
of politics and national or local party
policy creeps in. the loose odds and ends
become substantial. That there will be
some dead losses is inevitable No one
can possibly predict what they will
amount to. Even should the Nation
run into prolonged period Of pros
perity, certain losses could be expected;
should a long period of depression be i'll
store. those losses would be huge. All
would become part Of the public debt
because the money advanced to these
agencies had to come in the first place
out of taxes or public borrowing.
So the most inspired statistician in
the world could not possibly accurately
state what the real public debt Of Amer
ica is today or may be next year or lG
years hence. There are too many i'm
| pcnderables, too many intangibles in
volved. That the debt is more than
appears on the bookkeeping face Is in
escapable.
The annual interest on the Federal
public debt alone now amounts to al
most as much as the principal Of the
debt on the eve of the World War. The
present administration has done fiscal
| wonders in bringing down the interest
rot IN