Evening star., 1939-08-06
Public Interest Aroused
by National Debt
By Frederic J. HuSkin.


thought since the Civil War period, when
debt of $1,000 00O,O 900 seemed to threat
en- the very existence OF the Nation.
True, public men have talked publicly
great deal about the national debt,
but it is only recently that the rank and
file Of the people have begun to think
seriously concerning it. Perhaps the
fact that next year will bring a presi-
Dental election has something to do
with the enhanced discussion.
At the time Of the World War there
was no worry about the national debt,
although it had passed s25 900 900 900
and was, by billions, greater than it ever
had been before. But the Nation was
on the upgrade and, except for the rela-
lively slight dip in 1920 and 1921, there
was the greatest prosperity the world
had ever known.
But today the debt has passed SAL 00O,-
100000 with an additional S5.4OO, 900 ,OOO
OF debt which has been guaranteed by
the Federal Government. This indebt-
edness has been incurred in peacetime,
After the postwar peak of S25, 900 900 900,
debt retirement began and continued at
the rate of $1,000 900 900 a year for 10
consecutive years. Further, in spite of
these heavy retirements, each year saw
heavy Treasury surplus. some years
exceeding S500000,00O Moreover. taxes
were being progressively reduced. Today
taxes are mounting, the national debt is
climbing higher and higher, and the
10 1NaIa
In such circumstances it is not remark
able that people are beginning to wonder
what the outcome will be-
The story of debt is the same for ma
tions or great corporations as 1t is for
individuals. Micawber observed that Q
surplus of penny at the end of year
meant security, while a deficit of penny
at the end Of year meant an outlook
on penury and woe. Translate the
penny into millions for corporations and
billions for nations and the moral re-
mains the same.
The United States has gone through
several phases of currency imitation.
Some of them have been almost disas-
trouS-indeed, have been disastrous to
millions Of people. The initiation of Con-
federate currency brought outright and
final catastrophe. But the entire Nation
has never collapsed. The lowest the
United States dollar ever fell was to "a
cents, and that for only a brief while.
Quick recovery of the currency has come
because of the expanding resources of
the Nation. Money has become good.
money issued on the credit of the United
States, because the strength of the
security back of that credit was steadily
enhancing. Also, since the aftermath Of
the American Revolution 1t had been the
fixed policy of the United States to pay
of debts incurred in time of war and
not to incur debts in time Of peace. The
contrast between the old policy and the
new Is what is challenging the thought
of the people.
The average man, out Of his own ex-
perience, knows what happens when he
falls too deeply in debt. It is true that
IN the vigor of his youth he often en-
braces debt gladly, strong in the convic-
ton that he will be able to pay. And
the story of the average American is
that, following the same policy his Ma
ton has followed in the past he does
pay out. owns his home and owes not
any man when he reaches maturity.
The same Is true of business enter
prises.
But examine some groups which have
not followed that policy. In the latter
half of the 10th century the railroads
were the pampered pets of the Govern
ment. They received enormous grants
OF land. Also, foreigners, especially the
English, invested heavily in them. They
could afford large debt because they
were going to develop the country and
all would grow rich together In the
period from 1900 to 1910 the aggregate
debt of the American railroads was
$500 900 900. Their income was about
S1,000,000 900. This was sound enough.
But last year the debt had climbed to
$4,000 600 900 while income had fallen to
about $500 100000 This was unsound
and every newspaper reader knows how
the Reconstruction Finance Corp. and
other Government agencies have been
fighting, with loans of public money,
which, in turn, increase the national
debt, to keep the carriers going
The individual knows that, once he has
begun to borrow and finds it relatively
easy, the temptation to keep on borrow
ing Is great. He borrows to pay off his
old debt with little more to 60 on with.
~
paper reader has read of how great
cities, such as Chicago and Philadelphia,
have not only defaulted on their debts,
but have been unable to pay their
schoolteachers, policemen and firemen.
Many Of the cities have fallen into
that same habit of expanding debts.
The same Is true of the States and
lesser political Jurisdictions which are
empowered to incur debt. About the
beginning of the present century the
aggregate debt of the State and local
governments was but little more than
$1.0OO.OOO, 600. Today that debt is ten
times and more that sum. The popula-
ton Of but few cities has seen such null
tiplication and the population of the
aggregate has fallen far short.
There was long period during which
local jurisdictions - counties, road dis
tricts, school districts, drainage districts
and the Hke-took advantage of their