Evening star., 1939-12-04
New Hampshire Study
Reveals Dangers in
Deficit Spending
Assets Loss Shown
Despite Appearance
Of Prosperity
BY ]. G.. DONLEY.

BY ]. G. DONLEY.
Released by Consolidated News Featureso
NEW YORK, Dec. AIN order
to find out what is wrong and how
to correct it, the State of New
Hampshire has taken its economy
to pieces and put it together again
on paper, of courSe-in the form
of a complete double-entry book
keeping picture of the affairs OF its
people.
This is the first time that an
entire State has ever got down to
brass tacks in this fashion, and the
result should be most helpful, II
heed is paid to what it reveals.
The report, released today in the
form of a booklet-"What We Earn
What We Owe"-was written by
Samuel Crowther for the commits
sion which came into being as the
result of Gov Francis P. Murphy's
message to the Legislature on jan
uary Z, 1887, authorizing this en-
terprise without cost to the State,
ito the end that in the making
and administering of laws we may
be guided by facts and thus be able
to work in the highest interest OF all
the people
Some of the facts brought out in
the bookkeeping picture covering the
year 1886 are rather startling. For
instance, it is shown that the people
as individuals are thrifty, for they
tho nonnlp
in their institutions of business,
banking and government suffered
large losses, the net loss in their
enterprises being shown as ST.
750,0O0-or $3,989, 900 in excess of
their personal savings.
Others In Same Fix.
New Hampshire is not in worse
case than the other States of the
Union" says Mr. Crowther in his
pointed comments on the situation
revealed by the businesslike auditing.
"The picture of New Hampshire is
comparatively speaking far from a
dismal one and, If the facts are
grasped and considered, action is
taken on them, it is easy to believe
that the scene can be greatly
changed for the better"
To the businessman the significant
thing about the whole picture is
that, although the citizens OF New
Hampshire, as individuals, appar-
entity grew richer in 1936-one OF
the best of the so-called recovery
years" since the deep depression
they collectively grew poorer. Their
collective assets at the end of the
year were less than at the begin
ming" says the report.
Looking for the why" to all this,
one comes across the following in
the report: I'm the bookkeeping pic
ture, all the parts of the State econ
omy are in view and it is plain that
what appears to be saving by in
dividuals is really only a transfer
through debts from business and
Government and that what reached
the people as income was, in part,
not income at ALL" In other words,
borrowed money has been regarded
as income, has been treated as in
come, whereas it is no more than
the proceeds of going into debt.
AS Mr.. Crowther puts it, while
the persons who receive the money
derived from deficit financing have
an income. the people as a whole
must ultimately pay the debt"
Situation Confirmed.
No man in his personal economy
would think of considering money
obtained by mortgaging his prop
erty as income, but, in the collec-
tive economy Of State, the money
that comes from deficit financing
and also from taxes becomes so in
termingled with the stream of hon.
est-to-goodness earned income that
q false appearance of prosperity is
difficult to avoid.
Neither Government borrowing
nor taxation produces wealth, but
it does divert money from useful
employment. Mr. CroWther shows
that the business proprietors in New
Hampshire did not get enough mon
ey to pay for the wear and tear
upon their plants and equipment.
"The people as proprietors of pro-
ductive enterprises and the peo-
pie as individuals in their homes
needed to spend around $30,OOO0 900
to maintain what they had" he
says. IF they had been able to
spend that sum-which vastly ex-
ceeds all the relief distributed
there would have been no unem-
ployment in the building and re-
lated capital industries.
And it is to be remembered that
Our national unemployment has
been in capital goods and the de-
pending services. Free enterprise
has a force and drive unknown
to fettered enterprise"
On the tax burden, the report is
specific, saying that the indirect
or hidden taxes in each dollar the
consumers of the State spent
amounted to at least 1913 cents and
the direct taxes to at least IL cents,
or total out of each dollar of 17.9
cents And these are only the trace
L.