Evening star., 1939-01-05
should occupy a separate category


in budgetary reporting. Our finan-
cial statements, of course, should
clearly reflect, in appropriate clas-
siflcations, the amount of Govern
ment outlays for physical improve
ments that are not self-nquidating
in character. We must take into
account the necessity for making
such of these and other changes
as will permit the presentation to
the Congress and to the public of
more accurate and ineligible state
ments of the financial operations of
the Government.
I should like to call your attention
to the following table comparing for
the l0-year period the amount of
the Federal deficit and the increase
in the public debt, with the amount
included therein for capital outlays.
1t should be understood that this
table is not intended to represent
values on an earning basis. Never
theless, under our policy of expand
ing capital outlays to compensate
for variation in private capital ex-
penditures and of making loans to
meet emergency needs OF our peo-
Pile, the table clearly shows that
the greater part of the deficits and
the larger part of the increase in
the public debt have gone for per-
manent additions to our national
wealth.
Let us all fix that fact in our
minds so that there shall be no
doubt about it and SO that we may
have clear and intelligent idea
of what we have been doing. We
have not been throwing the tax
payers money out of the window or
into the sea. We have been buying
real values with it. Let me repeat:
The greater part of the budgetary
deficits that have been incurred
have gone for permanent, tangible
additions to our national wealth.
The balance has been an invest
ment in the conservation of our hui
man resources, and do not regard
a penny of 1t as wasted.
A year ago I recommended an in
crease in work relief, public works,
and other related expenditures to
check the downward spiral of busi-
ness. The program undertaken at
that time has contributed materially,
I believe, to the existing upward
movement Of business and employ
ment, and I feel that the business
men and farmers and workers Of
the country, no less than the unem-
ployed, are entitled to an assurance
that this program will not be cur
tailed arbitrarily or violently.
The actual cost of work relief and
similar expenditures goes down after
jobs are found by the workers on
these rolls. A violent contraction,
before the natural expansion of
private industry is ready to take up
the slack, would mean, not only
human misery, but a disruptive
withdrawal from American industry
of a volume of purchasing power
which business needs at this time.
The necessity of increasing Federal
expenditures a year ago to check a
recession is well-known fact.
Any decision to decrease those ex-
penditures now that recovery has
just started would constitute a new
policy which ought not to be
adopted without full understanding
Of what may be the result.
May I say emphatically that I am
not suggesting an ordinary budget
which is always balanced and an ex-
traordinary budget which is always
unbalanced. The ordinary expenses
Of government should continue to be
met out Of current revenues. But I
also hope that those revenues in
times OF prosperity will provide q
surplus which can be applied against
the public debt that the Government
must incur in lean years because of
extraordinary demands upon it.
believe am expressing the
thought Of the most far-sighted
students of our economic system in
saying that it would be unwise either
to curtail expenditures sharply or
to impose drastic new taxes at this
stage OF recovery. But in view of the
addition to our public expenditures
involved in the proposed enlarged
national defense program and the
program for agricultural parity pay
ments, for which no revenue pro-
vision has yet been made, think we
might safely consider moderate tax
increases which would approximate
ly meet the increased expenditures
on these accounts. It should be
added, however, that it is my firm
conviction that such new taxes as
may be imposed should be most
carefully selected from the stand
point Of avoiding repressive effects
upon purchasing power.
Sound progress toward Q budget
a. A. A.