Imperial Valley press., 1939-02-17
Famous Sayings

ST. PETERSBURG, Fla, tep. IL
Since 1893, nearly every econo-
mist, including myself, has pre-
dicted that we would have phoney
dollars in the United States. Yet,
after six years of the widest spend
ing spree on record, the American
dollar is today the strongest cur
rency on earth.
Furthermore, few economists are
now worrying about it. Can it be
that they were all mistaken? viii
our dollar continue sound? Or have
certain factors interviewed to save
us temporarily? 1 strongly feel that
the latter is true. Here, however,
are eight reasons why our dollar
is still good, despite our mammoth
spending programs:
|. DEBT NO GREATER THAN
IN 1929: Total debt in the United
States is no greater today than in
1929. There has been $4,000, ,000,-
600 gain in federal debt, but pri-
vate debt has been cut an almost
equal amount. Private debt, how
ever. is a lesser evil. Private debt
is a lien on definite companies, a
mortgage on definite homes,
load on the backs OF definite mdi-
viduals. Private debt is paid off or
settled because il is an individuafs
responsibility; public debt is sell
dom paid off for it is everyb0dy's
and, therefore, nObOdy's-respon-
Sibility.
2. SCARCITY OF PRIVATE
INVESTMENTS r he drastic
slashing OF private debt is one ma
lor reason why United States bond
prices have held up i'll the lace
of our wild spending orgy. The
money formerly invested in private
loans must be put TO work some
where else. Much OF it has gone
into government bonds. Compare
our life insurance companies port
folioS today with 1929. The per-
centage Of funds invested in u. $.
Governments" has increased over
ten times. Naturally this scarcity
Of private securities has helped to
push up prices OF public bonds.
3. PUBLIC BONDS TAX-EX-
EMPT: Since 1929. taxes have been
pushed sky-high in the wealthy
brackets. But government bonds
are free from normal tax and GER
tain Short-term treasury notes are
even exempt from Sur-taxeS. Hence,
the big investor can get as good a
return on a per cent treasury
note as on 3 per cent top-grade
corporate bond. One of the best
ways to curb public spending would
be to throw out this tax-exemptiOn
feature. without it, public borrow
ing would become difficult. If the
politicians cannot easily borrow
money, they will have to spend less
money because they cannot push
taxes much higher!
4. CONTROL OF BANK IN
VESTMENTS: The biggest prop
for public credit so FAR has been
the new federal control of bank
investing since 1888. Banks have
been encouraged to buy govern
mentS. They have taken the lion
share of the 100000 900, 900 of new
bonds. A bankers only obligation
is TO pay dollars. He does not have
to worry about how much food and
clothing the dollars he pays out
will buy compared with the dollars
which were deposited. As govern
ment bonds are now eXchangeable
into paper dollars, one can easily
see why bankers buy these bonds.
5. DESTROYING CONFIDENCE
IN BUSINESS: Investors conf
dence in private bonds and stocks
has been undermined by attacks
on business by politicians; by bur-
denSome taxes; by the fostering OF
labor troubles. Such actions have
forced huge sums of timid capital
into savings banks, trust funds
annuitieS and, from there into
government bonds. High prices have
created the impression that United
States Governments are the safest
investment on earth. Yet, theil
ultimate value will depend on the
ability Of business to make money
in order to pay taxes.
6. INCREASE IN RAW MATE.
RIAL SUPPLIES: Another reason
that the buying power of our dol
lar has not declined is because there
are huge surpluseS Of nearly al
raw materials. Since 1888, our out
put Of copper, cotton, wheat, etc
has increased spectacularly. At the
same time there have been feverisf
efforts by other countries to boos
. their production. For instance, the
| amount of foreign cotton grown
= has jumped 80 per cent since 1888
:. ALL NATIONS HAVE ABAN-