Evening star., 1939-01-24

OAVGo Views olN TGOGISAA
who spoke last night in the MAJ
have not fully perceived or fully ap-
praised-I can no longer bring my
self to believe that the Nation can
risk stopping its support to the
unemployed in the hope or expecta-
ton that, upon doing so, private
enterprise will move forward on any
scale sufficient to give them jobs.
Now q Creditor Nation.
To discuss these fundamental
changes adequately, would take more
time than I have on the air. I can
only remind you that we are no
longer a Nation with rapidly ex-
panding markets at home and
abroad, as we were through most
Of our history. We are no longer
pushing our frontiers westward and
opening up vast new territories to
settlement. We no longer have great
incoming tides of immigration.
The day has passed when millions
can follow Horace Greeley's advice
and go West when they fail to find
employment or opportunity in the
populous Eastern centers. The era
of railroad expansion has come to
an end.
We no longer have expanding for
eign markets. We are now credi-
tor and not a debtor Nation, as we
were before the war. We are no
longer willing to lend billions of
dollars abroad. as we did in the 20s,
to enable foreigners to absorb Amer
lean products.
The rapid growth Of the automo-
bile and related industries, which
were important factors in the ex-
pansiOn of the 20s, has been greatly
slowed down. There are not imme-
diately visible vast markets awaiting
production by existing industry. Nor
does new invention and new indus
try, which I should especially like
to see encouraged and stimulated,
hold out prospects for enough in
vestment and employment to absorb
great numbers of the unemployed at
this time.
Doesn't Share Fears.
If felt that the Government were
risking a dangerous imitation, or
that 1t could not afford the expendi-
lures, because of the size of the ma
tional debt. would not advocate a
continuance of the present stimulus
ON the basis of a deficit I do
not share these fears I do not
agree with those who believe, as
Senator Byrd does, that the Govern
ment is like an individual in it's
fiscal affairs and, therefore, should
not spend more than its income, but
should always balance its budget
and keep out of debt.
do not scorn the old precepts of
thrift and frugality, as the Senator
has said. One of the most familiar
OF these time-honored sayings is:
Neither borrower nor a lender
be-" Admirable as these maxims are
for the individual. they cannot be
applied realistically to business or
to the Nation. If there were no
borrowing or lending in the business
world, there would be no business
except by the primitive methods of
barter. Borrowing and lending
means creating debt. We have never
had a period of prosperity without
an expansion of debt. Conversely
we have never had a period of de-
fation without contraction of debt.
would like to see more equities
and fewer debt forms in our econ
omy. but it operates now very largely
by the process of debts being Gre
ated ana extinguished. To recog-
nize that debt expands with pros
perity, which we all favor, does not
mean that one is in favor of debt,
but only that under our system we
cannot have the prosperity which
we all want without the debts which
we all dislike.
Government Brings Upturns.
1t is beyond dispute, I think, that
as debt contracts or expands, busi-
ness activity rises and falls and that
national income increases or de-
creases in relatively greater volume
Thus, from 1929 to 1888, total debts
both public and private, contracted
by IA per cent. Yet at the same
time national income fell by more
than so per cent. AS result, the
private debt structure, even though
contracted, was so large in relation
to the diminished national income
that debts became insupportable
Hence, our entire financial struc-
ture collapsed and general economic
paralysis resulted.
Had the Government been like an
individual, nothing could have been
done to help the situation. We
ultimately found that only the Gov
ernment, under such conditions as
existed, was able by its lending and
spending to stop the tide of deflation
and bring about the upturn that
we have since had, though it is still
far short of the goal of full recov-
cry. However, acting on the advice
of the business and financial leaders
of the country, the Government did
attempt to act like an individual
from 1880 until the end of 1888, on
the theory that the Government
could not afford to do otherwise
and that in order to maintain con-
fldence and keep money sound 1t
must balance the budget. Most of
you haven't forgotten the results.
Revenues Fell Faster.
OF course the. Government could
not balance its budget because the
incomes and profits of the taxpay-
ers continued to fall or to disappear.
Therefore, the Governments reve-
nues fell faster than it was possible
to reduce expenses. Consequently
it had total deficit of more than
$1,000, 600, 900 for the calendar years
Of 1881, 1882 and 1888, while it was
pursuing the policy advocated by
those who believe as Senator Byrd
does. And, mind you, all this hap
pened during the period when every
thing was being done that business
leaders thought would encourage
business, even to the extent of set
ting up the r. r. G. to provide
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