Evening star. [volume] (Washington, D.C.) 1854-1972, 1940-12-11
Spending for Defense
Burden, Not Boon,
Bankers Told
Job Can Be Done Without
Huge Increase in Debt,
Bookings Head Says
BY the Associated Press.

HOLLYWOOD, Fla, Dec, 1.-THE
Investment Bankers Association
was told today that the huge ma
tional defense expenditures should
be regarded not as an economic
boon, but an economic burden"
DR.. Harold G. Moulton, president
of the Brookings Institution Of
Washington and a member OF the
former War Resources Board, told
the bankers at their convention,
however, that approaching the prob
lem with that viewpoint might per-
NIT doing the job without stagger-
ing increase in the national debt.
This economist condemned the
theories Of the spenders, some of
them occupying important public
positions as failing to take into
account that funds spent on
bombers and naval bases, and on
public works. are not provocative"
in that they do not earn revenues to
pay for themselves, and to contrib
ute to Government taxes.
Dead Weight Charges.
They simply represent dead
weight charges against the economic
system" he declared.
While explaining that the defense
program was subject to change to
meet changing conditions, he said
it appeared that in the three fiscal
years ending June 80, 1913, it should
cost the Government not more than
$40 900 100000.
Assuming an increase in the ma
tional income, Inauguration Of a
high geared and broad-gauge tax
system, virtually elimination of
unemployment and the cutting Of
non military expenditures to the
bone" DR.. Moulton said, the Gov
eminent should be able to meet the
larger part Of the defense cost.
IF perchance the total cost can be
kept we'll within $4,000 100000, we
might cover the whole" he said.
IF, on the other hand, defense out
lays should run well beyond s2O,-
900, 100000, the deficiency might be
greatly increased"
Urges Plant Conversion.
But at best, he thought, the
stimulating effects of the defense
program will generate sufficient in
crease in national income to enable
us to prevent the national debt from
increasing more rapidly than it has
| grown in recent years"
The head of Brookings, an en-
dowed economic research organiza-
ton, recommended that the defense
planners adopt policy of convert
ing as much as possible of present
plant and equipment to war needs,
rather than constructing additional
plants.
"By building up additional plant
capacity in concentrated lines" he
asserted, I'VE complicate the problem
of postwar adjustment"
Ending Tax Exemptions Studied.
The associations Municipal Secu.
rites Committee, headed by John S
Clark of Cleveland, viewed with
apprehension recent comments Of
Secretary Morgenthau on his pro.
posal to ask Congress to take steps
to impose Federal taxation on STATE
and municipal bonds because moth.
ing in the remarks of the Secretary
as quoted, suggests that the consent
of the States be obtained through 6
constitutional amendment"
While officials of the Bankers AS.
ISOLATION have criticized the activi.
ties of Government in taking ovel
financing Of war industry, the Com
mittee on Industrial Securities foune
loans made by the r. F. c. so fal
limited" and in many cases tn,
credit risk was such that financing
probably would not have been &C.
cepted for public offering.