The Wrangell sentinel., 1940-03-01
NATIONAL DEBT BUGABOO


Behind the economy headlinesI
pouring out of Congress these days.
lies the national debt limit-a bug-I
aboo of finance that always turns
into a bugaboo of politics in electionI
years.
The minute the Federal govern
ment reaches its debt limit lif i'll
does) the headlines will proclaim
the news to 130,O00.00O Americana
citizens, and to the world.
As far as anybody can tell now,
the net result will be to give the
Republican party a handy peg for
their plea against Federal spend
ing-nothing more, nothing less.
The limit of direct Federal debt
is fixed by law at S45, 0,00O,I
although the actual total obligations
of the Federal government are much
higher, counting social security
bonds and the obligations of govern
ment corporations guaranteed by
the treasury. At the moment, the
direct debt is crowding close to the
$4S, 100000, 900 mark.
Every man-iack of US who holds
a social security card or an insur
ance policy really has a chunk of the
national debt in his safety deposit
box, just as If we had bought a
government bond.
~
Why a limit fixed by law, and
how did it get where 1t is?
Search in vain. You'll find no
fundamental financial philosophy
to back up any specific debt limit
law. When the 45-billion-limit was
set in 1885, it simply seemed a sen
sible thing to Congress to give the
Treasury some leeway for issuing
bonds and notes against the FEEDER
al government.
In itself, the specific debt limit
of $4,000, 100000 means nothing.
Nobody can prove it's too high-or
too low. Nobody can say it ought to
be this or that figure, and be sure
he's right.
Anybody can argue about the debt
limit Anybody can claim we're
spending more than we take in, and
we're going bankrupt. Or anybody
can say that's a lot of poppyeock,
that we're the richest nation in the
world, and that we can stand a lot
of debt for the sake of saving Amer
lean citizens from misery. But no.
body can prove what he's talking
about.
#%AH
Debt, like religion, has chung to
civilization through all its ups and
downs Ancient Greece and Rome
heard the same argument we're
hearing today.
But debt was never really astro-
nomical until the modern-day bank
er learned how to pile one chunk of
it on top of another The banker
learned how to do that under the
stimulus of colonization in the 10Th
century. In 1872, the total private
and public debt of the world was
around the $500, 900, 000-mark In
the hundred years of war and colon
ization that followed, the total
world debt scared to $3.50, 900, 0O0,-
900. Now it's over 500, 700, 900, 900,
and going up
By and large, debt piles up after
wars. Take our own case. At the end
of the Revolutionary war, our nal
tional debt was about SIC per per-
son. 1t dropped almost to zero by
1910, but the Civil war boosted it
again to SIT per person.
The national debt fell again un-
der the spell of peace. Even the
Spanish-Amerian war failed to
boost 1t in a nation so filled with
national resources. 1t took the World
war to get us head over heels into
debt. BY 1919. it was $240 per per-
son, and despite the sag of the '20s,
the depression caught the debt, and
whirled it up again. Now it's about
1913 per person.
The World war, then, compelled
Congress to get into financial high
links. Congress told the Secretary
of the Treasury he could borrow up
to $4,000, 100000 to help win the
war. He actually did borrow more
than $40, 1000, 100000.
But Congress attached an invisi-
s4ea 4 X
BILE string to- that borrowing. You
can't find the string in the law, be-
cause the limit on the debt can be
figured only by what the law did
not say. The law did not say that
the outstanding debt at any given
time could be % billions. 1t merely
said that 1t was the amount of debt
the government could make. When
the various bonds and notes repre-
senting that debt were paid off no