Evening star., 1940-01-04
Text Of Budget Message Estimating 8424OO00OO Outlay

decreased. The interest on the pub
lie debt alone in the calendar year
1899 constituted only las per cent
of the national income as con-
trasted with q corresponding per-
centage of 1852 per cent for the year
1898. The increase in the natio1Zl
income over 1882 for the year 1899
alone is far in excess of the total in
crease in the debt for the whole pc
riod since 1888 The credit Of the
Federal Government has never
been higher.
The debt accumulated since 1888
represents a far more prudent and
productive use of our peoples saw
ings than much of the enormous
private debts piled up in the twen-
ties. The billions that were bor-
rowed for speculation, for foreign
loans, for second and third mort
cages on overproduced commercial
construction, hardly represented the
most prudent use of our peoples
savings.
1t is true that isolated debts can
be defaulted without great harm to
the general economy. But this is
not true when, as in 1888, a large
part of our private debt was in
danger of default and the savings
Of the whole community as we'll as
the general credit OF industry and
agriculture, were imperiled.
A part of the existing public debt
and of agency loans is in fact ac-
counted for by the necessary as
sumption by the Government
through the familiar "bailing out"
process-of private debts on the
verge of default.
In considering the growth of the
Federal debt, it must finally be
borne in mind that in recent years
the Federal Government has had
to take over some of the burdens
which had heretofore fallen upon
upon our States and municipalities.
BY 1888 the strain of the depression
upon the finances of local govern
ments had become unbearable.
From June 1929 to June 1888, States
and municipalities had to increase
their net debt by over billion dol
lars and their credit in many cases
had approached the breaking point.
BY 1888 there was an insistent de-
mand that the National Govern
ment come to the financial aid of
local governments.
Consequently, between June 1888
and June 1910, the Federal Govern
ment will have made available for
local relief, work relief, and local
public works the sum of II billion
dollars. In addition, during this
same period, the Federal Govern
ment increased its grants for pub
lie roads by billion dollars ovel
the preceding seven years.
BY reason of these Federal ex.
penditures it became possible fol
the States and municipalities dur.
ing this period to rehabilitate theil
credit, and even to reduce slightly
their aggregate Indebtedness. L
they had continued to discharge tht
responsibilities that were formerly
theirs to a degree commensurate
with the Federal Governments ef'
fort, the aggregate Indebtedness O.
our States and municipalities woulc
have been increased by not less thar
18 billion dollars and their take.
would have been enormously in.
creased.
Debt, whether individual, corpo-
rate or governmental, cannot be
judged in vacuum: 1t must be
considered in light of earnings, as.
sets and credit standing. Wher
the increase in the national deb
is viewed against the background o.
what was accomplished by tht
growth of useful physical assets ane
of effective national earning power
and by the strengthening of the Ma
tion's credit and morale. there is NJ
economic ground for anxiety, so fa
as the national debt is concerned
as to the Nations future. And i
our citizens understand the capacit.
of the Nation to produce increased
national income and act Thereon
with all possible faith and practica
energy, they will be in a position
to anticipate balanced budgets with
out curtailing essential social pro
grams.