Evening star., 1940-04-03

rresent Neiiin9 ADOPTED as
Motter Of Convenience
And Necessity
By Morgan M. Beatty,
Associated Press Feature Service Writer.
Before Congress these days lies the
national debt limit-a bugaboo of a.
nance that always turns into q bugaboo
OF politics in election years.
The minute the Federal Government
reaches It's debt limit df it does) the
headlines will proclaim the news to
13o,ooo,00o American citizens, and to
the world.
As far as anybody can tell now, the
net result will be to give the Republican
party handy peg for their plea against
Federal spending-nothing more, Moth
Ing less.
The limit of direct Federal debt is
fixed by law at $45, 900 100000, although
the actual total obligations of the
Federal Government are much higher.
counting social security bonds and the
obligations Of Government corporations
guaranteed by the Treasury.
Every man-jack of us who holds a
social security card or an insurance
policy really has chunk of the national
debt in his safety deposit box.
Why limit fixed by law, and how did
1t get where it is? Search in vain. You'll
find no fundamental financial philoso-
ply to back up any specific debt limit
law. When the 45-billion- limit was set
IN 1885, 1t simply seemed a sensible
thing to Congress to give the Treasury
some leeway for issuing bonds and notes
against the Federal Government.
In itself, the specific debt limit of
s45 900 100000 means nothing. NOBODY
can prove it's too high-or too low. No.
body 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 SPEND
ing more than we take in, and we're
going bankrupt. Or anybody can say
that's lot of poppycock, that we're the
richest nation in the world, and that
we can stand lot of debt for the sake
OF saving American citizens from misery.
But nobody can prove what he's talk
ing about.
Debt, like religion. has clung to civili-
zation through all its ups and downs,
Ancient Greece and Rome heard the
same arguments we're hearing today.
But debt was never really astronomical
until the modern-day banker 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 18th century. In 1912, the total
private and public debt of the world
was around the $500 900 900 mark. In
the hundred years of war and colonial
ton that followed, the total world debt
scared to $3.50 1000, 1000. Now it's over
$500, 900 100000, and going up.
BY and large, debt piles up after wars
Take our own case. At the end of the
Revolutionary War, our national debt
was about SIS per person. It dropped
almost to zero by 1840. but the Civil War
boosted it again to SIT per person.
The national debt fell again under the
spell OF peace. Even the Spanish
American War failed to boost it 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
s24o per person, 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 Con-
gress to get into financial high links
Congress told the Secretary of the
Treasury he could borrow up to 28,0OO,-
600 900 to help win the war. He actually
did borrow more than $4,000, 900, 900.
But Congress attached an invisible
string to that borrowing. You can't
find the string in the law, because 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 was the amount of
debt the Government could make. When
the various bonds and notes representing
that debt were paid of no authority
remained for piling up any more debt.
That also meant there was no au-
thority to switch the debt around, and
put some in bonds and some in notes,
according to which was the cheapest
for the Government So, in 1895, with the
depression driving them, the Congress-
men made the debt revolving affair.
They said the outstanding debt at any
one time could be $45, 5000, 100000. That
gave the Treasury constant ceiling,
and plenty of room to make its debts
the cheapest way.
The Secretary of the Treasury told
Congress he thought a 45-billion dollar
ceiling would give him enough room to
save money There was very little dis
cussion of how much the limit ought
to be. 1t was all matter of conven-
ience and necessity, of how much leeway
the Government needed.
The nub Of the whole business is this:
,<c