Evening star., 1941-11-30
Cost of War
A Growing Burden
Bu OUen L. Scott.

Only few years ago even New Dealers
were discussing whether or not the
United States safely could shoulder
$50. .000, ,0O0, 900 national debt, but that
question was settled In the affirmative
when the Nations debt shot past that
mark without so much as causing rip
pie of comment.
Now the subject OF debate Is: Can the
United States safely carry debt OF
SlO0 900 ,0000 900 or even $3.50 100000 900?
The issue Is far from academic. On
the basis of present taxes and present
appropriations, debt Is going to pass the
slO0 0O0, 900 900 mark before July, 1914
Before the close Of 1s45, unless the war
ends sooner, debt will be well along
toward the $3.50 900 900 900 mark.
One reason is that the United States.
in addition to shouldering the burden
of supplying an American Army and
Navy also Is shouldering the burden OF
supplying the British and Chinese and
Russian Armies. Commitments In this
task already total $4,000, 900 900 with
only a start made. In the first World
War. total American war loans we're
$40 1850 900 600 In this war there is lend
lease in place of loans. which means that
no formal I. 0. US are given in exchange
for the goods supplied and paid for by
the United States. The dollar sign does
not enter the picture, except for the
American taxpayer.
1t is right there that start can be
made in answering the query As TO
whether the United States will be able
10 carry the load that is shaping up.
The answer depends upon several con-
ditions.
In the first place, it depends upon who
wins the war II Great Britain finally
emerges on top, there may be some way
by which the British Empire can be in
duced to bear part Of the load. The
British Empire is being relieved OF
very important part OF the problem OF
war financing by lend-lease. President
Roosevelt even now is giving consider
alton to a method of getting something
in return. His thoughts. and those of
his advisers. run along the line of post
war trade concessions
However. the British reneged on the
last war loans. partly through necessity
and partly because their property owners
baked at the sacrifice which payment
would have forced. There is nothing to
suggest that the British will find it any
easier to make payments on lend-lease
than they did on the war debts. And
there is nothing to suggest that the
American Congress is going 10 be any
more ready to lower tariffs to permit q
postwar food Of foreign goods in pay
ment OF lend-lease than there was that
Congress would permit the flow that
could have paid for war debts
This means. in the second place. that
the ability to carry the debt that is
being created will depend primarily upon
shoulder the load That ability. in turn,
depends upon q number of factors which
cannot be foretold with certainty
A debt Of sl5o,OoOOO 900 will cost
about $500 000, 900 annually to carry. if
interest rates are held to the present
average rate Of ga per cent. The British
are financing their part of the war on
an even lower average interest rate so
that the United States should be able
to count on a cost no higher than 2l2
per cent.
The total cost Of running the Federal
Government. including payment of IN
terest on the public debt. was only slight
ly higher than $500 900 900 in 1882 Now
interest charges alone may reach that
figure before this war is ended. The
ability to meet these charges will depend
to a great extent upon the Government s
taxing ability.
In the full year 1912. the Treasury ex-
poets TO extract $4,000, 900 900 from what
will be about 100000 900 900 national
income. This expectation is based upon
existing taxes. Henry Morgenthau. as
Secretary Of the Treasury, is prepared
to ask Congress to find another s5O00.-
900 900 Of revenue to bring the total
to $40 OOO, 100000.
If revenues as large as that flow into
the Government. then it should have
little difnculty meeting interest charges
of $500. 900 900.
But taxes OF such size are very pain
full. And those taxes are dependent
upon a very high national income to
provide the yield that is expected of
them A high national income, in turn.
is dependent upon prosperity. So the
ability of this Nation to carry the debt
that is growing so large will depend
upon the Nations ability to maintain
high level Of prosperity.
According to New Deal theory. and
judged by experience of recent years, the
only apparent way to maintain pros
perity is to 60 on creating debt. public
or private and at home or abroad
The situation, as result, appears to
boil down to this: If the United States
finds the magic formula for permanent
prosperity, the debt now being created
will not become an impossible burden
But, if the United States comes out OF
this war without such a formula and il
depression recurs In acute form, then
the debt is going to be a very trying
burden.
More Government agencies are at work
today trying to find the formula for re-
making the postwar world on q basis
that will assure permanent prosperity
than are at work trying to find out how
to win the war itself. A victory In the
war seems to be taken for granted. Ad-
justment after the war seems to be the
problem that occupies the attention OF
the coumtry's heaviest thinkers
| That adjustment. however ties in with
the creation of debt that goes along with
winning the war.