Evening star., 1942-03-29

For 18 months in 1910 and 1941 the
Nation took financial Joy ride on the
deficit spending of the Federal Govern
ment.
That joy ride of the defense period
now has come to a jolting stop against
a series of barricades, some erected by
Government, some by economic laws,
but all of them due to the demands of
total war
Now that the ride is over, it is op-
perfume to explore both its causes and
results, and more particularly to deter
mine what the passengers-the people
of the United States-face in their eco
nomic life during the war period. 1t
certainly will not be another financial
Joy ride.
The Federal deficit spending during
those l8 months of increasing prosperity
was more than IL billion dollars, equal
to approximately half the total deficit
spending for the whole of the "depres-
sion" period from 1881 to 1899.
Spiral Reversed Quickly.
Unless otherwise Offset deficit spend
ing by the Government multiplies itself
IN national income. Thus, largely as a
result of those Federal expenditures, our
national income by last December was
above the rate of 100 billion dollars,
level which far exceeded the income of
that famous boom" year of 1929, and
which was more than twice the national
income at the depression low of 1882
Business doomed in that recent surge
OF prosperity, profits mounted, unem-
ployment lessened. The spiral of de-
preston reversed itself with amazing
rapidity. The purchasing power of the
Nation, nudged even faster forward by
installment credit, gained speed and pow
er. During 194l, more than 100000 new
homes were constructed, about 5O0O.-
1000 automobiles were produced. New
refrlgeratorS new furnaces, consumer
goods of many kinds were acquired in
record-breaking amounts while the Ma
ton was switching to war economy.
State and local government prospered
financially. AS tax receipts, particularly
sales taxes, rose to new highs in many
cases, local government debt was reduced
and budgetary surpluses began to ac-
cumulate. These levels of Government
were also riding on the deficit spending
of the Federal Government.
Why has that financial Joy ride of in
dividuals and of local governments
ended?
Certainly it is not because Federal
deficit spending is less. Instead, it is
increasing at an unprecedented rate and
will continue to increase until one of two
things happens-we reach the limit of
productive expansion, or the Axis powers
are defeated
$4,000, 100000 Month Now.
At present, our outlay for war approxi-
mates $4,000 100000 a month. In this
budget message, President Roosevelt es-
timated that in the fiscal year 1943,
beginning July l, our war expenditures
would approximate s56,000,00 900, sum
unapproached by any country in the
worlds history. In the same message,
the President estimated that the Federal
deficit for the fiscal year 1943 would total
s35 900 900 000 Yet this time, despite its
magnitude, the Federal spending will
produce no repetition of the 1940-4l pro-
duction boom"
The joy ride is over; the headaches
have started.
Business, which prof1ted greatly during
the recent months Of prosperity, now is
facing difficult problems. Large seq
ments Of 1t have been hurt mortally by
scarcities and dislocations. Our national
goal is to put half of our total pro-
ductivity into material of war; that
means other great segments Of business
must be injured by shortages Of labor,
material and transportation. Further
more, those businesses which prosper
must pay an ever greater share of their
profits into the Government Treasury
as taxes.
Labor supply offers an increasingly