The Coolidge examiner., 1943-12-03
ARGUMENTS AGAINST SUBSl
DIES IMPRESSIVE AT FIRST
GLANCE
BY Raymond Clapper

OT hdJI1OuO S'oRPSi
WASHINGTON Several argu
ments are made against food sub
sidies which SEEM to make sense
until you take a second look at
them.
For instance, some people write
in saying that the food subsidies
add to the public debt and thero-
fore only aggravate the danger OF
initiation, although the subsidies
have saved the public and the
Government a large sum, probably
billions.
The subsidies do add to the pub
lie debt. They run about 500
million dollars a year-the cost of
the war for three days. But what
would happen if the subsidies
were knocked out? You would not
add that particular item to the
public debt. But you would add a
larger item to the public debt just
a little bit later.
For if the food subsidies are
knocked out, prices will go up,
James F. Byrnes, director of war
mobilization, says that the Govern
ment cannot hold the Little Steel
formula unless food subsidies are
continued. There would be a
strong wave of wage increases.
And then all of your cost-plus-fee
contracts would begin to crawl up
Seventy per cent of industrial pro-
duction is devoted to war. In 9TH
er words, the Government, rough
" speaking, buys nearly three
quarters of the industrial output
of the country. Wages are a big
item in the cost of those goods.
So the Government pays more for
the billions of dollars in war
goods that it buys and your public
debt goes up-not by the restrict
ed amount of the subsidy, but by
the amount reached after pyramid
ing Through the whole economic
system.
The cheaper system in cost to
the Government is the subsidy
But you have to take second look
to see that.
Another argument is persuasive
at first glance. 1t is that the sub
sides are only loading on the pub
lie debt a charge that will have
to be paid by the American sol
diers when they return home.
Take the point which l have just
made and apply it here. The pub
lie debt will be less in the long
run by holding down prices, and
by holding the line against infia'
ton is allowed to break loose be-
cause the government is such q
heavy consumer.
But there is also another con-
sideration. Families Of most sol
diers are dependent. partially at
least, on dependency allotments
Those are fixed amounts. Run up
prices and by every cent of price
increase you, in effect, cut down
the allotment pay by the same
amount. You either subject fam
lilies of soldiers to what amounts
to a reduction in their means OF
support, or else the Government
will have to increase the allowance
es. There you come back to ou,
old friend the public debt, which
then takes another jump.
The fight against subsidies has
it's real purpose-one that nobody
wants to admit openly-the break
ing up of price control so that pro
ducers in certain foods can gougf
the nation for all that can b'
squeezed out of people at a tim'
when all consumption is distorted
by the heavy demands Of war.
Subsidies are paid on some o
the metals, and to transport Goa
and oil to Eastern consuming reg
ions. If that were not done th'
Government would have been LEI
short of some precious metals.
Every dollar of copper subsid.
has saved the Government perhap
s2S in price. The Eastern indus
trial area would have had to sus
tain a far higher cost for fuel tha
would have been reflected in high
er prices for the war output.
The term subsidy is bad one
Subsidies themselves are undesll
able. But ever since we first be
gan using the protective tariff, w
have used subsidies in one form
or another.
The choice now is between
smaller evil and larger evi
When look over my mail, al
astounded at how many peopl
want the larger evil, some inne
Gently because they have no
thought through the problem, an
some because there happens to b
profit in in.
ATba infant daughter of Pvt. an