Evening star., 1945-01-28
Government to Guide
Savings Investment
Observer Sees Prosperity Based
on Making Dollars Work
BIZ owen L. Scott.

on Making Dollars Work
By Ouen L. Scott.
President Roosevelt now Is formally on
record as accepting the theory that win
| underlie the fourth term effort to assure
60,000,000 jobs. This theory is: It Is
the Governments responsibility to direct
the Nations savings into investment by
| its own borrowing and spending If pri-
vate investment fails to take up all those
savings.
The President offered his budget for
the Nation" along with his regular
budget submitted to Congress This new
budget, Of which the regular budget is
just one segment, was presented in
| rather complicated form and largely has
been overlooked, but it is there to see
| for those interested in fourth term plans
What the President has done is to
| accept, and to write into formal budget
| message, the idea OF compensated
economy" This is the idea that the
| working of the economic machine Is
| mathematical proposition in which so
many dollars are added to the income
| stream, so many paid out and so many
| diverted into savings which may or may
| not be invested by private investors. If
not invested, there then is leakage
jim the stream of income that lowers -
level and results in unemployment.
When this leakage" of income occurs,
due to "over-savings," in relation to the
needs of private borrowers, the Govern
ment then needs to step in to direct
| those dollars into use either by borrow
ing them itself or by encouraging others
| to borrow by one means or another.
This is the theory, in broad outline,
advanced by Great Britains Lord Keynes
| and by Professor Alvin Hansen, eco
nomic adviser to the Federal Reserve
Board. in the United States.
II this theory is accepted, then the
budget for the Nation" is not balanced
until there is full use of savings and
until everybody who seeks work can find
a job. And if public attention can be
shifted from the regular Government
budget to the overall job and national
product budget, then there will be less
concern over $500, ,Oo0. 600 900 debt and
a continuing absence of balance be-
tween ordinary outgo and income Of the
Federal Government.
The fact is. fourth term plans call for
the Government to step in on a very
broad scale to direct savings into In
vestment. Its planning in this field is to
form the basis for the fourth term New
Deal that will emerge when the war is
over and unemployment returns The
coming New Deal, however, will put its
! emphasis not upon direct Government
| spending through WPA, but on Govern
ment lending and Government guaran-
| tee of loans so that the effect will not
be felt so quickly or so directly In the
year-to-year budget of income and
outgo.
Plans call for loans abroad on a very
large scale to promote world recovery
These loans, in important part, would
be expected to be made by private in
vestors whose loans then would carry
Government guarantee. In this way
the Government would direct funds into
investment, but would not itself make
the investment. There would be no
need to show these transactions on the
| regular Government budget until or
unless the loans were defaulted and the
taxpayers had to- make good s:--e-
The President also favors very large
plans for rebuilding American cities,
with financing at low interest rates and
long periods of amortization made pos
| cfhIo hv >f
private loans. The plans likewise call
for series of TWAS in the Nations
river basins. They call for low-cost
housing and slum clearance. There are
ambitious plans for toll roads and toll
bridges, for Government financed hos
pitfalls in all parts of the country; a
much broader program of social security
with protection against disability and
with health insurance, as well as insur-
ance for old age and insurance against
unemployment.
The point of all this is, If there is
to be full employment after the war,
then there must be large national
income and a large national product
When the national income is large the
volume of savings is large. Thus, back
in 1899 when the gross national prod
uct amounted to s88, 500, 900 900, indi-
vidual savings totaled $500, 900 900 on
the basis of the Presidents budget esti-
mates. In 1914, when the national prod
uct totaled s197, SOC, 900 900, the volume
of the individual savings amounted to
$35, 800 900, 900 or more than six times
the 1899 rate.
In wartime the Government invests
savings in war plants and munitions OF
war and other war expenditures In
peacetime, if savings are anything like
the wartime rate, all kinds of expedients
will need to be used to find an outlet
for those savings. Back in 1899, when
savings were $500 900, 900, private in.
dustry found an outlet for only about
half that total while the Government
borrowed the other half The whole
level of activity was low, however, and
there was not full employment.
Mr.. Roosevelt now has made clear that
his fourth-term plans, for the period
/ after wars end, will revolve around
very broad program of Government
| directed investment. 1t is in that field
that the Government will operate, If
Congress approves, to assure relatively
full employment.
virile quality and magnetism Of those
compositions are only to be compared to