Evening star. [volume] (Washington, D.C.) 1854-1972, 1951-02-25
Would Recruit Money
From Investing Public
Writer Fovors Merrill Plan
Of Government Financing
BY Fronk R. Kent

vi SOYCIHguSut ] suuftStuA
BY Fronk R. Kent
The Governments financial condition
has reached stage where the concern
felt by most informed and thoughtful
men at the direction in which we have
been going has been turned, by the great
crisis that has arisen. into acute alarm.
Aside from imitation. the three moss
vital problems are: % How best to raise
the $40 billion Of additional revenue
called for by Mr.. Truman without inn
position Of taxes 30 heavy as to stop
crush all individual and corporate
initiative; ca how, against presidential
opposition, to achieve the cut Of billions
of dollars in non-defense expenditures.
without which the whole fiscal structure
will become perilously lopsided: CD how.
considering that In the last six months
sales of war bonds to citizens have
gone very badly, to persuade the Treas
ury to find some sounder way OF financ-
ing future issues than the infiationary
one Of compelling the Federal Reserve
Board to purchase. without limit. Gov
eminent securities, which, OF course,
means perilous use of the printing press.
Concerning these questions, the Adj
ministration's fiscal policy is so marked
by inadeQuacy, heSitancy and unSound-
ness that these unadmirable qualities are
reflected in Congress and q state OF
general confusion exists in the Govern
ment with no one, except the consistent
economy advocates like Senator Byrd
and a few others, clearly knowing what
he wants to do. The simple, straight
forward steps to raise revenue are re-
jected because of opposition from either
the labor bosses and other demagogic
groups or the professional liberals"
journalistic and political, who auto
matically react against any proposal
that conforms with the multiplication
table Back in 1894 when a Democratic
Senate had overwhelmingly voted for
Federal sales tax, it was killed by Presi-
dent Roosevelt, who expressed him.
self as mortified" at the idea.
Regardless of its soundness, similar
reception doubtless will greet any other
suggestion from those in private life
who know most about money. At once
the blatherskites howl wall Street"
and big Business" and run OF at the
mouth about the common man" and
the greedy rich" And an always appre-
hensive White House turns its back and
lets things drift. That is the prospect.
Nevertheless, there are more than a
few scared men here wistfully looking
to the financial world in the hope that
some strong voice therein will sound a
note and propose plan to which they
can safely attach themselves. In this
connection, it is interesting to consider
an idea put forth by Charles E. Merrill
in the Investors Reader. published by
~ 4ry,, in Nou vork
Private ownership, he points out,
most sharply distinguishes our society
from that of the totalitarians. In
World War II the Government provided
most of the money for industrial ex-
pansion because during the thirties
investors seemed to be shrinking in
numbers. But now the securities business
is equipped not only to help private
industry but also to help the Govern
ment raise the extra funds it needs.
Because it has never been attempted on
a big scale, nobody knows how much
of the defense costs could be shouldered
by investors In World War II, for ex-
ample, investors undoubtedly would
have bought synthetic rubber shares
had they been offered. Instead, the Gov
eminent therefore the taxpayers) paid
some 81 billion for the synthetic pro-
gram.
But, says Mr. Merrill, things may DO
different this time, especially If Mr..
Truman insists on his pay-as-you-go
policy and Congress gets balky about
raising taxes again. II United States
investors are allowed to play direct
wartime financial role it would start
an interesting economic cycle; private
capital would cut Federal costs. which,
in turn, would cut taxes. which, in turn.
would encourage more investment. In
various sections there are investors eager
for the chance. If the Government
took advantage of this trend, it could
keep its own investment risks at a
minimum. 1t would not have to tie up
so much money, require so much tax
alton or accumulate so many bureaus
and bureaucrats. It could keep full con-
troll, direct policy. set the general rules
but allow capital and industry to do the
rest.