Evening star., 1953-10-18
By james Y. Newton

The Eisenhower administra-
ton has eased considerably its
tight money" policy of six
months ago, although the change
is not yet discernible to the aver
age eye.
Since June the trend definitely
has been toward "easy money
And next year could see COM
plete abandonment of the tight
money" idea and a return to the
free-wheeling easy money days
of the Truman administration.
That change almost certainly
will develop If (a) signs of eco
nomic recession, already notice
able in some industries. increase
and Cb) if the Treasury is forced
to go in for large-Scale deficit
financing to pay for the needs OF
! the Government.
Differ on Recession.
Economic experts differ over
whether a business recession is
imminent. Most agree that if
there is a recession it will be
relatively mild compared to some
the country has been through.
Because of the obvious inn
portance of next falls congress
sional and State elections
among other things the admin
iStration may be expected to
take every possible step to pre-
vent any serious downturn. If
turning on the money faucets
will do the trick, it is not likely
there will be recession in the
next year.
The threat of large scale def
cit financing, and the threat to
the administrators promise of
a balanced Federal budget, are
very real. The Treasury will lose
SIS billion of revenue a year as
a result of tax cuts which will
take place January l, and unless
Congress changes the law. an
other So to So billion by auto
matte tax reductions on April /.
Will Seek New Taxes.
To make up for those losses.
the administration hopes to per-
Suade Congress to levy new
taxes, probably through new ex-
else levies on manufactured
goods. But the possibility of
Congress approving any new and
large tax increase in an election
year is slim, at best. q
T4lat would leave the admin
istration with the alternatives
OF trimming the Federal budget
substantially or going in for
large-scale borrowing in order to
make ends meet. Substantial
savings can only lbe made
through a severe cut in the mill
tary build-up program. Barring
the miracle of a sudden change
of heart in Moscow, it is un-
likely that such a step would be
undertaken.
Thus, the Republicans would
be forced into an "easy money, ="
big-deffcit position and the Gre
alton of false prosperity.' for
which they so bitterly criticized
the old Democratic regimes.
Tight Money" Was First Aim.
With the change of admins
tration last January, Eisenhower
officials Immediately began talk
ing tight money" and the
sound dollar" and taking steps
calculated to make those objec-
tives a reality. It was felt that
lnf1ationary pressures were still
great in the economy. In order to
stabilize or increase the pur-
chasing power of the dollar.
steps were taken to tighten the
supply of credit and money.
Officials, in the winter and
spring, talked about shaking
down" the economy, "halting the
BOOM" and perhaps, creating a
small recession in order to head
off a bigger one which surely
would come unless steps were
taken to cut the top off the boom.
The Treasury raised interest
rates on Federal securities and
this caused rates for all types of
private borrowing to go up ac-
cordingly. officials said large
scale private projects should be
postponed if this could be done
without harming any one very
much. There was even quiet talk
Of the desirability of creating
some unemployment so that
workers would have more appre-
citation OF their jobs and. work
harder.
Treasury officials claim they
accomplished the objective Of
quelling the dangerous fires of
imitation. They claim that, due
to the actions restricting spend
ing, the danger of any major
recession is less.
In any event, there no longer
is talk of postponing private
projects and shaking down the