Show 5 PLACE J GRIP ON I REE PEOPLE Standpoint of All government Finance a ady dy Demoralizing of Wealth t With Germany Is as Great- Great Financial Debauch II ilie Worlds World's History Sight yr r 1924 In U. U S S. and Great lain by North American News- News viper Alliance All AU rights re- re ved l JOHN F. F SINCLAIR tt t of every dollar which waI was wa I d by Alexander Hamilton the federal government in went to pay interest ie e public debt The government for aU all purposes in inI i Interest took I Ith th neXt twenty years the pub- pub charges took three to four sour lons a on year ye Then bump No 1 eared ared A warA war A of 1812 caused public pubic charges to increase for fifteen J lt about five millions of dolI dol- dol I annuallY Then for t ten n years I reduction took place for j II fee was ewas as abroad in the land Peace ht greatest healer of ot financial mess known to mankind By y lithe lithe- public debt had been enI en- en I ip Id off The item Hem of Iner- Iner next ten years was a. a e trifle But it was too good to tol toJ J l the government of the United es Cs tely ran into bump I 2 The Mexican l war to 1860 the public debt reached from three our millions of annual- annual I And by that time it was not cult to meet The government again control of the situation I ump Xo No 3 appeared It was wasI I one Another nother war wart b war nearly wrecked the rican nation financially both financially both and nd in the South In- In harges rose from in 1866 The years ears were heartbreak- heartbreak tones ones The debt charges aver- aver over annual- annual e the great financial healer ee e was again agam in the land In- In st c charges arges decreased as pays payi pay- pay i s S' S were made on the principal American Spanish war added littI to the burden because the rt of ot the war expenses I out o of current taxes at at as the right policy in It was the one policy to have I ue in 1917 But it was not noti MIt i Iwed wed Bump No Ko 4 appeared Lh her war TEST DEBAUCH ireat war was the greatest of I financIal nci J l' l debauch bauch itt in all the history of ot mankind W Ve spent for purely war purposes a total of and we raised In war taxes a total of ot For every dollar which we spent for war we raised 22 4 cents In taxes The balance bal bal- ance ance cents cents we we got by selling government credit and by debauchIng debauchIng debauchIng debauch- debauch Ing our money Ve We conscripted men but we wo did not conscript wealth That was our biggest mis mis- take Jean de Bloch a Polish banker published a very great treatise on The Future of ot War In the six I volumes of this monumental work the great banker established the proposition that from a purely economic economic economic eco eco- viewpoint a modern war var was nothing less than international sui sui- sul- sul cide And unless civilization could I get rid of it war would get rid of civilization Bloch was the first business statesman to understand I just what war did to the modern industrial plant He saw clearly that unless all 1 the war expenses are paid for out I of ot current taxation future g generations genera genera- ions will pay the cost by their nera-I nera savIngs savings sayings sav say ings and hardships Yes and at a lower standard of living The whole world is experiencing just that thing today And the people of the United States arc are not outside outside outside out out- side of this law iron of war It is very important at this point that we should not confuse real wealth with the evidences and symbols symbols symbols sym sym- bols of wealth Real wealth consists consists con con- of goods and services while evidences of wealth consist of money and credit In real wealth therefore the United States paid its Us entire cost of the war while it was being fought There was no escape from It Every army saddle eVery gun every uniform every ton of shell every piece of ot beefsteak every man-hour man spent in military serice serice service ser ser- vice ice ice was taken from the current store of wealth at the time REAL INCOMES REDUCED I Now if it these materials and en energies energies energies en- en given to war activity did not notarise notarise notarise arise from increased productive efficiency ef ef- ef which would have been impossible under peace conditions this draft on our real wealth made poorer by just that much the current current current cur cur- I. I rent real Incomes of our tion don How then did we pay for forthe forthe forthe the war We Ve paid for it in housIng housing housing hous hous- ing shortages In food and clothing scarcities scarcities scarcities-In In a word In a reduced purchasing power of the average individual So Ifo o the real cost post fost of the war was met only by a reduction in consumption Every person who ha has been through the experiences of the last war should know and understand that such deprivations and hardships hardships hardships hard hard- ships would not have been an iota enlarged if the entire money cost of the war had been raised by taxation taxation taxation taxa taxa- tion and not a cent had been raised rals-ed by borrowings So it If f the entire cost of the last war for the United States had been paid out of current taxation In Instead Instead instead in- in stead of ot only 31 per cent as raised the immediate cost to the people in real wealth would ha have been no greater and there would have hav been no federal war debt of twenty-five twenty billions of dollars to Lo pay oft off after the war was over I want to make malte this point especially especially especially espe espe- clear The government of the United States by raising 69 per cent of the money necessary I for war by governmental borrowIngs borrowings borrowings borrow borrow- ings only added to the future tax burdens WITHOUT REDUCING G THE IMMEDIATE REAL nEAL COST But you ask asIc how howls Is such a thing possible If It the government had doubled his taxes would Mr Ir Citizen Citizen Citizen Citi Citi- zen not have less money with which to buy current necessities and so soless soless soless less purchasing power Such a a question overlooks the change Inthe in inthe inthe the value alue of mone money which accompanied accompanied and must always accompany accompany pany pan large scale government bor bor- It Is true that the Individual individual indi Indi- vidual taxpayers ers had to give over overto overto overto to the government fewer dollars than If it the war had been entirely financed by taxation But the dollars dollars dollars dol dol- lars which he had left could buy less because of the higher prices accompanying the inflation of credit and currency which in turn was caused directly by government I borrowings WEAl WEALTH TH SHRANK So the last war from rom the standpoint standpoint standpoint stand stand- point of all government finances was a tragedy not only because of the real wealth destroyed but be because because because be- be cause it corrupted and demoralized the s symbols or evidences of wealth the the currency and credit of the nation Our country was no ex ex- When the ratio o of the volume of credit and currency Increases faster faster fast fast fast- er than the ratio of the volume of goods produced prices rise money falls in value and inflation sets in That is what wha t happened throughout the world in the last war period It happened also in the United States Result Result money money the meI medium medium me- me I of exchange shrunk in value It tj just withered up so that In 1913 became worth only 48 48 in purchasing purchasing purchasing pur pur- chasing value In 1919 Inflation is grand larceny by the government It robs one class of ot people and hands the loot over to another class It always works the same way wa The greater part of the worlds world's troubles today are directly due to the evils of inflation We I borrowed per cent of our war expenses expense We Ve too committed the crime of inflation Interest on the public debt grew from Crom in the fiscal year 1918 to In the fiscal year 1923 For every dollar spent by the United States for Interest In 1918 42 was needed in 1923 Our public debt charges in 1923 were more than twice the cost of the whole whore federal government In 1900 It was more than on ont and one half times the total cost of the entire government as late as the fiscal year 1917 1911 A DAY INTEREST Since the beginning of the fiscal year 1920 the people of the United States have had to to pay payout out ap approxImately approximately ap- ap proximately a day for public debt charges This is more by approximately than the total spent on the army and navy Y together for 1923 Yet it Is really a war cost one cost one of the tangible tangible tangi tangi- ble things we got out of the war On June 30 1916 our Interest bearing debt was On June 30 1923 it had reached 22 The interest charges had grown during the same period from to For every dollar spent by the federal government in the fiscal year 1923 this item of interest alone took cen cents s. s But this is I Inot not the whole story Another 42 I must be added to the public I debt charges as payment on prin prin- cipal Together for tor interest and principal over 41 cents out of every dollar which the government of the United States spent went for this item of debt charges It is easily the largest single Item In the cost of the federal government |