Show National Debt Reaches Record ecord High L L- L By WILLIAM C. C UTLEY was n a time when shen the T THERE United States had n a national debt of o only ly But that was exactly years ago ago In In 1536 And for each of those years the debt has multiplied multiplied multiplied multi multi- plied almost times The United States be began an existence existence exist exist- ence with the staggering for those thos times national debt of That was to pay for the Revolutionary Revolutionary ne war var and up Lip to the present resent day great rises In the national debt have been the result of wars accepting accepting ac ac- ac the theory theor of ot one school of thought which regards the spendIng spending spend spend- ing that caused the present enormous enor enor- total as necessitated by n a depression depression de de- which was the direct result result re re- re- re sult suit of the World war The War of 1812 sent the debt up to In 1810 In rn the debt reached a new high of 2 following the Civil war In 1915 It stood at the comfortable total of but the World war skyrocketed It to the alarming total of four years later By conscientious during the next decade the debt reached Its pOstwar postwar post pOst- war low how of In 1930 1130 When hen Pr President Roosevelt elt delivered delivered ered his budget messa message e to congress on January 0 the national debt was higher than It had bad ever been be be- fore It was as well over o He lIe predicted that on June 30 1 1937 1037 31 at nt the end of the 37 1930 fiscal fiscal fis fis- cal year rear It would be or more than 1000 for Cor every family In the land hand The present record national debt Is the direct result of the administrations administration's administrations administration's adminis adminis- policy of ot priming the pump to aid business In effecting a 11 recovery from the throes of de do- It Is not as large as President Roosevelt noose had bad predicted it would be six sis months ago Two years ears ago ngo he said The liThe debt would amount to on on June 30 1035 1935 But the President also said then In n his first annual budget message to congress My ry estimates for the coming fi fiscal year ending June 30 1935 1035 show an excess of expenditures expenditures expendi expendi- tures over receipts of We should plan to have a definitely balanced budget for tor the third year ar of recovery the present fiscal year and from that time Ume on seek a continuing reduction of ot the national debt Balance Not In Sight Yet such a balance has not been effected or even forecast for the 1937 1037 fiscal year ear He estimated that for that year t the le government would collect In revenues and would spend plus a sum for work relief still sun to tobe tobe tobe be determined The deficit then would have been at least Sl 1098 1008 S- S plus whatever amount had to be he added for relief Unfortunately Unfortunately there were Immediate pendIng pending pend pend- ing lug Issues which would throw the Presidents President's estimate out of ot whack On the very day of ot his message the Supreme court declared the AAA Invalid and a later ruHn ruling decreed I that the government would have bave to I pay back the processing taxes Also It was virtually certain that the soldiers' soldiers bonus would pass congress The situation cases be laid lad to the total Inability of the Treasury department the banks nn and the people In general to estimate the duration of the depres depres- sion When Incomes sl slUmped so did revenues And nd when the primIng primIng primIng prim Ing failed to get the pump workIng workIng work work- Ing as quickly as had been predicted predicted pre pro tax revenues re failed to grow to expected proportions From Irom Wall Vall WallStreet Street money marts have ha rumbled accusations of or deliberate overstate o overstatement ment In the more recent budget es es- es- es In January 1931 1034 President President dent Roosevelt eIt estimated that the deficit six months later would be It turned out to be An estimated for the first half of l 1935 35 proved pro to be an actual wan Wall Street sa says s 's the treasury treas ti-ens- ury Is too smart to make such mistakes mistakes mistakes mis mis- takes unwittingly The Real National Debt For other reasons It la is to estimate the real national debt The gross debt deM of more than at the end of 1035 1935 actually represented the proceeds of December December Decem Decem- ber borrowing added to the exis- exis Ing debt But though the mone money I I p X 1 f. f r 1 S j o a o E o oa x i ra CI r r U t L- L r- r 4 u x CO ra COca 0 ra co cobl fJ 2 bl a ca mE I- I cac C E 5 a 8 fJ 1 c C 3 c fJ 0 o 2 J. J ra fJ CI C J. J To ra C I- I s IJ J I C ra o 3 O lra l- l CO g o 2 g ra 2 c I- I II J. J fJ co 0 c o 0 fJ 0 cJ c a c. cuS 2 O J r J g g 2 0 O Q toa ra J 0 toa r i t- t IJ 00 ra L- L ra raN r- r N WHERE THE GOVERNMENTS GOVERNMENT'S DOLLAR COMES FROM Recent court decisions would cancel the column labeled Processing Taxes and these taxes will have to be returned by the government Both the charts on this page are based on 1936 1935 budget estimates was serious enough for Secretary of the Treasury l to predict predict pre pre- dict that the country might face a national debt of bythe uy by the end of or the 1037 1937 fiscal year The balancing of the budget has been complicated In recent years by the over optimistic character of ot annual bud budget et deficit estimates as the following fono table tuble reveals The first three deficit estimates w were re reby by Mr Hoover Hoo All AU are given In InI I millions of dollars Predicted d Actual 1032 1931 31 31 1333 1032 33 1738 1933 1534 1935 1934 2512 1 1935 1936 1986 Surplus As As of or Jan 17 Inc That estimates were so 50 far away from the actual totals may In most had been heen borrowed It had not yet been spent With the sum thus held In the general fund Cund deducted the debt In December was actually only a little over liver But there are also complications not so ros rosy In nature During the thelast thelast thelast last half half-do half dozen en the years government govern ment has embarked on some extraordinary ex ex- ex financial ventures Many critics of the government financial policy polley would add to the debt the contingent liabilities taken on by the treasury How Flow the Treasury departments department's financial finan finan- cial ventures ventur s stood on October 31 1035 Is shown In the following Combined Statement of ot Assets and Liabilities ties of Governmental Corporations and Credit Agen Agencies les lesot of ot the United States Figures are In millions of ot dollars Assets As As- AsLia Lla- Lla sets bUes ty Recon Fin Corp 2340 2068 2063 Commod Cred Corp Public Admin Ship Board Mer F. F Federal Land Bits Bics 2403 Fed latex rn Cr Fed Farm Mori Mort C C. C 1622 1397 Banks for tor Co operate Home Loan Banks Banka 89 Homo Home Own LC 2932 2 2842 60 Fed Say Sav I L. L Ins C. C Fed Dop Ins Corp All others Grand Total Like so much of the New Deals Deal's financing the value or the danger of these liabilities depend entirely upon recovery If It business returns to normal or prosperous times the assets assets as as- sets sels will be gradually realized as IlS were those of the War Var Finance corporation cor cor- But if times do not get better and und stay better the assets will be virtually Impossible of col lection In a continued depression they might become an extremely embarrassing em burden The liabilities of are not only a claim on tho the taxpayer but they are over o and above the national debt of more inure than S Further Moral Obligations Moral obligations of or the treasury are outstanding liabilities of or the Federal Land Banks Bunks Home Loan Banks' Banks discount functions Federal Deposit Insurance corporation Federal Fed Fed- eral Savings Sa and Life Insurance corporation and the real estate loans to the Federal Housing Administration Ad Ad- ministration These implied liabilities lia ha- ha total another or so Painting the blackest side of the picture It Is seen that if It times go utterly bad had If these actual and Implied liabilities have to be met and 1 if Mr Ir worst fears are realized the national debt might reach or 45 or oren even ven more There are some Intangibles on the asset side too There is about which the government government government govern govern- ment may realize from equities If It all the debtors to and HOLO HOLU pay up There Is not an Intangible but a real asset of ot gold profit now being held In the stabilization fund Secretary Mor- Mor a year and a half haU ago announced announced an nn- that this sum would eventually even even- be turned Into revenues and would contribute toward reducing the national debt It Is barely burely possible possible possible pos pos- sible that will be collected collected col col- from the of war debts At some time In the future future fu fu- fu ture revenues from the Social Security Security Security Se Se- act passed In August l 1033 1035 35 may be reckoned on the asset side No administration In history has borrowed so much money as the present one No administration has borrowed It so cheaply either The cost of carr carrying a debt of today Is 19 little more than the cost of carrying the of 1033 1933 and Is actually less than carrying the war debt deb of l 1010 1019 19 While the debt has risen 70 per cent since the 1031 fiscal year the cost of carrying it has risen only 34 per percent cent This Is what the President was referring to In his budget message message message mes mes- sage when he said that the tIle governments government's govern m ment's ments nt's credit was never higher Refunding Debt Cheaply If It the low rates for money continue continue continue con con- and economists right now can see little reason that they shouldn't nt the government will find Itself getting out from under the great grent part of oC the debt dirt cheap since about one half of ot It matures within the next five years ears Refunding He- He funding should be possible at low cost One evil of cheap mone money Is the temptation to spend more It Iten en encourages Irresponsibility The world holds plenty plent of ot precedent to show that It Is budgetary Irresponsibility that leads to inflation The estimated In revenues for the 1037 fiscal year rear If It It proves accurate would mean the largest federal tax receipts In history history his his- tor tory with the exception of ot the year yearl l 1020 20 when w wartime tax taxes were at their height but Incomes were up too How some of the tax rates have been Increased to make up for tor forthe forthe the difference In Income today Is readily seen Maximum surtax on personal Incomes has grown rown from 20 per cent In 10 30 1020 30 0 to 75 73 per percent percent percent cent the maximum rate on estate taxes from 20 per cent t to 70 per percent percent percent cent cent and the maximum corporate Income tax from 11 per cent to 1517 per cent There has actually been a decline In the amount of ot federal tax taken from the citizens citizen's dollar however In 1 1032 32 It was per cent In l 1033 1933 33 1 5 per cent and In 1034 1934 l G per cent The 20 cents out ol olevery ot of every dollar that the citizen clUzen pays I Into the federal treasury Is reflected reflect reflect- ed cd In almost every article he lie buys food toad gasoline telephone service tobacco tobacco to to- bacco theater tickets ets electric power pow pow- er etc But It Is admitted that the new financing depends entirely upon recovery recovery recovery re re- re- re covery for revenues to Increase If It times get worse Instead of ot better better- 1 i t tE 4 I E cu Q JC J. J c co C 0 C a C C Q 2 a S E u c C UI en CI a. a fJ E 0 I s J C 0 J 0 C o J 2 Q O. toa fJ Q- Q a cn 0 oX c c Q c ct C O o 2 ci 0 o 0 U en t c co ow C 0 i g c l Q J 3 cn J. J 2 0 co Q c- c toa Q c c 2 co Q co s a C Z cu C Q C C- C Q fl Q to U J f 4 C U o c 3 WHERE THE GOVERNMENTS GOVERNMENT'S DOLLAR GOES The Tho shaded columns columns col col- represent expenditures for recovery and relief Although the Supreme Su preme court declared the AAA unconstitutional the administration will seek seck some other means of payment and regards farm subsidy of this nature nature nature na na- na- na ture as a permanent policy well the Wall Vahl Street Journal has said The question how much debt the country CAN carry is Incorrectly posed It should be how much debt deb WILL L the country carry IF spending continues and IF federal receipts do not swing up only two courses lie ahead More and higher taxes or Inflation e c Western Union |