| Show outlook alarms finance experts see new deal financing as prelude to heavy inflation by DR E W KEMMERER professor of international finance princeton university and member national advisory council of the american liberty league the increase in our public debt for the three years ending next nest june will be approximately equivalent to 40 a minute from the date columbus discovered america to the present time Alean meanwhile while our taxes also have been increasing rapidly while our national income out of which they are payable has been far below what it was before the depression having declined every sear but one from 1029 to 1034 1934 and having averaged in current currant dollars 32 per cent lower during the last three of these years than during the three years preceding Uund hundreds reds of millions of dollars of our recently accumulated deficit have been incurred to pay for the production at excessive costs of unproductive and little needed public works and to compensate farmers for destroying little littie pigs plowing under cotton and for not producing crops and live stock the burden of taxation is increased to obtain funds to destroy the national wealth out of which the taxes must be paid present policy dangerous although we have been experiencing a substantial growth of taxes during the last few years against which the public are showing increasing opposition our enormous increase in public expenditures has been financed chiefly not out of taxation but by means of inflationary borrowing from the banks in this fact lies the greatest danger of our present financial policy the usual antidote for extravagant government expenditures Is heavy taxation the basic principle of an anglo glo saxon democracy is control of the government by the people through their control of the purse namely of the taxes they pay an eminent english historian has called the power of the purse the surest safeguard of freedom 11 when the members members of congress who vote for large expenditures of public money are compelled at the same time to vote for additional taxes for meeting these expenditures taxes which are distributed equitably among all classes of voters both rich and poor and that are consciously paid by the voters and not concealed in the form of increased prices then and then only do the members of congress become watchdogs watch dogs s of the treasury aind become careful and economical in the expenditures they authorize if they are not economical they are not reelected re elected the situation however is very different when a great part of the expenditures Is financed through the sale ot of government debt to the banks which the banks pay tor for by issuing bank no notes tes or more importantly by placing placing to the governments credit bank deposits that the government in turn pays out as it desires by means ot of checks this practice when long continued spells inflation |
