U.S. BUDGET

Southland Times, Issue 22215, 6 January 1934, Page 5

U.S. BUDGET

MR ROOSEVELT’S PLANS

PROSPERITY THROUGH SPENDING

NAVAL EXPENDITURE {United Press Assn.—Telegraph Copyright.) Washington, January 4. Mr Roosevelt definitely committed the Government to a policy of regaining prosperity through spending when to-day he submitted to Congress the 1934-35 Budget estimates, calling for expenditures of 10,569,000,000 dollars during the current fiscal year ending on June 30 and some 6,000,000,000 dollars in the following fiscal year with appended information that 10,000,000,000 must be borrowed by the Government within the next six months to meet the unprecedented expenses coincident With the recovery programme Balance-sheets were submitted with the President’s message to envisage receipts during the two fiscal years of 7,234,000,000 compared with aggregate expenditures of 16,569,000,000. The 1934 expenditures include 3,045,000,000 on general expenses and 6,375,000,000 for emergency appropriations. The general expenses are considerably less than the 4,218,000,000 estimated by Mr Hoover in his 1932 Budget message. Emergency appropriations then, of course, were not anticipated. Campaign Against Deficit. Mr Roosevelt reported to Congress a prospective 9,000,000,000-dollar ‘‘recovery campaign” against the deficit for the next two years, and asked that the lid be clamped down to put the United States Government on a pay-as-you-go basis by 1936. In a message transmitting the Budget, the President estimated the expenditure chargeable entirely to the recovery effort at almost 7,500,000,000 dollars for the fiscal year ending on June 30 and asked for 2,000,000,000 dollars to continue and taper off the drive in the following year. Mr Roosevelt also asked Congress to appropriate 53,819,334 dollars for new naval vessels and for continued work upon those authorized and generally permit the continuance of the work on 15 vessels and the laying down of the last of the planned 10,000-ton eightinch gun cruisers next January; also the construction of 33,000 tons of sixinch gun cruisers under the terms of the London Naval Treaty. “Brutally Frank” Statement.

In listing extraordinary expenditures in 1934 Mr Roosevelt did not include extra requests for 1,166,000,000 dollars, which would make the total 10,569,000,000. The message, which the President regards as “brutally frank,” is clearly based on the most pessimistic possible estimates. The revenue makes no allowance for the almost certain increase in the tax on spirits from 1.10 dollars a gallon to 2 dollars. The estimates regarded payments due on war debts as a total loss, although the Government has by no means abandoned hope of realizing something on them. Likewise the estimates took no cognizance of the efforts of Congress to prevent wholesale income tax evasions. On the other hand the estimated emergency expenditures are so large that some Congressmen doubt the Government’s ability to spend so much. The President indicated that he expected relief needs to taper off during 1934-35 through normal recoveries. “By 1936 we will have truly balanced the Budget,” said the President. “Powerful forces for recovery exist. If by laying the foundation of confiden in the present and faith in the future, that up-turn which we have so far seen will become a cumulative cornerstone. This foundation is the credit of the Government. If we maintain the course I have outlined we can confidently look forward to cumulative beneficial forces, represented by an increased volume of business, greater employment, a diminution of relief expenditure and larger governmental receipts and repayments.” Emergency Expenses.

In simplified language, Mr Roosevelt has anticipated a deficit of 7,000,000,000 dollars in the current year and 2,000,000,000 dollars in the next. With no specific taxes to meet the difference he is trusting that increased business, with a corresponding reduction in appropriations, will even things off eventually and in the generation to come liquidate the vast public debt. In round figures the current emergency expenses include:— Dollars. Public Works 1,677,000,000 Agricultural adjustment 103,000,000 Fann credit 40,000,000 Conservation Corps 341,000,000 Reconstruction Finance Corporation 3,969,000,000 Tennessee Valley 19,000,000 Land Banks 52,000,000 Deposit Insurance 150,000,000 Administration of the N.R.A. 4,250,000 EFFECT ON MARKETS BONDS AND DOLLAR SLUMP. (United Press Assn.—Telegraph Copyright.) New York, January 4. Stock Exchange prices, Government bonds and the dollar all sank on the President’s Budget message. Commodities were moderately stronger, wheat gaining about haff a cent of yesterday’s losses. The Government’s gold price was unchanged. The Government bond market suffered a sharp break when it was learned that the Government contemplated borrowing 10,000.000.000 dollars. Wall Street experts are of the opinion that 4,000,000,000 dollars will be needed to meet maturities withwith 6,000,000,000 dollars of “new money.” Bond experts are somewhat critical. The market, already saturated with Government issues, is not able to absorb such heavy flotations. The dollar was gaining when the message was published. Immediately foreign exchanges started to rise, sterling jumping six points. The dollar closed at 62.73, sterling at 5.15 J and the franc at 6241. BIMETALLIC SYSTEM BILL BEFORE SENATE. (United Press Assn—Telegraph Copyright.) (Rec. 7 p.m.) Washington, January 4. Senator Wheeler, after visiting White House, introduced a Bill in the Senate to establish a bimetallic system at a ratio of 16 to 1 between silver and gold. He also proposed the free coinage of both metals. A BOLD PROGRAMME HUGE ARTIFICIAL STIMULUS. (United Press Assn.—Telegraph Copyright.) (Rec. 5.5 p.m.) London, January 4. The financial editor of the Daily Telegraph says: “The real meaning of Mr Roosevelt’s programme is that he is borrowing 10,000.000,000 dollars in order to create immediate activity in employment and stimulate the purchasing power, staking everything on the belief that this huge artificial stimulus will eventually carry the country into real prosperity. The boldness of the programme is illustrated by the fact that the President is proposing to create a new national debt equal to the whole amount paid off after the

war. By our standards the proposal is amazing, but America is not Britain. She is more self-contained and her resources are vast. The City of London’s chief inquiries are: Can the money be borrowed? Can the objects be found to spend it on? The answer to both is in the affirmative.” TAX ON LIQUOR TWO DOLLARS A GALLON. (United Press Assn.—Telegraph Copyright.) (Rec. 7 p.m.) Washington, January 4. The new liquor tax Bill, carrying a basic levy of two dollars a gallon on distilled spirit, is expected to be passed to-morrow, by the House. The prohibition rate was 1 dollar 10 cents.