The Timaru Herald. MONDAY, JANUARY 7, 1935. PRICE OF THE NEW DEAL

Timaru Herald, Volume CXXXIX, Issue 20000, 7 January 1935, Page 6

The Timaru Herald. MONDAY, JANUARY 7, 1935. PRICE OF THE NEW DEAL

Giving an assurance that the budget proposals which are to be announced in the United States Congress to-day, would be “within the sound money credit of the Government,” reporting more gains than losses in 193-1, and expressing a strong hope for 1935, President Roosevelt forecasts a new and greatly enlarged plan of relief to meet the difficult financial and economic situation as it confronts the United States at the dawn of the new Year. Moreover, the President gave a promise that he would soon propose definite legislation on unemployment insurance and old age pensions. If this is so. bigger and more pressing problems of finance will instantly confront the President and the administrators of the new deal. 1 The President on his part has had the temerity to report more gains than losses in 1934, but he cannot evade the significance of the official statement isued by the United States Treasury. A few figures occasionally enable even the casual observer to keep the position of national finances of the United States in the true perspective. The interest bearing debt, for instance, has been increased $ Prom .. .. 20,584,310,000 To 28,500,000,000 by the Roosevelt Administration or a rise of approximately 18,000,000,000. According to a calculation by a leading group of American actuaries the annual interest charges on the debt outstanding have increased as shown below: $ At February, 1933 698,577,000 At November, 1934 801,530,000

Increase $102,953,000 In a word President Roosevelt has increased the national debt by 29 per cent., and on the authority of The Christian Science Monitor, the disbursements of many millions have not yet brought economic recovery! Moreover, President Roosevelt, notwithstanding his claim that 1934 has shown more gains than losses, has led the country into such deep plunges of national expenditure that not only has he piled up a mountain of national indebtedness, but he has expended national funds so lavishly that he is expected to report to Congress an unprecedented budget deficit for the half year, of $1,600,000,000 and a prospective deficit for the year, compared with a substantial shortage the previous year as under: Deficit. To June 30 $ 1934 (actual) .. .. 4,000,000,000 1935 (estimated) .. 3,500,000,000 Total for two years $7,500,000,000 It will thus be seen that month by month the national indebtedness of the United States is increasing by leaps and bounds; indeed, the national recovery plan seems to have its roots in borrowed money; so much so that the country is going into additional indebtedness at the rate of nearly three million sterling a week, made up as under : Per month " $ National debt increase .. 290,000,000 Budget deficit 350,000,000 $640,000,000 And yet at the moment, a Washington group is working out a programme, the wisdom of which will do much to determine whether relief shall eventually give way to a system of, economic security, or whether it shall in some way be saddled upon the United States even more tightly than now. Says one reviewer: Out of the conferences will come recommendations for unemployment insurance, old-age pensions, and possibly health Insurance, mothers’ pensions and other forms of security. The immediate temptation in attempting to launch a social insurance system under conditions of depression and stark, widespread need is to try to make the leap too quickly from relief to security. Naturally it is desirable and essential to try to taper off relief payments as soon as possible. But it Is essential to remember that unemployment insurance is fundamentally a long-term safeguard against the effects of another depression rather than an instant mechanism with which to jack the American people out of the present one.

If we may assume that the forecast of the President’s programme is approximately accurate, as outlined in the cable messages this morning, the new security plan Mr Roosevelt proposes to undertake will start off badly because he continues to confuse public relief with economic self-support.