PRIMING THE PUMP.

Star (Christchurch), Volume LXVI, Issue 20361, 19 July 1934, Page 5

PRIMING THE PUMP.

Roosevelt Has Vast Sums to Spend. PLAYING KEYNES’S GAME. (By PAUL, MALLON.) WASHINGTON, June IS. Those who know the inside of business feel a little better now. The adjournment of Congress, President Roosevelt’s attitude (he is so confident that he is going away for a six weeks’ vacation), and the softening of N.R.A. policy have removed glum looks.

That is why the stock market has been stronger recently. There will be a July recession. There always is; it will be no shock to sentiment. Prospects for the autumn are fairy good. The main thing is that Mr Roosevelt’s pockets are bulging with money. The sum he has is so vast that it cannot be accurately calculated, but it is somewhere near £2,000,000,000. This includes the £1,000,000,000 he can use out of the R.F.C., the remainder of the public works funds, drought relief, A.A.A, funds, etc.

He will not spend all this money unless an unexpected emergency arises, but his economic calculators are figuring now on putting out more than £400,000,000 before the first of next year. Mr Roosevelt is playing the Keynes game; that is, he has quietly accumulated from Congress this session authority to spend these vast sums with a view to ur-ing them to balance the business situation. He calls it “priming the pump.”

Unquestionably, his rate of expenditure will increase during July and August. His Treasury is in good shape; his only worry will be to balance the Budget during the fiscal year beginning July 1, 1935. His prospects of doing that are not very good, but that is a long way off. o