AMERICA'S FINANCES.

Waikato Times, Volume 111, Issue 18652, 2 June 1932, Page 7

AMERICA'S FINANCES.

BALANCING BUDGET. MR HOOVER INTERVENES. THE RUN ON THE DOLLAR. DRAMATIC PROCEEDINGS. United Press Assn.—Elec. Tel. Copyright. WASHINGTON, May 31. The protracted struggle by Congress to balance the Budget reached a dramatic climax to-day. The President, Mr Hoover, almost without notification, appeared in the Senate and read a message urging the immediate balancing of the Budget and the adoption of a manufacturers’, sales tax, excluding food, clothing and other necessities. Mr Hoover declared that an emergency existed which demanded quick action. He spoke at considerable length on the weakness 'of the dollar In foreign markets and the recent steady depletion of gold stocks. He named three major duties which, he said, Congress must accomplish, namely: 1. Drastio reduction in expenditure. 2. Passage of adequate revenue legislation, and 3. Unemployment relief. The President gave reasons why he considered the Tax Bill in its present form was inadequate. He declared that he did not favour the general sales tax system providing for a levy on every sale from wholesaler to retail)-.’ to consumer. However, Mr Hoover said, he endorsed the special manufacturers’ excise sales tax along the lines recommended by the Ways and Means Committee of the House of Representitlves, which was twice rejected by the House. This tax was levied only once upon a commodity, when it was sold by the manufacturer. Assistance for Business. The President also outlined a project of Federal aid which would broaden greatly the lending powers of the Reconstruction Corporation, so that it could advance funds to States and municipalities and private industry to start a business recovery. The continued downward movement in the economio life of the country had been particularly accelerated during the past few days, and it was related in part definitely to the flnanei il programme of the Government. “ There can be no doubt," continued the President, “ that, superimposed upon other causes, the long continued delays over the passage oJ legislation providing for such a reduction in expenses and such additional revenue as would balance the Budget, together with the proposal of a project which would greatly increase Government expenditure, have given rise to doubt and anxiety as to the ability of the Government to meet its responsibilities.

Fears and Doubts Exaggerated. “ These fears and doubts have been foolishly exaggerated in foreign countries. They know from bitter experience that the course of unbalanced Budgets is the road -to ruin. “ They do not realise, however, that, slow as our process may be, we i are determined, and have the resources ! to do so, to place the finances of the United States on an unassailable basis. “ The immediate result of these fears and doubts has been to create an entirely unjustified run upon the American dollar in foreign countries within the past few days,” said Mr Hoover. "In spite of our national wealth and resources and our unparalleled gold reserve the dollar stands at a serious discount in the markets of the world for the first time in half a century. “ This can, and must, immediately be corrected or the reaction on our economic situation will he such as to oause great losses to our people. Further it will retard our recovery. “Nor is the confusion in the public mind and the rising feeling of doubt and fear confined to foreign ■countries. It reflects itself directly in the diminished economic activty and increased unemployment within our borders and among our own 'Citizens. There is thus further stress on the already diminished and strained economio life of the country." The Tax Bill Passed. The President’s message came at a most hectic time. The Secretary to the Treasury, Mr O. L. Mills, earlier in the day had appeared before the Finance Committee of the Senate and said the pending Tax Bill was still some 285,000,000 dollars (aboul £57,000,000 calculated at par) short of being balanced. He again urged a sales tax, but proposed alternatives, including a one cent tax on gasoline. Subsequently, within half an hour of tiie President’s address, the Finance' Committee defeated the manufacturers' sales tax by 12 votes to 8. At a late hour the Senate itself defeated the proposed sales tax by 53 votes -to 27 and then passed the Tax Bill by 72 votes to 11. The measure provides for a revenue of £1,115,000,000 dollars (about £223,000,000 calculated at par). This amount, supplemented by 250,000,000 dollars under the -pending Economy Bill, will meet the Government's requirements within the next fiscal year.

Ft is estimated that America’s gold stocks have been depleted to the extent of dollars this year, of which 207,000,000 was lost in May.