FISCAL: Matter of Course

Five years and fifteen billion dollars ago Franklin Roosevelt embarked on the policy of spending the Nation out of depression. To raise submerged industrial indices and put 12,000,000 men to work, the pump of national finance was primed with Government money. Spending theoreticians like the Federal Reserve’s Marriner Eccles would have liked to see the full force of the spending concentrated on industry rather than scattered between producers and consumers and an important Eccles corollary would have been a temporary lifting of the tax burden to help business help itself (see p. 18). At any rate, Federal spending, according to Mr. Roosevelt, who “planned it that way,” produced one fairly good business year, 1936. In 1938, more than 11,000,000 men are again out of work and industrial indices are once more in the cellar.

When a business runs into hard times, it pulls in its financial belt. The present U. S. Government, while it will not trust business to mind its own affairs, is not a business. In spite of the Administration’s anti-trust tirades and its plans for lower daily wages for the building trades, for reorganization of untenable capital structures like the railroads, when it came to the point it has shied away from meeting deflation by the orthodox means of scaling down monopolistic high prices, disproportionate wages and interest charges. “Because it is unpopular to readjust by liquidation and politically inconvenient to revise its policies,” summed up Pundit Walter Lippmann last week, “the Administration has come back as a matter of course to inflation by spending.”

So last week Franklin Roosevelt issued a call to his first-line spending lieutenants: Senate Majority Leader Alben Barkley and House Leader Sam Rayburn, fresh from his humiliation over the failure of the Reorganization Bill, Works Progress Administrator Harry Hopkins, Acting Budget Director Daniel W. Bell, Chairman Carter Glass of the Senate Appropriations Committee and Chairman Edward T. Taylor of the House Appropriations Committee. These met for a White House conference this week. Meantime, Congressional spadework and broad hints by the President in his press conferences and elsewhere during the week had roughed in the three sums to be provided: $1,500,000,000 for loans to business and various governmental units, $1,500,000,000 for public works, $1,500,000,000 for relief. The sources:

RFC, The first $1,500,000,000 was to come from RFC. Two months ago Chairman Jesse Jones announced that RFC, which has pumped into banks, insurance companies, railroads and miscellaneous borrowers $6,883,195,607 of Government credit since 1932, had accessible resources of $1,500,000,000 on hand. At that time RFC, which has been tapering off its activities by Presidential direction since last October, received another Presidential direction to find ways & means of making the $1,500,000,000 it had on hand readily available in the form of loans that would help maintain or increase employment. Last week Congress set out to make this task easier. The House approved a bill amending the RFC Act, already passed by the Senate where it had been introduced by Carter Glass, which removes the limit for maturities on RFC loans (previously set at Jan. 31, 1945), provides for self-liquidating loans to States and their political subdivisions.

PWA. The second $1,500,000,000 was to be made available through PWA, which has spent $4,337,000,000 since it received its original appropriation of $3,300,000,000 from Congress in 1933 and has undertaken no loans nor grants since the President asked it to liquidate along with RFC in October.

Still on PWA’s file, however, is a batch of applications for 2,700 projects totaling $432,000,000. Last week, day after ebullient Publisher Joseph Medill Patterson dined at the White House and same day his Sister Cissie bawled out the President in her Washington Herald (see p. 15), Brother Joseph’s New York Daily News published an uncontradicted “scoop” announcing that Congress would shortly be asked to authorize a new $1,500,000,000 public works program, financed by a bond issue and undertaken by PWAdministrator Harold W. Ickes.

Relief. The third sum, amounting to $1,500,000,000, was to be spent through WPA and other relief agencies. In his January budget message the President allotted $1,000,000,000 to recovery & relief for fiscal 1939, some $841,000,000 less than the 1938 budget estimate.

But after relief rolls climbed from 17,314,000 in January to 18,502,000 in February, Administrator Harry Hopkins got a $250,000,000 appropriation from Congress last month to hire 500,000 more workers before June 30. After this week’s conference Senator Barkley announced that Congress would be asked to appropriate $1,250,000,000 for WPA for the first part of fiscal 1939, also to eliminate the Woodrum amendment, inserted in last year’s appropriation bill, which requires that disbursements be spread evenly over the months of the year, in addition $150,000,000 was to go to the Farm Security Administration, $50,000,000 to CCC to avoid closing 300 camps in July, and $50,000,000 to the National Youth Administration. Wise old Senator Glass predicted that the contemplated $1,250,000,000 for WPA would be only a “starter.”

This impression was strengthened by Administrator Hopkins who appeared before the Senate Unemployment Committee the same day to recommend a long-range program for eliminating direct relief, providing WPA jobs for all employables on relief rolls and some kind of insurance for the rest.

“You don’t mean to say,” inquired shocked Committee Chairman Jimmy Byrnes, “that WPA should never be liquidated?”

Replied Mr. Hopkins: “It is difficult, Senator, to look forward into the future.”