those conversant with the American situation, one of the more frequent sources of misgivings is in the trend of Federal finances, states "The, Financial News.
June, 1939, will mark the end of nine successive fiscal years of unbalanced Budgets; the year ending June, 1940, is expected to be the tenth in this series. At the end of that time President Roosevelt will have failed to return a balanced Budget during two terms in office, a unique record in American annals. In itself this would not be a serious matter for, in adverse times, unbalanced Budgets have their advantages. But the forces set in motion by easy finance seem at this stage to be too much for politicians to handle with the celerity and despatch envisaged by the advocates of this policy.
Table I shows the course of revenues and expenditures since 1929, together with the deficits incurred outstanding. low revenues in the years subsequent to 1929 was reached in 1982, the next to last fiscal year of the Hoover Ad-5 ministration. The fiscal year which ended June 30, 1938, saw revenues at the highest point in the history of the country, excluding only the inflation-revenues of 1938 coincided with a national income of about $65,000,000,- 000. If production were to rise by about 20 per cent., together with some rise in prices, the income figures should appróximate 80 milliard dollars. With this rise of some 15 milliards over the 1938 income, Gov-emmental revenues would have to increase by about 45 per cent. above the figure for that year in order to achieve a balanced Budget with 5
HAM ary post-war year 1920, when they expenditures maintained at a love which appears to be a modest reached $6,605,000,000, with the index of wholesale prices, however, at 154. estimate for 1940.
Similarly, revenues last year were Recovery Prospects over one and one-half times those of is Were European political conditions the boom: year 1929. Expenditures and the uncertainties they create for had meanwhile increased much fas-business to show some lasting signs ter, so that the Budget was still of quieting, the general prospects for quite out of balance. For those who American recovery seem to be state it was "approximately" balanced favourable. The Governmental ex-during only a moderate business rependiture, the pick-up in residential covery it is well to bear in mind construction, the possibility of more these focis: (1) that this deficit was extended utility financing, and a peace-time history Congress less hostile to business should all be strong factors for an advance, If national income were thus to rise to the levels indicated, and.a broader tax base be adopted, it might be that at the scale of exit penditure contemplated for the fiscal year ending 1940, given. Congressional "will the Budget could be balanced di obs kedly.
Tabi and Interest-bearing at some time early in the next de-tie ood States Treasury cade. fiscal But to followers of the American a view to believe mat this level li tical scene. it seems too sangı Deficit ort C Interest "bearing ined jet alone reduced. For relief penditure will on! main-
expenditures should not be expected an WE to fall so soon even were the upward movement to take place. The experience of 1937 will invariably be brought forward to the attention of those who suggest such political action. Moreover, 1940 is a Preside tial election year. No matter how much party leaders will talk economy, to expect any substantial moves in that direction will probably be disappointing. The international situa-Foreshadowed Expenditures tion calls for increased armaments.
So much for the past series of A drive for larger social security deficits. For the current fiscal year payments is already being heard and ending June 30, and the next one may be at least partially successful ending June, 1940, the President's inasmuch as the President has shown Message to Congress in January of himself ready to entertain these pro-this year foreshadowed expenditures posals. Even the opposition Republi-of $9492,000,000 and $8,995,000,000 can party has, in States where the respectively, with deficits of $3,972,- Townsend Plan for 1938 shows a re-000,000 and $3,326,000,000. Thus it is duction in business done, including estimated that by the middle of 1940 management commission, from £920,- the interest-bearing debt of the 494 to £776,351. As a result of the United States Treasury will be in lower turnover costs are less, but the neighbourhood of $43,874,000,000. the fall is not proportionate to the There is ro doubt but that this sum, loss of business and with income-tax though in sharp contrast to the total up from £1,350 to £17,867, a net at the: end of 1929, is not beyond the profit of £52,046 for 1937 is converted capacity of the United States to bear, into a loss of £16,516. Consequently, particularly should some rise in no payment is made on the 7 per prices accompany an increased out-cent. Income Debenture stock, and put. The more disturbing aspect, the carry-forward is reduced from however, is in the relation between £44301 to £27,785. Nothing has the Federal deficit, the banking been earned or paid on the Ordinery position and the recovery movement, shares since 1930, and the Cumulative which may well give rise to a Hob-Preference dividends also are in son's choice among the cross currents arrears since that year. Moreover, of Federal finance and monetary after the end of the-current year the control. But first let us examine the interest on the Income Debentures theory behind Government spending becomes cumulative, the annual cost able to publish details of the which has led President Roosevelt to being about £25,000 gross. The imreached between the railways and the trading and embark on this policy on an extended mediate outlook for the company interests and of the memorandum submitted by the scale during the last few years. cannot be regarded as promising for The.grgument for unbalanced Bud-reasons outside its control. to the special committee of the Transport Advisory gets is-that in times of depression
Text read from the printed page and cleaned; old type leaves the occasional error.