Sad Subject

While the nation was dividing itself into clangorous groups of hard and soft money men last week, frantically trading theory for theory as prizefighters swap punches, a plainspoken, uncompromising young Arizonan who parts his hair in the middle and knows more about Government income & outgo than anyone else, arrived in Boston to speak a few hard facts. He was Director of the Budget Lewis Williams Douglas, addressing the annual conference of the New England Council (industrialists, businessmen). As a spokesman, he had come neither to praise the Administration's fiscal policies nor to bury any illusions about them.

Because of the $3,300,000,000 Public Works expenditure, the Agricultural Adjustment Administration's domestic allotment operations, the Federal Deposit Insurance Corp.'s bank liquidations, said Director Douglas, "the national debt in the fiscal year 1934 will be substantially increased."* The amount of the increase Director Douglas was unable to predict because of "certain still undefined policies of the Government." Though he did not say so, this meant that U. S. citizens would wake up July 1, 1934 to find a fourth successive Treasury deficit behind them.

Fiscal 1935 presented a brighter picture. General Johnson had announced in Fort Worth that industry was 25% recovered. Director Douglas estimated that if industry was 10% recovered by the end of fiscal 1934, 1935 Government income would be $3,550,000,000--provided there were no further extraordinary expenditures. Ordinary expenditures would be $2,600,000,000, leaving a balance of $950,000,000 to reduce the public debt for the first time in five years.

"But if additional obligations are contracted," grimly continued Budgeteer Douglas, ''then (this is a sad subject) additional taxes must be imposed. The gaps in the old tax law must be closed so that the wealthy may not escape. And in addition, and I say this in all sincerity, the great middle class of this country . . . for its own preservation must be willing to subject itself to the taxes necessary to finance the additional emergency obligations incurred if they are incurred. There are no other alternatives. . . . The middle class must willingly carry the burden of saving itself from destruction, for continuous and prolonged budgetary inflation means its destruction."

* The Public Debt on Oct. 31 stood at $22,668,932,880.

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