The President and Congress are exhibiting a spirit and a capacity for united and virtuous action, which cannot but raise the morale of the whole country. Courageous leadership and the prompt demonstration by congress of its willingness to support it wake a new hope throughout the nation. They inspire a new confidence not only in our government but in ourselves to deal decisively and successfully with our difficulties. This constitutes the first step in the restoration of prosperity.
The next step is to vest in the President full power to without check or delay the drastic retrenchments in federal expenditures essential to a balance of the budget, to the revival of the public credit, to the relief of the people and private enterprise from the drain of federal taxation, and therefore to the release and mobilization of the vast resources of the nation for the work of restoration.
The abstract reality of living within one's means has been conceded by all spendthrift governments, including our own of recent years. The abstractions need not detain us. The reasons for granting the President the power he demanded to [curb] government expenditures are so concrete and so pressing that he had to set as he did in demanding immediate authority to carry out a program of economy. A wasteful government has brought us low. We cannot recover until the waste has ended.
Moreover, there had to be a prompt demonstration to the world of the determination of our government not to finance itself through this crisis by turning on printing presses loose. There is only one way to put that message over convincingly and that is by actual economy. A thousand pledges by congressmen to balance the budget we've seen have meant nothing. The federal budget has gone unbalanced for three years, as Mr. Roosevelt said in his powerful message and as The Tribune has repeatedly pointed out. The accumulated deficits of the three years ending next June amount to 4 billion dollars. As matters now stand the government faces another billion dollar deficit in the year ending June 10, 1934.
More congressional promises and pledges of economy would be merely more promises and pledges. The way to economize is to economize.
Half a billion can be saved by squeezing the veterans' appropriation. Perhaps as much more can come from reorganization of the executive departments, for which the President has already received authority, and from salary reductions. Altogether these measures seem to ensure a balanced budget in 1934; and if they are not sufficiently drastic the President has the authority and the will to squeeze the appropriations still further.
That is the first, and to readers of the Tribune a familiar, reason for demanding retrenchment at once. The other reason, no less pressing, in the midst of this banking crisis, is to assure the government sufficient funds with which to reconstitute the banking system on a sound and workable basis. Much attention has been paid to the issuance of new money with which to render the banks in the big cities impregnable. This measure will cost the treasury next to nothing at all. The banks which will be reopened are sound by any standard, and with the provisions made for converting every deposit into cash to the last penny. No one is justified in drawing more money than is required for normal business and personal payments. The class A banks are impregnable.
The banks for which the government will have to provide new capital are the smaller banks scattered throughout the country. Individually they are unimportant. In the aggregate they are immensely important. The great banks in the cities are the heart of our credit structure. Through them the city pays for the food the city man eats, and the raw material such as coal and lumber, cotton and wool which are consumed in the factories. The food comes in and the money goes out.
Normally the return flow is provided for through the machinery of the small banks. The funds sent out from the cities for raw materials flow back in payment for manufacturing and services performed in the cities. The analogy of the blood stream in the human body is as nearly perfect as an analogy can be. The reopening of the class A banks provides a means of sending blood out to the toes from the heart but it is almost as important to provide a means of bringing the blood back from the toes to the heart. Without that return flow the economic life of the nation cannot long continue.
This relationship has been clearly understood in Washington. The emergency banking act passed on Thursday naught contains many provisions regarding the big banks, and toward the end another provision which permits the Reconstruction Finance corporation to restore a sufficient number of state as well as national banks to complete solvency. The government can invest in preferred stock in these banks and it will invest enough in each case to leave no more doubts of their soundness. With enough of those lesser banks reconstituted, the business life of the country can go on. The movement of goods in and out of the cities can be balanced by the flow of money in the reverse direction.
To do that job of reconstituting a sound country banking organization will take new money. If the Treasury has to dissipate its resources in paying half a billion dollars this year non-service connected disabilities, in addition to the half billion of deserved pensions, it may find itself without enough money to reorganize the banking structure at a vital point. Even to the recipients of the dole to veterans the sacrifice of their monthly stipend is a small matter in comparison to the stake at issue. A veteran who can think that his pension of $10 a month is worth months and perhaps years of business stagnation and its attendant misery and unemployment ought to be locked up as a lunatic.
The government has been spending billions wastefully. Now it has to retrench, not only because it can't raise the amounts it has been spending but also because it has far more important uses for such money as is available.
Let us be utterly candid. The veterans who suffered no injury in the last war but are receiving pensions were enlisted in a struggle against a foe 3,000 miles and more away. They could have quailed in the face of the enemy-such of them as saw fighting-and still their country would have been 3,000 mile away from immediate danger. Today they and their country are in peril as never before in our lifetime. The superb leadership of the new President will go for naught if his plans are wrecked by the lack of means to carry them out. That is why the pensions and the useless government jobs and bureaus must go. Our government, in this hour of crisis, cannot spend a fourth and more of its income, close to a billion dollars a year, for veterans' care. The best it can do, and this Mr. Roosevelt has pledged himself to adopt as his guiding principle, is to care for those who were incapacitated in service and for the widows and orphans of the men who gave their lives for their country.
The issue is clear cut. Patriotism and self-interest both dictate unhesitating support of the position which the President has taken.