Evening Star Newspaper, April 1, 1932, Page 5

THE EVENING S HOUSE BUMPI_HES ' How Shall We Balance Budget? TAX AVENDNENTS $88,000,000 Expected as Assessment Is Planned on Stock Dividends. (Continued From Pirst Page.) every cabinet member is going over to the Senate and yowling that we are ruining their departments” he said. “How are you going to get anywhere when that happens? “These sam= cabinet officers and Mr. Hocver could save that $250,000,000 themselves if they wanted to. They refuse to do it. It could be done, it ought to be done and it will be done.” Acting Chairman Crisp of the Ways and Means Committee said the com- mittee reduced its estimate on sav- ings to $200,000,000. He said Secretary Mills had changed many of the Treasury's original esti- mates of yields on proposed taxes, low- ering several. In Mills’ original estimate of savings, ! he said that $150,000,000 could be | slashed from appropriations. Already, the House Appropriations Committee has cut six appropriation bills $115,- 000,000. Byrns Expects Slashes. Chairman Byrns of the House Ap- :—lopmunm Committee expects to slash dget figures for the War and Navy) Departments by $30,000,000. These re- ductions do not take into considera- tion the 10 per cent cut ordered on supply bills by the Senate. As the committee pondered what ad- ditional taxes it would offer for the bill before consideration of the measure is finished today by the House, Rep- resentative Clancy, Republican, of Michigan, said no reconsideration would be wufiht on the 3 per cent tax on au- tomobiles, 2 per cent on trucks and 1 per cent on accessories. - An -effort would be made to have the Senate strike out the item, he said. Reconsideration will be sought of sev- eral other items, however. ) Garner sald: ime the Treasury wants to have its way it can do it.” he sald. “Its estimates for many years have been low, when it wanted them that way, and high when it wanted them that way. “I think the country knows I have outguessed them in many instances.” Declares Treasury Unfair, He expressed belief that increased rates on individual income taxes would in~ $20,000,000 more than the and that the net loss repeal provision would net $100,- | 000,000 instead of $70,000,000, as the ‘Treasury figured. “They simply don't want the net Joss change,” he said. “When the Treasury and the administration don't want @ thing, they simply say it won't bring in what other people say it will. “I think it is quite unfair for the| “Treasury to reduce by 30 or 40 per cent | the very estimates it gave to us a cou- | ple of months ago. “They can't be doing that on any| basis but the belief that the country is to be much worse off. e Treasury ought at least to figure the country is going to hold its own. That's one reason for trying to balance the budget. “To say we can't reduce expenses but $125,000,000 is simply to say the ad-| ministration won't reduce them any| more than that.” Explains Differences. Crisp took the floor when the House met and outlined the difference between the and committee estimates. “Secretary Mills . allows only $125,- 00,000 for reducing expenditures,” Crisp . “The committee estimate, and it is just as apt to be correct and accu- | rate as the Treasury, allows $200,000,000 | n savings. “Under the Treasury estimate we would fall $159,000,000 short of balanc- ing the budget. The committee esti- mates the bill as it now stands would fall 850,000,000 short. Estimates of the Joint Congressional Tax Committee would Jleave an actual surplus of $2,000,000. “The committee realized hard-headed business men would be more apt to accept the Treasury's than our esti- mate. Therefore the committee deter- mined to leave no question and pro- poses now an amendment to raise (In this article, the fourth of a series on balancing the budget, David Lawrence deals with the ez- pense of Government in America and tells of the gradual growth of the cost of State governments and the reason for the increase in State debts.) BY DAVID LAWRENCE. State Budgets. Of the total cost of government in America, which now amounts to about $13,000,000,000, the Federal Government spends $4,000,000,000 the States about $2,000,000,000 and the cities about $7,- 000,000,000 & year. Back in 1890 all of the States of the Union had an_annual budget of only $77,000,000. This jumped to $182.- 000,000 in 1903, and was more than doubled a decade later, namely in 1913, when the figures stood at $383,000,000. This has been the story every decade. For, in 1923, we find the annual budget figure at $1,242,000,000 for all the States and, judging by the way the States have been spending money, we shall, in 1933, have a State budget total of $3.- 000,000,000 unless the present depression brings a halt. While there is some consolation in the fact that the Federal Government has since the war kept its expenditures from increasing at the same rate that State and local expenses have been going up, this does not erase the fact that the general trend in_governmental and local, has been rising steadily. It has been suggested that perhaps the increased figures do not give a true picture because the purchasing power of the dollar was down during the years of prosperity and that some comparison ought to be made with a year like 1931, when the dollar bought considerably more than it did in 1929. In terms of 1913 dollars, however, the total com- bined expenses for Federal, State and local government would have amounted to about $9,000,000,000, instead of $12,- 500,000,000 spent by all three budgets in 1928. Even this amount is exactly three times the combined Federal, State and local budgets of 1913, The Federal Government, however, did a much better job in the last dec- ade than did either the States or the local governments. The Washington authorities cut the Federal debt from $26,000,000,000 down to $16,000,000,000 and managed to have surpluses prac- tically every year until the end of 1929 The States and local governments dur- ing the same period increased their debts by about $10,000,000,000, which, curiously enough, was almost exactly the amount the Federal Government had cut off of its deb* in the same pe- riod of time. Examining State Budgets. Examining the State budgets, we find that about 36 per cent olge[he annual expenditures goes for highways and that education absorbs another 30 per cent. Thus, we see that 76 per cent of all ex- penses of the State governments go into two main divisions, education and high- ways, and the remaining 24 per cent is divided among such items ss general government, protection, special welfare and economic development. Social welfare takes nearly 14 per cent and protection is next with 9 per cent. The actual cost of administra- tion is between 5 and 6 per cent. What these percentages mean, how- ever, can best be understood by taking a typical budget of about $2,000,000,000. About $663.000,000 is spent for high- ways and about $523,000,000 for educa- tlon. Social welfare costs about $240,- 000,000 and protection, which includes the regulatory functions of the Stste governments, amounts to about $170,- 000,000. General government takes about $107,000,000, economic develop- ment about $70,000,000. Debt redemp- m::u;nsmx’mermumc $140,000,000 an- miscellaneous - wmm e activities al . There has been a correspondin in the total amount of deb!goin thge fi:: decade. means that the States have not been able to carry on their extensive improvements, especially for highways, on current revenues. They have had to bo;row and the market for their securities' has been aided by the fact that the Federal Government could not tax State bonds and that tax-ex- empt securities were popular, especially dn the early days of the last decade. The total bonded debt of the States | is in the neighborhood of $2,000,000,000 | as compared to a total debt of the cities | States Could Avoid Borrowing by Cutting Expendi- tures for Capital Improvement and by Economies in Administration. sive in New England, where it amounts to only 18 per cent of the State debt. Just what the future of the State governments in America is going to be | depends to a large extent on the trend of the taxing power. If the States are to develop new sources of revenue, they wil. gradually increase their responsi- bilities and the tendency may be to | centralize more power. in the State capi- | tal, especially that of co-ordinating local | governments. This has already occurred in several States, where local units can- not borrow without making provision for a sinking fund and supervision of their finances by the State government. There is no doubt that during the last decade the States have increased the | plant—that is, they have added to capi- | tal assets by improving roads and build- | ings and constructing buildings which will last many, many years and take care of all the expansion that is prob- able in the next decade in the way f governmental activities. In other words, | these expenditures should have a tend- | ency to decline from now on and there | doubtless will be a halt to the con- | tinued borrowing. Within the next five | years such a policy would mean the im- | provement of State credit and the | gradual reduction of taxes. |~ What the States need is to find a way | to balance their budget and to quit | borrowing. THey could do this by re- ducing their expenditures for capital | improvement &nd by economies in ad- | ministration. Probably the largest per- | centage of economy will be effected in | connection with State budgets where | there is a complete revision of taxing expense in all divisions, Federal, State | gystems. Some of the taxes have proved | | so productive that they have led to ex- |travagance. Thus the gasoline tax, which was originally intended to pay for | road building, brought in not only enough money to absorb that expense, but to tempt some States to increase their budgets and borrowing. From all parts of the Union there are reports of increased interest in State budgets and the trend is uniformly | downward. The item of unemployment relief, however, bulks large and is tem- rarily obscuring the downward trend | of other items. | Copyright, | (Tomorrow’s article will deal with city budgets and municipal expenses.) ' SPANISH BUDGET PASSED Balancing Surplus of $7,110,000 | Is Provided by Assembly. | MADRID, Spain, April 1 (#.—The Spanish Assembly last night approved the budget for 1932 providing for in- come of 4,550,000,000 pesetas and ex- penditures of 4,442,000,000. (At the present rate of exchange the Spanish budget embraces total income for the year of $341,250,000 and total | expenditures of $334,140.000, allowing a balancing surplus of $7,110,000.) 1992 | Plan Benefit Bridge Party. | FALLS CHURCH, Va., April 1 (Spe- clal—Young women of the “Little Aid” will give a benefit bridge party | Saturday night at the home of Mr. | and Mrs. | of Mrs. | Brown Dorothy Snyder and Mrs. Will Lecture at Fairfax. FAIRFAX, Va. April 1 (Special).— Commodore Longfellow from National Red Cross headquarters in Washington will give & lecture and first aid demon- stration tonight at 8 o'clock in the Court House under the auspices of the Fairfax County Health unit. | William S. Brown in charge | AR, BROKERS FEARTAY WL SLOW SHLES Volume Expected as Re- sult of U. S. Levy. By the Associated Press. NEW YORK, April 1.—Stock Exchange brokers, whose business has dwindled to | about one-fifth of its 1929 volume, fear deeper inroads as a result of increasing taxes. While they mostly insist taxes must be increased to balance the budget re- gardless of financial hardships that re- sult, they express concern over the probable effects of the proposed Federal tax on stock transfers, approved by the House yesterday. In reviewing two and a half years of declining stock prices, they record the following changes in their fortunes: Stock trading volume, which in the boom period was considered normal at 5,000,000 shares a day on the exchange, is now running nearer 1,000,000 shares a day. Further Shrinkage Certain. Stock Exchange seats which then brought around $500,000 are down around $100,000. i Brokers' Tevenues from arranging |loans to carry marginal customers, which once netted many hundreds of | thousands of dollars a year, are down | to_nominal size. | Further shrinkage is certain to de- velop in stock trading, they say, if the | tax burden on customers becomes too heavy. They admit they cannot tell whether the new tax will be enough to ‘szifle the day-to-day trader—but they insist it would seriously hamper him. In ]suppnn of their arguments they have figured out the cost of present and pro- posed tax rates on the round trip process of buying and selling & unit of 100 shares of stock. Purchase and sale of that many shares of stock selling at $5_entails a commission expense of $15, a New York State tax of $4, a proposed Federal tax which at its minimum rate would be $4, thus making a total charge to the cus- tomer of $23. This amounts to 4.6 per cent of the purchase price. Hampers Speculation. For a $20 stock, which is the most | important barometer, because the aver- | age price of stocks listed on the ex- | change stands close to that level, there |is a $25 commission charge for 100 | shares, $4 State tax, $5 proposed Fed- eral tax, making a total cost of $34, or 1.7 per cent. For an $80 stock the cost would be | $40 commissions on 100 shares, $4 State tax, $20 Federal tax, or $64 in all, amounting to eight-tenths of 1 per n o | These charges, leading brokers con- tend, would make little difference in | the total of business they transact for | investors who buy stocks outright to | hold for years. | But every increase in the cost of | doing business tends to restrict the vol- ume of speculative trading, they say, and it is this business that is particu- larly profitable to brokerage houses. Furthermore, they point out, many large borkerage houses are running heavily into “the red.” | AGREE ON PEST FUND | Conferees on the agricultural supply bill today accepted the Senate provision appropriating $1,450,000 for grasshopper control .n the Northwestern States. The Federal money will be used in supplying poison bait for the grass- hoppers, which scourged the agricul- tural regions last Summer. Local and State communities will pay for dis- tributing the bait. | The agriculture conference report | will be submitted shortly to the House and Senate for final approval. W edding Smfz'o/zer}/ by WASHINGTON, Further Inroads on Smaller D. C.,. FRIDAY, |Wives Were Bought On Easy Payments 3,500 Years Ago Archeologists Find Meth- ods of Today Not So Modern After All. By the Associated Press. CHICAGO, Auril 1.—These arche- ologists, who are always digging up new facts from the old, have brought to light some new stories to show moderns they are so modern after all. No only did some of the ancients use |the installment plan for buying things. |but in Babylonia scme 3,500 years ago a poor man could acquire a wife with five shekels down and the balance in easy payments. Prof. Edward Chiera of the Uni- versity of Chicago told about it at a conference yesterday of the American Oriental Society. The story, he said, was written in clay tablets found at th site of the ancient Iraq City of Nuzi. Neither is there anything new in the idea of brushing one's teeth. The ancient Indo-Europeans some 1,700 years before Christ made & rite of this hygienic act, Dr. George V. Bobrins- koy, also of the University of Chicago, said. Only they used twigs, taken from living trees, instead of toothbrushes. And these modern young newspaper reporters who tear their hair when their editors edit their “copy” may find tians did the same thing, using chisels on the_ hieroglyphics cils. This was brought out by Prof. John A. Wilson of the institute. NEW HONOLULU-SHANGHAI OCEAN ROUTE SURVEYED Expedition Reports Partial Success in Effort to Find Shorter Shipping Lane. By the Associated Press. SAN FRANCISCO, April 1.—Partial success in finding a shorter shipping lane between Honolulu and Shanghai was reported yesterday by Capt. O. W. Swanson, member of a United States Coast and Geodetic surveying expedition. The survey boat Poineer returned here yesterday after two years of surveying in the litfle-known “Flat Islands” west of Honolulu. Several discoveries valu- able to shipping were reported. Capt. Swanson said the Pioneer had followed & new route between the pres- ent two ship lanes in use between Hono- lulu and Shanghai and had found it clear of reefs and rocks for several hun- dred miles. 18-Karat White Gold'_, > < and your APRIL - 1, solace in the fact the ancient Egyp-| in place of pen- | 1932. BALANCED FRENCH BUDGET APPROVED Tardieu Cracks Whip to Force Senate-Chamber Agreement. | By the Assoctated Press. | . PARIS, April 1.—The French Par- liament, after a session which lasted all night and through the entire morn- | ing, approved a balanced budget today | for the period from April 1 to De- cember 31 The budget calls for receipts of 41,100,883,000 francs and expenditures of 41,097.501,000. The Chamber adopted the final draft |of the bill by 435 to 55. | ‘Premier Andre Tardieu was obliged to crack the whip over the Deputies | during the night session to force an agreement on differences between the Senate and Chamber bills. He raised a question of confidence three times in an effort to speed the proceedings, | getting an average majority of 50 votes, | Throughout the debate the opposition | charged that the budget was balanced |only on paper and that by the end of | 1932 there would be a deficit of from 2,000,000,000 to 9,000,000,000 francs. | Shortly after the budget was ap- | proved the House adjourned. BRITAIN REVEALS SURPLUS LONDON, April 1.—The British treasury announced last night that the budget for 1931-32 had been balanced with a surplus of £364,000 (81,822,000 at par), bringing to a happy ending what threatened to be the gloomiest year in British financial history. The surplus was achieved after pro- viding £32,500,000 (normally $162,- 500,000) for redemption of Britain's debts and the withdrawal of £12,750,- 000 (863,750,000 at par) from the dollar exchange account, instead of New Morocco | Beaver Board || Made of imitation leather. Will make 1 beautiful panelled 2 FT. O ORDER TOO SMALL"” “SUDDEN SERVICE" rooms. Choice of mahogany, green, chestnut. || J. FRANK KELLY, Inc. | Lumber, Millwork, Paint, Coal | Sand, Gravel Cement 2121 Ga. Ave. North 1343 old mounting buys this white gold beauty ‘The revenue for the year amounted to £770,963,000 and the expenditures ‘were £770,599,000. (The pound sterling is worth about $5 at . but has depreciated to $3.70 l:ndze E:hnd went the gold stand- ard.) Drastic measures taken by the Na- tional government of Prime Minister Ramsay MacDonald last September to balance the budget as the first step toward a restoration of world confi- dence and prosperity were regarded as having been successful when the figures were published A loan of $100,000,000) from the French public has not been repaid. 2,500,000.000 francs | England and Prance before ** A—S »-1 the 23000000 contempiated 1st| WOMAN PLANS SEA HOP . Will Fly From East to West Over “Lindbergh Route.” PANAMA CITY, April 1 () —Edna Colter, young Seattle, Wash., woman, passed through the Panama Canal yes- terday aboard the S. S. Oakland bound for Europe with plans for an east-west _ transatlantic flight over “the Lindbergh - route.” 4 She said she planned to visit Belsum. ling “her life's ambition to pllot s trans- 1 tlantic plan “I Wore Your BELL Suit to the Club and Won a $50 Wager” —a Prominent Washingtonian Told Us Recently This man, with a reputation for wearing expensive custom-tailored clothes, bought a Bell Suit that attracted him in our window. At the club one night it was admired and appraised—*‘Sixty-five dollars,” close to $12,000,000,000. Between 1953 | America’s Oldest Credit Jewelers! said one man; “Fifty dollars,” said $80,000,000. Oppose Amendment. Representative Treadway (Repub- lican) of Massachusetts, a member of the committee, opposed the Crisp amendment, which would apply normal income taxes to dividends paid by cor- porations having a gross income of over $25,000. “This is the first time partisanship was introduced into the Ways and Means_ Committee,” Treadway said. “The Republican members were taken | wholly by surprise.” Treadway proposed that dividend in- ccomes up to $10,000 should continue ex- empt from normal taxes. The Tread- way amendment would apply the tax to individuals and that by Crisp would be applicable to corporations. Representative Ragon, Democrat, of Arkansas, said the Treasury estimates submitted to his subcommittee were “indefensible,” and charged that “if partisanship was introduced into this bill it was done by the Treasury De- partment and not the Democratic members of the House." { Ragon said Mills appeared before the | committee and said expenses of the | Government could be cut $200,000,000 d then in his revised estimates had d only $125,000.000 could be saved. “If the administration’s departments | wanted to, they could cut their ex-| penses $200,000,000.” he said | Ragon said the bill would balance the budget, although “it won't be balanced like a lot of people would like it bal- anced.” Hawley said the dividend amend- ment would take the “life blood out of industry.” Representative Campbell, Republican, of Towa, denied there was any partisan- ship in the formulation of the revenue bill and that the Treasury deficit was “a bi-partisan deficit.” Senate Gets Ready. Seeing the revenue bill coming, the | Senate began preparations. The Demo- cratic leader, Robinon of Arkansas, kindly disposed toward the measure, de- cided to call a party conference on it earlv next week. Chairman Smoot, Re- publican, of Utah, of the Finance Com- mittee, arranged for extremely limited committee hearings, with the intention of reporting the bill for debate quickly, to do all possible to assure final ad- Journment before the June conventions. Talking of the tax bill today, Senator Robinson said “There is a disposition in the Senate to receive it favorably. Of course, it is 00 early to discuss particular rates, but on the whole I am convinced that the members of the Democratic party, at, least, are inclined to look favorably upon the measure as it stands today.” One of the last provisions tacked, on to the measure yesterday provided that | all the special excise taxes inserted as substitutes for the sales tax would take effect 15 davs after President Hoover signs the bill and would end on July 1, 1934 The bill's total revenue was brought to an estimated total of $999,- 000,000 All told, $255,500.000 was added during the session, by provisions for a gift tax running up to 33!, per cent on amounts over $10,000,000; a change in loss deduction limit on income tax; 10 _per cent on fire arms and ammuni- tion; 8 per cent on oil .pipe line carry- ing and taxes on stock, bond, futures and real estate and 1928 the debt of States, as well as the debt of :ities, practically doubled. Half of Bonds for Highways. If we analyze the purposes of i debt in the States, we ‘;ln!?o!‘hlt prl’c‘:lf cally 50 per cent of the bonds were is- sued for the purpose of building high- ways, and that the States themselves built relatively few buildings. Less than 4 per cent of the total of the State debts went for school or college buildings. But it is significant that only 14 per cent of the debt was incurred in veteran relief and maintaining soldiers’ and sailors’ homes. If we take the item of soldiers' and sailors’ rellef and homes, we find that approximately $2,800,000 was spent by the States in this category, which is a relatively small sum spread over the 48 States of the Union. It is obvious that the Federal Government with its billion a year has been bearing the principal burden for the care and relief of the veterans. Distribution of State expenses varies, of course, with the different sections of the country. Thus in the Middle At- lantic States the proportion of the State debt due to highways is 72 per cent while in the South Central States it is close to 70 per cent, and is least expen ments. NAtional 2231 ] Arthur J. Sun [ 40 Years at STATIONERS JEWELERS A.Kahn Jnc. ...synonomous with correctness . .. quality . . . and those forms indicative of fashionable usage. The all-important wedding an- nouncements must have the mark of unquestioned correctness . . . found always at A. Kahn Inc. Estimates gladly furnished. dlun, President 935 F Street PLATINUMSMITHS Banjo, Guitar, Mandolin or Saxophone Eight-private-lesson course FREE on any of the above instru- The first twenty persons presenting this coupon will also receive a club membership to Student Orchestra. No Instruments Required We furnish instruments for lessons and practice. A rare opportunity to discover if you have talent. Enroll Saturday, April 2, 1932—10 A.M. to 8 PM. Witt-Hamill Music Co. 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