Evening Star Newspaper, October 4, 1936, Page 33

Editorial Page Political Round-Up | Part 2—12 Pages “FASCIST VICTORY IN SPAIN ANTICIPATED BY FRANCE Military .Superiority of Rebels Assures Franco Forces Will Win—Paris to Increase Border Guard. BY CONSTANTINE BROWN. HE day Gen. Pranco and his Arab-Foreign Legion mer- cenaries enter Madrid and establish a government on the Mussolini-Hitler pattern France will be compelled to move eight divi- slons to the Pyrenees and concen- trate most of her defenses in the Mediterranean. Great Britain, too, would soon feel the effect of the establishment of such a Nationalist- Fascist government. Franco will have to prove that the nationalist-militar- ist government of Spain does not tolerate any foreign power to own an inch of Spanish soil, and will request the retrocession of Gibraltar to its rightful owners. The establishment of the military junta as a permanent government will have far-reaching in- ternational consequences.” These were the last words spoken to this writer early in September by one of France’s leading staff officers a few days before the fall of Irun. At that time nobody in Europe, and especially in Prance, had the slightest doubt that the loyalist government was doomed; that the occupation of Madrid was a question of weeks, and that by applying the “strong method” of Hitler and Mussolini, the generals could not fail to subdue the 90 per cent of the Spanish people who are not in sympathy with the generals and their hirelings. The Madrid government has failed, despite popular support, because it had no military leadership. Even revolutions, these days, require the talents of military specialists who know something about mechanized Jorces, strategy and tactics. The Spanish Loyalists were full of enthusiasm, self-sacrifice and reckless courage. They had against them, at first, small groups of militarist sym- pathizers. But these sympathizers ({4 killed with one stone: The despised, unruly Communist-anarchist govern= ment will be overthrown and the government organized in Madrid will have tc be friendly to the British ‘Tories. Blum and the French general staff believe that the British are hopelessly blind to actual facts. The Spanish revolution was organized in Berlin and in Rome last Spring. The French government has in’its files photostat - copies of the agreement reached between the leaders of the Spanish junta and Mussolini and Hitler. This agreement provides that in the event that the revolution is successful the Balearic Islands will be made into a naval and air base for the use of the Italian forces and the Spanish Morocco, with its two important ports, Ceuta and Melilla, will also be transformed into sub- marine and air bases for the benefit of the Central Powers. Furthermore, the French maintain, while there apparently is no agree- ment regarding Gibraltar, it stands to reason that the Nationalist gov- ernment will want to make some sort of a gesture to assert to the Span= ish people its independence of the mighty British Empire. The French expect, therefore, that the Spanish generals might demand the evacuation of Gibraltar, which they consider Spanish territory. As far as this writer has been able to ascertain, there is no concrete basis for the theory except that the French some- times are accurately intuitive. Dictators’ Proclamation. Blum admits that the financial aid | which London could place at the dis- | posal of the Madrid government might be tempting for the generals who are | concerned, primarily, with their own | establishment in power. But, the | French say, Mussolini and Hitler, have EDITORIAL SECTION ~ The Sunday Star WASHINGTON, D. C., SUNDAY MORNING, OCTOBER 4, 1936. Taxes Deluge Consumer Check-Up on Actual Budgets of 3 Families Shows Average of 12.18 Cents Out of Each $1 Spent. mD IDOLLAR STABILIZATION MONETARY SOLUTION Observer Holds Morgenthau’s Recent Step Will Be Vain Unless U. S. “Budget Is BY MARK SULLIVAN. OSSIBLY, just possibly, the world has at last reached a - true turning point toward con- fidence and hope. The agree- ment looking toward stabilization of the French, British and American currencies may be the authentic thing. If we had not had so many “turning points” before, 50 many beacons that turned out false, we would not be so hesitant to believe in this one. But for nearly 20 years the world has seen one hopeful expectation after another turn to dust and ashes. Almost at an average rate of one a year, something has been done, some international agreement or other step, which has been proclaimed as, and received by a tormented world as, the event that at last set the world back on the track toward normal ways. One can call them off like litany of hopes turned to despair. There was the Dawes Plan and the Young Plan—both these “settled” the mat- ter of German reparations, and with that settled the world would be well again. There was the Locarno Pact and the Geneva Conference and the Lausanne Conference, each supposed to “settle” something. Most of the many international conferences “set- tled” the same thing. The fact that it did not stay settled and that in a year or so. another conference was settling the same thing again—after nearly 20 years of that, the world became distrustful and cynical. There was the Washington Conference for the limitation of armament, and the | London Conference for the same pur- pose, and the Kellogg Pact—all sup- posed to take us toward universal and any time since the Great War and the League of Nations. To read the ex- pectations excited by the League of Nations in 1919 and thereabouts, and Balanced.” agreement, the stabilization of cure rencies, and the restoration of inter national trade. The London Conference was abrupt« ly broken up by a message from President Roosevelt, and to this day the public has never learned why Mr. Roosevelt sent that message. Un- less there is adequate explanation, that disruption of the London Eco- nomic Conference in the Summer of 1933 would seem possibly the most serious of all the charges that Mr. Roosevelt’s critics can bring against him. But if there is reasonable ex- planation, and if his present step toward another stabilization turns out to be effective, the world will forget the three lost years. Stabilization of currencies will not alone get the world surely back on the track. A sound fiscal step within the world of international relations can- not e effective if it is accompanied by unsound fiscal conditions within any one of the nations party.-to the international agreement. The subject of domestic inflation cannot be con- sidered apart from the subject of in- ternational stability. Indeed, inter- national stability of several currencies cannot exist if there is instability of one of the currencies domestically. Mr. Roosevelt's recent action, cheering and wholesome as its promise is, can be of no use unless he at once takes the corresponding course of making our own dollar stable within our own borders. The two are closely related. Inter- national stabilization should improve imternational trade; improved inter- national trade should result in im- proved domestic trades, improved do- permanent peace, but today peace is | mestic trade should decrease unem- more remote, war more near, than at | ployment and thereby decrease Gov- ernment expenditures and at the same | time increase the Government's rev- enue from taxation. In short, Mr. Roosevelt'’s present step about cur- foreseeing such a possibility, 2 | were led by men who had spent their | taken the necessary precautions to then t nsider th t sad im- lives in barracks handling battalions | en to col e presEn! | rency internationally is & help do- and divisions. Neither of the Spanish leaders, Franco or Mola, could give & good account of himself in leading armies against French, British or Italian generals. But they are Napo- leons compared with the well-mean- ing civilians, the former top sergeants, and the few young officers who are in charge of the Loyalist troops. The only good troops which remained faithful to the republic were the Na- tional Guard, and they were weakened by the thousands of youngsters with no more than three days of military training. German, Ktalian Money. ‘The rebels had the support of Ger- many and Italy, who supplied just enough money to keep the mercen- aries from Morocco in good spirits, and plenty of arms of the latest type, ammunition and 186 airplanes, pilot- ed by experienced aviators. While this writer was in Rome and while the Italian government was issuing half-hearted denials that it was send- ing airplanes and aviators to France, an Italian Caprone bomber crashed in French Morocco and the three officers which it carried were Kkilled. Pending the official investigation, the French authorities gave the aviators a soldiers’ funeral. The Italian gov- ernment, informed of the accident, was “looking into the matter” and meanwhile Count Ciano, the Italian foreign secretary, sent for the French Ambassador, Count Chambrun, and asked him to express the heartfelt | thanks of Il Duce to the French gov- ernment for the funeral given these aviators. Against this effective assistance given to Franco and Mola by the authoritarian governments, Leon Blum was giving the Loyalists only half- hearted support. The Madrid gov- ernment had plenty of gold. Blum sllowed the French manufacturers to sell arms and ammunition to the sol- diers of the republic, and frontier guards were ordered to shut their eyes when long lines of trucks and busses were crossing the Pyrenees at night, carrying arms and ammuni- tion into Spain. When the rebels ap- peared seriously to threaten Irun, thus intercepting the communications tween France and Spain, one major and eight junior French officers crossed the border to organize the defenses. But brilliant as was the defense plan, it was impossible ta hold that key city with the undis- eiplined though enthusiastic mob which formed the force of that town. Just before Irun fell, these officers returned to France. In the British general staff and ad- Miralty the hatred of communism is 80 strong that the British diplomats ‘were slow in supporting France's neu- trality proposal. When it was ac- cepted by the interested powers— three weeks too late—Great Britain observed it scrupulously, to the dis- advantage of the Madrid government. While Germany and Italy continued to pour airplanes and ammunition into Spain—“because the orders were placed and paid for before the neu- trality agreement came into force”»— British ammunition makers could not send a single machine gun or a single airplane to Madrid, despite the fact that the Madrid representatives in London had placed orders as early as July. The British authorities were enforcing the arms ban 100 per cent. Madrid Fall Due. The Moors, under Pranco's leader- ship, are expected to take Madrid forthwith. Whether Franco, Mola or some other general will become the head of the military dictatorship is immaterial. Orders to Madrid will be given from Berlin and Rome, and on this point there is a divergence of opinion between Paris and London. The British profess to be unafraid of the consequences of the dictator- ship of the military junta. The Brit- ish are practical people. They be- lieve that when the generals officially take over the reins of government they will need money to maintain them- selves and reorganize Spain. The economic and financial life of the entire country has been shattered during these months of civil war. And neither Germany nor Italy is in & position to offer any financial suc- cor to the Spanish government. Hence, London believes, the junta which was brought to power by the efforts of Hitler and Mussolifi necessarily will ‘veer toward the country which can offer it the necessary cash for re- habilitation. Two birds thus will be Ly | thwart the unreliability of their tools |in Spain. The military junta is di- "vlded into four groups: The Carlists, the Alfonsonites, the Leroux repub- licans and the out-and-out dictators, who want to establish a totalitarian state independent of the other fac-| | tions. If all the efforts have hereto- | fore been centered around Franco, it | | is because he is the best soldier of | | them ull. But should he attempt to | betray his benefactors, the Germans and the Italians can produce a num- ber of rivals who wauld be only too | glad to replace the present leader. The | Foreign Legion and the Moors are | mercenaries who will follow and fight | for those who pay best. The aviation I—me Germans and the Italians have taken good care—is not Spanish. The | planes and the pilots are either Italian or German, naturally obeying orders | from Rome and Berlin. Thus, the | French think, the London government ‘[is living in a fool's paradise if it im- | agines that with cash alone it can de- | stroy the carefully planned work of letler and Mussolini. Of course, the establishment of the | junta as & permanent government in Spain is more dangerous to France than to any other country. Since it is | | now believed that submarines and air- planes will play an important role in | | another war, Gibraltar has lost much | | of its old importance. But it is still a symbol of Britain's might. The loss | of the “Rock” would be a blow to the | prestige of the British, but not much more than that. | The French situation, however, is much more dangerous. The general stafl has informed Blum that as soon as the junta takes over the govern- ment in Madrid eight divisions will have to be placed in the Pyrenees. This will seriously tax France’s mili- tary strength. For the time being the French defense system calls for something like 15 divisions in the Alps, on the Italian border, and about an equal number on the Maginot line of fortifications. Nothing has been provided for the defense of the Pyrenees, since Spain, under Alfonso and under the repul lican regime, always maintained a friendly attitude toward France. But, what is more important than the mili- tary effort, is the fact that for the first time in a century the communi- cations between France and North | Africa might be imperiled. As long as Spain was a weak military state the Balearic Islands and the Spanish Morocco constituted no danger to France. But if these two important territories are placed at the disposal of Germany and Italy—directly or in- directly—the French Navy considers that it is not equal to the task of protecting its vital communications. France will be checkmated in the western Mediterranean even more than Britain has been checked in the eastern Mediterranean. It is for this reason that Paris is alarmed over the consequences of the establishment of a Fascist state in Spain. (Copyright, McClure Newspaper Syndicate.) World Again Focuses Attention Toward Elba ROME.—The recent visit of Il Duce to the Island of Elba again focuses the attention of the world to this lit- tle island that seems forever to at- tract the limelight of history. Lying like a little kernel of land in the Mediterranean, this island has seen the life history of man from time immemorial. Elba is only about 20 miles long and 7 broad, some 40 miles from Italy. It was recognized from earliest times as a favorite point of approach, It was used by the Greeks of Syracuse in their wars with the Etruscans, and it Is recorded that the island was oc- cupied by a Syracusan squadron in 453 BC. - In the middle ages it passed suc- cessively into the hands of the Re- publics of Pisa and Florence, until it was taken by Philip II of Spain to- ward the end of the sixteenth century, By the treaty of Amiens in 1802, Elba was ceded to France. Twelve years later, Elba was to be- come famous by «the. arrival of Napoleon in 1814, and where he lived until February 26, 1815, when he made the startling flight that fell like & thunderbolt upon Europe. 'l‘h;.“ls- tains interesting relics of Napoleon's days, iy The publication of this interesting article in The Star is made possible through the courtesy of the Provi- dence Journal. f NDIRECT and unnoticed taxes l have become & most impor- tant and highly controversial item in American ‘costs of liv- ing. Imposed through a tax struc- ture that has grown in a ram- bling, politically expedient and gen- erally unco-ordinated way, they start usually with the harvesting of every raw product and pile up steadily until the consumer pays the aggregate with | his purchase of the finished article. Their existence has been a favorite topic of political discussion, with con- troversy centering about their amount and responsibility for their existence. To establish a reasonably accurate which has never previously been estab- lished, the Providence Journal made an interesting 12-month study of three families below the income tax level. From September 1, 1935, to September 1, 1936. these families ac- counted for virtually every penny spent in any way and a special research staff checked each of these expendi- tures to determine as closely as pos- sible the exact tax payment included. The three families chosen were thrifty and for the most part avoided luxury expenditures upon which the highest taxes are levied. One family had no automobile, two families had no telephone. None ever went to a moving-picture show at which the ad- mission cost was more than 40 cents, the point at which the Federal taxa- tion begins. The total liquor bill for all three families for the entire year was $5.69. In the case of one family, the study definitely traced 14.39 cents of every dollar to taxes. In a second case, the tax bill was 11.35 cents per dollar. In the third case, it amounted to 10.13 cents. The average for the three was 12.18 cents per dollar. In con- nection with some expenditures, how- ever, it was impossible to determine the tax and when these expenditures were deducted from the totals it was found that the -average tax was 14.74 cents for every dollar spent. No Income Tax Included. In the case of one family no faxes at all were shown for expenditures totaling $628.50. If this group of ex- penditures is deducted from that fam- ily’s total expenses of $2,430.99. and the tax bill is applied only to those ‘| items on which taxes have been fig- ured, 19.40 cents of every dollar spent was found traceable to taxes. Simi- larly, if from family No. 2 expendi- tures of $2,561.63, the $221.50 for which no taxes were figured, is de- ducted, there is & tax percentage of 12.42 instead of 11.35. In the case of family No. 3, deduction of the $292.68 on which no taxes were shown raises the tax percentage from 10.13 to 12.43. This gives an & of 14.74 cents s dollar. . Pred Green, annual income, $2,764.95, family consisting of Mr. and QGreen and their 13-year-old daughter, a student at a junior high school. The family owns a two-family house, flat having five rooms. They live in one flat and rent the other. They in~ vested their savings in the present home, which they purchased when prices were high and the family in- Always There’s a Tax This is the tax story of three exceptionally thrifty and frugal families living below the income tax level. Taxes for three families actually traced averaged 12.18 cents gr dollar of total family expenditure. It proved impossible compute taxes on some expenditures. With these de- ducted, the tax averaged 14.74 cents for every dollar spent. For food, 7.10 cents of every dollar spent represented taxes. The tax on clothing amounted to 6.41 cents on each dollar. Of rental payments, 20.65 cents of every dollar went for taxes. Taxes took 12.50 cents of every dollar paid for electricity. For every dollar of their phone bill they paid 10.26 cents tax. ‘Their gas bill tax was 14.70 cents on every dollar. hangs the fear of less employment, lower wages and higher taxes, which would interfere with and perhaps de- stroy their plans for the future. The Greens were married in 1922. They own an automobile and a radio, and upon these they depend almost | entirely for their simple pleasures. estimate of the amount, something | 2 g They have no telephone. They rarely g0 to the movies, and during the Summer they spend as many week ends as possible in North Hampshire. A large percentage of the money they spend on entertainment is for gasoline and automobile maintenance. * Mrs. Green keeps her family well clothed on a small budget by mak- ing her own and her daughter’s clothes herself. She obtains the cloth at the mill where she works at a price considerably lower than the current retail market price. She also keeps her husband: supplied in shirts and other articles of clothing which can be madé from materials she ob- tains from’ the mill. Translated into work days, the Green family tax bill meant that Mr. and Mrs. Green worked 3886 days each to pay the tax collector. It would have taken Mr. Gregn, working alone, 77.72 days to earn ®nough for taxes salone. Frank A. Bateman: . ‘The Bateman family is a typical city family living in the suburbs. Mr, Bateman is office manager for a con- cern, and his salary is $2,600 a year. Mr. Bateman is 51 and his wife 1s 46 years old. They have three chil- dren, Alice J., 20; F. Arnold, 18, and Ralph A; 16. The daughter, a grad- uate of high school, studied for a year and one-half at State College and plans to continue her education elsewhere. The older son graduated from high school this Summer, while the younger son is now in his second year at the same high school. The Batemans live in a rented eight-room cottage in a residential suburb. They own an automobile and have a telephone and radio. E Mr. Bateman is a graduate of the Eastman College of Accountancy at Poughkeepsie, N. Y. He has held several responsible positions prior to getting the job he now has. The de- pression also hit the Bateman family severely and they lost considerable real estate they owned. Mr. Bate- man obtained his present job two and one-half years ago and now earns a salary considerably below that of Mr. Bateman’s labor was com- sumed by the tax collector. Their plot, 50 by 100 feet, allows them ample space for a back yard, where they grow many vegetables and a few flowers. The back-yard vegetables keep the grocery budget down considerably during the late Spring and Summer. ‘The Allsups have no automobile. They seldom go to the movies and rarely visit a beach. Their chief sources of amusement are their home, their garden and their radio. Their home is comfortably, but not expen- sively, furnished, and they keep it in good condition by doing all the paint- ing and repairing themselves. ‘They have never lived extravagantly. In the good years they saved syste- matically and used the money to establish a home. Now they are very slowly paring down the mortgage, hop- ing they can keep their jobs, maintain their slender income and give Kath- leen some of the things they have never had themselves. If Mr. Allsup had been the only wage earner of his family of three. he would have had to have worked 52! days to pay his tax bill. " Study in Detall. Previous to this study the only available information on hidden taxes came from generalized statistics on the sources of the Nation's tax reve- nue. While these generalized statistics are revealing, they are too general to show the precise effect upon the in- dividual citizen. Armed with pencil and paper the housewives in the three families chos- en for study jotted down at all hours of the day and night every expendi- ture made. . While the burden of keeping the accounts naturally fell on the house- wives, who do most of the spending, every other member of the family did his share shd at the end of the day or week submitted his report to the chief household accountant., Loaf Had 53 Taxes. Consumer’s goods collect taxes in every stage of production, just as & snow ball rolling down hill collects Snow. ‘Thus a loaf of bread has at least 53 taxes tucked in it from the time until the bread reaches your table. In- producing and distributing pe- troleum products, the petroleum in- dustry. pays 201 taxes which must figures on taxes on certain commeodi- ties. In such cases the taxes were omitted altogether in the interest of scientific accuracy. The figures given in this studyssre therefore invariably conservative. Accumulated taxes on at least 200 articles of food, clothing, household use and other goods which these families used in the course of the year had to be figured. The various taxes which each article picked up in the process of production had to be checked and addea up and then computed on the basis of the small quantity which Mrs. Allsup, Mrs. Green or Mrs. Bateman purchased. Computations often had to be made in tenths of mills. Farmers, miners, industrialists, wholesalers and retail- ers in all parts of the country bad to be approached for information. Settling With Tax Collector. At each stage of production or marketing a new tax is slammed on. This tax is immediately incorporated in the price of article. As most of the food we eat and the raw material base of many of the things we wear and use come from the farm, the original tax paid by the farmer and passed on to the con- sumer in the cost of farm goods is the first item which had to be taken into account. Utilizing Department of Agricul- ture figures, it is found that slightly more than 9.3 per cent of the total farm income is paid out in real estate, personal property and gasoline taxes and in automobile license fees. Many other shiftable taxes paid by the farm- ers, such as levies on electricity, tele- phone, farm machinery, feed and fertilizers have not been included in this 9.3 per cent figure. These taxes undoubtedly raise the farmer’s total tax burden to a considerably higher figure, but, as no accurate figures per- taining to them are available, it has been decided in the interest of exacti- tude to make no estimates. Not only that, but the 9.3 per cent figure has been arrived at after mak- ing adjustments for tax delinquency and for taxation on land itself. In the case of tax delinquency, that por- tion of the tax which the farmer failed to pay cannot, of course, be passed on to the consumer. Nor were taxes on land counted, in keeping with orthodox economic theory that since such taxes can in no way affect- the supply of land, the price of the goods produced by such land likewise is un- affected by them. According to Federal Government figures, the farmer receives 45 per cent of the consumer’s dollar spent farm products is s charge directly traceable back to taxes on the farmer. In other words, when you go into i3t !ég Y] gggis g g E§§§EE s 8¢ 8 i i > > i i g 2 i wo k3 potence of the League—that is indeed & sombre comparison between hope assured and hope destroyed. Slogans We Believed In. There were the slogans we believed in. Woodrow Wilson's assurance that our taking up arms in 1917 was in a “war to end all wars,” and Wilson's other assurances, that it was a war “to make the world safe for democ- racy.” Beginning the very year in which ‘Wilson held out that hope, democracy has been set back farther and farther; today, demoeracy as a conception of Government, with in- dividualism as a form of society, is the new conceptions of Society that have sprung up since 1917. Little wonder if the world is shell shocked, neurotic, reluctant to put confidence in & new promise. Yet the agreement for currency stabilization between France, Britain and America may be the real thing. We know that there cannot be nor- mal international trade in a world up and down in relation to each other. We know that in a world lack- cannot be economic within the separate nations. We know that economic contentment is, as Sec- .| retary of State Cordell Hull has said, the best preventive of war, the best path toward peace. We know all that. And we know that after several years of unstable currencies there is now a step toward alignment and stabil- ity, a step taken under conditions which promise probable success. True, it is not the first step. Here again, if we choose to yield to despair, we might recall that there has been a former step in the same direction, and that it failed. The London Eco- nomic Conference of June, 1933, had the same purpose as the present through the wholesaler and retailer to the consumer they were increased by anywhere from 25 to 100 per cent. When we talk of “pyramiding” we run into one of the most extraordi- nary things about this whole matter of taxation, namely, the fact that the taxpayer pays out a good deal more because of taxes than the Government receives in taxes. It works this way. When a tax is levied upon an article at any time during its production, that tax is as & part of the cost ef the article. When the article then passes on to the wholesaler or retailer and he adds his profit mark-up to the price of the article, he also adds the mark-up to that part of the price which is tax. ‘This may be illustrated through the processing tax. The packer for- merly paid a processing tax of 4.29 cents per pound of bacon. The mark- up on a pound of bacon from the packer to the consumer is about 25 per cent. Thus, by the time this tax had reached the consumer it was 5.36 cents, although only 4.29 cents actu- ally went back to the Government. This “pyramiding” takes place on all taxes which are levied anywhere along the line of production, except, of course, those levied directly upon the ultimate consumer. Since the object of the study was to ascertain what part of the con- sumer’s dollar actually goes back to the Federal, State and local govern- ments in taxes, the results of “pyra- miding” do not appear in its final figures. It must be remembered, hot ever, that when we figure a farmer’s tax of 2093 cents on $5 worth.of vegetables the consumer is actually paying 3243 cents after the various profit mark-ups. Of this 20.93 cents goes to the Government, and the rest has been added on along the line of marketing. Farmer’s Tax Only Beginning. As shown, the farmer’s tax is only the beginning. More taxes be- come involved as the wheat is made into flour, the leather into shoes, or the cotton or wool into cloth and then into clothes. In each industry the amount which the industry must add te the price of goods to cover taxes paid on the busi- pess varies. There is even consider< able variation among concerns in- volved in the same type of produc- tion. It was therefore necessary to obtais fgures fiom a number of con~ cerns in eaeh type of business show- 4 trying to defend its very.life against | in which national currencies jiggle | ing normal international trade there | contentment | Passed on by the person who pays it | | 1 | United States is secure. mestically. To use the familiar word, Mr. Roosevelt’s present action lessens the danger of inflation in the United States. But inflation cannot be sure- ly averted unless Mr. Roosevelt takes vigorous, affirmative steps toward re- ducing Government spending, toward doing less Government borrowing, toward—one is obliged to use the worn phrase—toward “balancing the budget.” Discussion Became Acute. At the moment when Mr. Roosevelt took his curative step toward inter- national stability of our currency and that of the British and French, the internal stability of our own dol- iar had become a subject of acute discussion. It was made acute by a statement of Republican Vice Presi- dential Candidate Mr. Frank Knox in 'a campaign speech. Mr. Knox's statement was: “Today no-life insurance policy is secure, no savings account is safe.” Let us say at once that Mr. Knox's use of the word “safe” was wrong. ‘When we say that a bank is not “safe” we mean it is likely to fail, likely to go into bankruptcy and close its doors. That is not what Mr. Knox meant and that condition does not exist. I incline to think, also, that Mr. Knox’s use of the word “se- cure” about life insurance policies was wrong. For myself, let me begin by saying that every life insurance policy in the (I doubt if any unsound life insurance company is left in the United States; practi- cally all are now under rigid super- vision by State governments.) Every holder of a life insurance policy for $1,000 will get his 1,000 dol« lars on maturity. About that no pol- icy holder need have the faintest une easiness. But there has been sufficient rea- son for policy holders to be uneasy. It is best the country should know this. Widespread knowledge may help to correct the condition. Every holder of & policy for $1,000 will get 1,000 dollars when the policy matures. That is, he will get 1,000 pieces of paper called dollars. They will be identically the same as the pieces of paper which are today called dollars. The policy holder will get dollars of exactly the same sire, shape and color as the dollars he pays in, The dollars he gets back will have exactly the same printing on them as the dollars he has paid in. Nevertheless, the dollars which the policy holder gets back in two, three, four or more years from now may be very different from the dollars he has paid in. The reader will observe I say “may be”; I do not say “will be.” The danger of inffation, while it still exists, has been materially re- duced by Mr. Roosevelt's step toward better world conditions. May Differ in Power. The dollars a policy holder gets back may differ greatly in purchasing power from the dollars he pays in. And since purchasing power is all that a dollar is good for, it follows that diflere&ce 8t purchasing power is all the difference in the world. Each dollar that the policy holder has paid in during several years past would buy, let us say, 10 loaves of bread or 10 quarts of milk. The dol- lar which the policy holder or his beneficiary gets back three or four or more years from now may buy only five loaves of bread, or even less, Some persons, deeply -impressed by the danger ahead, have thought that the dollar which the policy holder gets back several years from now may buy only about two loaves. That would be extreme. ‘That would only come about through long continuance of improper fiscal practices. . What is this improper fiscal prac- tice? It consists of the Government spending more than it takes in, ex« cessive Government spending, exces. sive Government borrowing. What i the remedy? It is for the adminise tration to adopt a policy of not spend« ing any money except what it has in the Treasury, what is receives in the form of taxes. It is for the adminis« tration to keep within its income. It should become easier to do thi if the; administration’s recent stey toward_international stability is su cessful, But internal inflation cane not be certainly averted except by vigorous, affirmative steps toward lesa expengiture by the Government. % (Copyright, 1936, §