BS: 'Surplus and the National Debt'

Subject: 'Surplus and the National Debt'
From: Ebbie
Date: 29 Jun 01 - 12:52 PM

In doing research yesterday in old newspapers, I came across this. Only slightly tongue-in-cheek, I maintain that now we know what caused the Great Depression.

NEW YORK WORLD

June 19, 1928

"The next four weeks will bring the answer to the moot question of this year's Treasury surplus. The fiscal year ends with the current month and another installment of the income tax becomes due on June 15. Last October Secretary Mellon estimated this year's surplus at 455 millions; later he reduced this to 401 millions. Meantime, those who were urging a more drastic reduction of taxes than the Administration had recommended maintained that these estimates, like those of previous years were much too conservative. We shall soon know who is the better forecaster.

"The importance of these estimates is to be found in their bearing on the fiscal situation a year hence. When Mr. Mellon could see a surplus of 212 millions on June 30, 1929, he took no account of a possible expenditure of from twenty to thirty millions for flood control nor of various other special appropriations. When to these expenditures is added the tax reduction of the recent session, which will not be fully effective in the next fiscal year but will reduce the revenues by at least 150 millions, the prospects for any surplus whatever in 1929 become very slim. That is, if Mr. Mellon has guessed right. The accuracy of his guess for the current year, soon to be ascertained, will throw some light on his estimate for next year.

"If the figures bear out the Treasury's forecasts, Representative Garner and others who are complaining that we are paying off our nationl debt too fast have little cause to worry. There will be little if any surplus to apply on the debt next year. And even if we have redeemed some eight billions of the debt by the use of big Treasury surpluses as well as of the sinking funds in past years, we still have eighteen billions of national debt hanging over us. That is no slight sum."

Ebbie