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About The news-review. (Roseburg, Or.) 1948-1994 | View Entire Issue (July 13, 1949)
12 The News-Review, Roseburg, Ore.- Wed., July 1J, 194 Deficit Financing Big Task For Federal Government As It Ends Fiscal Year In Red By SAM DAWtSON NEW YORK, July 13. P Uncle Sam is In the red again. He's spending more than he takes In he has more relatives and old friends dependent upon him than a movie star. And the U. S. Treasury is now trying to decide from a number of suggestions by interested par tieswhich la the bst way to raise cash to pay oil', the bills. It's looking for the way that will be the least painful for the trea sury and at the same time be rofitable for the banks and may e give business a helping hand, too. The treasury calls this deficit financing. . ' i Six months ago President Tru man wanted more taxes to keep I'he treasury In the black, say ing that a budget surplus "Is es sixntlal to sound fiscal policy." Now he' plumps for deficit financ ing as the better course at this time. H'is economic counsellors say In i heir midyear retrt that if we -tut down on foreign aid and national defense two of the big gest nems we 11 not uiuy uc lad ing a serious risk, but will .be ..I f ika flmtr nf foHoi-Sll CULIIIIK I'l 1 lilt nun v. ' dollars to consumers, and thus lead to more lay-ous. Deficit financing will pump nnnAtr Inln tha apnnnmlf atrpam. through treasury borrowings trom oanKS. At ine same umc, various industries will profit nm ivinllniiorl rtrwram moVl t hi IV ing. Subsidies and social security payments. Accoraing 10 mn school of thought, this will give ! jii.nr.innn li oat his second postwar wind and be off again on ine roaa 10 pruspciuy. iney coniena inai mji.uwn.K ( n n nnnnlnn nraA)(f in th buslness world. Great industrial empires are started on borrowed money, corporations Dorrow 10 expand, to meet payrolls, to fi nance Inventories in anticipation of future sales. Nothing New to Americans Certainly the American people are used to deficit financing by now. W've been in and out of the red with Uncle Sam for years. In the last 30 years rarely In the middle '20s and again a year ago nave we useu uiam ." MasnurhiU .Via foHorill ftht haS nrouin tn miM-A than 252 billion. The question businessmen ask is now mucn nigncr can h aau-ijr go lf it's finally decided to go on spending at the old rate, the next problem is just now ine trpasurv should borrow the mon ey to meet the bills. Long-term bonds with compara tively high interest rates will ap peal to private Investors and insti tutions, and cost the treasury most. Banks with money on their hands just now because business es loans are falling off are urg ing medium-term treasury notes with moderate yields. When there was more demand for business loans, which are much more profitable to a bank, the treasury s practice of financ ing its cash needs with short term certificates with a low yield gave the banks a chance to keep idle funds earning a little and still easily available when a good Durness risK oame along. But this week the treasury sold $900 million of these short term bills at an average rate of 0.923 per cent two weeks ago It had to pay 1.158 per cent. Nat urally, the banks don't find the new low rates attractive. Up to Big Money The Treasury also raises a lit tle money, but not enough, by selling 10-year savings bonds to individuals. But the Treasury can't depend upon this source of revenue in a pinch. Therefore, the treasury will have to do its deficit financing through the banks or insurance companies. It will have to decide how to do it fairly soon. The treasury started its new year the first of this month with a deficit of $1,800,000,000. The mid dle of September it has $1,292, 000,000 of two per cent bonds coming due. It will decide well before that Just how these are to be refunded. Many bankers hope the treasury will decide to issue five-year bonds paying two per cent or better. This, they say, would find a ready market, help the banks, and take some of the pressure off the treasury for going into the market at frequent Intervals to borrow money at whatever rate is possible at the time. Whether or not deficit financ ing will start another, and worse, Inflation spiral is another question. The News-Review classified ads bring best results. Phone 100. Registered Willamette Vat ley tred Romneys from im ported rams. Choice selec tions now available. OAKMEAD FARM Newberg, Oregon PORTABLE WELDING Are and acetylene is at your command anytime, any place. Years of experience in heavy-duty welding. HARRY F. DRULINER PHONE 1198-RX (Mm Distributed In Roseburg By Bates Candy Co. 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