MEDFOHD MAIL TRIBUNE. MEDFORD, OREGON
TUESDAY. SEPTEMBER 18. 1962
Your Money's
T , Worth
W
1
By SYLVIA PORTER
Copyright, Hall Syndicate, Inc.
DO BUDGET DEFICITS SPUR ECONOMIC GROWTH?
"You should read an article which has just appeared In
'The New Republic' on this question of the American econ
omy's inadequate growth in recent years in comparsion with
the strong growth rates of European economies and what
should be done about it," said William McChesney Martin,
chairman of the Federal Reserve Board, "for the article says
things people here should understand." The face of a man
I have known since he was the boy-wonder president of
the New York Stock Exchange years ago, broke into a broad
smile. "Of course, the reason I'm asking you to do this is that
I agree with the points the article makes."
So naturally, as soon as I left the Federal Reserve Board's
headquarters in Washington, I picked up the magazine (Aug.
27 issue) and studied the article "Deficits and Economic
Growth" by Matthew J. Kust, identified as a "Washington
lawyer specializing in international tax and financial mat
ters'" It is not easy reading, but here in simple language
are the major points Kust makes.
(1) It has become fashionable this year to suggest we
examine what Europe has been doing that we have not been
doing to spur economic growth and an argument gaining
adherents is that Europe "owes its greater economic growth
to a bolder use of government deficit finance." But before
we accept this, we should inquire whether government budget
deficits have the same economic impact in the U. S. as in
Europe.
(2) We have kept pace with European countries in run
ning deficits during the past decade. Our federal, state and
local governments had deficits in eight of the last 12 years,
England had deficits in nine of the last 11, France had deficits
In each of the last 10 years and Germany had a deficit in four
out of the past six years.
(3) Why. then, have government deficits resulted "in
uch an inadequate rate of growth in the U. S. while yield
ing such high rates in France and Germany?" The answer
is that, "Europeans have accepted, which we have not, the
principle of the mixed economy wherein the government
conducts many industrial undertakings that are privately
owned in the U.S." In Europe governments own, by and
large, transportation, communications, power and many
basic industries such as coal, gas, petroleum, iron and
leel. When European government budgets go into the
red, a fundamental cause is that they are investing in
these enterprises which are productive, make jobs, spur
growth.
(4) In the U.S., the situation is drastically different, for,
"Much that would be government enterprise in Europe is
privately owned." When our federal budget goes into the
red, little of the extra spending is for productive enterprise;
most is for purposes which do not result in productive in
vestment. Kust dramatizes his point by remarking "It would
be quite different if, let us say, the government owned the
railways and floated a multi-billion bond issue for rehabili
tation and modernization."
(5) In short, European deficits mostly create productive
Investment. U. S. deficits mostly create consumer spending.
(6) Tax policies also are key factor. We tax coroprations
far more heavily than other countries do. "Since corporations
undertake most of the private productive investment in in
dustrialized countries, heavy taxation of their earnings dis
suades growth." The same goes for our personal tax struc
ture which idiscourages savings and yet savings are es
sential to great investment in productive facilities. We invest
much less of our total annual production in new machinery
and equipment than European countries do, and the outcome
Is that the U. S. "has an old and obsolete industrial plant."
Kust's conclusion is that "it is this quite striking dif
ference in the economic impact" of our various govern
ment policies "which may provide the answer to the great
difference in growth rates" and he clearly believes the
fundamental need is lo overhaul our fiscal policies with
the primary aim of stimulating investment rather than
consumption.
Whether or not you agree, this is a throughtful contribu
tion to the debate on what we should do to get back on the
road to strong growth. And most significant is that Martin
sympathizes with this view, for, as head of the powerful
Central Bank of the U.S., Martin is among the most informed
and influential men in the free world.
Contracts Awarded
For New Josephine
PP&L Service Unit
Grants Pass Award of
contracts for construction of
Pacific Power and Light com
pany's new Josephine county
(service center was announced
Monday by William J. Moycr,
PP&L district manager in
Grants Pass.
He also said construction
will begin immediately.
Ausland Construction com
pany. Grants Pass, was award
ed the general contract for the
project. Other principal con
tractors, all Grants Pass Firms,
nre Royal Plumbing and Heat
ing, Rogue River Hardawrc
and Browncll Electric.
Moycr said the date for
groundbreaking ceremonies,
which will launch the project,
will be announced within a
lew days. Completion of the
S200.000 installation is sched
uled for about Jan. 1.
Site of the new service con
fer is at the junction of High
way 99 and Redwood High
way, south of Grants Pass, a
tract formerly occupied by
llie Mutual Lumber company.
Plans call for two main struc
tures on the six-acre site.
Addition to Section
"In addition to providing
sn efficient center for t h e
company's service crew oper
ations and the warehousing of
materials and supplies, this
modern center will be a hand
some addition to the city's
industrial and commercial sec
tion." Mover stated.
Modern lines arc the key
note of the Center's design,
according to plans drawn by
Kobert F. Fisher. Grants Pass
architect. External walls will
be of concrete construction,
with the contemporary front
and entrance on the olficc
quarters section The main
buildina will house operations
office quarters and warehouse
facilities. The district's vehicle
fleet will be housed in the
second building. Moycr re
ported. The power company man
a:or said 43 of the district's
74 employees will work out of
or in the new center. Interiors
of the two structures will be
air conditioned and heated by
a latest type electric powered
heat pump, he said.
A large section of the serv
ice center site will be assigned
to pole storage. Facilities also
will include a heavy duty
working platform for outdoor
storage of large capacity trans
formers used in normal serv
ice improvement projects as
well as emergency service
work.
5,'
mmwi
Western Hotel
tnjfiy the finest, most
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food and beverage m
the Golden Kn.jjM,
rionton location,
free Da'b ng antj IV.
For Reerafioni
Call Your Travel
Agtnr or Writt
Retervarion Office
Multnomah West
ern Hotel,
Portland, Orroan
MONTGOMERY WARDM
117 S. CENTRAL
773-7301
OPEN FRIDAY
TIL 9
We're painting the town red with our big 90th An
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... .
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SPECIAL
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ANNJVERSARY
7 V J
REG. 59c
PRINTED COTTON
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yd.
Latest fall and winter
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CO) 7
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Enclosure 39.95
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lets fittings
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Full-size, 5-foot steel tub
Large 19 x 17-in. lavatory
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Outstanding 90th Anniversary valuel
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REG. 153.95 DELUXE 66-IN. STEEL
Priced extra-low for Wards
90th Anniversary! Big double
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90
118
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LAWN SWEEPER
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height 1Q90
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30 IN. AUTOMATIC
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unit, too. IV V
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Excellent value at
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this
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7 PC. SOLID BRASS FIREPLACE SET
Large 3 1 x38-in. steel-reinforced
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I on ffo
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II