Bookkeepers' Surplus

Nobody cheered last week when the Treasury Department, just before the end of the first half of its fiscal year, found itself with a $14,768.621 surplus. It was merely a bookkeepers' surplus--a row of eight figures in black at the bottom of a column of current running expenses. The real story was on the other side of the ledger. To nine fat figures in red labeled "Emergency Funds," a tenth was last week added as the 1934 deficit climbed over the billion mark for the first time this fiscal year.

But it was not news. Ever since Congress rose last June, a huge deficit has been certain. It was paradoxical to have a surplus at the same time, but that was only because of President Roosevelt's firm determination to keep the costs of Recovery separate on the books from the ordinary running expenses of government. Since July 1 the Federal Government has spent $2,464,315,131, has taken in only $1,440,193,463. Of its expenditures, $1,425,424,842 was devoted to routine running costs--37% less than for the same period last year. These costs were covered, with $14,768,621 to boot, by regular revenues. Emergency loans and relief projects thus accounted for the entire deficit. When Mr. Morgenthau's clerks added them up and subtracted the small surplus, President Roosevelt was informed that his deficit was precisely $1,024,121,667 of which the chief items were: RFC $532,000,000; PWA $204,000,000; CCC $146,810,000; CWA $53,842,000; FCA $40,000,000.

Mr. Roosevelt was not worried. When newshawks crowded into his press conference to quiz him on the budget he smiled. Hadn't he kept the Government's running expenses within its income? The deficit was chargeable solely to the cost of Recovery, said he, and he might have added that it was $500,000,000 less than the deficit on the same date last year. His budget message to Congress just one week off, he declared he had not yet prepared his recommendations, was waiting for last minute estimates on public works. As to the future, the President would make no predictions, preferred to leave "the burden of error to writers in the Sunday papers."

But in and about the Treasury there were unofficial predictions as follows:

1) By next July the deficit would be $3,000,000,000, and the gross public debt would be lifted to within $1,000,000,000 of its 1919 all-time high: $26,596,000,000.

2) The next budget would be more than $6,000,000,000. Revenue for fiscal 1935 would be $3,400,000,000, ordinary running expenses not more than $2,600,000,000; leaving a surplus of $800,000,000 to help meet emergency expenditures. There was some hope that to this surplus could be added $700,000,000 in loan repayments to the RFC. But Jesse Jones was talking about the probable need of another $500,000,000 for U. S. railroads whose bonds mature during 1934 and which still found it impossible to sell new bonds to the public.

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