Rope's End?

"Increased taxes sounds easy but it isn't. . . . The turnip is dry. The Administration has only two real alternatives--to cut spending or to print money. If the price of Government bonds should take a serious nose dive, we would have a new bank holiday-or else. The assets of banks, trusts and insurance companies are loaded with them. The Government would almost certainly be forced to make them redeemable at par--in paper money--the ultimate spilling of the beans. The President is no fiat money man. That leaves only reduced spending. But isn't that political ruin? Is this the end of the rope?"

Such were the ominous words of Hugh Johnson last week. They reflected the worry of many a politician in Washington: the expectation that revenues for fiscal 1937 would fall $300,000,000 to $500,000,000 below estimates, the fact that Secretary Morgenthau found it necessary to resume borrowing, beginning with the sale of $50,000,000 worth of short-term bills this week. In the Senate, Majority Leader Joseph T. Robinson spoke out almost as pessimistically as Hugh Johnson:

"While many efforts have been made to close the gap between receipts and expenditures, such efforts have not been completely successful. It seems that the time has about come--indeed, it has already arrived--when we should give careful consideration to that subject. . . . Insofar as I am informed, we have about exhausted the sources of taxation to which Congress is willing and able to resort."

If Franklin Roosevelt thought the New Deal had reached its fiscal rope's end, he did not show it. He buckled doggedly down to work with pencil, paper, Secretary Morgenthau, Budget Director Bell, Deputy Relief Administrator Aubrey Williams. This week he sent a special message to Congress asking for $1,500,000,000 to carry next year's relief burden, and acknowledging that his midwinter estimates of fiscal position would no longer hold up because income taxes and other revenue had fallen $604,000,000 under expectations. He now foresaw a deficit on June 30 of $2,557,000,000, boosting the national debt to a peak of $35,500,000,000. With revenue estimates for next year revised downward, the President contemplated a deficit for fiscal 1938 of $418,000,000. But: "I propose to use every means at my command to eliminate this deficit during the coming fiscal year."

Defending his outlays for armaments, the President, declared that the U. S. spends a smaller proportion of its total income for war materials than any other great power.

P: When 150 newshawks turned up at a press conference, his first since the Supreme Court upheld the Wagner Labor Act (TIME, April 19), the President beamed up at them with even more beneficence. When they raised the topic of that decision, he announced that everything he said was absolutely off the record, then launched into a voluble ten-minute exposition of his views. Strictly keeping his confidence, correspondents thought it nonetheless fair to say that he was in high fettle. P: Equally off the record, equally contented were the talks he gave to 200 members of the American Society of Newspaper Editors who dropped in to see him. P: One of the pleasantest episodes of the President's week was a little visit from silver-haired six-foot-sixer Jesse Jones, Chairman of RFC. Mr. Jones's business was to make plans for that fishing trip which Franklin Roosevelt plans to take with Mr. Jones next week, for tarpon, off the Texas coast. P: To forestall a strike on the Southern Pacific Lines the President appointed a special mediation board. P: Franklin Roosevelt stood up in his box and tossed out the first baseball of the season to the Washington Senators and Philadelphia Athletics, saw the home team lose to the visitors, 4-to-3, in ten innings. During the game a plane flew over the stadium trailing a huge red sign: PLAY THE GAME--DON'T PACK THE COURT. The President and Son James laughed. P: To vacant places on the Tariff Commission the President appointed William Joseph Sears of Florida, veteran of 18 years in Congress and Henry F. Grady of California. He also shifted Minister Anthony J. Drexel Biddle Jr. from Norway to Poland to make way for new Minister Daisy Harriman; shuffled John Cudahy from Poland to the Irish Free State, Robert Granville Caldwell from Portugal to Bolivia. P: At the White House the President made public a letter to Dr. Jose M. Gallardo: "My dear Dr. Gallardo:

"I have decided to appoint you Commissioner of Education for Puerto Rico and have sent your name to the Senate. I desire at this time to make clear the attitude of my Administration on the extremely important matter of teaching English in Puerto Rico. Puerto Rico came under the American flag 38 years ago. Nearly 20 years ago Congress extended American citizenship to Puerto Ricans. It is regrettable that today hundreds of thousands of Puerto Ricans have little and often virtually no knowledge of the English language. . . . The American citizens of Puerto Rico should profit from their unique geographical situation and the unique historical circumstance which has brought to them the blessings of American citizenship by becoming bilingual."

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