"Smallest Deficit"

Fiscal 1938, dressed in lamb's clothing was last week ushered out by Secretary of the Treasury Henry Morgenthau Jr. in the role of beneficent shepherd. He was able to say that the Treasury's deficit for the year of 1,459 millions was: 1) only 371 millions larger than predicted; 2) the smallest deficit of Franklin Roosevelt's administration. He was able to show that the National Debt had risen only 740 millions* the smallest rise since 1931. He could say these things because of: 1) some real reductions in Government over-head at the start of the year; 2) the greatest Treasury receipts since 1920, from taxes levied on business done in the most prosperous portions of calendar 1936 and 1937.

Fiscal 1938's statement, compared to last year's, looked like this (in millions of dollars) :

1937 1938 Receipts 5,294 6,242 Expenditures 8,001 7, 701 Deficit 2,707 1,459 The Public Debt table through 1938 now reads as follows: 1870 $2,436 1931 $16,801 1880 2,090 1932 19,487 1890 1,122 1933 22,538 1910 1,146 1934 27,053 1917 2,975 1935 28,700 1918 12,243 1936 33,778 1919 25,482 1937 36,424 1930 16,185 1938 37,165

Ahead the Treasury did not look just yet. The net effect of the 75th Congress' whopping appropriations and authorizations will not be known until it is seen: 1) how much more money will have to be voted for Relief after next March; 2) how far Government revenues fall in fiscal 1939 due to Depression II. (The Treasury's first guess, last week, was a decline of some 750 millions.) Last week President Roosevelt ordered the Treasury to undertake a tax study for the edification of the 76th Congress. In the next twelve-month the Treasury's deficit may well reach 4,400 millions and shoot the National Debt up over 41 billions--six billions greater than the figure of $35,026,000,000 which Franklin Roosevelt anticipated 17 months ago would be the peak of U. S. debts.

*The difference between the deficit, $1,459,000,000 and the increase of the public debt, $740,000,000 was due to the fact that the Treasury spent $337,000,000 of its cash on hand at the end of the previous year, and $382,000,000 of net receipts from Government trust accounts.

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