Indianapolis Times, Indianapolis, Marion County, 8 January 1937 — Page 16

Hie

udg

et Message

By United Press : WASHINGTON, Jan. 8—The text of President Roosevelt’s budget message follows: To the Congress of the United States: | v . Pursuant to provisions of law I transmit herewith the budget of the United States Government for the fiscal year ending June 30, 1938, together with this message, which is a part thereof. 2 The estimates have been developed after careful analysis of the revenues, gbligations and reasonable needs of the Government, and I recommend appropriations for the purposes specifically detailed herein.

PART 1

The programs inaugurated during the last four years to combat the depression and to initiate many needed reforms have cost large sums of money, but the benefits obtained from them are far outweighing all * their costs. We shall soon be reaping the full benefits of those programs and shall have at the same time a balanced budget that will also include provision for reduction of the public debt.

The fiscal plans of the Federal Government for these four years have been formulated with two objectives in mind. Our first was to restore a successful economic life to the country, by providing greater employment and purchasing power for the people, by stimulating a more balanced use of our productive capacity, and by increasing the national income and distributing it on a wider base of prosperity. Cur second was to gain new advantages of permanent value for the American people. Both of these dic: tives can be accomplished under a sound financial policy. Business conditions have shown each year.since 1933 a marked improvement over the preceding year. Employment in private industry is increasing. Industrial production, factory payrolls and farm prices have steadily risen. These gains make it possible to reduce for the fiscal year 1938 many expenditures of the Federal Government which the general depression made necessary. Although we must continue to spend substantial sums to provide work: for those whom industry has not yet absorbed, the 1938 budget is in balance, and, except for debt reduction of $401,515,000, it will remain in balance even if later on there are included additional expenditures of as much as $1,537,123,000 for recovery and relief. We expect, moreover, if improvement, in economic conditions continues at the present rate, to be able to attain in 1939 a com- - pletely balanced budget, with full provision for meeting the statutory requirements for debt reduction. In carrying out this policy the American people are obtaining lasting benefits. Economic protection of the aged and physically handicapped is being secured through the operations of. the Social Security Act. Ability of the farmer to obtain a more constant livelihcod has been enhanced by the enactment of legislation especially designed for that purpose. The home owner has been benefited through the financing of mortgages at reasonable rates of interest. Investors in securities are being given a larger measure of protection by the Securities and Exchange Act. The market for corporate securities has been restored and industry has been able to finance its long-term requirements . on a favorable basis. The rights of labor are being materially advanced through operation of the National Labor Relations Act. I plan to submit at a later date an estimate of appropriation for additional relief for the fiscal year 1938, which I hope will not exceed the amount of $1,537,123,000, previously mentioned. This hope is based on the assumption that industry will co-operate in employing men and women from the relief rolls in larger numbers than during the past year. Many of those in charge of industrial management, recognizing their obligation to the nation, have furnished a large measure of employment to the jobless. Today, while it is true: that in some sections of the country certain types of skilled workers are . still seeking employment, it is nevertheless a fact that the great majority of those now receiving relief belong fo the unskilled group. It is my convictionsthat if every employer or potential employer will undertake during the next six months to give employment to persons now receiving. government help, the national budget can thereafter be kept definitely in balance. Without such co-operation on the part of employers, the question of a balanced budget for 1938 must of necessity remain an open one, for the very good reason that this Government does not propose next year, any more than during * the past four years, to allow Ameri‘can families to starve. To continue the gains we are making and to accomplish in the 1939 budget a complete balance between receipts and expenditures including debt “reduction, we must now lay the groundwork of our future fiscal policy. While relief expenditures should decline with greater re-employment, the, normal growth of the country naturally reflects itself in increased costs of government. Many of the old functions and duties of government naturally cost more as the industrial and agricultural activities to which they are related expand in volume. The cost of new functions and duties can be substantially reduced only by curtailing the function or the duty. I propose shortly to submit to the Congress a broad plan for placing the executive branch of the Government on a sounder and more responsible basis of management. The carrying out of such a plan will undoubtedly result in some savings in -expenditures; but it must be remembered that what is generally known "as overhead represents only a small . fraction of total expenditures in any large business, government or private. : Expenditures must be planned with a view to the national needs; and no expansion of Government activities should be authorized unless the necessity for such expansion has been definitely determined and funds are available to defray the cost. In other words, if new legislation imposes any substantial increase in expenditures either in the expansion of existing or the creation -of new activities, it becomes a matter of sound policy

& 4

Above is shown a general scene as the Senators marched from the Senate to the House to attend a joint session of Congress Wednesday. Shown in the procession are, at the head: Vice President John N. Gar-

‘ner and Senator Key Pitman (D. Senator Joseph L. Robinson, left (R. Ore.).

‘Text of President Roosevelt's B

Senate Marches to House for Joint Session

Nev.). Walking at the rear are: and Senator Charles L. McNary

—Acme Photo.

enue sufficient to meet the additional cost. The success of such a policy .can be assured only through the full and friendly co-operation of the Congress and the Executive. Of this co-operation I am confident.

PART II

RECOMMENDATIONS

Temporary miscellaneous inter-nal-revenue-taxes — I recommend that the Congress take steps by suitable legislation to extend the miscellaneous internal-revenue taxes which under existing law will expite next June and July, and also to maintain the current rates of those taxes which would otherwise be reduced next June. I consider that the revenue from such taxes or its equivalent is necessary for ins financing of the budget for 8.

Postal Recelpis—The estimates of appropriations for the postal service included in the 1938 budget are predicated upon the continuance during that fiscal year of the 3-cent postage rate for first-class mail other than for local delivery. While the Government makes a profit on first-class mail, the postal service is not self-supporting because it carries other classes of mail at a considerable loss, as shown in the tabular footnote on Page XXIII. It should be the definite policy of the government: to operate the postal service out of postal receipts, and a continuation of the 3-cent rate will be necssary step toward the accomplishment of this purpose. Civilian Conservation Corps— The Civilian Conservation Corps has demonstrated its usefulness and has met with general public approval. It should be continued. I intend shortly to submit a supplemental estimate of appropriation to carry the corps from March 31, 1937, to the end of the current fiscal year; and I strongly recommend that Congress enact during its present session the necessary legislation to establish the corps as a permanent agency of the government. Expenses of Emergency Agencies —There are included in the 1938 budget: Pursuant to the direction of Congress at its last session, estimates of appropriations for the administrative expenses of certain emergency agencies and corporations. Such of the emergency agencies and corporations as may be continued by Congress should have all of their expenditure requirements made subject to the same scrutiny that is given by the Bureau of the Budget to the expenditure requirements of the regular departments and establishments; and I recommend that a provision to that effect be included in any future legislation for the continuance of any such agency or corporation.

PART III

Review of Fiscal Years 1936 and ’37; Fiscal Program for 1938.

This review concerns itself with the cash actually received and paid out by the Treasury in the fiscal year 1936, with the estimates of receipts and expenditures for the fiscal year 1938, and with the fiscal program for 1938. : FISCAL YEAR 1936 Receipts—Treasury receipts for

the year ended June 30, 1936,

amounted to $4,115,951,615, about $295,000,000 less than estimated a year ago. As a result of Supreme Court decisions, the Government lost about $457,000,000 in revenue from taxes levied under the Agricultural Adjustment Act and the Bituminous Coal Act. Had it not been for the invalidation of these taxes, the

-{ total revenues received during the

fiscal year 1936 would have exceeded the revenue estimates of a year ago by $162,000,000. The collection of taxes on carriers and their _ employees, estimated at $33,000,000, has been deferred to the fiscal year 1937 because of pending litigation. The receipts from income taxes were about $7,500,000- less than last year’s estimate. On the other hand, miscellaneous internal-revenue taxes produced $136,488,000 more than was anticipated; customs revenue, $33,621,000 more; miscellaneous receipts, $32,053,000 more; and realization upon assets, $1,483,000 more. Expenditures—The total expenditures for the fiscal year ended June 30, 1936 (exclusive of expenditures from Postal revenues) amounted to $8,879,798,258, as compared with the estimate of $7,645,301,338 shown in the budget submitted 3 year ago. This latter amount did not, however, include $1,673,493,000 for Adjusted Compensation payments to veterans. The expenditures for the year, excluding these - payments, were, therefore, about $439,000,000 less than the estimate. The total expenditures for recovery and relief were $2,776,796,469 against an estimate of $2,869,068,187. For the operation and maintenance of the regular departments and establishments of the government the expenditures amounted to $3,276,872,306 as compared with estimates of $3,482,208,151. For statutory debt retirement there was expended $403,240,150, and for interest on the public debt $749,396,802, the amounts budgeted for these items being $552,025,000 and $742,000,000, respectively. Deficit and Public Debt.—The gross deficit for the fiscal year 1936 amounted to $4,763,841,642. Excluding $403,240,150 for statutory debt retirement, there wasq a net deficit of $4,360,601,492. The estimated net deficit as contained in the budget submitted a year ago was $2,682,482,392, a difference of $1,678,119,100. As previously indicated, the original estimate has been affected to the extent of $457,000,000 as a result of the invalidation of taxes levied under the Agricultural Adjustment and Bituminous Coal Acts and by the additional expenditures of $1,673,493,000 under the Adjusted Compensation act. If it had not been for the increase in the deficit due to these causes, the net deficit for the fiscal year 1936 would have been about $452,000,000 less than that originally estimated. The increase in the gross public debt during the year amounted to $5,077,650,869, but this sum included an increase of the balance in the general fund of the treasury of $840,164,664.. The gross public debt

Fiscal Year 1937

Receipts—The income of the Federal Government during the- fiscal year 1937 will increase sharply over that of 1936. It is expected that the total revenue from all sources (exclusive of postal revenues) will amount to $5,828,151,000. This represents an increase of $1,712,194,000

By United Press

Expenditures sesscecsnsecsasene

retirement.

simultaneously to’provide new rev-

1938 Fiscal Picture at a Glance WASHINGTON, Jan. 8.—The 1938 fiscal picture at a 1938 Receipts cccovceccessiosaseeees$7,293,607,000

*Surplus vessisenssnesssssassess$1,135,608,000 Public debt ceecssssesscnscesss$35,001,543,000

*Surplus presented - without provisions for recovery and relief which the President hopes will be kept within $1,537,123,000, leaving projected deficit of $401,515,000, or the amount of the statutory debt -

glance: 1937 (Estimated) $5,828,159,000 8,480,804,000

(Estimated) 6,157,000,000 Deficit—$2,652,653,000 $35,026,543,000

on June 30, 1936, was $33,778,543,494. | POSe

| ticipated that $900,000,000 of the

over the actual receipts for the fiscal year 1936 and an increase of $173,933,000 over the estimates contained in the 1937 budget as submitted a year ago. :

The general improvement in business conditions and the enactment of the Revenue Act of 1936 have resulted in additional revenues from taxes which will not only make up the loss in revenue due to the Supreme Court decisions invalidating the taxes levied under the Agricultural Adjustment and Bituminous Coal Acts, but will produce additional income of approximately $174,000,000. Since the Revenue Act of 1936 materially changes the tax structure, the individual items of revenue as contained in the original 1937 budget will not be exactly comparable with the individual items ir the 1937 budget as revised in this message. Income taxes are expected to yield $2,372,900,000, or $946,325,000 more than was received from this source last year; miscellaneous internal revenue, $2,274,968,000, an increase of $265,389,000; customs duties, $446,800,000, an increase of $59,988,000; and realization upon ‘assets, $31,830,000, an increase of $26,362,000. In addition, it is expected that the new tax on unjust enrichment provided by the Revenue Act:of 1936 will amount to $82,000,000 and that the tax on carriers and their employees will be $134,552,000, including $33,000,000 deferred from the previous fiscal year. The collection of taxes levied under the Social ‘Security Act will begin in the last half of the fiscal year 1937, and it is expected that these taxes will produce additional revenue in the amount of $324,600,000.

The only item of revenue showing any decrease is that of miscellaneous receipts, in the amount of $50,325,000, which is ‘due to reductions in interest payments made to the Treasury by the Reconstruction Finance Corporation. Expenditures—From present indications expenditures for the fiscal year 1937 (exclusive of expenditures from postal revenues) will amount to $8,480,804,000. Exclusive of statutory .debt retirement and adjusted compensation paymeznis, the total expenditures will amount to $7,512,779,000 an increase over comparable expenditures for 1936 of $709,714,000. This amount is made up of increases of $371,192,000 on account of the Social Security Act, $85,603,000 on account of interest on the public debt, $194,161,000 for the general public works program, $123,442,000 for national defense, and $22,914,000 for other purposes; and decreases of $93,321,000 for the Veterans’ Administration, $74,996,000 for the Agricultural Adjustment program, and $118,281;000 for the Civilian Conservation Corps. The amount of the recovery and relief expenditures has been estimated at $2,166,157,000, but there is included in the supplemental expenditure items $650,000,000 from an appropriation of $790,000,000 to be requested of Congress for the purof carrying the Works Progress Administration and related programs from Feb. 1 to June 30, 1937. This will increase the estimated expenditures for recovery ‘and relief to $2,816,157,000, an increase of $39,361,000 over 1936. The expenditures in the current fiscal year will include, however, the supf of about $165,000,000 for assistance given to individuals and communities directly or indirectly affected by the widespread drought conditions prevailing during the past summer. If this drought had not occured, the net cost of recovery and relief for the current fiscal year would have beeng about $125,000,000 below the cost for, the previous. fiscal year. Deficit and Public Debt—The cur-. rent estimates for the fiscal year 1937 show a gross defiolt of $2832554000, Deducting public debt retir : the net deficit will be $2,248,129,000. The increase in the public debt on account of the deficit, however, will be only $1,348,000,000 since it is an-

deficit will be financed from cash on hand. The working balance will be further reduced by net expendi-

accounts and $100,000,000 for the retirement of national bank notes now a part of the public debt. This¢will reduce the working balance from $2,225,000,000 on June 30, 1936, to $1,783,000,000 on June 30, 1937. The gross public debt at the end of the current fiscal year is estimated at $34,026,000,000, an increase over 1936 of $1,248,000,000. The estimated debt at the end of the fiscal year is based on contemplated expenditures set out in-this budget and does not take into account any change which may occur as a result of the Treasury policy

quisitions of gold. : Fiscal Program for 1938

The expected increase in revenue and decrease in expenditures for relief both reflect the general improvement which has taken place in the economic conditions of the country. The Revenue Act of 1936 which was designed for the purpose of replacing. revenue lost chrough the invalidation of processing taxes, of providing sufficient revenue to amortize the cost of the adjusted compensation payments, and of equalizing tax burdens, gives every indication of satisfactorily accomplishing those purposes. I should like, at this point, to emphasize the importance of maintaining the productiveness of the present tax structure, so that we may properly provide for the fulfillment of our fiscal program. Under legislation enacted during the last session of Congress, which created authorizations for future appropriations aggregating more than $1,500,000,000, there is included about $130,000,000 in the estimates of appropriations contained in this budget. Such authorizations are contained in the new Federal Highway Act, the Rivers and Harbors and the Flood Control Acts, and the Rural Electrification Act. There is.also included $812,225,000 for social security grants and for the Government’s contribution to the old-age reserve account, more than double the expenditures for these purposes in 1937, and there will be for several years still further increases in these requirements. Ii should

By FRED

for a record-breaking billion-dollar

His budget estimates for the

agencies. Principal items in the projected 1938 agricultural program: 1. Soil conservation, $620,000,000. 2. Public roads, $181,500,000. 3. Rural rehabilitation, $150,000,000. (Estimated). 4. Department of Agriculture administration, $82,416,180. 5. Aid to tenant farmers, $50,000,000. (Estimated). 6. For agricultural experiment and extension work, $25,458,169. Budget estimates revealed about

‘propriations, or about $750,000,600, will go directly to farmers through loans, grants and soil conservation benefit payments. "Asks $856,000,000 Mr. Roosevelt asked for a new appropriation of $856,012,955, to which will be added $75,864,000 available from previous appropriations. He requested $128,665,556 more than was appropriated in the 1937 fiscal year. : The President’s estimates do no! take into account the possibility o another drought, such as cost the Government several hundred mil fion in added relief in 1934 and i 1936. » 1% : Drought relief for more tha;

Resettlement Administration fund: Mr. Roosevelt is expected .to as : Congress for an emergency appro priation of $50,000,000 to continu :

tures of about $42,000,000 for trust

| that work to July 1.

in holding as “inactive” future ac- |

Vom mnt Fame

Billion-Dollar Fund for Agriculture [s Requ

75 per cent of the agricultural ap®

400,000 farm families has exhauste

be pointe! out that these expenditure: will be offset to a large ext nt by the increasing revenues inder the Social Security Aci No estir ate of appropriation is presented I ir the needs of the Civilian Conser ation Corps, since its extension be ond March 31 of this year is de endent on the action of Congress. | 1 furtherance of my recommendat on for the enactment of legislation to continue it as a permanent a! ency of the government. There is ncluded in the “supplemental it¢ ms” an amount sufficient to meet he expenditure require‘ments for the fiscal year 1938.

tribution, on a functional basis, of the exper liture figures contained in this budg: and compares them with similar fi; ures for previous years.

@ years 19¢ 1-38. :

ency fun is). (In millions Estimated 1938 1937 Regular Operating Expend ures: Legislati e, Judicial an¢ Civil .. Nat’l. D fense .. Vets Pe: sions . & Bens fits Int. on | ub. Debt.

859.0 964.9 835.0

3,803.6, 4, 1,146.7

Total Public ' forks ... Unemp! jyment Relief’ Direct Relief.. Work Relief (WPA CWA) .. CCC

106.7

A2 B

1,400.5 368.0

1,875.2

Loans Net) .... C1533 C4199 C Subscr ations to Stock . .. Agri. / djustment Progr m Less tlevenues . Net . Social security .. Debt I etirement. Miscel ineous ...

Suppl mental

51.5

The foll wing table shows the dis- |

1,144.7 72,3514

591.7 1264.4

12,3424

821,000. For recovery and relief there is included in the expenditures for 1938 the amount of $316,031,000, which, of ‘course, is not the full amount that will be required for relief during that year. As previously indicated, it is our present hope that the additional amount to be requested for this purpose will not exceed $1,537,120,000. Thus the total: expenditure for recovery and relief during 1938 would be $1,853,154,000, or $963,003,000 less than the amount estimated for 1937. Again I emphasize the contribution which employers, can make to this attainment. - The general expenditures include $860,000,000 for interest on the public debt, an increase of $25,000,000 over the amount for the present fiscal year, and $401,-

Actu: | and estimated expenditures of the Government for the fiscal

.(Clas sifications include expenditures from both General and emerg-

of dollars)

Actual 1936

978.8 » 1018

572.5 540.3

697.5 667.8

591.7 1709.9

781.1 911.6

863.2 689.4

984.8 599.3

556.9 7156.6

607.1

7494 820.9

2,426.3 551.9

2,917.9 427.7

3,270.5 439.5

1793.5 868.7

2,735.6 | 704.3

1 . 19141 7158 cssese 805.1 331.9

113

486.3 435.5

350.7 874.4

2,360.9 805

1,852.8 175.2 788.6

69.3 1568 8265 110.7 + 7430 2903 5214 353.0

2216 D627

542.6 76.6 466.0 28.4 - 403.2

573.6 359.9

Gra id Total ..A 6,158.0 F jotnotes— ;

clude | under “supplemental items.” ( ~~Excess of credits, deduct. 1 —Excess of revenues, deduct.

Re: cipts—Treasury receipts in the fisca! year 1938 are expected to reac! a total of $7,293,607,000. An incre ise of $1,465,456,000 over similar 1 ceipts for 1937 and $3,177,650,000 : ver 1936. This gain is largely due © an increase in income taxes as ¢ result of improved business cond tions and the operation of the Reve aue Act of 1936. Tie amount expected to be collecte 1 in 1938 from income taxes is $3,3f 1,300,000, a gain of $992,400,000 . iver the fiscal year 1937. Miscell? neous internal revenue will proc uce $2,508,332,000, or $233,364,000: hore than is expected from this sous ze for 1937. The tax on unjust enr; ‘hment and the taxes on carrier and their employes from which $82.00,000 and $134,552,000, respective y, will be derived in 1937, will pro: uce no revenue in 1928 since unc ir existing law these taxes expirt during 1937. The first full year of / ax collections under the Social Sec irity Act will result in revenue of |:774,800,000 in 1938, which sum is 4150,200,000 greater than the antici sated revenue in 1937, when collec ions will be for only six months, It : : believed that customs revenues wil rise from $446,800,000 during the present fiscal year to $463,000,000 in’ 1938, a gain of $16,200,000. Misce! aneous receipts, however, will det rease $8,950,000, the 1938 collectio is being estimated at $151,550,000, as compared with $160,500 during 19:7. From realization upon assets $30 625,000 will be received, while in 1937 receipts from this source will ar ount to $31,830,000. ‘ jxpenditures — The expenditures fo 1938 contemplated under this bu iget (exclusive of those from Posta revenues) will total $6,157,999,000 or approximately $2,323,000,000 less thin is now estimated for 1937. G neral expenditures for regular a: tivities amount to $5,841,968,000, a: compared with $5,664,647,000 in -1£ 37, an increase of $117,321,000. The 1 37 estimate, however, contains an a aount of $563,500,000 for complet: :n of Adjusted Compensation payr ents to veterans, so that the corhp rable increase over 1937 is $740,-

ested

O. BAILEY

United Press Staff Correspondent WASHINGTON, Jan. 8.—Presider; Roosevelt asked Congress today

al propriation to fulfill his campaign

pledge of increased aid for agricultur .

1¢ 3 fiscal year call for immediate

appropriation of $930,876,985. Congr: ss, with his approval, is expected to add to this total an estimated $20,000,000 for emergency agricultural

Later he plans to request an |

'mergency appropriation of probibly $150,000,000 to continue rural ‘chabilitation work under Resettle‘ment in the 1938 fiscal year. He { fecently made Resettlement a permanent bureau of the Depart- - ment of Agriculture.

: - Aid for Tenants

Congressional plans appearing to have Administration support call for an annual appropriation of at least $50,000,000 beginning in the 1938 fiscal year for aid to tenants in purchasing farms. The President’s 1938 estimates are considerably above the $907,326,285 ' which he estimated the Department of Agriculture will spend in the 11937 fiscal year. Actual expendi- | tures in 1936 were $891,305,607, he | said. | Department of Agriculture expenditures have increased more ‘rapidly since the World War than {any other branch of the Federal Government. The Administration will spend more for agriculture in 1938 than it spent for the entire Federal Government 20 years ago. The principal reduction to be made in 1938 is expected to be for

the Resettlement Administration. |

That emergency agency’s 1937 fiscal year expenditures, because of the drought, will exceed $200,000,000.

84808 88031 68544 67520 51430

5,153.6

A -To be increased by any amount appropriated by Congress for recover: and relief for the fiscal year 1938. As indicated in the message, it is hos, ed the amount will not exceed $1,537,123,000. : . E/)-Punds for continuation of the Civilian Conservation Corps are in-

515,000 for statutory debt retirements, a decrease of $3,010,000. Exclusive of the service on the public debt and the payment of Adjusted Compensation to veterans, there is a net increase of $718,831,000 in expenditures for regular activities as compared with 1937. This increase is accounted for as follows: For increased requirements under the Social Security Act, $436,337,000; for additional expenditures under the general public works program, $132,519,000; for national de-

strength of the Army as directed by Congress and to provide for replacement of naval vessels in accordance with existing authorizations, $92,882,000; for the necessary funds for the activities of the Railroad Retirement Board and for rural electrification, $39,566,000; and for increased needs of other activities, $17,527,000. | Surplus and Public Debt—The surplus for the fiscal year 1938, as presented in this budget, is $1,135,608,000, after providing for debt retirement. Excluding provision ior debt retirement, the surplus will amount to $1,537,123,000. As I have previously stated, it is hoped the additional needs for relief during the fiscal year 1938 will not require expenditure of more than this later amount. On this basis the estimated gross public debt, on June 30, 1938, will be about the same amount as at- the close of the fiscal year 1937. This does not take into account any change which may occur as a result of the Treasury policy in holding as “inactive” future acquisitions of gold. Appropriations—The total appropriations recommended in this budget aggregate $6,839,000,000, including those for the Postal service, District of Columbia and probable supplemental items, while the appropriations already made and prospective supplemental items for the fiscal year 1937, exclusive of requirements: for recovery and relief, total $6,261,000,000, an increase of $578,000,000 for 1938. This increase is due to additional appropriations amounting to $309,000,000 on account of departmental requirements, including the national defense. The appropriations made and contemplated for recovery for 1937 total $2,215,000,000. Whereas it is hoped that corresponding appropriations Jor 1938 will not exceed $1,537,123,00.

PART IV

THE DISTRICT OF COLUMBIA

The first section of the 1937 District of Columbia Appropriation Act, approved June 23, 1936 (Public, No. 762, 74th Congress), contains the following provision: “Not to exceed $50,000 shall be available for expenditure, under the direction of the President, for making an independent study of the fiscal relations between the United States and the District of Columbia and enabling him to report to Congress at the beginning of the next regular session, what, in his Judgment, is a fair and equitable amount to be paid by the United States as an annual contribution toward the expenses of the government of the District: of Columbia; such sum shall be available for personal services without regard to the Civil Service laws and the Classification Act of 1923, as amended, and for such other expenditures as may be necessary in connection with’ such study. Pursuant to the above, I appointed a director and an advisory committee of three members to conduct an independent study of the various elements and conditions affecting the fiscal relations between the United States and the District of Columbia. The report contains detailed findings and recommendations with the supporting ‘data and information collected: from the Federal and

fense to provide for the increased |-

District Governments in Washing ton and from 17 comparable American cities and the capital cities of 21 foreign countries. The application of the basic prin ciples and recommendations as outlined and detailed in the report is reflected in the following 3-point formula, which I recommend be carefully considered by the Congress with a view to enacting such legislation at this session as may be necessary to establish equitable fiscal relationships between the two Governments. 1. Intergovernmental Contractual Services—Contractual arrangement shall be established for the reimbursement of the cost of specific intergovernmental] services supplied either Government by the other, Appropriations therefore shall be included in the respective annual departmental budgets. 2. Capital Outlays of Joint Interest—The National Capital Planning Commission (proposed in the report) shall determine the extent of the respective Federal and Districtinterests in capital outlays and improvements to be included in The District budget. : 3. Per Capita Governmental Costs—Pending the grant of broads er powers of local control over purely local affairs, the excess of The District governmental costs per capita over the average of those in comparable cities shall be assumed by the Federal Government: Provided, however, that such excess District governmental costs shall be assumed only after allowance has been made for reimbursements due to unusual costs occasioned by Congressional enactments. I also recommend that, concure rently with enactment of any legislation which carries into effect the provisions of this continuing formula, the substantive law provid ing for annual Federal contribue tions of a fixed percentage of District appropriations be repealed and that the system of annual Federal lump-sum contributions be abandoned. : The application of this formula to the 1938 budget estimates would provide for a net reimbursement by the Federal Government to the District of Columbia of $2,533,357, made up as follows: 1. Intergovernmental Contractual Services, $1,996,407. 2. Capital Outlays, $536,950. 3. Excess Per Capita District of Columbia Governmental Costs —, Total, $2,533,357. After the application of the formula there will still be a deficit in the general revenue account of the District of Columbia - of about $9,800,000, which will make it necessary, of course, to provide additional revenue. Sources of additional revenue are indicated in the report. Franklin D. Roosevelt.

ENTERSUS.IN BIG NAVY RACE

F. D. R. Announces Start of Construction of Two Superdreadnaughts.

By United Press WASHINGTON, Jan. 8.—A $100, 000,000 entry in the new world naval race today capped the largest peacetime national defense budget ever presented to the American people. President Roosevelt, responding to frenzied competition to increase

armaments by world military and naval powers, entered the United States officially in that race by annouicing immediate start of construction of two superdreadnaughus to cost $100,000,000. He called upon American taxpayers to provide the fighting forces with ‘more ships, more guns. more airplanes and more men. The bill for the fiscal-year 1938 will be about one billion dollars. For the third consecutive year expenditures jumped about $100,000,000. Actual 1938 fiscal estimates for strictly military purposes were: ‘Navy $5817,302,600 War Department.. 393,460,400

fornais +. .$980,763,000 Total Over Billion

Added to this were $34,828,200 for nonmilitary War Department activities and $143,322,101 for rivers and harbors, bringing the 1938 total well above $1,000,000,000. Increased enlisted strength of the Army and Navy, more airplanes for both and construction of warships accounted for the principal expenditure gains. Last year the President's budget gave $510,280,080 to the Navy and $377,601,000 for war military active itles, making a national defense total of $887,881,080. Actual 1938 fiscal expenditures were $391,424, 149,26 for Navy; $373,014,977.68 for military activities of the War Department, a total of $764,439,126.94. The Navy's chief gains were caused by provision for start of construction of two new battleships, announced by President Roosevelt today; continued construction of other new warships to lift naval strength to the limits of the Wash ington and London Treaties; ine creased personnel to man the new ships, and more and bigger airplanes.

Navy to Continue Construction

The Navy will continue construce tion of 2 aircraft carriers, 1 heavy cruiser, 3 light cruisers, 20 destroyers, 4 submarines and 2 gunboats and will begin 12 destroyers, 6 sube marines and the 2 superdreade naughts. » The total for naval construction in 1938 was $115,000,000. A total of $49,500,000 was asked for the Navy Bureau of Aeronautics, a gain of $10,912,000. Some $27,186,000 is ear= marked for new airplanes, $6,206,000 more than last year. With an added 18,000 enlisted men, bringing enlisted strength to 165,000 men, the Army got increased pay and" allowances of $8,025,540. The Quartermaster Corps was upped $15,276,218 to feed, house and clothe the new men. : The Army Air Corps asked for $60,500,000, an increase of $1,102,286. With this the Army proposes to purchase 530 new airplanes, 441 for the regular Army and 81 for the National Guard. Some $3,588,000 is asked to equip planes ‘with modern

radio apparatus, machine guns, ete.