It has always been our policy to retire our debts.  That of the Revolutionary War period, notwithstanding the additions made in 1812, was paid by 1835. and the Civil War debt within 23 years.  Of the amount already paid, over $1,000,000,000 is a reduction in cash balances.  That source is exhausted.  Over one and two-thirds billions of dollars was derived from excess receipts.  Tax reduction eliminates that.  The sale of surplus war materials has been another element of our income.  That is practically finished.  With these eliminated, the reduction of the debt has been only about $500,000,000 each year, not an excessive sum on so large a debt.

Proposals have been made to extend the payment over a period of 62 years.  If $1,000,000,000 is paid at the end of 20 years, the cost to the taxpayers is the principal and, if the interest is 4% per cent, a total of $1,850,000,000.  If the same sum is paid at the end of 62 years, the cost is $3,635,000,000, or almost double.  Here is another consideration:  Compared with its purchasing power in 1913, the dollar we borrowed represented but 52 cents.  As the value of our dollar increases, due to the falling prices of commodities, the burden of our debt increases.  It has now risen to 631/2 cents.  The taxpayer will be required to produce nearly twice the amount of commodities to pay his debt if the dollar returns to the 1913 value.  The more we pay while prices are high, the easier it will be.

Deflation of government after a war period is slower than deflation of business, where curtailment is either prompt and effective or disaster follows.  There is room for further economy in the cost of the Federal Government, but a co n of current expenditures with pre-war expenditures is not able to the efficiency with which Government business is now being done.  The expenditures of 19161 the last pre-war year, were $742,000,000, and in 1925 over $3,500,000,000, or nearly five times as great.  If we subtract expenditures for debt retirements and interest, veterans’ relief, increase of pensions, and other special outlays, consisting of refunds, trust investments, and like charges, we find that the general expenditures of the Government in 1925 were slightly more than twice as large as in 1916.

As prices in 1925 were approximately 40 per cent higher than in 1916, the cost of the same Government must also have increased.  But the Government is not the same.  It is more expensive to collect the much greater revenue necessary and to administer our great debt.  We have given enlarged and improved services to agriculture and commerce.  Above all, America has grown in population and wealth.  Government expenditures must always share in this growth.  Taking into account the factors I have mentioned, I believe that present Federal expenses are not far out of line with pre-war expenses.  We have nearly accomplished the deflation.