"Moreover, it would be a demonstration of our faith that this Nation fully expects to be in business 100 years from now. It should have a salutary effect upon the inflationary spiral of cheap money and increasing indebtedness. It would serve to revive confidence both at home and throughout the world in the stability of the dollar. Perhaps more basic than any of this, it would be a simple act of good faith with the generations of Americans yet to come."

Two TEXANS OFFER PLAN-ONE PERCENT-PER-YEAR DEBT PAYMENT PROPOSED (By Bascom Timmons)

Two young Members of Congress have come up with an idea of paying off the national debt.

That two Members of Congress out of 534 should bring forth a proposal that the Federal Government not only begin living within its income by paying off the bills of World War I and World War II is no reason to stop the presses and replate the first pages of the country's newspapers.

The proposal has been received so calmly that no radio or television chain interrupted a popular program to give the country the glad tidings.

The two are Texans, which is no disadvantage in the present congressional setup. They are Representative James C. Wright of Fort Worth and Representative Frank N. Ikard of Wichita Falls, both Democrats. This is encouraging for it is the Democratic Party which is widely suspected of harboring a thought that the Nation is in some sort of a fairyland where debts need never be paid.

Wright is 37 and in his fifth year in Congress. Ikard is 45 and in his seventh year. Ikard is a member of the powerful Ways and Means Committee and one of his distinguished constituents at one time was Secretary of the Treasury Robert B. Anderson.

The National debt has reached the astronomical sum of $283 billion. On that debt the Nation is paying interest of $8,100 million each year; with increased interest rates this may soon go to $9,800 million a year.

Wright in a statement pointing out that "it is cheaper to pay than to owe," emphasized that if there is no reduction in the next 28 years we will have paid out in interest an amount equal to the debt without having reduced the debt itself by one penny.

So Wright and Ikard proposed that the Government live within its income and yearly earmark 1 percent of what the Nation owes for debt retirement. That would not break any speed records in debt payment. It would in fact take 100 years to do it.

But no one can overestimate the psychological effect of a determined and systematic effort to pay off the Federal debt.

"One hundred years is, of course, a long time," said Ikard, "but the adoption of a definite play for payment would be beginning and now is the time that we should get started. During the past 4 years the debt ceiling has been increased four times and only once since World War II has there been any debt reduction."

Ikard and Wright have already introduced a joint resolution to accomplish the debt-paying plan. Hearings on the subject will be scheduled by the Ways and Means Committee of the House.

STATEMENT OF HON. PAUL G. ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. Chairman and members of the Executive and Legislative Reorganization Subcommittee, I appreciate the opportunity to offer testimony today in behalf of a systematic, annual plan of public debt retirement. In considering such a proposal this committee is performing a valuable public service and will be commended by all of us who are concerned with fiscal responsibility and integrity. Last year, I was privileged to join with our colleagues, Jim Wright, Frank Ikard, and others, in sponsoring legislation directing the Secretary of the Treasury to include in his annual request for funds an amount of money sufficient to reduce the national debt by not less than 1 percent each year. A number of

other proposals to reduce the debt by varying amounts were also submitted. The possibility of debt reduction was considered by the Committee on Ways and Means during the last session in connection with the administration request to increase the temporary debt ceiling but no action was taken.

In supporting this plan for the gradual payment of our national debt, it was interesting to make a study of this problem, and I would commend the thoughts that have been set forth on this subject in the following publications for those who are interested: "National Debt and the New Economics" by Seymour E. Harris, "Government Finance" by John F. Due (revised), "Government Financing" by Harold M. Groves (fourth ed.), and "The National Debt Series" by the Committee on Public Debt Policy.

Having studied with much interest the various proposals offered, I cannot help but compare our present approach to the existing public debt with a situation that could not possibly exist in private enterprise.

Suppose that any one of us went to a bank to borrow $10,000. Suppose also that the terms set forth in the loan agreement made provision for interest payments on the loan to be paid at regular intervals but made no provision for repayment of the actual loan. We do not need a financial genius to tell us that such a state of affairs could never exist in our well-ordered private business world.

Just such a situation as I have mentioned does exist in the largest business of them all-the business of government.

The dilemma to which I refer is the existing public debt. The fault lies not in the fact that we have created such a Frankenstein-it lies in our continued failure to face up to our creation.

Many take the attitude of hopelessness when the possibility of reducing the public debt is discussed. Therefore, the problem has been, to a great extent, ignored. Certainly it has not been properly met. The time has come for actionin fact, it is far past due.

To be sure, the debt was created in large measure by the great global wars we have had to finance since the turn of the century. The Korean conflict, periods of internal crisis, and our efforts to achieve global supremacy in the space age have added no small amount to the total. And the end is not in sight. A proposal which would provide an orderly, systematic plan for reducing the debt, is desirable in view of the constant temptation of Government to find new ways of spending and to put off debt payments until some more "convenient" time in the future. History shows us that it is quite impossible to predict what will happen tomorrow. Such a "convenient" time may never materialize.

Permit me to call attention to certain facets of the debt which might be of historical interest.

In 1790, the debt could have been wiped out had each living inhabitant of the United States paid in $19 to the National Treasury. After the end of the War of 1812, each person would have had to pay in $15. Just after the Civil War, the figure rose to $78; after World War I, to $240. In 1946, to extinguish the debt, each one of us-man, woman, and child-would have had to pay about $2,000 to the Government over and above the amounts collected each year to keep the Government running.

In the 27 years immediately following the Civil War, two-thirds of the Federal debt outstanding was repaid.

Over a period of 11 years after World War I, the Federal Government reduced more than one-third of the amount outstanding.

By 1949, almost $18 billion of the World War II debt had been redeemed. Surely, history shows us that it is in the American tradition to repay debts. The payment of the principal of a debt tends neither to impoverish a nation, nor to retard its material development; but on the other hand, the maintenance of the principal and the constant payment of accruing interest tend to cripple the productive capacity of any people.

The President has told us that in the current fiscal year the Government will pay almost $9 billion in interest on the debt. This item alone is more than the total peacetime expenditures of the Government for all purposes in any year prior to 1934.

During the peak year of 1946, the amount of interest paid on the debt constituted 3.5 percent of our total national income.

The burden of heavy interest obligations is not the only feature we have to consider. The size of the debt and its service reduces the action of the Treasury and the Federal Reserve System in their credit policy. The debt enhances the

danger to the country of wrong policies; it is one thing to make mistakes in handling a small debt, but far more serious and costly when the debt is a large

one.

I do not suggest for a moment that we sacrifice national security for fiscal solvency on the contrary, if we do not maintain an adequate national defense, fiscal solvency has a hollow meaning. However, the larger the debt and interest load currently, the less room there will be for the Government to finance readily and soundly some future emergency.

There is no reason why national defense and fiscal solvency cannot go hand in hand. A systematic debt retirement plan would help to achieve fiscal stability, while at the same time it would provide adequately where our defense needs are concerned. If we choose, by proper planning, we can accomplish both. Another strong reason that should impel us to give favorable consideration to such a plan is that money paid out in debt retirement could well serve as a stimulus to business. Of the amounts paid to individuals and financial institutions, a limited sum may be held in idle balance, but the bulk of the money will be reinvested, thus helping to shore up a flagging economy in times of recession.

On the whole, there is substantial merit in a program of gradual retirement of the Federal debt. The advantages to be realized are, first, that it results in a saving in governmental expenditures for interest; second, that it strengthens the credit of the Government so that it can better meet an emergency; third, that in time of inflation, it may serve as a tool to cope with excessive spending.

We cannot afford to ignore these advantages. We cannot afford to ignore the ever-increasing pleas for fiscal stability. We must remember that throughout our history the greatest obstacles to national financial strength, and the most acute dangers to fiscal collapse, have never been the results of inadequate or failing resources, but always consequences of weak financial policies. An orderly debt retirement plan is one step on the way back to fiscal and political responsibility.

STATEMENT OF HON. CHARLES E. BENNETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Thank you for the opportunity to make this statement.

I have been deeply concerned over our failure to reduce our national debt. I feel that we need some workable plan of debt reduction which will offer some hope of eventually paying off the debt and which will put a damper on inflationary psychology. I congratulate this committee on its efforts and hope that from this committee some practical debt reduction program will result.

In an effort to make a contribution toward such a program I have introduced several bills which, I feel, would aid in some ways the reduction of our national debt. I believe that certain provisions of these bills which I have introduced might successfully be incorporated into the legislation which might come from your committee. I would like to say a few words about each of these bills and how they could do something about our national debt.

Enactment or inclusion of my bill, H.R. 6292, would be a significant first step toward exploiting gifts as a means of reducing the national debt. At present, gifts to reduce the debt are negligible, because the Government can only accept unconditional gifts, and no assurance can be given the donors that the gift will, in fact, have the effect of reducing the national debt. The donor cannot even be certain that the net effect will not be to increase spending on programs with which he is not in sympathy. H.R. 6292 makes possible the giving of that assurance. It provides that such gifts are to be placed in a special fund to be used only for retiring obligations constituting part of the national debt. The Treasury, Bureau of the Budget, Comptroller General. and General Services Administration have all submitted favorable reports on this bill as they all feel that such legislation would be highly desirable.

It has been said that unless there is a surplus no receipt can reduce the national debt. However, H.R. 6292 would allow the Government hereafter to receive gifts conditioned on their being applied to reduce the national debt; while in the present situation of the law an heir or other interested party could object to the Government retaining money given "to reduce the national debt." If H.R. 6292 did nothing more than correct this, it would be a financial assistance to the country. This assistance might be greatly enhanced if accompanied by an effort throughout the country to reduce the national debt by gifts made in accordance with this statute.

My bill, H.R. 6348, would be a good companion bill to H.R. 6292, but either can stand separately. H.R. 6348 gives added assurance that gifts and other receipts to reduce the debt are used for that purpose and not for swelling current receipts. This is assured by dividing the public debt into the "1949 national debt" and the "post-World War II national debt." The "1949 national debt" would consist of obligations totaling the amount of the public debt on April 30, 1949, when the debt was at its lowest point since World War II, $251,530,468,254.82. All gifts made for debt reduction would be used to reduce this figure. This would have the advantage not only of insulating from current expenditures the debt to which gifts are applied, but also of maintaining a definite figure which would be affected only by gifts and other receipts specified for reducing the public debt. Thus, every gift would result in reducing the debt by an easily determined precise amount and no current expenditure could change this result. Gentlemen, I firmly believe that insulating the debt to be reduced in this way is an important step in any program to reduce the national debt. If this step is not included, wars, depressions, and deficits will easily upset the debt reduction program. I, therefore, urge that such a provision be included in any debt-reduction program.

My last debt-reduction bill which I would have you consider is H.R. 6293. This bill would require proceeds from sales of Federal surplus property to be used for reducing the national debt. If provisions in this bill were included along with the provisions of H.R. 6348, such proceeds would be applied to the "1949 national debt." This would mean that such proceeds would not show up in current receipts and would not determine whether a current year's budget is balanced. Applying proceeds of surplus property sales to the national debt in this way would provide a substantial means of reducing the debt.

Thank you again for letting me testify in this matter. The American people have been led to have a defeatist attitude toward the national debt. So long as we do not assume leadership to do something in this matter this attitude will continue and the national debt will continue to rise in good years and bad. These bills would be a good beginning in the right direction. Any beginning in an effort to reduce the national debt would be a monumental accomplishment. I hope your committee will make this beginning.

Chairman DAWSON. Now we will go into executive session.

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