Preparing for War Is Costly, 1941

“U.S. Expenses Mount Hourly for Defenses” published in the May 2, 1941, issue of the Burlington Daily Times-News.

Two Billion Monthly May Be Spent By July 1

Washington, May 2—(AP)—American defense production is increasing so swiftly that officials predicted today federal expenditures would reach $2,000,000,000 a month in the fiscal year beginning next July 1.

In comparison, the government spent approximately $1,300,000,000 last month—about $750,000,000 for defense and $550,000,000 for other purposes.

The estimate of spending was reported to have been prepared by Stacy May, statistician of the office of production management, for presentation to the senate committee investigating the defense program.

Over the year, this figure is $5 billion above the estimate made by Secretary of the Treasury Morgenthau in testifying on taxes before congressional committees last week, and is $6.6 billion larger than the budget President Roosevelt submitted to congress in January.

Under Morgenthau’s theory that two-thirds of the government’s over-all spending during the defense emergency should be covered by tax revenue, the new figure would require doubling of the treasury’s plan to add $3.5 billion of the new taxes to the $9.223 billion revenue expected from existing levies.

No such revision of the tax program was anticipated by officials, however, both because the new taxes already advocated are so steep and because May’s estimate does not bear budget bureau approval.

Harold D. Smith, budget director, was understood to be calculating expenditures somewhat between Morganthau’s $19 billion and May’s $24 billion.

Either of these figures would make the next fiscal year the most costly in American history. At the peak of world war spending, the most expensive year was $18.522 billion.

May’s estimate interested officials intensely because the actual size of spending will be determined almost solely by how fast the factories can turn out the airplanes and other defense materials which have been ordered. Orders and appropriations exceed any of the estimates.

Meanwhile the house ways and means committee, considering plans for raising necessary revenue, studied the recommendations of some 170 economists who urged that congress use its taxing power to prevent a defense-born currency inflation.