-2- 



grain prices were of a minor nature. ^ G-reatest increases for the week 

 were in the prices of soybeans, corn, oats and hogs. The cold weather 

 also brought about a contraseasonal gain in egg prices this week of 6ne 

 cent a. dozen. 



Implications of the prop^ram proposed by President Roosevelt . 

 The general public doubtless gasped and then smiled with pleasure at the 

 suggestion that the United States must and would produce 6o thousand 

 planes, ^5 thousand tanks, 20 thousand anti-aircraft guns and S million 

 tons of shipping in 194-2. That is as pleasant news for patriotic 

 Americans as it must be bad news for the Axis. This rate of production 

 is to be greatly expanded in 19^3* ^^ received this information on 

 January 6. January 7> the President's budget message called for 5^.9 

 billion dollars for the coming fiscal year, July 1 to June 30. A net 

 deficit of 35.^4- billion dollars for 19^2-19^3 and a public debt at the 

 end of the period of 110.^ billion dollars were forecast by the 

 President. Of this budget of 5^.9 billion, the deficit of 35.^1- billion 

 will have to be borrowed; the balance, 23.5 billion, v/ill be paid from 

 taxes. This will call for an increase in taxes of 9 billion dollars, 

 or about 60 per cent. It is expected that 7 billion of the new taxes 

 will come from general taxation and 2 billion from social security 

 taxes. There will be an attempt to make some reduction in non-defense 

 expenditures including those for agricultural programs. 



A net deficit of 35 "billion dollars in one year suggests, in 

 the absence of further qualifications, a substantial inflationary rise 

 in prices. Whether we have a rise in prices would depend upon two 

 things: (l) Whether the 35 billion dollars will be borrowed from 

 individuals and corporations out of current income, or v^hether it will 

 be borrowed from banks and (2) the extent of price fixing. If we loan 

 the government "^5 billion dollsirs out of our current income, we wouldn't 



