Washington, March 14, 1934.

THE deficit for the fiscal year of the Federal Government which ends three and a half months from today will be about $4,300,000,000 instead of the $7,000,000,000 predicted by President Roosevelt in his message to Congress in January.

The reason is that, try as they may, the spending agencies of the Government are not finding it possible to disburse even the allocated funds. Lots of red tape surrounds the actual expenditure of funds and many of the projects in the Public Works Administration, especially those that require action by city councils and public bodies, are taking more time than was originally contemplated.

There has been, so far as is noticeable, no effort to slow down the spending. But the machinery itself takes considerable time. Hence the deficit cannot be as large as was anticipated.

This means that in the fiscal year beginning next July and ending June 30, 1935, for which the President indicated a deficit of $2,000,000,000, we may have a larger deficit than was planned. Between now and that time, however, increased tax receipts and possibly a business revival may take some of the load from the Government, so that the important thing is to focus attention on the deficit of this year.

A discrepancy of more than $4,300,000,000 is the largest in all the history of the United States. It is larger than any deficit of the Hoover years. It comes near being as much as all the Hoover years of depression put together. But the Roosevelt Administration feels that the spending was in good purpose and that business recovery justified the borrowing policy.

Some of the money being spent this year is in the form of loans and will come back to the Treasury. This is especially true of the R. F. C. loans as distinguished from the grants. To date the R. F. C. has disbursed about $5,600,000,000, dating from the time the organization was set up under the Hoover Administration in 1932. Of this amount about $1,600,000,000 constituted grants for relief and aid of Governmental establishments and agencies and is therefore not expected to be repaid. This leaves about $4,000,000,000. Of this sum about a half billion has gone to buy preferred stocks in the banks and will of course come back in due time. Then there's about $1,200,000,000 which has already been repaid on loans. This leaves about $2,400,000,000 in loans of various kinds and on these a high rate of repayment is expected.

The funds allocated but not yet loaned amount to more than a billion dollars. Much of this money does not require any new appropriation, as the R. F. C. is authorized to lend any proceeds from repayment of loans.

The R. F. C. has proved to be the mainstay of the financial side of the Government. The banks, insurance companies, railroads and municipal and state governments that have been helped may repay over a period of years. Excellent collateral has been required, so that it is generally felt the loans will pay out close to 95 per cent on the dollar on an average.

The R. F. C. may become an even more important factor in the creation of intermediate credit for business generally if the present plans for the banks to set up machinery to furnish capital to industry do not work out.

The Treasury is this week quite happy over the way preliminary tax receipts are coming in. There is every evidence that receipts will come up to the schedule marked out. But of course there is no thought that receipts will be sufficient to balance the budget as a whole. The carrying of a deficit of $4,300,000,000 is an unprecedented ask for Federal credit, but the refinancing operations have thus far proceeded satisfactorily and, with the diminished amount needed this fiscal year, unquestionably the flotation of longer issues to absorb the maturing short term indebtedness will continue to be the objective of Federal policy.