Business Operations of the Federal Government

September 19, 1934

Report Outline
Expansion of Federal Business Activities During Depression
Principles Underlying Government's Business Enterprises
Federal Business Activities Before the Depression
Emergency Business Activities of the Government
Sinclair Plan for State Production in California

Expansion of Federal Business Activities During Depression

Federal efforts to combat the depression have expanded the business activities of the government, inevitably increasing the area of competition with private business. The freezing of bank assets in the spring of 1933 and the cautious policies pursued by bankers since that time have led the government to extend one type of credit after another until it now occupies a position of dominance in the field of finance. The development of water power projects to serve as “yardsticks” by which to measure the fairness of private utility rates, the launching of a vast social experiment in the Tennessee Valley, and the purchase and processing of surplus goods for distribution to the unemployed have embarked federal agencies upon widely diversified types of business activity.

Even before the emergency expansion of federal activities, private business had become alarmed over the varied business ventures of the national government. While not conceding that public agencies could produce and sell merchandise at lower rates than private enterprises, organizations of business men declared that failure properly to compute costs and unfair methods of competition gave a false picture of government business operations which tended to encourage their expansion and thus progressively to restrict the markets available to independent producers. The shrinkage in the total volume of the nation's business has caused the relatively small amounts of commodities produced by the government in most cases to take on an added importance during the depression.

Roosevelt on Relations Between Government and Business

President Roosevelt's views on government and business have been modified during the 22 months since his election The platform upon which he campaigned, and which he accepted in every detail, advocated “the removal of government from all fields of private enterprise except where necessary to develop public works and natural resources in the common interest.” In his book published in March, 1933, Roosevelt said: “We do not want the government in business.” He pointed out, however, that while it has been American doctrine that the government must not enter business in competition with private enterprise, it has nevertheless been traditional for private business to ask for all kinds of governmental assistance.

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