Budget Balancing vs. Pump Priming

Report Outline
The Administration and the Business Slump
Extent of Current Business Recession
Progress Toward Balancing the Budget
Government Pump Priming and Recovery
Special Focus

The Administration and the Business Slump

President Roosevelt in his message to the special session of Congress, November 15, conceded that the current business slump, in so far as it had the effect of decreasing the national income, was “a matter of definite concern,” but he insisted that “with the exercise of ordinary prudence, there is no reason why we should suffer any prolonged recession, let alone any general economic paralysis.” The message displayed a conciliatory tone toward business, stressing the consideration now being given by the government to elimination of injustices in the tax laws, to stimulation of the construction industry, and to solution of problems of the railroads and of other public utilities.

Obviously [he said] an immediate task is to try to increase the use of private capital to create employment. Private enterprise, with cooperation on the part of the government, can advance to higher levels of industrial activity than those reached earlier this year.

Such an advance, the President observed, would assure balanced budgets, and he said he expected the budget for the fiscal year 1939 “can be brought within a definite balance.” At the same time, he warned that “if private enterprise does not respond, government must take up the slack.”