Debt, Credit, and Recovery

July 17, 1934

Report Outline
Administration's Attitude on Debt and Credit
Public Debt Increases and New Loan Facilities
Debt Reduction and Reorganization Measures
Credit Expansion V. Debt Reduction as Recovery Aid
Special Focus

Administration's Attitude on Debt and Credit

The Drive for economic recovery initiated by the Roosevelt administration has led to government spending on a scale never before attained in time of peace. The large borrowings necessitated by this program had. before the close of the fiscal year 1934, wiped out substantial reductions in the federal public debt effected since the war and raised the total of that obligation to a new all-time peak. Not only did the federal government undertake huge expenditures on its own account, but through the public works program it induced states and local governmental subdivisions to in cur additional indebtedness for the purpose of providing work for the unemployed. Federal funds were likewise made available for a wide variety of other purposes, enabling government agencies to make new or increased loans to banks, railroads, industry, and farmers and other individuals, while authorization was given for creation of various new credit facilities directly or indirectly under government auspices.

The administration's program of liberal spending and liberal provision of funds for other than governmental use, resulting in new public and private indebtedness, was accompanied by measures designed to reduce the amount of existing debt commitments and ease the weight on debtors of both old and new obligations. Amendments to the bankruptcy laws made possible reorganization and composition of debts of municipalities, rail roads, corporations, and farmers. Several enactments opened the way to alleviation of the mortgage burden on many hard-pressed farm and home owners. Devaluation of the dollar was carried out in the hope that it would raise prices and thus enable payment of old debts in a unit of value more nearly equivalent to that prevailing when they were incurred. Other policies of the administration, in so far as they might speed general recovery, were also calculated, directly or indirectly, to improve the debtor's lot.

Reconciliation of Conthadictoky Debt Policies

An apparent contradiction was plainly visible in the aforementioned debt and credit policies. On the one hand, the administration plunged the federal government more deeply into debt, stimulated borrowing by lesser governmental units, and readily acceded to demands that it open the channels of public credit to private individuals and interests. On the other hand, it adopted policies and set up machinery to facilitate reduction of semi-public and private indebtedness and encourage eventual complete retirement of certain types of debt previously ordinarily contracted on an un-amortized basis.

ISSUE TRACKER for Related Reports
New Deal, Great Depression, and Economic Recovery
Feb. 20, 2009  Public-Works Projects
Jul. 25, 1986  New Deal for the Family
Apr. 04, 1973  Future of Social Programs
Nov. 18, 1944  Postwar Public Works
Apr. 12, 1941  Public Works in the Post-Emergency Period
Mar. 08, 1940  Integration of Utility Systems
Feb. 26, 1938  The Permanent Problem of Relief
Jun. 08, 1937  Experiments in Price Control
Jan. 05, 1937  Credit Policy and Control of Recovery
Nov. 27, 1936  New Deal Aims and the Constitution
Oct. 16, 1936  Father Coughlin vs. the Federal Reserve System
Sep. 25, 1936  Roosevelt Policies in Practice
Feb. 11, 1936  Conditional Grants to the States
Dec. 11, 1935  Capital Goods Industries and Recovery
Sep. 25, 1935  Unemployment Relief Under Roosevelt
Jul. 17, 1935  The R.F.C. Under Hoover and Roosevelt
Jul. 03, 1935  Six Months of the Second New Deal Congress
Jun. 04, 1935  The Supreme Court and the New Deal
Mar. 05, 1935  Public Works and Work Relief
Feb. 16, 1935  Organized Labor and the New Deal
Dec. 04, 1934  Rural Electrification and Power Rates
Oct. 26, 1934  Federal Relief Programs and Policies
Jul. 25, 1934  Distribution of Federal Emergency Expenditures
Jul. 17, 1934  Debt, Credit, and Recovery
May 25, 1934  The New Deal in the Courts
Mar. 27, 1934  Construction and Economic Recovery
Mar. 19, 1934  Price Controls Under N.R.A.
Feb. 15, 1934  Federal Promotion of State Unemployment Insurance
Jan. 10, 1934  Government and Business After the Depression
Jan. 02, 1934  The Adjustment of Municipal Debts
Dec. 12, 1933  The Machine and the Recovery Program
Dec. 05, 1933  Winter Relief, 1933–1934
Nov. 11, 1933  Power Policies of the Roosevelt Administration
Oct. 28, 1933  Buying Power under the Recovery Program
Oct. 19, 1933  Land Settlement for the Unemployed
Sep. 20, 1933  The Capital Market and the Securities Act
Jul. 18, 1933  Public Works and National Recovery
Jul. 01, 1933  The Plan for National Industrial Control
May 03, 1933  Economic Readjustments Essential to Prosperity
Apr. 26, 1933  Government Subsidies to Private Industry
Mar. 25, 1933  Rehabilitation of the Unemployed
Feb. 17, 1933  Federal Cooperation in Unemployment Relief
Nov. 16, 1932  Systems of Unemployment Compensation
Nov. 09, 1932  Policies of the New Administration
Aug. 18, 1932  Emergency Relief Construction and Self-Liquidating Projects
Dec. 28, 1931  Relief of Unemployment
Aug. 01, 1931  National Economic Planning
Jul. 20, 1931  Dividends and Wages in Periods of Depression
Feb. 19, 1931  Insurance Against Unemployment
Jan. 19, 1931  Business Failures and Bankruptcy Administration
Jan. 01, 1931  Federal Subsidies to the States
Dec. 08, 1930  Federal Relief of Economic Distress
Sep. 25, 1930  The Extent of Unemployment
May 16, 1930  Politics and Depressions
Dec. 20, 1929  The Federal Public Works Program
Jun. 08, 1929  The Federal Reserve System and Stock Speculation
Apr. 14, 1928  The Federal Reserve System and Price Stabilization
Feb. 25, 1928  The Federal Reserve System and Brokers' Loans
Consumer Credit and Debt
Economic Crises