Montana labor news., 1937-09-02
Economy Versus Prosperity
From The Federal Machinist


Business interests and their political sup
porters who think in terms of what is good
for the taxpayer, as distinguished from the
the needs of the wage-earners, the farmers,
and the unemployed, have for some time
been going through a warming up" process
with a view to cut down Federal expendi-
lures; and are bringing tremendous pressure
to bear not only upon Congress, but upon the
President of the United States, to cut down
expenditures and balance the budget"
The total national debt, at the close of bust
ness on July %, 1887, was $36, 660, 00,261, an
increase of approximately $14, 900, 900, 1000
since the spring of 1888. This national debt,
when stated in an a~we-inspiring tone of voice,
is supposed to scare folks into thinking that
unless the Government stops spending, the
country will soon be on the verge of bank
ruptcy. Those public officials who have the
economy" complex are prone to forget that
the expenditure of money by the Federal
Government since the spring of 1888 has
raised the national income from at the rate of
$38, 900, 900, 900 in April of 1888, to $62, 058,-
100000 in the year 1886; and that this vast
public expenditure in the generating of pur-
chasing power for the American people has
really been a paying proposition.
The economy drive has reached the point
where all Departments and agencies of the
Government are expected, during the current
fiscal year, to return to the Treasury not less
than 10 per cent of the money appropriated
for their use by Congress, and Congress has
been tightening up the purse strings in the
amounts of money carried in most of the
appropriation bills enacted this year, and has
generally refrained from e~nacting legislation
which will have the effect of increasing Fed
eral expenditures.
In January of 1881, the office of District
No. A attempted to help stem the economy
drive in Congress by pointing out that, ac-
cording to eminent economists, every dollar
spent by the Government would generate
five dollars worth Of purchasing power in the
course of a year, by reason of the fact that
Federal payrolls resulted in the purchase of
consumers and durable goods which, in turn,
had to be %replenished by putting other people
to work who would in turn, become active
consumers of goods. 1t was pointed out to
the members Of Congress that every time a
dollar was saved, the depression would be
deepened by five dollars per year; and con-
versely, every time an additional dollar were
spent, the depression would be lifted by five
dollars per year; and that the number of
additional dollars which it would be neces-
sary for Congress to spend to lift the depres-
sion, could be determined by ascertaining the
drop in income from the $85, 200, 000,0 900
earned by the American people in 1929, and
then appropriating one-fifth of the amount
for Federal expenditure.
How did this work out? In April of 1888,
the income of the people of the United States
was at the rate Of approximately $4,000, 00O,-
900. In April of 1886, it was at the rate of ap-
proximately $685. 00, 000, 1000, an increase in
national prosperity of $780, 00, 100000 per
year.
In the spring of 1896, a distinguished
United States Senator, Kenneth Mcclellan, of
Tennessee, delivered a speech in the United
States Senate, in which he announced that
during the preceding three years, the New
DEAL had spent approximately $780, 900, 600
above normal appropriations, for relief and
upon public work projects.
Assuming that these Federal funds were
expended at an approximately uniform
rate during the three-year period, and that
their expenditure WOULD generate purchasing
power at the rate of five dollars to one dollar
per year, our calculations indicate that the
national rate Of income has thereby been
lifted $40, SOC, 100000, a figure within $780,
OOO. 900 of the actual increase in the national
income.
1t would appear, therefore, that practically
all of the recovery from the depression can
he credited directly to the Federal Govern
ment, in thus creating purchasing power to
prime the national industrial pump" In
1886, Congress added to the total available
purchasing power of the country by e~nacting
the So, 1000, 000, 900 soldier bonus bill and addi-
tional funds for relief and public works prof.
ects. The upturn in business which began
in the fall of 1886, therefore, would appear
to be caused by the efforts of business in gen.
eral, to garner in the loosed purchasing power