Administration Supporters' Denunciation of Sixty Capitalist Families Held Responsible From Ovr Own When the Administration men began to refer to the business decline as a "rec their object was to be reassuring, and to prevent it being compared with adverse political effect and collapse of 1929. They did not foresee its deadly alliterative pos-The phrase "Roosevelt recession" now sed as a descriptive term is heartily resented, This may explain some of the virus lence displayed by Administration supporters of the Jackson-Ickes school and their denunciation of the "60 families," reputedly responsible for leading America deliberately into the economic quicksands. They hoped in this way to remove the impression that Administration policies were responsible.
The best way to absolve the President from bla that the "recession" was not n the old depression was never fully over, Over-optimism which failed to appreciate this fact and led instead to a belief that the depression was not only over but another boom was threatened was perhaps the basic cause of the 1937 autumn catastrophe.
Fallacies of the Recovery Period During the recovery period the Government was adding to the purchasing power of the country $4,000.- 000,000 annually. It was putting in that much more than it was taking cut in the form of taxes. The huge excess was only borrowed in the sense that it would have to be paid back in the future; it was not taken from the general incon the e of country. It was printing pr Such a policy it was 7 mitted must sooner o brought to an end for the Government could not continue to borrow from the future.
Ideally the government would tape off the additional sums it injected into the stream of national income and the improvement in private bu ness would fill the void. That is to say the budget would gradually be batan he stream of cash flowing into the Budget Bureau would be the same in size as the stream flowing out The budget figures show that more flows out of the Tr y than comes in. But in reality if the Treasury doors are watched it will be seen that more is being taken out of the national income stream than is flowing back.
What has happened is that the Administration did not only adopt a policy to check an anticipated boom which failed to materialize, thus abruptly reversing its previous policies instead of viously and gradually changing them; but it also omitted one vital factor. The curtailing of government "priming coincided with the imposition of heavy burden of semi: taxation under the social security law. The social security taxes mean that despite an unbalanced budget the Treasury operating with a current surplus so far as cash is concerned. prices were (oe high. Administration spokesmen continued for some time after to insist that certain prices were too high, though the field was gradually narrowed to prices in the heavy mass production industries. Then reserve requirements of the banks were doubled, that is to say the banks were forced to keep twice as much cash available as had been required of them before.
The object was to reduce excess reserves which might form the page of a credit structure ten times as large. It was a measure to prevent the boom which never came, A further measure designed to check the boom which never came was the gold sterilization programme.
To prevent the excess reserves base being increased the Administration bought up the gold and locked in a sterilization fund. Now that it is obvious that this break will never be needed the Administr has saved itself m the ne of borrowing by only sterilizing gold imports when they re ch extreme
Text read from the printed page and cleaned; old type leaves the occasional error.