As seen on p263
The Fiscal Burdens of Government
How did the fiscal burden of government press upon the public during 1931?
should have deflated instead of inflated, to bolster confidence in
gold, and also to speed up the adjustments needed to end the
depression.
The inflationary policies of the Federal Reserve were not
enough for some economists, however, including the price stabilizationist
and staunch ally of the late Governor Strong, Carl Snyder,
statistician at the New York Federal Reserve. As early as April,
1931, Snyder organized a petition of economists to the Federal
Reserve Board urging immediate cheap money, as well as longrange
credit expansion. Among the signers were: John R. Commons,
Lionel D. Edic, Virgil Jordan, Harold L. Reed, James Harvey
Rogers, Walter E. Spahr, and George F. Warren.5
THE FISCAL BURDEN OF GOVERNMENT
How did the fiscal burden of government press upon the public
during 1931? The gross national product fell from $91.1 billion
in 1930, to $76.3 billion in 1931. Gross private product fell from
$85.8 billion to $70.9 billion; total government depredations, on
the other hand, rose from $14.1 to $15.2 billion. Total government
receipts fell from $13.5 billion to $12.4 billion (Federal receipts
fell from $4.4 to $3.4 billion), but total government expenditures
rose sharply, from $13.9 billion to $15.2 billion. This time, the
entire rise in expenditures came in federal, rather than state and
local, spending. Federal expenditures rose from $4.2 billion in
1930 to $5.5 billion in 1931—excluding government enterprises, it
rose from $3.1 billion to $4.4 billion, an enormous 42 percent
increase. In short, in the midst of a great depression when people
needed desperately to be relieved of governmental burdens, the
dead weight of government rose from 16.4 percent to 21.5 percent
of the gross private product (from 18.2 percent to 24.3 percent of
the net private product). From a modest surplus in 1930, the Federal
government thus ran up a huge $2.2 billion deficit in 1931.
And so President Hoover, often considered to be a staunch exponent
of laissez-faire, had amassed by far the largest peacetime
1931—“The Tragic Year” 263
5Joseph Dorfman, The Economic Mind in American Civilization (New York:
Viking Press, 1959), vol. 5, p. 675.