Read America's Great Depression Online
Authors: Murray Rothbard
344
America’s Great Depression
business, general government
and
government enterprise, as $1.02
billion for 1931–32. The average of the Department of Commerce figure of Federal government (general) purchases from business for 1931 and 1932 is $.54 billion. We may therefore estimate the expenditure by Federal
enterprises
on goods from business as $.48
billion for 1931–32.
On the state and local level, Fabricant estimates a total of $4.08
billion spent by government and government enterprise on business products in 1931–32; the average of 1931–1932 for general state and local government purchases from business is $3.48 billion (Department of Commerce). This leaves as the estimate for 1931–1932 of purchases of government enterprises, state and local, from business at $.60 billion.
Unfortunately, Fabricant presents no figures for any other years for our period on the state and local level. For Federal purchases from business, Fabricant estimates the total, for government and government enterprise, at $.88 billion for
fiscal
1929. Now, unfortunately, we have no data for 1928; using calendar year 1929, therefore, we obtain $.36 billion as the Department of Commerce estimate for Federal government (general) purchases. Subtracting this from the Fabricant figure, we obtain a rough estimate of $.52 billion for the purchases of Federal enterprises from business during 1929.
To extrapolate these sketchy figures into estimates of federal, and state and local, government enterprises for each of these years is certainly arbitrary, but it would just as certainly be
more
arbitrary if we simply ignored the problem altogether, and permitted government enterprises to remain partially ensconced in the private sector. We will therefore assume that, for each of our years, Federal enterprises spent $.5 billion on the products of business, while state and local enterprises spent $.6 billion. Our estimates for the expenditures of government enterprises are then as follows in Table V.
The grand total of expenditures for government and government enterprises for these years is therefore as follows in Table VI.
What were governmental receipts during these years? Here we may take the Department of Commerce data, adding to them for both federal and state and local, “interest received.” As for government
Appendix
345
TABLE V
EXPENDITURES OF GOVERNMENT ENTERPRISES
($ billions)
Purch.
Income
Purch.
Total
Income
from
Orig.
from
Expend.
Orig.
Bus.
State &
Bus.
Govt.
Fed.
Fed.
Local
S. & L.
Enterp.
1929
0.6
0.5
0.2
0.6
1.9
1930
0.6
0.5
0.2
0.6
1.9
1931
0.6
0.5
0.2
0.6
1.9
1932
0.5
0.5
0.2
0.6
1.8
TABLE VI
EXPENDITURES OF GOVERNMENT AND GOVERNMENT ENTERPRISES
($ billions)
State
Federal
and Local
Total
1929
5.2
8.8
14.0
1930
4.4
9.1
13.5
1931
3.4
9.0
12.4
1932
3.0
8.5
11.5
enterprises, we may simply and roughly assume that their receipts balanced their expenditures, and estimate them in the same way,
except
that we know from the Department of Commerce the current surplus of state and local government enterprises, which we may add to the receipt figure. Total estimated receipts of government and government enterprise are presented in Table VII. It might be thought that, to arrive at the highest aggregate figure of government expenditures or receipts for any year, we simply total federal and state and local receipts, and the same for expenditures, and see which one is the higher. This is not correct, however. Whenever we have independent centers of governmental
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America’s Great Depression
TABLE VII
RECEIPTS OF GOVERNMENT AND GOVERNMENT ENTERPRISES
($ billions)
State
Federal
and Local
Total Govt.
1929
5.2
8.8
14.0
1930
4.4
9.1
13.5
1931
3.4
9.0
12.4
1932
3.0
8.5
11.5
activity, the deficits and surpluses of these centers do
not
cancel each other in their impact on the private economy. Suppose hypothetically, that, in a given year the Illinois state government has a fiscal surplus of $200 million, while New York has a deficit of $200
million. If we are interested in a figure for the governmental impact of New York and Illinois states combined, we do
not
simply aggregate receipts and expenditures and compare them. For Illinois’s surplus taxes drain the private sector, and New York’s deficits also drain the private sector. The ideal step, therefore, is to take each state’s and each locality’s receipts or expenditures, whichever is the higher, and add up each of these
higher
figures, along with the higher figure for the Federal budget, to estimate the total fiscal impact of all level of government. With the data we have available, we can only do this for state and local on the one hand, and Federal on the other.5
Now, at last, in Table VIII, we are ready to estimate the fiscal
“depredations of government” for Federal, and for state and local authorities (including government enterprises), and compare them to the data for private product.
We see here, in stark relief, the record of the enormous increase in the fiscal burden of government during the depression, from 5Because, in our figures, state and local governments are already lumped together, our estimates will, from this standpoint, considerably
underestimate the
fiscal burden of government on the private sector.
Appendix
347
TABLE VIII
GOVERNMENT AND THE PRIVATE PRODUCT
($ billions)
Gross
Net
State
Total
Private
Private
Fed.
& Local
Govt.
Prod.
Prod.
Depred.
Depred.
Depreds.
1929
99.3
90.7
5.2
9.0
14.2
1930
85.8
77.3
4.4
9.7
14.1
1931
70.9
62.7
5.5
9.7
15.2
1932
53.3
45.7
4.4
8.8
13.2
Private Prod.
Private Prod.
Remaining (Gross)
Remaining (Net)
1929
85.1
76.5
1930
71.7
63.2
1931
55.7
47.5
1932
40.1
32.5
State
Fed.
& Local
Total Govt.
Depreds.
Depreds.
Depreds.
% of GPP
% of GPP
% of GPP
1929
5.2
9.1
14.3
1930
5.1
11.3
16.4
1931
7.8
13.7
21.5
1932
8.3
16.5
24.8
State
Fed.
& Local
Total Govt.
Depreds.
Depreds.
Depreds.
% of MPP
% of MPP
% of MPP
1929
5.8
9.9
15.7
1930
5.7
12.5
18.2
1931
8.8
15.5
24.3
1932
9.6
19.3
28.9
1929 to 1932. The percentage of Federal depredations on the private product rose from approximately 5 percent to 8 percent of the
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America’s Great Depression
GPP, and from 6 percent to 10 percent of the NPP; state and local depredations rose from 9 percent to 16 percent of the GPP, and from 10 to 19 percent of the NPP. Total government depredations rose from 14 percent to 25 percent of GPP, and from 16 percent to 29 percent of NPP, not far from double the burden!
Index
Abbott, Charles Cortez, 130, 161
American Acceptance Council, 128,
Abbott, Charles F., 278
155
Abbott, Edith, 251, 271
American Association for Labor
Acceleration principle, 60–68
Legislation, 176, 193–94,
Acceptances, See Federal Reserve
196–97, 202, 250
System
American Bankers’ Association, 244
Achinstein, Asher, 251
American Bar Association, 176
Addams, Jane, 194
American Construction Council,
Addis, Charles S., 179
195
Agricultural Adjustment
American Cotton Association, 222
Administration, 280
American Council of Agriculture,
Agricultural Credits Act of 1923,
225
122, 221
American Council on Education,
Agriculture
179
exports of, loans to, 121–22,
American Economic Association,
129, 138–39, 142, 147, 153,
248
156, 159, 165, 219–21,
226–27, 241, 258, 271,
Committee on Purchasing
299–300, 322
Power, 174
farm holidays, 235
American Engineering Council,
prices, 147, 153, 158–59, 171,
196, 300
181, 191, 222, 227, 239, 248,
American Farm Bureau Federation,
315
179, 217, 223, 225, 228, 241,
Agriculture, Department of, 217,
310
222, 225
American Farm Economic
Alabama, 301
Association, 179
Aldrich, Winthrop W., 140, 149,
American Federation of Labor,
181, 262
174–75, 195–96, 198, 200,
Alexander, Magnus W., 306, 309
213–14, 241, 244–45, 266,
Amalgamated Clothing Workers,
281–82, 294, 308, 310, 319
282
American Gas Association, 212
349
350
America’s Great Depression
American Home Economic
Bancroft, Hugh, 269–70
Association, 244
Bank credit, See Banking; Credit
American Institute of Architects,
Bank of International Settlements,
244
240, 258, 260
American Iron and Steel Institute,
Bank of Belgium, 145
200
Bank of England, 144, 146, 150,
American Legion, 319
153, 155, 156, 162, 258–60
American Railways Association, 212
Bank of France, 144, 152, 154, 175,
American Statistical Association,
258–59
179
Bank of Italy, 145, 152
American Wheat Growers’
Bank of Poland, 145
Association, 225
Banking
Anderson, Benjamin M., 46, 76,
bank holidays, 325–28, 330
101, 123–24, 131, 153, 156,
160, 186, 239, 249, 257, 296,
bank runs, 15, 21, 25, 55, 88,
326
97, 304, 325–26
Andrews, John B., 193–94, 196, 250
demand deposits, 87–89, 91,
97–102, 113–16, 160, 258,
Angell, James W., 313
261, 302, 304–05, 324–27,
Angly, Edward, 268, 326, 330
330
Argentina, 231, 242
fractional-reserve banking, 15,
Arizona, 247
21, 24–25, 27, 34, 326, 329
Associated General Contractors of
“free” banking, 27
America, 197, 294
mortgages, 90, 276, 317
Atkins, Willard E., 252, 311
Panic of 1819, 325
Austria, 152, 175, 257–60
Panic of 1837, 186
Austrian theory, See Mises, Ludwig
von
reserves, 21, 26, 97–98, 99–103,
105–08, 111–14, 123, 160,
Avery, Sewell, 264
214, 240, 261–62, 302, 305,
Aydelotte, Frank, 311
324
Ayres, Leonard P., 175, 277, 311
time deposits, 87–90, 97–102,
114–16, 160, 325
“wildcat” banking, 27
Bacon–Davis Act, 268
see also
Credit; Federal Reserve
Bailey, W.J., 156
System
Baker, Newton D., 174, 273, 290
Banking School, 76–78
Baker, Ray Stannard, 197
Bankruptcy laws, 187, 243, 274,
Balch, Emily Green, 251
285–86, 318–19, 323
Balderston, C. Canby, 311
Barnes, Julius, 212, 229
Balfour, Arthur, 175
Barnett, George E., 311
Ballantine, Arthur, 330
Barrett, William J., 335
Index
351
Baruch, Bernard M., 197, 225,
Brand, Charles J., 225
227–28, 273, 279, 280, 296
Brandeis, Louis D., 189, 279
Bassic, V. Lewis, 81
Breckenridge, Sophinisba P., 251
Baster, A.S.J., 130
Bresciani-Turroni, Costantino, 23
Bault, William J., 264
Brewster, Ralph Owen, 197–98
Beard, Charles A., 278
Brissenden, Paul F., 251, 265, 292
Beard, Mary, 197
Britain, See Great Britain
Beck, James M., 290