Dear Editor
Dear Editor Keynes In "The New Hooverites" (NL, September 29), Carl Landauer says: "Keynesianism, which fit the situation of the 1930s very well, has since revealed its inadequacies." If he means...
...It is true that some early steps to cut expenditures were soon reversed, but the main emphasis for recovery in 1933 was on monetary policy and especially on raising the price of gold, with the repeatedly announced goal of raising commodity prices to the 1926 level...
...The NRA policies had...
...There was also the quite different approach through NRA (National Recovery Act), and much discussion of the contradictory character of these two major attacks upon the problem...
...in my opinion, an important bearing upon deficit spending...
...was deliberately pursuing a deficit policy as a major means of recovery...
...The primary failure of fiscal policy to be expansive in this period is attributable to the sharp increase in tax structure at all levels of government...
...Brown concludes that fiscal policy "seems to have been an unsuccessful recovery device in the Thirties because it was not tried...
...In his 1936 essay, "Public Spending and Recovery in the U.S.,' Gerard Colm pointed out that "in the U.S...
...during the Depression much less was spent for public works than in the preceding years of prosperity...
...But we shall see what we shall see...
...Deliberate deficit financing did not occur until 1940-42...
...in the years 1933-35 it was $1.9 billion...
...Finally, E. Gary Brown of MIT, in an article for the December 1956 American Economic Review entitled "Fiscal Policy in the Thirties: A Reappraisal," demonstrated that "the Federal government's policies were little more than adequate in most years of the Thirties to offset the contractive effects of state and local governments...
...It was President Eisenhower, to combat the 1954 recession, who started "deficit financing" as a deliberate policy...
...Federal expenditures for this purpose did indeed increase from an average of $257 million to an average of $897 million, but this increase was more than offset by the decrease in state and municipal expenditures for public works...
...In the American Economic Review for February 1941, John H. Williams of Harvard University wrote: "In the early part of the first Roosevelt Administration, there was little or no evidence that public spending was to be a major policy of recovery...
...In the years 1927-29, the average annual expenditures of Federal, state and local authorities for public works was $2.9 billion...
...Afterward, President Truman reversed this, running a terrific surplus, and the Federal debt was reduced...
...Sidney Koretz Sidney Koretz...
...If he means to imply that Keynesianism or compensatory fiscal policies were tried in the 1930s, he is mistaken...
...Can we then speak of 'additional' public works which might have 'primed the pump...
...as his ample evidence demonstrates, is correct about the inception of compensatory fiscal spending...
...But Carl Landauer, as the context of his article makes clear, was describing the appropriateness of Keynesian economics for the 1930s.—Ed...
...Falls Church, Va...
...Now President Ford says he won't touch it with a 10-foot pole...
...The Federal Revenue Act of 1932 virtually doubled full employment tax yields...
...Some date the beginnings of a conscious policy from Keynes' visit to this country in June 1934...
...There was no indication, however that the government The New Leader welcomes comment and criticism on any of its features, but letters should not exceed 300 words...
...The great agent of "deficit financing" was World War II...
...The fiscal policy undertaken by all three levels of government was clearly stronger in the Thirties than in 1929 in only two years?931 and 1936...
...Marriner S. Eccles, former chairman of the Federal Reserve Board, in his 1951 book Beckoning Frontiers said that the first time President Roosevelt "formally and frankly declared the Administration's intention of balancing the budget out of increased receipts arising from an increase in national income rather than by sharply decreasing expenditures or increasing taxes on consumption" occurred in January 1939...
...By raising costs they impaired its effects...
Vol. 58 • September 1975 • No. 23
