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Or JANUARY : , 1929.

"A year Ago I recommended an increase In work relief, public
works, and other related expenditures to check the dowsw&nl spiral
of business. The program undertaken at that time has contributed
materially, I believe, to the existing upward isovenent of business
and fpinj—nt; and I feel that the business men and farmers and
workers of the country, no less than the unemployed, are entitled
to an assurance that tfcll
• -r will not be curtailed arbitrarily
or violently.
"The actual cost of work relief ana similar expenditures goes
&OMI after joba are found by the worfcsrfi on these rolls. A violent
contraction, before the natural expansion of private industry is
ready to take up the slack, would mean, not only hu&an misery, but
a disrupt!Ye withdrawal frOB ^iiericsn industry of a volune of purchasing power vMe& bu .
at this time. The neceaaity of
Incr—fflttg j'^de.ral expert! itures a jeur ago to check a recession is
a well-fcn.0" u CAOt-. Aay decision to decrease tho^e expenditures no-!f
that recoTery has just started woold constitute a new policy ^hich
ought not to be ado;
ithout full understanding of ' ' a may be
the result."

"I believe I as expressing the thought of the most far-sighted
students of our economic system in sayin:° that, it " r u d be unwise
either to curtail expenditures sharply or to impose drastic new taxes
at this stage of recovery* But in vieve of the addition to our public
expenditures Involved in the proposed enlarged national defense program and the program for agricultural parity payments, for T?hich no
revenue provision has yet been made, I think v:e might oafely consider
moderate tax increases which ?rould approximately meet the increased
expenditures on these accounts• It should be added, how«rera that
it Is r y firm conviction that suzh ne1- taxes as may be imposed should
be most carefully selected from the standpoint of avoiding repressive
effects upon purchasing power.
"Sound progress toward a budget that is formally balanced is
not to be made by heavily slashing expenditures or drastically increasing taxes. On the contrary, it is to be sought by employing
every effective device we may have at our command for promoting a
steady recovery, which means steady progress toward the goal of full
utilization of our resources. T e can contribute very materially to*
ward that end by a 'vise tax program*

-8"I a® I tin—mifllim the reenactaent of the excise taxes which
will expire in June and July of this yei:-, not bacat&ft I regard
them as ideal components of car tax structure, but because their
collection has been perfected, our economy is adjusted to th«B, and
we cannot afford at this time to sacrifice the revenue they
represent. If the Coogr^as should at this cession adopx- tarn taxes
rdore scientificelly planned to ears for the defense and agricultural
programs, it is quite possible that the existence oi" the^e new taxes
will enable us in a latsr year to give conaideration to abolishing
some of the present excise levies,"