View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

INFLATION POTENTIAL
Mav 28. 1945

Copies of bound copies were given to the following;

President Truman

—

5/29/45

Brown Bound

Harold Smith

—

5/30/45

Gray Bound

Judge Vinson

—

6/7/45

Gray Bound

Charles Ross

—

6/8/45

Gray Bound

Phillip Murray

—

6/5/45

Gray Bound
(Mailed)

General Somervell

--

6/5/45

Gray Bound
(Mailed)

Mr. Thurston

—

6/5/45

Gray Bound

Major Parten

—

Sent to Europe through
Mr. Adams (Unbound)

TAIL'S I

FEDERAL WA.HTIME BUDGET
Total Funds Raised
(in billions of dollars)

Period

From Taxes

From Borrowing

Total

Taxes as
Percentage
of Tota],

Fispal year
ending June 30
1940

5&1+

2.5

7.9

68,1+

191+1

7.6

6,9

11+.5

52.1+

191+2

12.8

a,8

5U.6

37.0

I9I+3

22.3

62,9

85.2

26.2

19^

l+l+.l

61.6

105.7

1*1.7

191+5

¿+5.7

1+7»7

93.Ì+

1+8.9

19U6

1+1.2

39.1+

80.6

51.1

179.1

21+2.8

1+21.9

1+2.5

191+0-19Ì+6




5- 28- 1+5

c

CHART I

FEDERAL WARTIME BUDGET
TOTAL FUNDS RAISED

422 BILLIONS

BILLIONS OF DOLLARS

IOO

1940

1941




1942

1943

1944

END OF FISCAL YEAR

1945

1946

1940 - 46

TABLE II

THE FEDERAL DEBT
Deficits from War and Depression
(in billions of dollars)

Period

1/
Dates

Interest-bearing Debt
Change
Outstanding
During Period
End of Period

World War I

I9I6-I919

+

24.2

25.2

Seduction in »Twenties

1919-1930

- 9*3

15.9

Early Depression

1930-1933

+

5.5

a.4

Relief and Recovery

1933-1940

+ 26*5

47.9

World War II

1940-1945

+200.9

243.8

1945-1946

+ 39.4

288.2

l/ All figures apply to June 30 dates with the exception of 1930 which applies to
Uarch 31 *




5-28-45

CHART IL

THE FEDERAL DEBT
DEFICITS

FROM WAR AND DEPRESSION

BILLIONS OF DOLLARS

BILLIONS OF DOLLARS

300

300

250

250

200

150

00

DEFICIT

FROM

WORLD WAR

I

D E F IC IT
CARRIED OVER
FROM

WORLD WAR

I

D E F IC IT FROM

le>EIPMIE§§fl®K)

50

0

1919

1930

JUNE 3 0

JUNE 3 0




193
MAR

1940
JUNE 3 0

TABLE III

RJ3LIC AîüD PRIVATE DEBT
(in billions of dollars)
End of Calendar Years
1929

1933

191+0

19I1I+

191+5

196

177

200

375

1+20

35

1+8

73

250

296

Federal

18

28

53

233

280

State and Local

17

20

20

17

16

l6l

129

127

125

12l+

Corporations

93

82

77

77

76

Other

68

hi

50

IjS

1+6

Typfci; of Debt
Total
Public

Private




CHART

HI

PUBLIC AND PRIVATE DEBT
B ILLIO N S OF DOLLARS

BILLIONS OF DOLLARS

500

1

500

PUBLIC DEBT

400

- 400

3 00

- 3 00

c

FEDERAL

200

STA TE

-

200

-

100

AND LOCAL

PRIVATE DEBT
100
CORPORATIONS

OTHER

1929




1933

1940

1944

END OF CALENDAR YEARS

1945

TABLE IV
s f
INFLATION POTENTIAL IN LIQUID ASSETS

(in 'billions of dollars)
End of Fiscal Years

1920

1 1929

Demand

18.6

21.k

Time

15.8

U.S. Gov’t.
Total

1940

19^4-

I9U 5

191+6

13 .2

30.5

57.9

72.5

86.0

28.6

21.7

27.1+

35.7

1*3.7

51.7

0.3

0.4

0.8

0.8

19.5

16.0

li*.0

3U.7

50.h

35.7

58.7

113.1

132 .2

151.7

4.1

3.6

1+.8

6.7

20.9

25.3

28.3

U.S. Securities

I8.9

10.0

10.3

11.7

72.9

9 1.2

102.3

Grand Total

57.7

6l*.0

50.8

77.1

206.9

21*8.7

282.3

Type of Asset

1933

Deposits

“Currency

1( Includes holdings by individuals, unincorporated, business and corporations.
The figures exclude holdings by Government trust funds, Federal Reserve Banks,
coimneroial banks, mutual savings banks, insurance eompanies, and savings and loan
associations.
5-28-1+5




CHART E t

INFLATION POTENTIAL IN LIQUID ASSETS
DEPOSITS, CURRENCY, AND U. S. SECURITIES HELD
BY INDIVIDUALS AND NONFINANCIAL CORPORATIONS
BILLIONS OF DOLLARS

BILLIONS OF DOLLARS

300

300

250

250

DEPOSI TS

200

o

200

150

150

CURRENCY
100

10 0

SECURITIES

50

0
1920




1929

1933

1944

1945

END OF F IS CA L YEAR

1946

TABLE V

SOURCES OF POTENTIAL CLAIMS ON UNITED STATES PRODUCTION
3Y FOREIGN COUNTRIES
(in billions of dollars)
End of Calendar Years

19l*0

I9Ì1Ì+

191*5

Gold held abroad

7.0

10.6

11.5

Gold under earmark in U.S.

1.8

3.9

5.0

Official dollar balances

1.3

3.0

3.U

10.1

17 .5

19.9

U.S. currency held abroad

0.3

0.5

0.6

Other Short-term assets

2.5

2.3

2.6

Long-term assets

5.8

6 .1*

6 .1*

8.6

9.2

9.6

Lend-Lease "commitments”

8.0

5.0

U.N.R.R»A., unused balance of
U.S. contributions

1.3

0.7

0.6

0.5

o»5

0.6

9.8

6.2

19.3

36.5

35.7

Source
Monetary Reserves

Total

Private Assets

Total

Gifts and Loans

Export-Import Bank, unused loan
commitments-' and autjporized
lending capacity
Total

Grand Total




5-284+5

CHART Y

SOURCES OF POTENTIAL CLAIMS ON
UNITED STATES PRODUCTION BY FOREIGN COUNTRIES
B ILLIO N S OF
DOLLARS

B IL L IO N S OF
DOLLARS

40

40




GIFTS A N D
LOANS

30

PRIVATE

ASSETS

20

MONETARY
RESERVES

1940

1945

DEC. 31

DEC. 31

—

I 0

NOTES TO TABLES

Table I
"Total Funds Raised" is defined to include (1) net receipts, general and
special accounts, and (2) the increase in total interest-bearing direct and guaran­
teed securitiest Note that for any single year expenditures may fall short of or
exceed fpnds raised, depending on changes in Treasury balances.
Table II
<fcti interest-bearing direct and guaranteed securities are included*
Table III
The table shows the gross debt, public and private. The figures for
1929 to 19i*0 are from Survey of Current Business, Department of Commerce, July
19iiU$ figures for later yeafrs are estimated.
Table IV
Holdings by individuals, unincorporated business and corporations are in­
cluded. The figures oxclude holdings by Government trust funds, Federal Reserve
.Banks, commercial banks, mutual savings banks, insurance companies, and savings and
.oan associations.
Demand deposits include "adjusted demand deposits” only; they exclude
interbank and U.S. Government deposits, loss cash items in process of collection.
Table V
The estimates of foreign monetary reserves and assets in the United
States for 19U5 are based on the following assumptionst (a) that the rate of U fS*
disbursements abroad remained the same as in I9I4U until V-E (May 19^5)» and de­
clined by approximately one-third thereafter until V-J (June I9I+6)} (b) that the
increase in claims by foreign countries is distributed between short-term balances,
and earmarked gold in the same proportions as in the preceding years. Changes in
long-term investment are also possible, but they would result in a corresponding
decline in short-term claims and/or earmarked gold; (c) that the rate of gold pro­
duction resulting in increases in foreign gold holdings remain the same.
The estimates for lend-lease have been derived on the basis of the fol­
lowing data? During 19UI+ lend-lease expenditures exceeded 1 billion dollars a
month. On the assumption that the authorities anticipated correctly the end of
the war in Europe and contemplated a curtailment thereafter, the figure of 8
billion appears reasonable* The figures for the subsequent dates were based upon
tentative commitments made vis-a-vis the United Kingdom, France, the Netherlands,
and Belgium, the larger part of which should be liquidated by the end of June 19t|6.




-

2

-

With respect to the data for U.N.R.R.A. it is assumed that almost onehalf of the contribution of the United States will be used in 19h5*
The table does not include any estimates for dollars afeich would be sup­
plied by the International Monetary Fund and the International Sank, since it is
unlikely that these institutions will start opérations before June I9I4.
6 . The maxi­
mum amount which would become available from these sources over a period of four
years after the beginning of operations, is estimated at 10 billion dollars (6
billion through the Bank, 2.9 billion through tho utilization of the United States*
quota in the Fund, tho remainder through the conversion of the Fund’s gold hold­
ings into dollars,).
In general, it should bo kept in mind that the estimates refer only to
those potential claims of foreign oountries or United States production which are
inflationary, i.e. are not offset by a corresponding inflow of goods and services
into the United States, such as imports. They are maximum figures. For instance,
it is extremely unlikely that foroign countries will be willing to make substantial
use cf their gold reserves for purchases in the United States.