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December 87, 1939«
My dear Mr. President:
In accordance with your request, I am enclosing the
best estimates available of gross public and private debts in
this country for 19£3, 1933, and currently. The sources of
the data are indicated. However, the available statistics
are at best' rough estimates, and are not altogether satisfactory
which—with the holidays—account:? for my not getting them to
you sooner.
What has impressed tm moat by such comparisons is the
fact that private debt is smaller than it was in 1929, while
the combined private and public debt, notwithstanding the increase of the Federal debt, is materially less than the 1929
total. Carrying charges, of course, have been substantially
reduced by reason of the reduction in interest rates that hasbeen brought about under Administration policy.
The growth of public debt has been a necessary offset to the contraction and liquidation of private debt in the
deflation after 1929, end the Federal debt had to be increased
more than would have been the case if States and municipalities
had been able to finance relief and recovery expenditures themselves , As the figures shot;, and as we know, the States and
cities had largely exhausted their credit, many were bankrupt,
and only the Government had the credit resources to meet the
emergency.
Finally, ao private debt expands, as it smst under
our economic system if we are to have reasonably complete recovery and full employment, the public debt will not have to
be further expanded and can be reduced, as it has been in the
past, as an offeet should en inflationary boos develop.
Respectfully yours,

The Honorable
The President of the United states,
The White House.
enclosure

ET:b



December 26, 1939

PUBLIC AKD ROTATE DEBTS IK THE LIMITED STATES

(In billions of dollars)
latest

1929
Private
State and municipal (gross).........*..
Federal (gross)•••.....................
Total

1933

153
17
16

date
available

U9
20

186

16C

1?3

Sources of datas
Private; Estiiaate for end of 1929 is based upon Twentieth Century
Fund study * Debts and Recovery1*, nhile those for 1933 &»d the latest date
(end of 1937) su*® unofficial comparable estimates by a Department of Cossaeree
expert* Bank deposits and insuranoe company liabilities to policy holders
are not included in these totals.
State and aunicijml; Annual Report of the Secretary of the Treasury for 1938. Figures are for June 30 of 1929, 1933, and 1938, Present
total is probably little changed from
Federalt Figures showi are gross public debt on Treasury statements of D e c e d W 31# 1929# March 3, 1933, *n& December 21, 1939 • From
these debt figures might be deducted the Treasury's working balance -which
amounted to |173,OOO#OOO on December 31, 1929, |159#OOO,OOO on March 3,
1933, and 11,865,000,000 on December 21, 1939.