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,Form F. R. 131
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
To
Fronni

fffrairmgm

Bccl***

Date ^ niftyy g t 1936
Subject:

Mr » Gk>l
GP 0

In response to your inquiries concerning the increase in the
public debt, the following is submitted:
!• The deficit accumulated under the Hoover Administration,
as shown by the increase in debt from December 31• 193® to the end
of February 1933, was about $**, 900,000,000*
2* The increase in debt under the Roosevelt Administration to
date, that is, to January 31, 1936, is about $9,6OO,OOO,OOO# The
estimated increase to June 3°» 193^• a s shown in the 1937 budget
estimates, is about $10f000,000,000 and to June 30, 1937t is $10,^00,000,000, assuming expenditures for recovery and relief of $1,100,000,000,
3* The increase in the debt under the present Administration has
been accompanied by an increase in assets owned by the Government which
totaled about $5,600,000,000 on December 31» 1935«

T ^ 8 increase includes

$1,800,000,000 in the exchange equalization fund, and increases of
$1,800,000,000 in the general fund balance and of $2*000,000,000 in the
Government-owned interest in United States corporations and credit
agencies•
The Government's interest in United States corporations and credit
agencies totaled about $^,^00,000,000 on December 31, 1935* I* s distribution by corporations and agencies indicates that about $2,200,000,000
represented loans to and investments in banks and other private credit




16—852

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agencies, loans to "business, railroads, and on self-liquidating
projects, including public works; nearly $700,000,000 was invested
in agencies making farm and home mortgage loans, about $200,000,000
went to agencies making crop and other short-term agricultural loans,
and $700,000,000 went to various other organizations,
U. The principal increases in the debt now in sight which were
contemplated neither "by the recovery program nor in the 1937 budget
estimates will result from the Supreme Court decision on the Agricultural
Adjustment Act and the bonus legislation. These will add nearly
$3t0Q0t000,000 more to the debt by the end of the fiscal year 1937t
provided a substitute agricultural program is enacted, no new taxes are
levied, and some $900,000,000 of processing taxes already collected
are not refunded.
Details on the increase in public debt appear on the following
page*