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Revised draft—August 1, 19S6*
Ity friends, an issue has been raised in this campaign, a
false iseua, that would not have been raised were not the memory
of soise sea—some woaaen, too, perhaps—pitifully short* It has
been raised by persons whose entrenched and fortified position
in the economic life of our country shielded them from the worst
effects of the depression and nude them the foremost to profit
from recovery.
Alre&ding owning or controlling ^uch of the nation1s material resources before the recovery from depression began,
they now have the additional wealth and income that three ymrn
of business improvement have brought to them* And they have
gained this, mind you* not through any bold initiative or exceptional enterprise on their own part, but through a recovery final**
ly brought about by measures initiated and energetically pursued
by government after all private efforts* and an administration too
much reliant on thos© efforts, had miserably failed* they have forgotten* and seem to think that others will also quickly forget, what
the dismal prospects of business and finance were three or four
years ago, what the fears of business men and bankers were then*
how powerless they were then to cope with the economic forces that
threatened to overwhelm them* They have forgotten, too, that it

was the power of the national governaeat and the strength of the
national credit that finally saved thea.
For they coae forward now challenging, attacking, decrying
88 8 fearful and abhorrent thing, the r&xy means l?y which the processes of recovery have been set in motion. The issue that they
raise is the use of the national credit—the use of that credit to
combat the social and economic evils of depression, to give an
impetus to business ®ad employment, and to Increase the national
wealth and ineoae for the benefit of all classes of our people, They
say that because of this use of the national credit the country is
on the road to bankruptcy and ruin. They would have you believe, if
they could make you do 00, that long Into the futur®, tor generations yet unborn, the American people will be oppressed with the
debt created during this national emergency*
These are the dire prophecies, the *soleoa words of warning,*
of business and financial leaders who eight or sine years ago—not
long enough for most of us to have forgotten-—wer© acclaiming a new
era of industrial prosperity and rallying under a banner that was
to abolish poverty forever froa this land* Have they more wisdoa,
aore foresi^it now than they had then? Only a llttl® while later,
six or seven years ago, they were explaining away a world-rooking
crash In the stock market and assuring us that business and financial
conditions in the United States were fundamentally sotmd, the stock-

- 5 »arket crash but a brief interlude in the new-found prosperity.
Have they a profounder understanding now, even of their own immediate concerns and activities, th&a they had then?
And are they acre reliable guides now to national aonetary and
fiscal policy than they were from 1929 to 1955? They told us then
that if we but kept the budget in balance, and held taxes down, and
adhered steadfastly to bound aoney and a currency convertible into
gold, "the natural forces of recovery8 would coae to our rescue and
all would soon be well* But while they harped on that tune year in
and year out the appalling miseries of deflation and depression spread
wider and wider, business and eaoloyraeat and values fell lower and
lower, discouragement and despair grew darker and darker, until at
length their whole vaunted system went Into a convulsion that closed
every bank in the country* That Is what case of their prophecies•
What, then, Is this use of the national credit about which they
raise such a gre&t hue and cry? $hat is this increase In the national
debt which they seek to surround with an atmosphere of suspicion and
distrust? the national credit, my friends, is not the private possession of business and financej it is not something that business
and finance magnanimously confer on government, or sternly withhold
at will* It is the country1® worth that wo have all a© a people inherited froa the generations past, and that w® have ourselves added to
these past few years for the present and the future. It is a great
national resource, the eoaaon possession of us all, that we have

- 4 *
used to save the country from the bankruptcy and ruin* the destitution and husan suffering, the mental anguish and desfmir, to which
deflation and depression brought American business, a^riculture,
and finance from 1929 to 195B. It is & great motive power by which,
when all other jaeans had failed, we were able to turn the wheels of
Industrie® that had long been idle* It is a powerful dynamic force
that we have infused into our social and economic life to give relief
and employment and order® for goods*
Hard necessity dictated this emergency use of the national credit,
and humanitarian orinciples have guided it; butt the us© that we have
aad© of it has been prudent and successful. Par froa being the national
calamity that the prophets of doom and fomenters of fear would have
you believe it to be, It is an investment in human rehabilitation and
productive enterprise that has yielded a larger return, even when only
th© material gains &re considered, than any other investment the American people have ever made in such a short period* We could afford to
m®k@ that investment»

What we could not afford was the idle plants auad

idle men, th© deterioration of machinery aad morale, the long-continued
failure to use the material and human resources of this rich country*
For that *as waste of the aost wanton kind. The huaan need© and huaan
want® that went unsatisfied during those depression y@ar®, when our
productive capacity was in reality isaasnee, tell their own ©iory of a
waste that is irretrievable* But the investment that we have made these

past three year® in relief and recovery i© not irretrievable«


from it.
I have said that our use of the national credit during this great
national emergency has been prudent and successful* To be prudent, ssy
friends, 1® to foe careful of the consequences, to have tax eye to the
future* To b@ successful, is to make perceptible and ete&dy progreft*
on the course of action that one sets for one's self* These thinge are
so with the nation's business, $&th the business that is done throu#
the activities of all our people collectively considered, as with a ©ingle
A 'business doe© not go backward, doe® not invite disaster, when it
goes into debt; not if it is careful of the consequences and has an eye
to the future. On the contrary, the fact that it is able to incur indebtedness on fair terms is everywhere acknowledged to be evidence of its colveney and strength? of it© ability to make headway, to turn e profit on the
debt it has incurred. And when it sakea perceptible and steady progreet,
doing aore and sore business each year, adding aach year to the value of
the enterprise, we do not «ay that it is headed toward bankruptcy and ruin,
that it has impaired its credit and imperilled the future of its owner •»
We should call that man a sischief-HB&ker and slanderer who said such a
thing. And we should call the business enterprise a success*
It ie so with the nation1 a buainese—the combined busixtesa of all
our factories and faring, our mine? and forests, our transportation and

and power systems, our mercantile establishments, our service

•«• 6 mm

trades, our professional ||>'mj>l| and all their ©stployeiu

Is the us®

that has been made of th@ national credit since March 4, 1955, groat
or email when measured by the progress which the country &e an economic
whole has isade since then? That is th© practical question} that is the
crux of the iggue which the critic® of our fiscal policy have raised,
<&n& that is the practical test, th© only sensible test* by which th®
policy is to b© Judged*
Look back for a aosaent to 1929 and 1950, and what do you find?
You find that whan the assets of American business in plant and money
were greater than they had ever been before, and its ability to «upply
human needs and human wants had reached a point never before attained,
th® demand for workers, who constitute the great bulk of th© market for
the ultimate products of induttry, entered a long period of decline. We
were like that man who built his family a fine house, and then on completing it wag content to let them live in the kitchen, From an income of
81 billion dollars that our people ae a whole produced in 19£§, the national Incoae fell to less than half that sum by 19SE. In three years
the total of the annual declines In our national incense from the 1929
level was 8g billion dollars* Gould we not better afford to invest a
fraction of that sum to arrest deflation and induce recovery than to let
that huge decline in national income go on unchecked?
In an earlier period of economic stress a bold financier laid down
the maxim, *Sev@r be a bear on the United States** 33y 1955, my frianda,
it was high time for gome one to become a bull on the United State*• It

• ? *
wa® time for government to take the risks, to mmkm th© investment in
the future of America, that private enterprise TOS unwilling or unable
to siake* And that is ?diat was done. It was done not only because it
would pay as it has already paid, but because it was necessary and
just &nd prudent to do it* We provided relief where relief was needed,
supplied ©a>it&l where capital was needed, extended credit where credit w»,s needed, when, no one else stood ready to do these tilings* In
this manner purchasing power was put into hands that would use it. Worker® began to- work again and aoney began to move again •
ind what is now the result?
Well, one result is that the national debt has been increased 15
billion dollars over the 21 billion© at which it ®tood on Sareh 4, 193$ •
Included in this increase is the provision made for the paynent of the
veteran** compensation certificates-—an obligation Incurred before the
depression began, and on® that we should have had to meet in any ©vent
in 1945* Apart from this, the increase in the public debt einee ferch 4,
19SS, is in round figures 11 billion dollars,
Sow there are sosie persons-—I have already referred to them—who
talk about thi® in th© public debt as if it were the sole itea
in the b&lan&e sheet of the imerican people as a nation. They dwell on
it to the exclusion of everything else; in fact, it has become an obsession with them. But there are none so blind as those that will not gee*
Hearly everyone else is aware, I am sure, that there is an asset side

to this national balance sheet as well as a liability sid@# True, the
liability side is important; I 6.0 not underrate its Importance. Put
the asset side is important, too; and it is not to be underrated,
We should not underrate, for example, the integrity and good faith
of the individuals and institution® to whom government loans h&r® been
a&de as part of the relief and recovery program, These borrowers ere
not cheats and rascalsj they are not repudiation!sts. They meet their
obligations when they have the s©ans to aeet them* There ©re of course
east® defaults h®r® and there, sone delinqulncies} it m s to be expected
that there would be. But the manner in which borrowers are meeting
their current payments, and the rate at which loang are being paid off,
should leave no one in doubt that the greet bulk of the loans made in
the recovery effort are recoverable assets*
Cash li another item that, lik© recover&bl© loans, belongs on the
asset side of the balance sheet* The increase in these two items together
since March 4, 1985, is 4 billion dollars} and this, let me say parenthetically, is exclusive of the S billion dollars set aside in 19S4 for
the deltase ~&f our currency in the international exchanges* When, therefore, the increase in recoverable assets and the increase in the ordinary
cash balance of the Treasury Is deducted froa the 11-bill ion-dollar deficit
incurred for relief and recovery expenditures and for the ordinary expenditures of goveroioenta we are left with a figure of 7 billion dollars which
say fairly be said to represent th© net coet of the progress aade from
March 4, X9B5. to the present tiiae. That is our net investment* if you

pleate, ta relief and reooveryj and it happens to eorreepond alaoet
exactly with the total expenditure® for direct relief and work relief.
It ii not, m? friend#f a startling fS0Wt ®r ft burden that we
shall §t&gger under* I shidl mot attempt to me&anre against It,
is bookk®«piag terns, th© protection of lalllioas of otu? pnopit
agaiast priratloii aad waat, or the protection of til© nation against
the social disorders that &ri*$ whm the aonsequmioeB of deflation
dapresftlon pass the limits of hwmn ©nduranc®. But there is
alue, aa imaadixraMe mlii©, in people who have been saved
from degradation and demoralisation, and m&de secure in at leaat
the eoaaaan neeeeaitieii of life, tec! there is value, too, of a
measurable kind in terme (if utility, in the public improvements
that have been paid for in large part through the expenditures for

numerous other pro j acts that will continue to ha used long after
the depresftion of th©e© recent yesr» h&# finally passed Into history•
It la true that mxch of till® addition to the pena&nent wealth of the
nation 4o©s not take the fora of saleable cossoditieg and Is on that
account so®@time<s referred to as unproductive. But one isust Indeed
have a perverted sense of values to aa£j$&aim that nothing is productive &r useful unless It is designed for sale*
I m not suggesting that all the project* undertaken during
the eaergenoy have b#em the ao^t productive i«aginabl@ or free

~ 10 fron defects. Such a result as that would have beea beyond k i s n
attainment in a work of such Magnitude, organised in such a short
apace of time, spread over such an imaiens® area, and to »©rv«
the welfare of such an enormous number of people. So that there
raist have been in all this &om waste, eose inefficiency, soae confusion, soae disappointment*
Nevertheless, it is surely plain to everyone that the money
spent on public works and on relief did not reach the end of its
usefulness as soon as it was spent for public works and on relief*
For our wage-learners and relief workers are not hoarders} they are
not In the position of these corporations that are able to build
up huge surpluses and keep them idle and unspent* The sonoy paid
to wage-earners on public works and cm work relief has in turn been
spent on the products of industry, with the result that virtually
every type of enterprise has benefited by its stimulating influence
on business and employment* the recovery aovement that is now
rapidly gaining momentum did not, like Topsy, Just Hgrowed.u


cane about because the taoving force was supplied by public spending.
fhe question, then, is whether the net investsient of 7 billion
dollars in relief and recovery ov®r the past three years is large or
small in relation to the progress we have iaade. As to this, let R»
present to you some significant comparisons.
In the year 1918 alone the national debt was increased twice 7

- 11 billion dollars. That was for the destructive purposes of war*
the total Increase in the national debt for th© prosecution of
the war was £S billion dollars in two and a quarter years• Did
that sudden increase in the national debt le&d the country to bankruptcy and rainf Ga the contrary, we eaerged ia tlie 1920»s a more
prosperous people, despite the debt, than we had ever been before *
The national debt was then gradually scaled down, and on three
separate occasions Incoia© taxes were reduced as th® national income
The fact of the isatter is that debt and taxes are burdensome
or not according as income is small or large* It is so of the
nation as of an individual* When the income produced by oar people
fell from 81 billion dollars in 1929 to less than h&lf that sum in
19S2, the burden of every dollar of debtj public and private, was
thereby more than doubled, th© burden of every dollar of taxes more
than doubled* That is when the borden of debt ®nd taxes became op*
presslve and insupportable. It was that 82-billion-dQllar loes of
Income in three years—tfa» iacoae that provides the seans of paying
debt and taxes—that aad© th© burden oppressive and insupportable.
But since 195S the national income has been stQ&dily rising.
Those who are competent to estimate the extent of the annual increases put our total gain for the past three years at more than 36
billion dollars* For the current year the national incose is ©stl-

sated to be running at the rate of 20 billion dollars higher than
in 1982• I think that even Wall Street would concede that such
returns in so short a time on a net investment of 7 billion dollar*
are not bad*
It is Illuminating also to eoap&re this 7 billion dollars with
another figure known to W&ll Street* the Hew York Stock Exchange
hag recently published the information that the stocks alone listed
on that exchange have risen in value from 15 billion dollars in July
1982 to 50 billion dollar© in July 1956—an appreciation of U
billion dollars* Doe© that suggest a country on the road to bankruptcy and ruin? Does it reflect the trepidation of men who expect
to spend the reet of their live© under the burden of the national
debt? Look at the income, the profits, and the dividends of their
companies if you would know the truth*
Let ae present just one more comparison. The interest rate on
govemttent bomde has been steadily reduced over th© past three y@ar##
until it i» now at the lowest point in ZB years* The same government bonde that In 1952 were gelling at less than $850 per |l,000
bond are now selling at more then |l,040 per $1,000 bond# &a& the
financial cossainity eagerly oversubscribee for every new issue of
government securities* This i# not th© «ay men act when they ar#
fearful of the national credit. It ie not the action of men who
think that the budget will not be balanced, or isho indeed believe
any of the dire predictions that the searewmgers among them make

~ 15 for political e«meuaption. If you would lesra what these sum
truly believe about the soundness of our fiscal policy and the
soundness of our aoney, look to their actions in the market for
government securities.
And so you see there is a good deal sore to the story of
our national finances and our national credit than a temporary
increase in the national debt* There is the arresting of that
frightful decline in the national income that was going on unchecked} there is the impetus and encouragement that was given to
business by public spending at a tiae when orders from private
sources were wanting) there is the laying of a firs foundation for
genuine and sustained recovery—not just another Wall Street booa—
and for a sore widespread, sore equitable distribution of the national income, And there is the substantial and tangible Increase
in the national wealth m& incotae that recovery has already brought,
and that is steadily and plainly gaining atoaentum every day*
X do not »ean by all this to suggest, ay friends, that the increase in the national debt* even though it is but teaporary, is a
good thing in and of itself*

Hot at all. X believe that the public

debt should be Increased only for the moat compelling reasons of
national «aiergency> and that with the passing of the emergency the
budget should be brought into balance and debt retirement begun.

<• 14 •
We have la fact been moving as steadily toward a balanced budget
these two years past as the diminishing emergency dea&nds on
government and the progress of recovery would permit*

We shall

have a balanced budget, but we shall not have It at the cost of
human misery. We shall have it by the only sure and sound means
through which a budget can be balanced, debt retired, and the tax
burden lessened* We shall have it by the continuance of & sound
recovery and the continued growth in the national iaeom© that this
recovery is bringing about*