US economy

Roosevelt plots route out of economic depression – archive, 11 March 1933


New York, March 10
While plans are being hurried on to permit the reopening of solvent banks by Monday, Mr Roosevelt today asked Congress for authority to make drastic economies in the cost of government in order to balance the Budget and restore public confidence. Pointing out that the accumulated deficit would soon be $5,000,000,000 (about $1,000,000,000 at par), he asked for power to reduce ex-soldiers’ payments and also government salaries and expenses. It is known that he hopes to save about $614,000,000 in this way, of which $279,000,000 come from the veterans, $135,000,000 from federal salaries, and $200,000,000 from reorganisation and elimination of governmental offices.

In a special message to Congress he says that if powers are granted to him “within a year the income of the government will be sufficient to cover expenditure.”

The reduction of federal salaries, including previous cuts, will total not more than 15 per cent. The reductions of ex-soldiers allowances will cut off disability payments except for those actually disabled while serving.

Reserve backs reopen to-day
Late last night Mr Roosevelt issued an order extending the federal bank holiday until further notice. Meanwhile the Secretary of the Treasury invited solvent banks to apply individually for permission to reopen. State banks must apply to the State authorities, but it is safe to assume that few of them can reopen until they receive Federal aid, which will only be forthcoming if they join the Federal Reserve system. The gold embargo will of course, continue even after the banks reopen.

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The twelve central Federal Reserve banks will reopen tomorrow.

All important life insurance companies with headquarters in New York state have suspended making loans or paying cash-surrender values on policies. In a public statement, however, they say their liquid resources amount to 50 per cent and are larger than their liabilities under their actual insurance and annuity obligations.

Work for unemployed
Mr Roosevelt to-morrow will ask Congress for a $500,000,000 bond issue for a vast programme of public works. The plan involves putting 500,000 unemployed men into a “peacetime army,” where they will receive food and $1 a day while engaged in afforestation and similar work projects.



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