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From Socialist Appeal, Vol. III No. 46, 30 June 1939, p. 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Perhaps the best comment on the Administration’s new “lending program” was provided by the stock market. There the passions which seek release in Chamber of Commerce speeches and N.A.M. publicity releases are sobered by the immediately controlling aim of making money. On the day the program was announced and on the two following days, the stock market did – nothing. The average stock prices changed scarcely at all, and trading was at an old dray house’s pace.
This may seem odd, for the “enemies” and “friends” of the program will have a lot to say about it in the weeks to come. To the latter it will publicly prove that Rooseveltism is still on the march into the land of honey and almonds; the former will find one more convincing piece of evidence that Roosevelt is running business into the ground. Beneath both varieties of ballyhoo. the stock market tells the truth: that the program doesn’t amount to much of a damn, one way or the other.
According to the headlines, the new scheme calls for a sum of $3,860,000,000. However, this amount is only to be “authorized.” The proposal is to spend at most $870,000,000 during the next fiscal year. The anticipated national income for the current year is around $68,000,000,000. The total of the Roosevelt plan, therefore, would amount to 11/3% of the national income. Salvation can hardly be bought at so cheap a price.
As a matter of fact, examination shows that. in spite of the headlines, there is really nothing “new” in the program. It amounts to little more than a bookkeeping change from the practises of the past six years. For example, P.W.A. has been lending and spending billions of dollars on many kinds of construction projects. Roosevelt’s budget provided nothing for P.W.A. in the next fiscal year; Congress has, so far, ear-marked $125,000,000 of W.P.A. funds for P.W.A., but even that may not stand. Much of what is included in the “new” program is simply a modest substitute tor P.W.A., to be handled under the recently created Federal Works Agency.
Other sections of the program will merely continue the already functioning activities handled under Rural Resettlement, Rural Electrification, and Home Owners Loan Corporation. The last section will make $500,000,000 available for loans to foreign nations, chiefly, no doubt, in furtherance of the administration’s aggressive Pan-American policy.
Far from being a bold step in advance, the program does no more than carry on old devices which have already shown their hopelessness in the past; and in most cases it does so not on a greater but on a much lesser scale than during several previous years of Roosevelt’s regime.
The most advertised change is also nothing new. The administration is under pressure to reduce the rate of increase of the national debt. The new appropriations will not be handled directly by the Treasury, but by special agencies created by Congress which will do their own financing; their obligations, however, to be guaranteed by the Treasury. Thus these obligations will not have to appear on the books of the Treasury as additions to the national debt. However, this has been done frequently in the past; and even now there are more than $7,000,000,000 of such obligations outstanding.
The new program shows once more the beginning and end of New Deal wisdom. It flows from the theory that was once called “pump priming” and is now known as “compensatory spending.” According to this theory, when private enterprise has a “temporary” slump, the government steps in with heavy spending to get business out of the hole; then private enterprise catches up, and a new wave of prosperity follows.
In line with this theory the government has, since 1933, undertaken compensatory spending which can be roughly measured by the increase in the national debt – $23,500,000,000 – plus the seven or more billions in obligations of the special agencies: a total of more than thirty billion dollars.
One thing was correct about this theory: without this compensatory spending, U.S. capitalist economy would have folded up. But a much more important side of the theory was wholly wrong: in spite of all these thirty billions of pump priming and compensatory spending, private enterprise has not “caught on”; on the contrary, private enterprise continues in disastrous shape, in fundamentals getting steadily sicker year by year. With all the patches, they just can’t seem to get Humpty Dumpty together again.
The latest spending program is a confession of, failure. The talk of the money being loaned exclusively for “self-liquidating” projects is a farce: if they were genuinely self-liquidating (i.e., profit-making), there is plenty of idle capital which would finance them through private channels. The Rooseveltians are hoping that they can whip up a brief flurry of fictitious prosperity which would get them through election year. But even for such a purpose, the new program is so small and timid that its effect will be hardly noticeable.
But from the program the War Deal will get one important weapon, and it may be that this was the reason for all the rest: half a billion more dollars for the State Department to use in lining up additional Latin American dictators for the war. The Johnson Act, which was once supposed to protect the United States from those financial entanglements which played such a role in swinging the country into the last war, is being suavely and effectively superseded by the maneuvers of the Roosevelt war machine.
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