Franklin D. Roosevelt

Annual Budget Message.

January 03, 1938

To the Congress:

Pursuant to provisions of law I transmit herewith the Budget of the United States Government for the fiscal year ending June 30, 1939, together with this message, which is a part thereof. The estimates have been developed after analysis of the revenues, obligations, and reasonable needs of the Government, and I recommend appropriations for the purposes specifically detailed herein.

In simple fairness to the Treasury of the United States I am confident that the Congress and the public will bear in mind certain fundamentals relating to the making of the National Budget.

The first step calls for the presentation, before the 15th of September, by every department and agency head, of estimates of appropriations for the fiscal year beginning the first day of the following July-in other words at least nine months before the spending of the money can begin. These estimates, carefully prepared by the budget officers and other officials of each department and agency, are intended to represent what they consider the minimum needs of the work assigned to them by law.

Thereupon the Director of the Budget presents these totals to the President who without taking up the thousands of separate items asks the Secretary of the Treasury for estimates of the total amount of tax receipts which the Government may obtain during the twelve months beginning nine months later. This estimate by the Secretary of the Treasury is furnished him by civil-service experts who have long-standing experience with the whole subject of forecasting economic conditions in what may well be called the remote future. These experts properly call attention to the fact that they are asked to guess what the economic status—and therefore the tax receipts—will be during the fiscal year beginning the first of the following July.

If the forecast of tax receipts made by these experts, who are at least of equal competence with the experts of the largest banks and industrial corporations of the United States, show that the departmental estimates of expenditures will exceed the estimated tax receipts, the President instructs the Director of the Budget to make every possible effort as a result of his hearings to pare the departmental estimates in order to reduce the total.

During the months of November and December and after the hearings have been held by the Director of the Budget, he presents to the President the total estimates with his recommendations.

Again the President obtains from the Treasury Department a check-up on estimated revenue during the year beginning the following 1st of July. If the new report shows a probable falling off of revenue, he makes every effort with the assistance of the Director of the Budget to make further reductions before approving the final department and agency budgets.

It should be remembered that the laws provide that the departments and agencies shall carry out certain duties. By these laws, the President and the Director of the Budget are, in effect, prohibited from eliminating Government functions or curtailing them to the point of ineffectiveness.

The result is that the President and the Director of the Budget arrive at a figure for each department and agency which they believe to be the proper amount under which the functions required by law can be carried out with reasonable efficiency.

During the final two weeks of the calendar year, the President obtains once more from the Treasury Department its final estimates of tax revenues during the fiscal year which begins more than six months later.

Since the tax revenues from practically every major source depend on business conditions during that future fiscal year the Treasury's figures of necessity are based on a prophecy of business conditions beginning six months later and ending eighteen months later.

Business concerns are more fortunate. They also lay out programs months and even a year and a half in advance. But their programs are flexible. They are controlled currently by the condition of business, which permits the making of necessary changes from month to month and even from week to week.

The affairs of the Government are not so flexible. The Budget reports are the administration's fiscal plan; and in the form adopted by the Congress during the winter and spring, it becomes practically a fixed program of expenditure which cannot be changed for many months even though economic conditions radically change the receipt side of the ledger.

While I re-emphasize the difficulty of estimating the revenue of the Federal Government from six to eighteen months before that revenue flows in, there is satisfaction in knowing that during the past 4 years the estimates of tax receipts thus made far in advance, have been infinitely more accurate as proven by the final result than in the preceding years. Estimates remain a prophecy; but our prophecies have been far better borne out by later events than prophecies of earlier years.

It is also worth while to call the attention of the Congress and the public to the fact that a very large proportion of our total expenditures represent fixed charges which cannot be reduced by Executive action. These charges are obligatory on the President and the Treasury, and include interest on the public debt, military and naval pensions, contributions to retirement funds and to the old-age reserve account, and many grants in aid to States.

Another class of expenditures, which, though subject to some measure of administrative control, does not afford opportunity for large reductions, is made up of those which carry on the normal, everyday operations of the Government. For example, the major part of the appropriations for the State Department is required to pay the reasonable salaries of consuls, diplomatic agents, secretarial staffs, and ministers who represent American interests in every part of the world.

The third type of expenditure is represented by the major effort of the Government to help the economic security of large groups of citizens in every part of the country who, for many reasons, definitely require some form of Government assistance. This includes various kinds of aid to save farms and homes from foreclosure, to furnish work relief for needy able-bodied unemployed, and to provide old-age pensions, unemployment insurance and other assistance under the social-security program. Obligations such as these, though large in amount, can be reduced only by depriving a very large proportion of our population of benefits which modern civilization insists on.

The final category includes items of public expenditure for capital improvements—such as new highways, new river and harbor projects, new flood control, new public buildings, new reclamation projects, and other new public works. All of these items can be contracted or expanded to conform with the contraction or expansion of Government income.

This year I recommend that such items be curtailed. First, because expected Government income will be less, and second, because it has been amply demonstrated that they do not provide as much work as do other methods of taking care of the unemployed.

For example, we have appropriated as Federal aid to new permanent State highways almost $1,500,000,000 during the past five years; and an equal sum has been spent during the same period for constructing, repairing, and improving roads and streets by Federal agencies administering unemployment relief. These vast expenditures have put our highway systems far in advance of what would have been normal expansion. I do not propose eliminating Federal aid to highways, but I do ask that such aid be restored to approximately the pre-depression figures.

We have a great accumulation of unliquidated "matching" authorizations for aid to States running into the year 1940-but the States also should be encouraged to bring their highway budgets back to a more normal figure. Therefore I hope that the Congress will start at this session to cut down the actual appropriations used to match State funds.

For the ten years up to June 30, 1933, the Federal Government spent an average of $40,000,000 a year for river and harbor improvements. During the past five years we have spent an average of over $100,000,000 a year. Meanwhile, a justified demand for greater protection against floods has developed. Flood protection is necessary and in this Budget I am curtailing the estimates for new river and harbor improvements in order to provide more money for flood emergencies.

Reclamation projects have been started which will call for future appropriations of nearly $600,000,000. It seems obvious to me, and I hope it will be to the Congress, that no further projects should be authorized until projects now under construction have reached a substantial stage of completion.

During the past five years we have built more than 1,100 new Federal buildings—almost doubling the number of such buildings throughout the country. It is true that this saves the renting of buildings, but to offset that saving we are paying in many cases far more for maintenance of these new buildings than we formerly paid for leasing private quarters. Except for meeting the problem of adequate housing for Government departments and agencies in the District of Columbia, I am strongly of the opinion that the public-building program should be restricted to the comparatively small number of projects where the capital investment will be returned through savings in annual operating costs.

Expenditures.— The most important fact of this Budget is the reduction of $539,000,000 in the estimated expenditures for the fiscal year 1939. They amount to $6,869,000,000, compared with estimated expenditures during the current fiscal year of 1938 of $7,408,000,000.

It is hoped that this fact will not be overlooked. It is fair to say that this estimated reduction may, by force of circumstances, become smaller because of future events which today cannot definitely be foretold. I refer specifically to the possibility that due to world conditions over which this Nation has no control, I may find it necessary to request additional appropriations for national defense. Furthermore, the economic situation may not improve—and if it does not, I expect the approval of Congress and the public for additional appropriations if they become necessary to save thousands of American families from dire need.

Actual and estimated receipts and expenditures of the Government for the fiscal years 1931-39

(Classifications include expenditures from both general and emergency funds)

[In millions of dollars]

Estimated Actual

1939 1938 1937 1936 1935 1934 1933 1932 1931


Internal revenue:

Income tax 2,414.2 2,692.9 2,157.5 1,426.6 1,099.1 818.0 746.2 1,057.3 1,860.4

Miscellaneous internal revenue 2,190.1 2,279.5 2,181.2 2,009.6 1,657.2 1,469.6 858.2 503.7 569.4

Unjust enrichment tax 10.0 5.0 5.9

Taxes under Social Security Act 598.8 571.0 252.2

Taxes upon carriers and their

employees 116.9 150.3 .3

Processing tax on farm products 76.6 521.4 353.0

Customs 390.4 415.3 486.4 386.8 343.4 313.4 250.8 327.7 376.6

Miscellaneous receipts 199.0 206.5 210.3 216.3 179.4 161.6 224.5 117.0 383.2

Total receipts 5,919.4 6,320.5 5,293.8 4,115.9 3,800.5 3,115.6 2,079.7 2,005.7 3,189.6


Regular operating expenditures:

Legislative, judicial, and civil


Legislative establishment 20.8 21.1 20.7 21.7 19.6 16.6 17.7 21.9 21.4

Department of Agriculture 124.9 150.0 176.1 122.9 71.1 62.7 72.2 98.0 71.5

Department of Commerce 44.5 41.2 40.3 44.3 39.0 30.8 41.7 48.1 56.9

Department of the Interior 95.2 102.6 112.4 78.5 74.4 49.9 55.8 63.4 60.6

Department of Justice 40.7 39.8 38.6 38.5 32.8 31.7 44.1 51.7 44.4

Department of Labor 17.5 24.5 30.7 26.9 18.6 12.7 13.7 14.7 12.2

Post Office Department (deficiency) 18.2 29.6 39.3 85.9 64.0 64.2 117.4 203.0 145.7

Department of State 16.3 17.6 17.1 17.2 18.7 12.0 13.8 16.7 15.3

Treasury Department 157.1 178.0 184.6 164.1 123.0 111.8 133.9 161.0 136.1

War Department (nonmilitary) 48.2 47.5 53.1 46.2 44.1 41.1 43.1 47.9 46.1

District of Columbia

(United States share). 5.0 5.0 5.0 5.7 4.5 5.7 7.8 9.5 9.5

Independent offices and

commissions 171.6 150.4 96.8 81.7 45.1 36.1 76.6 108.8 89.4

Subtotal 760.0 827.3 814.7 733.6 554.9 475.3 637.8 844.7 709.9

National defense 991.3 957.0 888.6 870.5 656.5 499.9 633.6 664.5 667.3

Veterans' pensions and benefits 538.6 537.7 1,128.2 2,348.6 605.9 554.1 848.9 972.8 942.6

Interest on the public debt 976.0 927.0 866.4 749.4 820.9 756.6 689.4 599.3 611.6

Other (refunds of receipts,

settlement of war claims, etc.) 50.8 47.9 48.1 41.1 38.7 62.8 69.7 150.0 97.0

Total 3,316.7 3,332.9 3,746.0 4,743.2 2,676.9 2,348.7 2,879.4 3,231.3 3,028.4

Public Works:

Public Highways 140.1 280.1 350.6 243.9 317.4 267.9 178.2 209.9 173.8

Tennessee Valley Authority 41.0 46.0 41.2 48.8 36.2 11.0

Reclamation 60.4 69.5 52.3 49.9 40.9 24.8 25.2 26.3 13.9

Rivers and Harbors, improvement 60.0 81.2 142.4 137.8 132.9 76.4 50.5 55.4 51.4

Flood Control 63.9 71.2 54.6 52.3 38.7 48.1 39.7 29.2 37.8

Public buildings 53.2 74.4 76.3 71.9 58.1 78.7 105.7 86.2 67.6

Grants to public bodies,

including administration 153.8 189.5 272.9 233.9 48.9 18.8

Other 47.1 66.2 89.1 74.0 89.6 87.4 59.4 71.7 59.6

Total 619.5 878.1 1,079.4 912.5 762.7 613.1 458.7 478.7 404.1

Unemployment relief:

Direct relief 35.9 126.8 184.3 591.7 1,914.1 715.8 350.7

Work relief (W.P.A. & C.W.A) 1,000.1 1,322.2 1,896.7 1,264.4 11.3 805.1

Civilian Conservation Corps 230.0 310.0 385.8 486.3 435.5 331.9 8.8

Total 1,266.0 1,759.0 2,466.8 2,342.4 2,360.9 1,852.8 359.5

Loans (net) 68.0 * 47.9 * 307.1 * 180.8 102.1 819.5 911.8 404.0 235.4

Subscriptions to stock and surplus 5.0 45.6 47.1 88.9 156.7 820.9 71.9 627.0 3.0

Agricultural Adjustment Program 586.1 442.5 515.8 541.6 743.0 290.2

Social Security 813.2 658.7 447.7 28.4

Railroad retirement 119.5 139.7 5.5 .3

Supplemental items 75.0 200.0

Total expenditures,

exclusive of debt retirement 6,689.0 7,408.6 8,001.2 8,476.5 6,802.3 6,745.2 4,681.3 4,741.0 3,670.9

Net Deficit 949.6 1,088.1 2,707.4 4,360.6 3,001.8 3,629.6 2,601.6 2,735.3 481.3

Gross public debt at the

end of each fiscal year 38,528.2 37,603.6 36,424.6 33,778.5 28,700.9 27,053.1 22,538.7 19,487.0 16,801.3

* Excess of credits, deduct.

Revenues.—During the first ten months of the calendar year 1937 business conditions improved materially and it was the consensus of opinion in Government and in business circles that the improvement would be maintained in 1938. There was every reason to expect that the revenues for the fiscal year 1939 would be greater than the expected revenues for 1938 and that with a reduction in the cost of relief, the total expenditures for 1939 would greatly decline. That was the basis for our expectation of a balanced Budget for the fiscal year 1939.

The recent recession in business has changed that outlook. Today it is necessary to revise the estimates of revenues. They will be less than we had anticipated. They will, as far as we can tell, remain below our estimated necessary expenditures.

We hope that the calendar year 1938 will bring an improvement in business conditions and, therefore, in tax receipts. The Treasury, leaning to the conservative side, predicts some improvement over the present level but does not assume in its figures that business in the calendar year 1938 will reach as high a level as in the calendar year 1937.

The present estimate of revenue for the fiscal year 1939 is $5,919,000,000 compared with the present estimate of receipts for the fiscal year 1938 of $6,320,000,000—or, in other words, a falling off of $401,000,000.

Balance.— The net result of these estimates of expenditures and receipts shows for the fiscal year 1939 a net deficit of $950,000,000, but it is fair to state at the same time that this deficit will be $138,000,000 less than the expected deficit in the current fiscal year. In other words, for the third year in succession we would continue to decrease the deficit.

It will be of interest to compare the major classes of receipts and expenditures for the fiscal years 1931 to 1939 as set forth in the accompanying table:


Appropriation item veto.- An important feature of the fiscal procedure in the majority of our States is the authority given to the executive to withhold approval of individual items in an appropriation bill, and, while approving the remainder of the bill, to return such rejected items for the further consideration of the legislature. This grant of power has been considered a consistent corollary of the power of the legislature to withhold approval of items in the budget of the executive; and the system meets with general approval in the many States which have adopted it. A respectable difference of opinion exists as to whether a similar item veto power could be given to the President by legislation or whether a constitutional amendment would be necessary. I strongly recommend that the present Congress adopt whichever course it may deem to be the correct one.

Commodity Credit Corporation.— At present the funds for the operations of the Commodity Credit Corporation are provided through allocations from the Reconstruction Finance Corporation. Such losses as the Commodity Credit Corporation may sustain upon its commodity loans remain an indefinite charge against the Treasury until the liquidation of the Reconstruction Finance Corporation. In order to provide for an annual review of the operations of the Commodity Credit Corporation and of its annual net cost to the Government, I recommend the enactment by the Congress of legislation which will require an annual appraisal of the assets of the Corporation, and, as a means of providing funds to make and guarantee its loans, provide the Corporation with adequate capital and authorize the issuance by it of obligations guaranteed by the United States. Congress would be advised annually of the Corporation's net profit or loss and be in a position to make such appropriations as might be necessary to meet any annual impairment of the capital of the Corporation that would result from losses sustained upon its loans.



This review concerns itself with the cash actually received and paid out by the Treasury in the fiscal year 1937, with the estimates of receipts and expenditures for the fiscal year 1938, and with the fiscal program for 1939.

Fiscal Year 1937

Receipts.— Total general fund receipts for the fiscal year 1937 amounted to $5,293,840,237 which was $534,000,000 less than was estimated one year ago but a gain over 1936 of $1,178,000,000. The receipts from income taxes were $215,000,000 less than the estimate contained in the 1938 Budget, while miscellaneous internal-revenue taxes were $94,000,000 less.

It was believed last January that taxes on carriers and their employees would produce $134,552,000, but litigation delayed collection of these taxes and only $345,088 was received in 1937. The tax on unjust enrichment produced only $5,886,836 as against Budget estimates of $82,000,000 a year ago, while the receipts from social-security taxes were $72,000,000 less than was estimated at that time. Customs and miscellaneous receipts, however, exceeded the amount anticipated a year ago by $40,000,000 and $18,000,000, respectively.

As pointed out in my message of April 20 last, the March 1937 tax returns brought to light certain defects in the present revenue law. As a result of these disclosures, committees of Congress have been considering corrective tax legislation; and I hope that there may be enacted at an early date such amendments to the revenue law as will maintain the revenue producing power of the present tax structure while correcting at the same time existing proven inequities.

Expenditures.—The total expenditures for the fiscal year ended June 30, 1937 (exclusive of expenditures from postal revenues), amounted to $8,105,158,547 as compared with an estimate of $8,480,804,493 in the Budget submitted a year ago. This latter estimate included an amount of $404,525,000 for statutory debt retirement while the actual expenditures for this purpose were $103,971,200. Thus, excluding debt retirement, the expenditures for the fiscal year 1937 were $75,092,146 less than the estimate for that year contained in the 1938 Budget. The total expenditures for recovery and relief were $3,014,589,913 as against an estimate of $3,144,689,700. Revolving funds showed a net credit of $243,569,165, which was $84,963,435 less than the previous Budget estimate of $328,532,600. Transfers to trust accounts totaled $872,386,048, while the estimates for this purpose amounted to $842,235,300. For the operation and maintenance of the regular departments and establishments of the Government, including interest on the public debt, there was expended $4,357,780,551, while the amounts estimated for these purposes totaled $4,417,887,093.

Deficit and public debt.—The gross deficit for the fiscal year 1937 amounted to $2,811,318,311. Excluding $103,971,200 for statutory debt retirement, the net deficit was $2,707,347,111. The estimated net deficit, as contained in the Budget submitted a year ago, was $2,248,128,774. The increase in the net deficit is more than accounted for by the decline in receipts.

The increase in the gross public debt during the year amounted to $2,646,070,239, bringing the total gross debt on June 30, 1937, to $36,424,613,732.

Fiscal Year 1938

Receipts.— The income of the Federal Government during the fiscal year 1938 is expected to increase $1,026,673,000 over that of 1937, the increase of $1,101,573,000 in internal-revenue collections being partially offset by a reduction of $74,900,000 in other classes of receipts. The total revenues from all sources (exclusive of postal revenues) will amount to $6,320,513,000. This figure, however, is less by $973,100,000 than the estimate of revenues for 1938 contained in the Budget last year.

Income taxes are expected to produce $2,692,900,000 as compared with 1937 receipts of $2,157,526,981. Miscellaneous internal-revenue taxes will amount to $2,279,511,000 as compared with actual collections in 1937 of $2,181,217,856. The re-enactment of legislation levying taxes upon carriers and their employees will produce $150,300,000 in 1938, whereas last year's receipts amounted to only $345,088. Taxes under the Social Security Act, levied on a six-month basis in 1937, produced $252,160,840, and in 1938, on a full-year basis, will produce $571,002,000. The tax on unjust enrichment is estimated at $5,000,000, or $886,836 less than the receipts from this source in 1937. Customs duties are expected to yield $415,300,000 in 1938, whereas in 1937 they produced $486,356,599. Miscellaneous revenues are $2,411,030 less than last year, the estimate for the current year being $165,409,083; and from realization upon assets there will be derived a total of $41,090,917, or $1,432,505 less than in 1937.

Expenditures.—The total expenditures (exclusive of expenditures from postal revenues) for the fiscal year 1938 are now estimated at $7,614,858,300. Included in this amount, however, are statutory debt retirements of $206,215,700. Eliminating debt retirement and the non-recurring item of adjusted compensation payments, the 1938 expenditures are expected to be about $35,900,000 less than last year. There is a decrease of $1,185,600,000 in expenditures for recovery and relief, the agricultural adjustment program, the Civilian Conservation Corps, and refunds of taxes, and an increase of $1,149,700,000 for the following purposes: $52,500,000 for the legislative, executive, and judicial offices and the civil departments and agencies; $167,800,000 for the general public works program; $89,700,000 for national defense; $2,300,000 for veterans' pensions and benefits; $90,900,000, principally for grants to States, under the Social Security Act; $60,600,000 for interest on the public debt; $280, 100,000 for payments into the old-age reserve account and the railroad and Government employees' retirement funds; $200,000,000 for supplemental items; and $205,800,000 representing a reduction in revolving fund credits.

Deficit and public debt.—Excluding public-debt retirements, the net deficit for 1938 is now estimated at $1,088,129,600 as against an actual deficit in 1937 of $2,707,347,111. The gross public debt on June 30, 1938, is estimated at $37,603,646,918. This, of course, does not take into account any future changes in the debt which may occur as a result of the Treasury policy with respect to the sterilization of gold.

Fiscal Program for 1939

Receipts.— The estimates of revenues for the fiscal year 1939, which are necessarily based on existing tax laws, amount to $5,919,437,000. This is $401,076,000 less than the anticipated receipts for 1938. With the exception of social-security taxes and realization upon assets, each major class of revenue shows a decline below the 1938 level. Income taxes are estimated at $2,414,200,000, or $278,700,000 less than for 1938. Total miscellaneous internal revenue will be $2,190,072,000, which is $89,439,000 less than 1938. The taxes upon carriers and their employees are expected to total $116,900,000, a decline of $33,400,000 from 1938, which is due largely to the fact that the 1938 collections included 1937 accruals deferred by litigation. Social-security taxes will be $598,865,000, an increase of $27,863,000 over 1938. The tax on unjust enrichment will produce $10,000,000, as compared with $5,000,000 for 1938. Miscellaneous revenues show a total of $148,882,320, or less than the current year by $16,526,763. Realization upon assets is estimated at $50,117,680, an increase of $9,026,763 over 1938.

Expenditures.— The expenditures contemplated for the fiscal year 1939 (exclusive of those from postal revenues) total $7,070,558,000. This includes $201,515,000 for statutory debt retirement, leaving $6,869,043,000 for other purposes, which is $539,600,000 less than the amount estimated for 1938. There are net increases of $52,917,000 in the regular activities of the civil departments and agencies which are more than accounted for by increases of $62,000,000 under the Rural Electrification Administration and the United States Maritime Commission. The general public works program will require $404,026,500, or $73,957,000 less than for 1938. Expenditures for national defense are expected to be $54,847,000 greater than for 1938, reaching a total of $988,623,400 in the fiscal year 1939. On the other hand, the expenditures for veterans' pensions and benefits will decline from $573,682,800 for 1938 to $538,610,000 for 1939, because of the completion of payments of insurance claims on account of deaths occurring during the World War. Expenditures under the agricultural adjustment program will increase $143,573,000 in 1939, due principally to the legislation enacted during the last regular session of Congress providing for subsidy payments to cotton producers.

The Civilian Conservation Corps, because of a contemplated reduction in the number of camps and reduced expenditures for cooperating agencies, will require $230,000,000, or $80,000,000 less than for 1938. Expenditures for administration and grants to States under the Social Security Act will reach a total of $338,230,000, which represents an increase of $66,525,000 in grants to States and a decrease of $1,991,000 in administrative expenses. The interest payments on the public debt will amount to $976,000,000, or $49,000,000 more than for 1938.

Expenditures for recovery and relief are estimated at $1,138,304,000, or $841,356,600 less than for 1938. The operations of the Social Security Act and the unemployment-compensation laws of the States have the effect of materially reducing our program for work relief. Moreover, operations under the new Housing Act will greatly assist in providing employment. We can also look to the regular public works program to provide a certain amount of employment. With these aids and the assistance confidently expected from private industry, I hope that the foregoing amount for expenditure will be sufficient to meet the needs for 1939. An estimate of appropriation of $1,000,000,000 for this purpose is contained in the 1939 Budget.

Expenditures from revolving funds are expected to amount to $141,961,000, which represents, because of an excess of receipts of $37,778,200 in 1938, an increase in total expenditures of $179,739,200. For the old-age reserve account the estimate is $475,000,000, an increase of $90,000,000 over 1938. For the railroad retirement account $177,250,000 will be required, $20,286,000 less than for 1938. An accumulation of payments due in 1937 had to be met in 1938, whereas there will be no accumulation to be carried over into 1939. The amount for supplemental items is $75,000,000, which is $125,000,000 less than the amount now indicated for 1938.

Deficit and public debt.—The net deficit for the fiscal year 1939 is $949,606,000, or $138,523,600 less than the deficit for the current year. The gross public debt on June 30, 1939, is estimated at $38,528,252,918. This does not take into account any changes in the debt which may occur as a result of the Treasury policy with respect to the sterilization of gold.

It should be pointed out, however, that the increase in the debt by reason of the deficit does not mean that the Treasury will borrow that additional sum on the market. There will be available during the fiscal year for investment in special issues of Government obligations, the net sum of approximately $1,163,000,000, which represents investments of $600,000,000 from the old-age reserve account and the railroad and Government employees' retirement funds and $573,000,000 from the unemployment trust fund, and a reduction of $10,000,000 in investments held for account of the adjusted service certificate fund. As a result of these investment operations the Treasury financing for the fiscal year 1939 would be confined to refunding maturing obligations.

The accompanying table shows the gross public debt at the end of the fiscal years 1936 and 1937 and the estimated gross debt at the end of the fiscal years 1938 and 1939.

Appropriations.— The appropriations and reappropriations recommended in this Budget, including those for the Postal Service, the District of Columbia, and probable supplemental items, total $7,973,843,219. The appropriations and reappropriations already made and prospective supplemental items for the fiscal year 1938 for the same purposes total $8,629,921,393. This is a decrease of $656,078,174.

[In millions of dollars]

June 30, June 30, June 30, June 30,

1939 1938 1937 1936

estimated estimated

Market operations:
Held by—

Public (banks, insurance companies,

trust companies, corporations,

individuals, etc.) 30,240 30,519 30,677 29,408

Federal Reserve System 2,564 1 2,564 2,526 2,430

Government agencies 509 1 509 451 381

Government trust funds 1,300 1,260 1,212 933

34,613 34,852 34,866 33,152

Special issues:
Held by—

Old age reserve account 1,143 661 267

Unemployment trust fund 1,538 965 312 19

Railroad retirement account 137 80

Employees' retirement funds 432 371 316 280

Veterans' funds 515 525 538 127

Other 150 150 125 200

Gross debt 38,528 37,604 36,424 33,778

1 As of Dec. 1, 1937, and it is assumed for the purpose of this statement only that they will remain at these amounts throughout the fiscal years 1938 and 1939.

Franklin D. Roosevelt, Annual Budget Message. Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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