Public Papers of Franklin D. Roosevelt, 1937

Author: Franklin D. Roosevelt  | Date: October 19, 1937

153 Statement Summarizing the 1938 Budget.
October 19, 1937

attached summation presents revised estimates of receipts and expenditures for the fiscal year 1938, reflecting the changes which have occurred in the Budget subsequent to the revision of estimates contained in my message of April 20, 1937. In the latter message I pointed out that the decline in tax receipts was almost entirely responsible for the then estimated deficit of $418,000,000 for the fiscal year 1938. It was indicated that this estimate would necessarily be subject to change dependent on any action taken by Congress which might increase expenditures.

The following changes have occurred which could not be predicted at the time of the April estimates.

The enactment by Congress of the new Railroad Retirement Act which increased the number of annuitants by adding certain groups of employees, retired under railroad pension systems, who were not included under the provisions of the former retirement act, and which added a reserve feature necessitating the annual investment of funds to establish a reserve against future payments, $113,000,000.

The continuation by Congress of reduced interest rates on Federal Land Bank loans and the reduction, for the first time, of the interest rates on Land Bank Commissioner’s loans, necessitating an additional expenditure to reimburse the Land Banks and the Federal Farm Mortgage Corporation for the loss suffered through these reductions, $40,000,000.

The enactment by Congress of legislation authorizing refund of the taxes collected under Title 9 of the Social Security Act to those States enacting, subsequent to the collection of such taxes, unemployment compensation programs, $36,000,000.

The legislative extension of the Public Works Administration for two years, and increase in the amount of funds made available for grants and administrative expenses, $25,000,000.

The situation with respect to the impending surplus cotton crop, which will make it necessary for the Commodity Credit Corporation to make cotton loans, $130,000,000.

The present revision by the Treasury of the revenue estimates showing a reduction of $256,000,000 from the estimates of April 20.

These changes have had the effect of increasing the deficit of of $418,000,000 of last April by $600,000,000, but there will be savings under other items of expenditure amounting to $323,000,000 which will result in a net deficit of $695,000,000.

The receipts for the fiscal year 1938 are now estimated at $6,650,000,000, and the expenditures, excluding $200,000,000 for debt retirement, at $7,345,000,000.

The present estimated receipts represent a decrease of $643,000,000 under the estimates contained in the 1938 Budget, and a decrease of $256,000,000 below the revised estimates of April 20. This decrease is more than accounted for by the reduction in the estimate of income and Social Security taxes.

The expenditure requirements, excluding debt retirement, are now estimated to be $89,000,000 more than was anticipated last January after adding $1,500,000,000 for work relief, and $21,000,000 more than the revised estimates of April 20.

As previously stated, changes which have occurred since last April have added $344,000,000 to the estimated expenditures, but there have been offsetting reductions in other expenditures amounting to $323,000,000.

A part of this reduction was in the estimated expenditures under the Old Age Reserve Account. While the former estimate of expenditures for investments under this account was $540,000,000 it has been found, upon a reexamination of the status of the fund, that the total amount of investments in the account on June 30, 1938, should be $690,000,000. Inasmuch as $265,000,000 was invested prior to this fiscal year the remaining amount necessary to place the fund in proper status at the end of this fiscal year is $425,000,000, a reduction of $115,000,000 in the amount previously estimated.

The remaining reductions amounting to $208,000,000 are accounted for by savings to be effected by administrative action in curtailing other classes of expenditures.

The following table shows by major classifications the present estimates of receipts and expenditures, as compared with those in the April revision, and those in the January Budget.

(in millions)

Present April January
Estimates Estimates Estimates

Internal Revenue $5,946 $6,243 $6,648
Customs 494 463 463
Miscellaneous 210 200 182
Total receipts 6,650 6,906 7,293

I. Legislative, civil departments and agencies
and the judiciary 1 1,002 1,085 1,092
2. National defense 925 953 981
3. Veterans’ Administration 1 580 580 588
4. Agricultural Adjustment Program 475 524 482
5. Civilian Conservation Corps 310 350 350
6. Social Security 250 286 296
7. Interest on public debt 925 860 860
8. Refunds 46 53 53
9. Recovery and relief 1,876 1,832 1,826
10. Revolving funds (net) 140 a 12 a 10
11. Transfers to trust accounts, etc 636 638 638
12. Supplemental items 180 175 100
Total expenditures
(exclusive of debt retirement) $7,345 $7,324 $7,256

III. NET DEFICIT (—) OR NET SURPLUS (+) -695 -418 +37

a Excess of credits, deduct.

1 Includes General Public Works Program items.


It is now estimated that total receipts for 1938 will be $1,357,000,000 more than the actual receipts for 1937. Income taxes will produce $634,000,000 more revenue, principally reflecting a full year of collections under the Revenue Act of 1936 as compared with one-half year’s collections in the fiscal year 1937. Miscellaneous internal revenue taxes will be $205,000,000 greater, representing chiefly an increase in collections from estate taxes and alcoholic beverage taxes, and from new taxes levied under the Sugar Act of 1937. During the past fiscal year, due to litigation, practically no collections were made under the law levying taxes on carriers and their employees, but in 1938 it is expected that $158,000,000 will be collected from this source. Social Security taxes which will be collected for a full year in 1938, as compared to only one-half year in 1937, will result in $353,000,000 of additional revenue. Customs revenues are expected to show an increase of about $8,000,000 in 1938 over 1937, while miscellaneous receipts remain at about the same figure.


The estimated expenditures for 1938, excluding debt retirement, will be $656,000,000 less than the actual expenditures for 1937.

General. The estimated general expenditures are $156,000,000 greater than the actual expenditures for 1937. This is due largely to increased expenditures of $63,000,000 for highways, $40,000,000 for the Maritime Commission, $69,000,000 for National defense, $67,000,000 under the Social Security Act, and $69,000,000 for interest on the public debt; and to decreased expenditures of $76,000,000 for the Civilian Conservation Corps, $59,000,000 for the Agricultural Adjustment program, and $7,000,000 (net) for miscellaneous items.

Recovery and relief. The estimated expenditures under the recovery and relief program will be $1,139,000,000 less than in 1937. This amount represents reductions in expenditures of $621,000,000 for the Works Progress Administration, $373,000,000 for emergency public works, $85,000,000 for Resettlement Administration, and $60,000,000 for other purposes.

Revolving funds. The excess receipts of the Reconstruction Finance Corporation, on account of repayment of loans, will be about $184,000,000 less than last year, thus increasing total expenditures by that amount.

Last year repayment of loans made by the Commodity Credit Corporation exceeded expenditures by $112,000,000, thus offsetting the total expenditures of the Government by that amount. This year, however, on account of the surplus cotton crop, not only will there be no corresponding offset but instead there will be an excess of expenditures over repayments of loans in the estimated amount of $100,000,000. The total expenditures in 1938 will therefore be increased by $212,000,000.

Other revolving fund items, including the Public Works Administration, show a net decrease in expenditures of $12,000,000.

Transfers to trust accounts, etc. Investments in the Old Age Reserve Account for the fiscal year 1938 will be $160,000,000 greater than in 1937.

The. annuity payments and investments under the Railroad Retirement Act will be $134,000,000 greater than the expenditures for 1937. In that year under the provisions of the Retirement Act then in force the expenditures consisted of annuity payments only, since that Act did not provide for the establishment of a reserve, and no investments therefore were required in 1937.

The contribution by the United States to Government employees retirement funds will be $27,000,000 greater than in 1937.

Last year $557,000,000 was transferred to the Adjusted Service Certificate Fund for adjusted compensation payments but it is not contemplated that any transfers will be made during the current year.

Supplemental items. There is included in the 1938 estimates of expenditure an additional amount of $180,000,000 for supplemental items which will be needed to meet appropriations authorized during the past session, or deficiencies in existing appropriations.

Debt retirement. There is included in the 1938 estimate $200,000,000 for debt retirement, which is $96,000,000 greater than the amount spent for this purpose in the past year.


The estimated net deficit (excluding debt retirement) for the fiscal year 1938 will be $695,245,000, which is $2,012,000,000 less than the net deficit for the fiscal year 1937.


By reason of the net deficit the total public debt will be increased in the current fiscal year by $695,245,000 provided that the balance in the general fund on June 30, 1938, is the same as it was on June 30, 1937. The point of major significance in connection with the debt, however, will be the change in the character of the debt which will occur during the year. There are included in the total expenditures for 1938 which resulted in the above deficit investments in special Government obligations in the amount of $575,000,000. In addition contributions to be made by the States to the unemployment trust fund will likewise be invested in special Government obligations in the net amount of $500,000,000. Thus public debt receipts made available from the sale of these special obligations to investment, accounts in the amount of $1,075,000,000 will be used to finance the deficit of $695,000,000 and lessen the debt outstanding in the hands of the public by $380,000,000. This does not mean a decrease in the total gross debt but only a switch from the hands of the public to Government investment accounts.

This does not take into account any change in the public debt which may occur as a result of the Treasury policy with respect to the sterilization of gold.


Reconstruction Finance Corporation. On September 30, 1937, the Reconstruction Finance Corporation had on its books undisbursed commitments in the aggregate sum of $405,000,000, exclusive of undisbursed statutory allocations to Federal agencies and of agreements to purchase securities from the Public Works Administration. These undisbursed commitments, however, include $149,000,000 in the nature of conditional agreements, a large part of which ultimately will be cancelled. Moreover, it is probable that the Reconstruction Finance Corporation will not be called upon to meet all of its other commitments. The details of these commitments are shown in the appendix as Exhibit A.

While the cancellation of such commitments would not of itself return money to the public Treasury, the ultimate effect of such action would relieve the Treasury of a substantial potential liability, and to this extent the Budget outlook would be improved. As a means of reducing this liability, and of avoiding the substitution of other liabilities therefor, I have determined that no further commitments should be made by the Reconstruction Finance Corporation, other than for administrative expenses, and that the money represented by commitments now on its books, which, for one reason or another, may later be cancelled, should not be used for expenditure on other commitments, but be completely cleared from the books, thus insuring the elimination of such potential charges against future budgets.

I have also determined that the liabilities carried upon the books of the Reconstruction Finance Corporation in the nature of undisbursed allocations to Federal agencies should not be used except to meet unavoidable requirements of existing law.

Public Works Administration. On September 30, 1937, the Public Works Administration had on its books undisbursed commitments for loans and grants in the aggregate sum of $530,000,000, of which $205,000,000 represents loan commitments and $325,000,000 represents grant commitments. These commitments are listed in detail in Exhibits B and C accompanying this summation. They will be financed from money now standing to the credit of the Public Works Administration on the books of the Treasury, plus the proceeds to be received from the sale to the Reconstruction Finance Corporation of securities now held or to be acquired by that Administration. Although the Public Works Administration finances a large part of its operations through the sale of its security holdings to the Reconstruction Finance Corporation, the burden of its expenditures must be carried by the Federal Treasury until the securities purchased by the Reconstruction Finance Corporation are actually sold on the market.

As in the case of the Reconstruction Finance Corporation, it is improbable that the Public Works Administration will be called upon to meet all of the commitments now outstanding against it, and to the extent that it is not necessary to meet such commitments, the budget outlook will be improved. I have, therefore, determined to adopt a similar policy with respect to the Public Works Administration, namely, that any commitments now standing on the books of said Administration, which, for one reason or another, are cancelled, shall be completely wiped off the books and no further commitments be made or substituted therefor; and that no present commitment—either loan or grant—on any project already approved shall be increased.

Unlike the Reconstruction Finance Corporation, the funds of the Public Works Administration are carried upon the books of the Government as appropriation accounts, and to make certain that this program is carried out, I am directing that the balances now carried upon the Treasury’s books which may not be required to take care of the Public Works Administration program already approved, and after reserving $15,000,000 for administrative expenses, shall be impounded and returned to the Treasury. The amount thus to be written off the books will exceed $100,000,000.


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Chicago: Franklin D. Roosevelt, "153 Statement Summarizing the 1938 Budget.," Public Papers of Franklin D. Roosevelt, 1937 in Franklin D. Roosevelt, the Public Papers and Addresses of Franklin D. Roosevelt, 1937 (New York: Russell & Russell, 1938-1950), Item 184 Original Sources, accessed January 27, 2023,

MLA: Roosevelt, Franklin D. "153 Statement Summarizing the 1938 Budget." Public Papers of Franklin D. Roosevelt, 1937, in Franklin D. Roosevelt, the Public Papers and Addresses of Franklin D. Roosevelt, 1937 (New York: Russell & Russell, 1938-1950), Item 184, Original Sources. 27 Jan. 2023.

Harvard: Roosevelt, FD, '153 Statement Summarizing the 1938 Budget.' in Public Papers of Franklin D. Roosevelt, 1937. cited in , Franklin D. Roosevelt, the Public Papers and Addresses of Franklin D. Roosevelt, 1937 (New York: Russell & Russell, 1938-1950), Item 184. Original Sources, retrieved 27 January 2023, from