The election of Franklin D. Roosevelt as president in 1932, was a factor in the older view remaining in effect, at least in principle, for Roosevelt strongly believed in a balanced budget. During his first days in office, he was too involved with the banking crisis and the first flurry of New Deal legislation to concern himself with budgetary matters. Besides, the ability to balance the budget was basically out of the control of the government, since the depression had caused a sharp decline in tax receipts. Roosevelt persisted in trying to balance the budget for several years, but the need for spending on welfare and public works, as well as the reduced tax revenues, prevented this from happening. Deficits ranged from $2.3 to $3.5 billion from 1933 to 1940. From 1933 to 1940, $26.3 billion in total deficits were incurred and the debt rose to $43 billion. Introduction of U.S. Savings Bonds The sale of United States Savings Bonds, which were first offered on March 1, 1935, was of great help in managing this increased debt. A Division of Savings Bonds was set up in the Public Debt Service to promote the sale of savings bonds. During this period, the Federal government started using its trust funds, such as the Social Security Trust Fund, as a source of debt finance. The Treasury underwent a complete reorganization as a result of several Executive Orders, including one in 1940 that placed the duties of the Register, and Offices of Accounts and Public Debt under the Fiscal Service. The Public Debt Service continued its operations under the title of the Bureau of the Public Debt. * Summary This first phase of the History of the Bureau of the Public Debt has traced the significant events of our nation's history in terms of methods used to finance the building of our country. The initial concerns of the founding fathers were to determine methods of raising the money necessary to win our freedom. As we progressed in size, both in population and geographical area, our financial needs grew, and the means to raise the funds and administer this debt became more complex. These events led to the need for a governmental agency charged with administration of the public debt. The details of this reorganization will be presented in the next chapter. |