Address at the Fourteenth Regular Meeting of the Business Organization of the Government

Title: Address at the Fourteenth Regular Meeting of the Business Organization of the Government

Date: January 30, 1928

Location: Washington, D.C.

Context: Coolidge addresses the annual Meeting of the Business Organization of the Government to discuss taxes, budgets, expenditures and finances pertaining to the federal government

Members of the Government’s Business Organization:

In spite of the fact that this is the fourteenth of the semiannual Budget meetings, there are, no doubt, many who are still wondering why they are held and just what their purposes may be. Nearly everyone connects them with economy in Government expenditures. But that is not the real answer. The orderly and proportionate use of the resources of the people of the United States is certainly being sought. But that is only the method and the means of accomplishing our main object. The real purpose is nothing less than the true and scientific progress of humanity. It is the major effort in undertaking to establish the correct relationship between needs and resources. It works out into conservation of human energy. It is immediately translated into concrete results, not only for the people at large but for the people in the Government service. For the unemployed it makes the prospect of employment more certain. For the employed it makes hours shorter, tasks lighter, wages higher, and positions more permanent. It makes the cost of food and clothing less. It reduces rents. It makes the home easier to buy, and, having been bought, easier to pay for. It makes investments give better returns and increases the opportunity for saving. The margin for the comforts, and even the luxuries, of life is widened. The ability comes for broadening educational advantages. Leisure is secured for the better appreciation of literature, music, and art. Means exist for the ministrations of charity. Contentment and peace of mind come under these conditions, because people have the feeling of success and the consciousness that they are rising superior to their environment. Our efforts are not based on any mean and sordid materialism, but are inspired by a desire to promote the mental, moral, and spiritual welfare of the people.

That, in short, is the meaning of the Budget system of the United States. If it is not worth working for, then I do not know anything that is worth working for. The members of this business organization are certainly entitled to take a great deal of pride in what they have accomplished. We are not only working for our own benefit but undertaking to promote the general welfare of all the people of our own Nation and carry the same influences to every quarter of the globe. Prosperity, with peace and contentment, is an enviable situation. We have that within our own Nation. We would not have it if the business of our Federal Government had not been well managed. The results of that management are portrayed in the present condition of our Nation. The enormous importance of constructive economy in Federal operations has been established. It is here to stay. The prosperity, peace, and contentment of the people demand it. They furnish the money to run the Government. They have a right to have it run for their benefit.

In this great business of the Federal Government problems of magnitude are constantly arising. Each day brings forth its differing problems, so that it is essential that we keep our principles constantly before us. We gather here twice each year for that purpose. Our record is represented by what has already been done. But all of this could be undone if we did not proceed carefully and wisely in our future operations. We are here to prepare for those operations in the light of past experience. The best gauge of the possibilities of the future is the successes of the past. We are not perfect. We do not claim to be. But since the inauguration in this Nation of the Budget system we have been steadily improving our business management. You have your individual tasks. It is essential, however, that you know the effect of your task upon the Federal finances as a whole. This is an essential factor to successful organized action. It is one of the basic reasons for these meetings.

We are now facing the time when it is even more essential that we proceed in an orderly manner. The result under seven years of the Budget system has been to the advantage of the people. It is for that, and that alone, that we labor. The advantages to the people have been manifold. It has found direct expression in vastly diminishing our public debt and in three reductions in taxes. Both of these would have been impossible without careful and prudent management of the expenses of our Nation.

On December 31 last the public debt stood at approximately $18,000,000,000. We can only visualize what is represented by that figure by going back to the days of 1917-1919, when our debt was increased from slightly over $1,250,000,000 to nearly $26,600,000,000. This increase in our debt from $1,000,000,000 to $26,000,000,000 occurred within the short space of slightly more than two years. But despite the heroic efforts of both the executive branch and the legislative branch of the Government, it has required eight and one-third years to reduce the debt by $8,500,000,000. This shows how much easier it is to borrow money than to pay it. From April, 1917, to December, 1927, covering a span of more than 10 1/2 years, we paid in interest alone over $8,500,000,000. Since the declaration of war in April, 1917, we have paid in interest and principal more than $17,000,000,000. We can not overestimate or overemphasize the importance of the reduction which has been made in our debt. Our interest cost is still a great burden. This cost for next year, however, will be $1,000,000 a day less than it was at the peak of our interest charges. Two hundred thousand men at $5 per day is what this represents. All of this labor has been released for productive employment for the good of all the people. What a saving of human energy!

The people are concerned in tax reduction. They are, therefore, concerned in everything that makes such reduction a possibility. In slightly more than six years we have seen three reductions in taxes. A real relief has been afforded the taxpayer. The conditions which made that relief possible did not occur by accident. They were the result of carefully conducted Federal business. The executive branch and the legislative branch of our Government coordinated their efforts to make this possible. Through those efforts the Budget has been balanced and a surplus shown. The benefits of this result have gone to the people.

I have expressed myself in favor of further moderate tax reduction. I have indicated the maximum reduction we can now afford. There was no partisan thought in that recommendation. I hope there will be none in its final consideration by the Congress. We should not depart from the wise policy established, and thus far rigidly followed, of keeping our expenditures within our receipts. That I had in mind in making my recommendation. It has made a rich contribution to the present splendid financial status of the country. It has enabled us to hire money at a lower rate than any other business in the world. It has been effective in the maintenance of prosperity. It has the hearty indorsement of the taxpayers. That policy of a balanced budget–expenditures within receipts–must not be molested. It must not be endangered. The great good which has come to this country from a balanced budget is too measureless, too far-reaching, even to suggest any other course. This Nation is neither too weak nor too improvident to meet its obligations as they occur.

The Budget for 1929 which forecasted a surplus of $252,540,000 is now before the Congress. The action so far taken by the Congress on that Budget indicates no intention of diminishing the expected surplus. With a continuation of the efforts for economy in Federal operations we can have a moderate reduction in taxes and at the same time adequately meet the urgent national problems which are now confronting us. Past economy has given us the means for internal improvements and developments and more adequate national defense. But we can not stand the cost of the things which we should and must not have, if we adopt excessive tax reduction. It is far better to have no tax reduction than to have too much. We have the public debt to which to apply every dollar of whatever surplus may accrue. That, indirectly, is tax reduction. Every dollar applied to the debt saves perpetually the interest on that dollar. It is a contribution to the welfare of the people, a logical step nearer adequate tax reduction.

To you of the Federal service comes the duty–I may say the privilege–of continuing the campaign of rigid economy of public funds. The success which has crowned your past effort is even more essential for the future. Last year, 1927, our expenditures reached the lowest level since the world conflict. This year they have necessarily taken an upward curve. We must hold that curve in check.

We are wiser from the effort which brought our expenditures to the low ebb of 1927. That effort was started in June, 1923, and had for its objective a reduction of our annual expenditures to $3,000,000,000. In fixing that amount we excluded alone the amount supplied to the reduction of the public debt. It was a courageous undertaking. We spent on 1923 $3,295,000,000. Our campaign, therefore, contemplated the elimination of $295,000,000 from our expenditures. Unafraid and unterrified by that formidable $295,000,000, you bravely sought your objective. While in some of those fighting years you lost ground, the average tendency was downward. Despite what must have been at times most discouraging conditions, you never lost hope. Notwithstanding legislation that swelled expenditures by many millions you still fought on, undismayed. At the end of the fiscal year 1927 you saw your brave effort rewarded with complete success. The expenditure for that year, exclusive of reduction of the debt, was $2,974,000,000. This gives a reduction below 1923 of $321,000,000.
Truly you fought a good fight. I congratulate you on your very great and constructive achievement.

If we added the constantly arising new and urgent requirements to what we are already doing, Federal obligations would simply be a mathematical addition. We have not been doing this. Each year all of our expenses which are not specifically fixed by law are given exhaustive examination. In this way we have excluded old activities no longer necessary or have curtailed them where curtailment was proper. This has made contribution toward meeting new and urgent needs without the requirement for greatly increased funds. This progressive and systematic examination of all of our activities must constantly go on. It is the only way to bring real economy into the Government’s business. This applies to our continuing work. This scientific estimate of our requirements has not prevented substantial saving in their actual execution after the appropriations have been granted. The Congress has wisely protected its appropriations by laws to prevent their overobligation. Those laws require an orderly apportionment of appropriated funds so as to prevent obligations being incurred in one part of the year which would give rise to a deficit in another part of the year. We have carefully observed that requirement. We have gone further in our apportionment of funds by setting aside a general reserve to provide for the unexpected. Requirements that can not be scheduled, needs that can not be foreseen, are always arising. They generally result from conditions that make the need urgent. If the need does not arise the money is saved. The wisdom of that policy has been definitely shown. It has justified itself so fully that there is little need of my expressing to you again my expectation that you will continue to adhere to it. The Budget gives the President the opportunity of expressing to the Congress what he requires. The appropriations which may be granted by the Congress constitute the maximum which you can spend. They do not constitute the spending minimum. From the reserve balances which have been set up in the Budget years to June 30 last, $330,000,000 has been saved. This has gone to debt reduction. It may add to the understanding of the concrete benefits of this course to state that the amount saved through the general-reserve policy exceeds the amount which the engineers estimate is required for Mississippi flood protection. It should be a matter of gratification to Federal administrators that their loyal adherence to this reserve policy has resulted so happily. This splendid result is the policy’s eloquent and unanswerable advocate.

Economy in Federal operations is here to stay. True economy means the discouragement of unnecessary expenditures. It carries no thought of unwise, unscientific limitation. Rather, it makes ample provision for things that must be done. Pressure for retrenchment, insistence upon wiser spending, have furnished capital to meet our new demands without expansion of our expenditure program. We can not absorb by economy all of our prospective new requirements. If we absorb as much as possible, we have realized the true meaning of economy. By saving money where money can properly be saved we have developed what is more properly termed a constructive economy program in our Federal service. A large source of expense is our national defense. The cost of this for next year is estimated at approximately $650,000,000. That means an average expenditure of $1,233 for every minute, or $20.50 for every second, of the year. We are also perfecting our physical plant. The building program as now planned will cost approximately $350,000,000. Of this amount $211,000,000 has already been approved for customhouses, post offices, and other building needs for the public service. The Army program contemplates an expenditure in excess of $100,000,000. The sum of $10,000,000 has been authorized for the purpose of properly housing our foreign representatives. This is an expensive, but amply justified, program. The buildings are necessary. Constructive economy has made them possible. We have other great programs of expenditure which could not have been financed without economy in our operations.

A construction program for the Navy is now receiving the consideration of the Congress. The authorization of 1916 was the last complete Navy program, and that has been practically completed. The recommendation now before the Congress to replace obsolete naval vessels and moderately increase our naval strength contemplates an orderly construction procedure; nothing more. It contemplates that the construction program will be carried out as conditions dictate and Treasury balances warrant. It considers our own requirements alone and carries no thought of entry into competitive construction with any other nation. The plan I have indorsed does not contemplate any limitation of time as to the beginning or the completion of this tentative program. But it does contemplate the building of the ships as fast as possible.

In preparing your estimates for 1929 you were advised that only $3,300,000,000 would be available for that purpose, exclusive of tax refunds and certain other excepted items. The Budget now before Congress carries for the comparable items which that limiting amount was intended to cover a total of approximately $3,261,000,000. It will be seen that we were well within the limit. This proved most fortunate, as it enabled us to provide for urgent needs not contemplated when the maximum was established. One of these was the item of nearly $20,000,000 for meeting the Government’s obligation in connection with the retired pay of Federal employees. We were enabled, because of that margin between your estimates and the limiting amount, to provide for other equally urgent requirements.

That is the meaning of constructive economy. It is not a policy of negation. It calls for positive action. It proceeds in accordance with the dictates of common sense and the principles of sound business. It is provident. It looks ahead. It undertakes to make plans to-day for the needs of to-morrow. It is because of care in expenditure that the surplus has been accumulated which reduced our debt, which cut down our interests, which gave relief from taxation, and which has still left a margin for public buildings, for internal improvements, for national defense. All of this is preeminently constructive. As I indicated at the outset, it has brought brighter opportunities to every home in the land. If there is any one thing on which the people of this Nation should insist, it is the continuation of this policy in the handling of their national finances.

One of the very important elements of the Budget Bureau is coordination. It is by this method that the bureau maintains contact with all the departments, and to a certain extent the departments maintain contact with each other. This enables a considerable body of men to have a very clear comprehension of the entire financial structure of the Government. This has been brought about, not by bringing in experts from the outside, but by making people already in the service of the various branches of the Government and securing the full benefit of their knowledge and experience. In the functions which they perform, the coordinators are the representatives of the President and entitled to his protection. It is an exceedingly important work that is done by them, and they are entitled to great credit for the success of our efforts.

It would be impossible to designate all the people who have contributed to the success of the efforts for the orderly financing of our national revenues under the Budget system. In the first place, it has been a success because it has had the active and energetic support of the people themselves. To this has been joined the approval of almost everyone connected with the Government, both in and out of the Congress. As all appropriation bills originate in the House, it is evident that the chairman of the Appropriations Committee, Representative Madden, of Illinois, has had a very large part in wisely balancing our expenditures in accordance with the policy of economy. In the other Chamber, this problem has had the advantage of the experienced wisdom of Senator Warren, of Wyoming. While it is the President who determines and submits the Budget to the Congress, he has to rely to a great extent on the investigations and recommendations carried on under the Director of the Bureau of the Budget. If there is any organization within the confines of our country that has ever made a request for cutting down an appropriation, I do not know where it is. The number who are engaged in advocating increased appropriations is more than legion. General Lord has been a success as the head of the bureau because he has had the judgment to say yes when the facts warranted and the courage to say no when the facts warranted. His only desire is to find out what each situation requires, and recommend that it be met. Any worthy object, any needed appropriation, could have no better friend. He has had great experience in Government financing. He is a clear thinker and plain speaker, a great benefactor to those who administer the affairs of the United States Government. One of the chief reasons for holding these conferences is to listen to the counsel of General Lord, who will now address you.

Citation: Everett Sanders Papers, Library of Congress

The Coolidge Foundation gratefully acknowledges the volunteer efforts of Judah Millen, who prepared this document for digital publication.

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