Title: Address at the Ninth Regular Meeting of the Business Organization of the Government
Date: June 22, 1925
Location: Washington, D.C.
Context: Update on the state of the Business of America and in order to “secure greater efficiency in government by the application of the principles of constructive economy”
We have met this evening to take counsel together for the purpose of securing greater efficiency in government by the application of the principles of constructive economy, in order that there may be a reduction of the burden of taxation now borne by the American people. The object sought is not merely a cutting down of public expenditures. That is only the means. Tax reduction is the end. The direct beneficiaries are composed of those who file the 17,000,000 tax returns. The indirect beneficiaries are all the rest of the American people, who must and do make an indirect contribution to the payment of the enormous sum of more than $10,000,000 every day in the year which goes out from the National Treasury. This is nothing more or less than a restriction upon the freedom of the people. This money has to be earned. Those who have earned it, instead of being able to retain it for their own benefit, must necessarily turn it over to the Government.
Because this gigantic task is self-imposed, it is none the less a gigantic task. We are seeking to let those who earn money keep more of it for themselves and give less of it to the Government. This means better business, more of the comforts of life, general economic improvement, larger opportunity for education, and a greater freedom for all the people. It is in essence restoring our country to the people of our country. It reendows them not only with increased material but with increased spiritual values.
It can not be too often emphasized that the property of this county belongs to the people of this county. The Government can not touch a cent of it save for a public purpose. Government extravagance is not only contrary to the whole teaching of our Constitution, but violates the fundamental conceptions and the very genius of American institutions. It is the high privilege of the people of this country to spend their own money.
It is four years since the holding of the first meeting of the business organization of the Government. The Federal Budget system had just been established and we met to dedicate our services to its successful operation and to reduce the cost of Government. That first meeting was held at the end of the fiscal year 1921. During that fiscal year our expenditures, exclusive of the moneys applied to the reduction of the public debt and the operations of the Postal Service, amounted to $5,116,000,000. Our public debt then amounted to $23,977,000,000. We are now nearing the close of the fiscal year 1925. The expenditures for this fiscal year will amount in round figures to $3,035,000,000 and the public debt will stand at approximately $20,551,000,000.
In the four years of operation under the Budget system the annual expenditures have been reduced $2,081,000,000 and the public debt has been decreased $3,426,000,000. This shows concretely what has been accomplished by the joint effort of the executive and legislative branches of our Government. It is an accomplishment which has further tested our institutions. It is an accomplishment which justifies the abiding faith of the people in our form of representative government. Full measure of credit is due the Congress, which, as representing the people, has supported and aided the Executive Budget. The history of public affairs will hardly show a parallel case of retrenchment in the cost of government. Nor will such history show a more worthy motive. Back of this tireless, persistent, and drastic campaign for constructive economy in Federal expenditure has been the relief of the people of this Nation from a great burden of taxation. It has been successful. Taxes have been reduced. The burden of the people has been materially lightened. But the reduction has not yet reached the point where taxes have ceased to be a burden. It is to the reaching of this point that our efforts must be directed. While the returns are not all in, it is estimated that we will end this fiscal year with a surplus of $200,000,000. It is estimated that our surplus for the next fiscal year will reach $290,000,000. The way has been prepared for further tax reduction. This I will recommend to the Congress in the next Budget message.
Economy in the cost of government is inseparable from reduction in taxes. We can not have the latter without the former. From some sources the statement has been made that this continuing drive for economy in Federal expenditures is hurting business. I have been unable to determine how reduction in taxes is injurious to business. Each tax reduction has been followed by a revival of business. If there is one thing above all others that will stimulate business it is tax reduction. If the Government takes less, private business can have more. If constructive economy in Federal expenditure can be assured it will be a stimulation to enterprise and investment.
We adopted the principle of orderly funding and generous retirement of the huge public debt left us as a legacy of the war. In the last three fiscal years the reduction has been $2,726,000,000 and it is probable that the fiscal year just closing will show a further reduction of $700,00,000, a total of $3,426,000,000. Interest paid in the year 1921 was $1,000,000,000, but interest this year will be only $870,000,000, or a saving of $130,000,000 a year. Here is a direct saving which is plain to everyone.
Let us see the part which orderly management had in effecting this saving. Our sound debt policy has progressively strengthened the credit of our Treasury. Bonds which in 1921 were selling much below par are to-day selling well above. As the price of our securities goes up, the interest rate which we must pay on new flotations declines. This month the Treasury offered a 3 per cent one-year certificate on which the subscriptions were nearly four times the amount of the offering. Of $130,000,000 of decrease in interest payments between 1921 and 1925, part of the saving came because there are less bonds outstanding upon which interest must be paid. Over thirty million of this decrease is due to the lower interest rates paid on our securities. Their lower rates are the result of improved credit, secured by the orderly management of our fiscal affairs. Thirty million dollars a year is good pay for a sound policy. It shows how orderly management goes hand in hand with economy.
Four years of effort have been marked by four years of accomplishment. They have been years of toil, but have yielded a full harvest. You are justly entitled to a reward for your labors. What reward could be greater than the relief which has been given the taxpayers, and the prospect for their future relief? What reward could be greater than their faith in you? There can be no interruption in this effort for constructive economy in the Federal business. To this we are dedicated. It is an effort to enrich the lives of the people we serve. There could be no nobler purpose.
Ours is a Government of the people. To conduct the business of Government so as to bring the greatest possible benefit to the people is to honor our constitutional obligations. Constructive economy in the business of Government is for the benefit of the people. We are fast reaching the time when we can not look forward to appreciable reduction in the legitimate cost of Government. This Nation is growing, and in the normal course of events we must face a gradual expansion of its legitimate business, but increasing resources and numbers will leave the burden on each of us diminished. Even greater watchfulness, greater care over our expenditures, must be exercised successfully to continue this campaign. The task is becoming more difficult, but the more difficult the task the greater is the reward of success. In this great business of the Government we are undoubtedly continuing activities which are no longer essential or productive. The undertaking of new projects or lines of effort made essential by changing conditions should be marked by the weeding out of those no longer essential. I refer, of course, to those functions which are within your administrative discretion.
Unfortunately the Federal Government has strayed far afield from its legitimate business. It has trespassed upon a field where there should be no trespass. If we could confine our Federal expenditures to the legitimate obligations and function of the Federal Government a material reduction would be apparent. But far more important than this would be its effect upon the fabric of our constitutional form of government, which tends to be gradually weakened and undermined by this encroachment. The cure for this is not in our hands. It lies with the people. It will come when they realize the necessity of State assumption of State responsibility. It will come when they realize the laws under which the Federal Government hands out contributions to the States is placing upon them a double burden of taxation‒Federal taxation in the first instance to raise the moneys which the Government donates to the States, and State taxation in the second instance to meet the extravagances of State expenditures which are tempted by the Federal donations.
This campaign for economy in Federal expenditures has added greatly to the efficiency of the Federal service. Constructive economy necessarily means efficiency. It is constructive economy which we have been preaching and practicing. You have your appropriations for the fiscal year which will commence within a few days. You have already prepared your expenditure programs, and I trust that you have not overlooked the setting up of a reserve to meet unanticipated or emergent requirements. Remember always that every dollar you save will add to the prospective surplus. It is my desire that the total of our expenditures for the coming year, excluding alone the Postal Service, be kept within $3,375,000,000. This is $125,000,000 less than our estimated comparable expenditures for this year. Keep before you always the fact that we are not practicing economy for economy’s sake, but for the sole purpose of reducing the tax burden of the people. Keep in mind how heroically they bore the enormous burden of war taxes. Keep in mind the sacrifices which this required.
During the period from April 6, 1917, to June 30, 1920, the people paid in extraordinary war taxes alone more than ten and one-half billions of dollars. This was nearly one-third of our total extraordinary war expenditures for the same period, which amounted to approximately thirty-three and one-half billions of dollars. And they loaned to the Government the remaining twenty-three billions of dollars. This was only the commencement of their sacrifices. The burden of war taxes, though materially lessened in these last four years, is still with the people. Let us continue in our resolution to afford them every relief possible.
Greater ultimate economy in Federal expenditures can sometimes be attained by larger annual outlays on some of our existing projects. In fact, greater ultimate economy can in some instances be attained by undertaking new projects. I do not advocate the withholding of additional outlays on projects essential to the best interests of the Government. But our present objective is the relief of the taxpayers of to-day, and any proposed increase of annual outlay on existing projects or any undertaking of new projects should be scrutinized with this objective in mind, and every doubt should be resolved in favor of the taxpayer of to-day who is carrying the burden of war taxes.
For the next fiscal year the fixed public debt charges will be about $1,315,000,000. Our other fixed charges, the amounts of which can not be decreased by administrative action, will approximate more than $900,000,000. This shows that of our total estimated expenditures for 1926, $3,375,00,000, only approximately $1,160,000,000, or about one-third of the total, is involved in the expenditures over which we exercise administrative control. It will require your best efforts to hold the expenditures for next year within the limitation which I have mentioned.
The estimates for the fiscal year 1927 are our next consideration. It will be my effort to hold these estimates within a total of $3,080,000,000, exclusive of the Postal Service. This figure does not contemplate any enlargement of our expenditure program for 1927 over what is estimated for 1926. [It] contemplates a shrinkage of this program. To accomplish the objective which I have outlined for 1927 will require your fullest assistance and cooperation. Scrutinize carefully each item of your estimates before you submit them to the Director of the Bureau of the Budget. We are waging a fight for the taxpayers. We are nearing the time when constructive economy in the business of government will not find a reflection in continuing lessening yearly outlays. But the necessity of constructive economy in our operations will ever be with us. Its enforcement is our privilege and duty because thereby we serve the people.
I would like you to give most careful consideration to the matter of personnel. On June 30, 1915, there were approximately 440,000 employees in the executive civil service. On June 30, 1924, the total number in the executive civil service was 554,986, an increase of nearly 115,000 in the nine years from 1915 to 1924. Of this increase 46,000 was in the Postal Service. I am not unmindful of the fact that the annual percentage increase in the executive civil service for the two decades ending June 30, 1915, exceeded that for the following nine years. The comparison is 5.2 per cent for the former period as against 2.9 per cent for the latter. This, however, does not mean that we need give no attention to the personnel now in the public service. I do not advocate an undermanned public service. This would be false economy and disastrous in its results. I do, however, advocate and desire the closest supervision over your personnel requirements so that any surplusage may be prevented.
Before turning this meeting over to General Lord, the Director of the Bureau of the Budget, I wish to restate my faith in the ability, resourcefulness, and courage of the personnel of the Federal service. I wish to restate my faith in your whole-hearted efforts to continue the campaign which we have been prosecuting these last four years. That we have accomplished what we have, and the record is most commendable, we have to thank you. The Chief Executive may preach economy, but unless the people in the service practice it the preaching is in vain. There are still reductions to be made. There are yet wastes to be eliminated. I expect you to prosecute a campaign of relentless economy to that end, not only in expenditures for 1926 but in the preparation of estimates for 1927. I am convinced that this way lies the welfare of the people of this country. Fidelity to our oaths of office admits of no other course. Wastrels, careless administrators of the Government’s substance, are out of place in the Federal service. They will not be tolerated.
If this policy means sacrifice, it is sacrifice for the benefit of 115,000,000 people. Their interests are paramount. Criticism by a few who look askance at drastic paring down of spending, has little weight in the scale against the spontaneous commendation of the millions of people who have had brought to them with unmistakable clearness the result of such economy. And, similarly, the strongly urged desires of a class should have little weight with you if adverse to the interest of the whole people.
I wish also to commend to you the efforts of the coordinating agencies of the Chief Executive, including the various interdepartmental coordinating boards. These agencies are applying constructive coordination to the vast routine business of the Government. The many Federal business associations scattered throughout the country are also applying constructive effort and cooperation to the work devolving upon them in the field services outside of Washington.
It is a great work that you have been doing. It is a great privilege that has come to you. To carry on the World War the people had to abdicate. The control of their property and even of their persons had to be intrusted to the Government. We are engaged in the restoration, the return of the property, the freeing of the person. You will meet those who scoff at it, who can not see and who do not know, rabid partisans who think they can advance their cause by perverting the truth to the injury of their fellow countrymen. But the great body of the people see and know. Their gratitude is yours. You are not engaged in something unimportant, but rather in a great crusade. You have made mighty progress. But not until you are done will American opportunity again belong entirely to American youth, or the restraints and servitudes be removed which will leave America entirely free. Your efforts are for the restoration, for the assistance of the fathers and mothers, for the relief of the children of the land, for the welfare of your county. The future progress of this Nation, its ability to maintain our domestic prosperity, its ability to do our share in the advancement of the civilization of the world, depend upon your steadfastness and your courage. You must not, can not fail.
I will now turn this meeting over to General Lord, the Direct of the Bureau of the Budget. You have no better friend, no more faithful adviser in your efforts for efficient public service. His broad grasp of the needs and requirements of the Government, his patience in careful investigation, his sound judgement, and wise discretion have all been devoted to his country at a very great personal sacrifice. It would be difficult to estimate the help that he has given you and me and impossible to recompense him for the faithfulness with which he has successfully served the American people. He stands as an example of the honest, earnest, conscientious service which characterizes the government of our country. He will give you more in detail what has been done in the past and what we propose to do in the future.
Citation: “Address at a Meeting of the Business Organization of the Government,” Everett Sanders Papers: Container 3, Vol. 1, Library of Congress, accessed in Prosperity and Thrift: The Coolidge Era and the Consumer Economy, 1921-1929, https://memory.loc.gov/cgi-bin/query/r?ammem/cool:@field(DOCID+@lit(ms021))