Open Letter to Franklin D. Roosevelt

John Maynard Keynes

[31 December, 1933]

Excerpts from Keynes's Letter To Roosevelt: "On Spending Our Way To Prosperity" The New York Times, on 31 December 1933

. . . "Broadly speaking, therefore, an increase of output can occur only by the operation of one or other of three factors. Individuals must be induced to spend more out of their existing incomes, or the business world must be induced, either by increased confidence in the prospects or by a lower rate of interest, to create additional current incomes in the hands of their employee, which is what happens when either the working or the fixed capital of the country is being increased; or public authority must be called in aid to create additional current incomes through the expenditure of borrowed or printed money.

. . . "Thus, as the prime mover in the first stage of the technique of recovery, I lay overwhelming emphasis on the increase of national purchasing power resulting from governmental expenditure which is financed by loans and is not merely a transfer through taxation from existing incomes.

. . . "The set back American recovery experienced this past autumn was the predictable consequence of the failure of your administration to organize any material increase in new loan expenditures during your first six months of office. The position six months hence will depend entirely on whether you have been laying the foundations for larger expenditures in the future."