group which had labored in behalf of the notion of compensatory public spending was unsympathetic towards the notion of secular public spending

TO BE NOTED: From "Chicago Economists, Deficit Budgets, and the Early 1930s"

Concluding Remarks
On at least one occasion, the Chicago economists directly attempted to
make their professional advice heard in Washington. In January, 1932, Henry
Schultz, Jacob Viner, Garfield V. Cox, Frank H. Knight, John H. Cover,
Lloyd W. Mints, Chester W. Wright, Harry D. Gideonse, Theodore 0.
Yntema, Harry A. Millis, Aaron Director, and Henry C. Simons were among
the twenty-four participants of the Harris Foundation who signed a telegram
to President Hoover, urging him to act favorably on (1) what later became
the Glass-Steagall Act, which broadened the assets eligible for rediscounts
with the Federal Reserve and permitted the Federal Reserve to use govern-
'Signers of the statement were Frank Bane, Paul Betters, Carl Chatters, Paul H. Douglas,
Simeon E. Leland, H. A. Millis, Clarence E. Ridley, H. C. Simons, Donald Slesinger, Jacob
Viner and L. D. White.
COMMUNICA'TI-ONS 481
ment bonds as well as commercial paper as collateral for its notes; (2) a systematic
campaign of Federal Reserve open-market purchases; (3) R.F.C. aid
to banks with ineligible assets; and (4) financing a public works program (of
a magnitude not less than 1930-31) with deficits5 [6, pp. 413-15]. Although
unintentional deficits occurred during the Hoover Administration, Hoover was
not dissuaded from his fetish of an annual balanced budget: the efforts of
Knight, Simons, Viner, and the others to persuade Hoover to utilize large budgetary
deficits were met with increasing determination to close the unintentional
excess of expenditures over revenues.
In a significant way, the policy proposals of Keynes and the Chicago economists
were remarkably similar during the early 1930s. Then why were many
of this group unsympathetic to the General Theory? Friedman's answer--
Keynes and the Chicago economists shared views regarding 1929-33, making
the latter unsusceptible to the "Keynesian virus"-is only a partial answer.
MIuch of the answer lies in an explanation offered by one of the key figures in
the Chicago tradition: those who argued for large deficits from the early
1930s on, but who were critical of (if not hostile to) the General Theory,
based most of their opposition on an interpretation of it as advocating deficits
as a desirable, normal practice and as seeing in deficits a cure-all for everything
which ailed the western world. In short, the group which had labored
in behalf of the notion of compensatory public spending was unsympathetic
towards the notion of secular public spending which they read into Keynes'
Gencral Theory.
J. RONNIE DAVIS*