This is an extract from page 708 of evidence given by Mariner Eccles to the US Committee on Finance in 1933. Hat tip to Bill Mitchell.
Why was it that during the war when there was no depression we did not insist upon balancing the Budget by sufficient taxation of our surplus income instead of using Government credit to the extent of $27,OOO,OOO,OOO? Why was it that we heard nothing of the necessity of balancing the Federal Budget in order to maintain the Government credit when we had a deficit of $9,000,000,000 in 1918 and $13,000,000,000 in 1919? Why was it there was no unemployment at that time and an insufficient, amount of money as a medium of exchange? How was it that with one billion less gold then than we now have we were not concerned about our gold standard?
How was it that during the period of prosperity after the war we were able in spite of what is termed our extravagance - which was not extravagance at all; we saved too much and consumed to little - how was it we were able to balance a $4,000,000,000 annual Budget, to pay off ten billion of the Gov¬ernment debt, to make four major reductions in our income tax rates (otherwise all of the Government debt would have been paid), to extend $10,000,000,000 in cedit to foreign countries represented by our surplus production which we shipped abroad, and add approximately $100,000,000,000 by capital accumulation to our national wealth, represented by plants, equipment, buildings, and construction of all kinds? In the light of this record, is it consistent for our political and financial leadership to demand at this time a balanced Budget by the inauguration of a general sales tax, further reducing the buying power of our people? Is it necessary to conserve Govern¬ment credit to the point of providing a starvation existence for millions of our people in a land of superabundance? Is the universal demand for Government economy consistent at this time? Is the present lack of confidence due to an unbalanced Budget?
What the public and the business men of this country are interested in is a revival of employment and purchasing power. This would automatically restore confidence and increase profits to a point where the Budget would automatically be balanced in just the same manner as the inddividual, corporation, State, and city budget would be balanced.