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and what Mussolini did later; what the republican regime of Germanydid after the war, and what Hitler, after denouncing hispredecessors, did later. It denounced the extravagance of the moreor less conservative Hoover administration, promised to balance thebudget, cut expenditures, reduce military expenditures, etc., andthen embarked upon the most amazing program of unrestrainedoutlays carried on with unbalanced budgets that the world has everseen.II * The Good DeficitsTHE PRESENCE of the problem of an economic system definitelyout of repair did not impress itself on the consciousness of theAmerican public until well after Mr. Roosevelt's administration hadhad its try at the situation for one term. After that the solemn truthsettled only slowly upon our minds. By 1940 there were few whodid not feel that there was something definitely out of joint.However, as in Italy and Germany, our first attack upon oureconomic disorder, as it appeared in 1930, took the form of governmentspending and welfare. This was something quite new with us.Before 1914 public spending of borrowed money was a negligiblefeature of our economy. The expansion that astonished the worldin America up to that time had been the product of private enterprisefinanced by private credit. In 1912, on the eve of World War I,after a century and a half of growth, the debts of our public bodieswere as follows:National $1,028,564,000States 345,942,000Counties 371,528,000Incorporated places 3,104,426,000$4,85o,46o,ooo 1Most of the national debt was a remnant of the Civil War. Thebulk of these debts was municipal, incurred for building cityStatistical Abstract of the U.S., 1929, p. 220.172