THE DEBT PROBLEM AND THE DEPRESSION
AT THE TIME the great depression began, in 1929, the total amount of outstanding debts in the United States was well in excess of $250 billion. To mention a few of the major items, there were about $32 billion of tax-exempt securities, representing debts of government bodies, outstanding, and corporations reported a total bonded debt of $47 billion. Mortgages on farms and urban property are estimated at over $40 billion. Short-term debts receivable at banks and non-financial corporations totalled some $53 billion. Commercial banks had debts in the form of deposits of about $47 billion (of which some $4 billion were interbank debts). Life insurance companies owed their policyholders over $12 billion; mutual savings banks owed depositors $9 billion; and building and loan associations owed "shareholders" over $5 billion.
Since 1929, the debt situation has changed greatly. By 1937, the tax-exempt debt had risen to nearly $53 billion, and corporation bonds probably amounted to some $50 billion. The mortgage debt was reduced to less than $35 billion. Short-term debts receivable at banks and corporations were in the neighborhood of $30 billion, an enormous decrease. Deposits at commercial banks were about $46 billion ($6 bil-