Story: Spending in the economy

During the depression of the 1930s the government was faced with a spending dilemma. The increasing number of unemployed needed support, but government revenue was dropping. In response the government reduced its own spending and introduced measures that reduced the spending power of individuals. Wages paid to public servants and pensions were cut, the Arbitration Court was given the power to reduce wages (which it did in 1931), and unemployment taxes were introduced. Those taxes funded payments to unemployed men who worked on relief schemes. The men shown here are digging a drainage ditch in the winter of 1932.