The theory supporting deficit spending for the prevention of unemployment is that widespread unemployment arises from a deficiency in aggregate demand. Deficit spending by the government,financed by the creation of credit, then works toward the alleviation of unemployment not only through the direct employment of workers for producing the objects of government expenditure but also through the secondary or multiplier effects of the additional expenditures of those who receive payment from the government in the first instance.' The deficit spending theory has associated with it an important assumption of fact, namely, that under normal conditions in advanced countries, especially. In the united States, present relations of productive capacity and income distribution would lead, if full employment were achieved, to a tendency for savin individuals and corporations to exceed expenditures of individuals and corporations from sources other than income. Under these conditions, full employment cannot be
expected unless a government deficit makes up the difference.