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Last year Reconstruction Finance Corp. was given $1,500,000,000 to lend to States & cities for self-liquidating projects. Due to red tape and conservatism, it had, up to its last monthly report, thus disbursed less than $27.000,000. Its biggest advances were toward the $62.000,000 San Francisco Bay Bridge for which ground was broken last fortnight and toward Southern California's $40,000,000 Metropolitan Water District on which work was commenced two months ago. R. F. C.'s fizzling efforts have now been taken over by the Public Works Administration.
Britain long ago tried public works for relief, stopped them as a costly failure. Last week when the U. S. delegation to the London Conference tried to woo Britain back to such a program on an international basis, Walter Runciman of the Board of Trade firmly declared: "This method of dealing with the problem is unduly expensive and an experiment we are not going to repeat. . . . We have come to the conclusion that schemes of this kind are most unremunerative."
For weeks the Administration has been split on the wisdom of pressing ahead with the U. S. public works program. One group, led by Budget Director Douglas, argued thus: "Natural recovery has started. There is no sense in piling up a large and unnecessary debt for projects that aren't really needed. Inflation has so boosted costs that $3,300,000,000 will build much less than it would two months ago and hence a reduced effect from such spending. Most States & cities do not really relish the idea of going into debt for 70% of a project just to get a 30% Federal grant."
The more radical Brain Trusters pressed the President with this counterargument: "The upturn is largely due to anticipation of heavy Federal spendings on public works. If the program is now curtailed the psychological props will be pulled out from under recovery. Industrial production is already outrunning wages. By spending $3,300,000,000 quickly and widely the Government will boost the public's consuming power, help it to overtake production."
Last week President Roosevelt resolved this controversy in favor of the Brain Trust with his announcement that he was ready to proceed with the full $3,300,000,000 program. But there were important limitations. The U. S. would not splurge on new public buildings; probably not more than six new post offices would be erected throughout the land. States & cities with hopelessly unbalanced budgets could expect neither gifts nor loans for public works. While self-liquidation was not a prerequisite for each project, every dollar spent must represent sound capital investment and make the U. S. a better, more comfortable land.