Senator Jimmy Byrnes last week wrote Franklin Roosevelt a note asking how he felt about the $125,000,000 which the House took out of WPA's new money for 1940 and allotted to PWA for heavy construction (TIME, June 26). When Jimmy Byrnes got his answer, it took his breath away.
Without prior notice to any of his Congress leaders, Mr. Roosevelt suddenly produced from his magical hat the long-awaited Great White Rabbit of 1939. It was a revolving, self-liquidating rabbit and Mr. Roosevelt put its life at a maximum seven years, its first-year size at $870,000,000, ultimate size $3,860,000,000. Rather than rob WPA to pay PWA said he, let Congress empower the following agencies to lend (NOT spend) the following sums on the following projects, which would pay for themselves in the end, interest payments meantime causing the funds to revolve:
Federal Works Agency (Millions of $$)
Totals 1940 For water works, sewage plants,
bridges, hospitals, etc., etc. 350 150
For toll roads, bypasses, etc., etc. 750 150 For railroad equipment to be purchased by the Government, leased to railroads 500 100
Department of Agriculture For rural electrification 460 20
For the farm tenant program 500 250.
Foreign Loans 500 200
U.S.H.A. (Expanded by) 800
GRAND TOTAL 3,860 870
Before the true size and nature of this rabbit could be assimilated by Congressional minds, Mr. Roosevelt further announced his appointment of Jesse Holman Jones to head the new Federal Loan Agency and of John Michael Carmody to head the new Federal Works Agency. Mr. Jones's translation from Reconstruction Finance Corp. was scarcely unexpected, but quick reference to the President's great new scheme made observers wonder if Mr. Jones had not been kicked upstairs instead of promoted. Only part of the proposed plan which the Loan Agency would supervise was the foreign business. Mr. Jones, professional banker, has been regarded by the New Deal as none too openhanded, no persistent pump-primer.* Secretary Henry Wallace, on the contrary, and John Carmody have ably learned the art of putting out Federal money, and the major portion of this new money would be theirs to put out. Mr. Carmody, large and brisk, has been the genius of REA, carrying light to farmers by Federal subsidy. He is just about as far Left-wing as Jesse Jones is Right.
To the White House Mr. Roosevelt summoned the Congressional and administrative figures chiefly involved, to exhort quick action. He made known that he wished all new Federal securities issued to supply the $3,860,000,000 to be nonexempt from taxes. He then left Congress and the nation to cogitate the implications of the 1939 rabbit, by all odds his largest since 1935.
Politicians at once applauded Mr. Roosevelt's acumen at finding 1) a way to continue spending without having it show in his chronically unbalanced Budget; 2) another big shot-in-the-arm for Business, produced (or at least talked about) in time to have effect on the 1940 elections.