Evening star., 1939-02-07

Moreover, job on P. w. A. prof.
ect, or job in factory supplying
materials for the P w. A. program
made it possible for Workingman
to pay his grocery bill and his
doctors bill. Because workers were
able to do this, some grocerymen
and some doctors were enabled to
buy automobiles. Because some
grocers and doctors did buy auto
mobiles, the motor companies bought
steel and the steel companies hired
men.
Wages for hundreds of thousands
of men and women in normal Amer
lean private industry were made
possible because of the P. w. A. pro-
gram. These wages went to pur-
chase food, clothing, shelters. med
ical care entertainment and other
products and services that agricul-
ture, industry and trade place on the
market. These purchases, in their
turn, made possible other purchases
and moved other goods, thereby
creating mighty economic force
that was able to turn the economic
tide. The millions of dollars thus
turned into channels OF business
created a demand for goods. All Of
this affected our national income,
sending it upward to higher levels to
improve our economy.
Turns Economy Upward.
Through the P. w. A. program,
the Government thus has increased
the production of goods and serv-
ices and thereby has improved the
earning power of our people. Through
quickening the production and turn
over Of both heavy and consumer
goods, we have aided in starting our
national income back toward the
$50 900, 900 900 mark, where it should
be- BY encouraging and creating
private employment, P. w. A. is
playing an active part in making
this an 100000 100000 income
country.
In another way p w. A. activity
pumped new energy into our eco
nomic mechanism. Private money
which had been lying idle was called
to work Under the P. w. A. system,
private capital and private credit
were drawn into the economic cur
rent in the financing of construction
before Federal funds actually were
paid out by the Treasury. A report
made to me early in January showed
that, although P. w. A. had paid
out only about 100000 900. in cash
advances, approximately $500 ,000,-
600 worth of work was already
under way. This was due to the fact
that applicants had put up their
own funds to get the projects
started, in addition to which con-
tractors, eager to get to work, had
employed their own money and their
own lines of credit.
There is some misconception about
this point which it is worth while
to clear up. When P. w. A. makes
an allotment to a municipality for
a non-Federal Public Works project,
it starts private credit system In
motion. This is because the max
ing of the allotment is Immediately
followed by the execution of a con-
tract between the municipality and
the Federal Government which obli-
gates specific amount for specific
project. In turn credit is set up
at the Federal Treasury for the
municipality. Bids are then called
for and construction contract is
let on the strength OF this credit.
The contractor receiving the con-
tract purchases or rents equipment,
places material orders and hires his
men on the basis of his regular line
of credit or his own resources. AS
his bills become due for materials
or pay rolls, the contractor meets
them by paying out cash that ne mas
saved or borrowed AfterWard. he
sends a bill to the municipality
which pays it's share of the project
cost, amounting to SIS per cent. The
city usually raises its money by
selling bonds to private purchasers,
thus drawing in private funds over
a wide sector.
U. S. Money Goes in Later.
Up to this point little Federal
money has left the Treasury. Con-
tracts have been signed, the project
started, men put to work and ma
terials and equipment bought
nearly all with private capital. 1t
is only after the work is we'll under
way that the municipality calls
upon the Federal Government to ad-
vance most of its contribution. Ihe
final payment is never made until
the entire job has been finished ana
accepted by the P. w. A. engineer
at the project.
During the last six months of 1888,
the Nation was given an opportunity
to see a clinical demonstration OF
an economic theory. This was that
by properly timing" a public WORKS
program it would be possible quickly
to stimulate industry. The sound
ness of this theory was demon
strated by through test. When
Congress authorized the new pro-
gram, it so happened that P. w. A.
had a substantial backlog OF ap-
proved projects which were ready
to go.
When the authorization came to
begin a new program, 1900 OF these
reserve projects were released IN
three days, thus putting $3.50 0OO, ,OOO
worth of construction work on the
market. Meanwhile, we were taxing
in new applications and examining
them. There was no lost time and
no lost motion. Construction was
begun, new applications were re-
ceived and new projects approved
in a continuous process which sent
pulsation after pulsation through
the economic arteries of the Nation
This was the first opportunity thai
this country has ever had to time"
public works. And this was possible
because we had going P. WA
organization and reservoir OF ex-
amined and approved projects ready
to be released over the spillway.
One of the essential elements Of Q