--Washington, September 23
Hardly anyone in Washington is happy about the victory of Mr. Hopkins over Mr. Ickes. Quite aside from personal predilections, the prevailing view is that the President has pursued a line which has now landed him in a first-class mess, economically, politically, and socially. What bound him to Mr. Hopkins is that severest of masters, a foolhardy promise. Solemnly he told the country that by the end of this year he would remove 3,500,000 persons from relief and put them into useful work. At the time of this pledge he believed it would be easy to keep. So did Mr. Hopkins. It appeared to be dependent on a single consideration, administrative talent, and Mr. Hopkins could be sure of his gifts and the President could be sure of Mr. Hopkins. When the promise was made both the President and Mr. Hopkins were distressed over the effects of relief, and dreaded its becoming a permanent prop in the social structure. They saw that it was deteriorating the country's most precious resource, human beings. Nobody is going to doubt their sincerity. Two years had been frittered away on vast public spending with disappointing results. Congress was not in a mood to vote astronomical sums annually for idle persons, and there had to be a turning into a new road. Mr. Hopkins formulated the new objective, to "purge" the relief rolls. He believed he would be able to create enough work of a useful kind and to do it with tile dispatch which Mr. Ickes had not demonstrated. So the $4.000,000,000 fund of 1935 was divided, first of all, to give Mr. Hopkins control over much the larger share, Mr. Ickes being left with the $900,000,000 allotted him by Congress. The President had not given up public works altogether, but they were slow, and they would not contribute directly to the "purge" of the relief rolls.
Probably the Hopkins scheme never could have succeeded. The relief rolls are not a cross-section of American labor, but rather a sediment. They contain more of the casualties of the depression than the unemployed not on relief. It is doubtful whether they number enough skilled men, able and fit to work, to carry out a vast program of public works, no matter how wisely administered. But whether or not the task was impossible under any conditions' it was made so by two decisions of policy. The first was by the President: he promised to pay a "security" wage on relief projects instead of the prevailing wage. The second was by Mr. Hopkins: projects would be selected for their low material cost.
At the time the security wage was first broached it was not what it has since become. The President's mind was full of an interesting and vital plan, to strike a blow at uneconomical high wage rates and to substitute for them a higher annual income. The idea was attractive, and promised, among other things, to rid the building industry of one of the chief obstructions to revival. The President conceived of the security wage as one which was somewhat lower than the prevailing wage, the difference to be counted as an insurance premium which a man paid for steady employment. This was spoken about at the time, but in the succeeding months it has been utterly forgotten. The security wage has come to be simply a relief payment which has to be worked for. Mr. Hopkins already had two million relief recipients on labor of one sort or another. Their status has changed in two particulars--they receive the somewhat better rates of the present set-up, and they are under the WPA instead of the FERA.
Thus has the problem been simplified as to wages. It has been simplified in another fatal respect. Mr. Hopkins took his appropriation and divided it by the 3,500.000 who had to be put to work to keep the President's pledge. And thereby he arrived at the figure of $1,040 per man-year, which could not be exceeded by any project. Subsequent calculations might make this figure even lower. Public works by long division, this can be called. The moment this method of calculation was adopted, Mr. Hopkins was forced to select projects using much labor and little material. He then could not go in for the construction on a large scale of capital assets, which the country would possess in return for its heavy outlays during the emergency. Obviously he had more or less to invent occupations for idle persons. This he is doing. And Washington is flooded with foreboding reports of the consequences. Workers on relief projects themselves are disgusted with many of the Hopkins-made jobs. They see how wasteful they are, how inefficiently managed, how degrading, and in essence how insulting. Cash relief may have been demoralizing, but it was better than mock work, obviously required of a man "for his own good." Much of the Hopkins program does not merit this criticism. But much of it does. And now that Hopkins will spend not only his share of the four billions but part of Mr. Ickes's money, there will be more such jobs, and there will be a rising tide of disgust.
The long-division method of selecting projects is foolish for two reasons. It leaves out of account the secondary effect of public works in creating employment. If a project uses much material it will spread the impetus of employment into many fields. For every man employed at least one, perhaps one and a half, perhaps two, possibly even three more men find work. If only those projects are chosen which require little material the secondary effect is correspondingly less. It may make sense on paper to say that Mr. Hopkins with his type of projects is employing more men than Mr. Ickes. In fact, he employs far fewer men. But Mr. Hopkins is not bothered, because his men come off relief rolls while most of Mr. Ickes's don't.
The second foolishness of the long-division method is that it leads to padding the labor requirements of projects. A job, normally reckoned, may need a hundred men, but at this figure it may work out to a man-year cost above $1,040. One need only add another hundred men arbitrarily to cut the man-year cost in half. The second hundred men may clutter up the job and produce hopeless inefficiency, but they make it possible for Mr. Hopkins to spend the money -and "purge" the rolls. This padding is going on all over the country. No matter how unethical it is or how glaringly it wastes public funds, once the long-division method has been adopted, padding becomes inevitable.
Attention has already been drawn in The Nation to the Alice in Wonderland spectacle of Mr. Hopkins bidding against Mr. Ickes for public-works projects. The Administration having decided that public works and work relief should live side by side, they were set in competition with each other. Mr. Hopkins had to land a certain proportion of sound public-works projects; otherwise there was something real in the cry of "boondoggling." So he went out into Mr. Ickes's market-place crying his wares. He couldn't promise to do as good work as Mr. Ickes, but he virtually gave his goods away. Mr. Ickes offered a dollar value for fifty-five cents, and it was a genuine dollar value. Mr. Hopkins offered a dollar value for five cents, two cents, or even nothing, but his dollar value wasn't reliable. That is, Mr. Ickes builds only if the local community puts up 55 per cent of the cost. Mr. Hopkins is ready to charge the entire bill to the federal taxpayer.
Mr. Ickes, in the meantime, was drumming up business with the expectation of spending his $900,000,000, inducing local communities to spend another $1,100,000,000, and thus giving the country a two-billion-dollar public-works program. Despite the Hopkins competition, he succeeded in filling his books. He found local communities which were ready to raise their share, and most of them went through the preliminaries to do so. But when the Ickes-Hopkins controversy went to Hyde Park this month, Mr. Hopkins had rejected more than a thousand of these projects because the man-year cost was too great. The President thereupon backed up Mr. Hopkins. He reduced to a third the $900,000,000 which Congress had allotted to public works, and the money now will be spent by Mr. Hopkins instead. In so doing he gave offense to every community which wanted an Ickes project and now is not to have it. And as in every instance local communities arc governed by politicians, these have been affronted to an extent which is worrying Mr. Farley. The President's spending program is making enemies among both groups which ought to be its most ardent friends. Recipients of relief work are increasingly critical, and communities which hoped to add to their permanent capital assets are disappointed.
To recapitulate, the spending program is making enemies instead of friends, which is bad politically. It is spending federal funds on a 100 per cent basis instead of a 45 per cent, and on projects which do not have much effect in stimulating indirect employment. This is bad economically. It is aimed only at finding work for those already on relief; hence is a clear invitation to all the unemployed not on relief to get on the rolls if they want any benefit. And this is bad socially.
But there is still a further reason why the policy is unpopular in Washington. It is changing- the country's conception of public works. The difference between the Public Works Administration and the Works Progress Administration appears to the uninstructed as a transference of only two letters. PWA and WPA are virtually the same. The country believes the New Deal has a public-works program. It also believes that a public-works program is wasteful, and that it is ineffectual as a means to recovery.
As a matter of fact, the trial of public works as a means to recovery has never been made in this country. We have spent billions; we loosely call the objects of expenditure public works. The NRA was originally sold to the public as a public-works program, of which self-government in industry was only a part. But of the $3,300,000,000 appropriated in the Recovery Act, to which $400,000,000 was added, only $934,000,000 was spent on non-federal projects by the PWA. And of this sum the greater part, or $725,000,000, was lent, not given away. Local communities spent, over and above their loans, $270,000,000 on these projects. So that the total genuine PWA program, before the present four-billion program was developed, was $1,213,000,000. And this cost federal taxpayers about $218,000,000, assuming that all loans are repaid. In addition certain federal projects must be considered genuine public works, for which the taxpayer footed the entire bill. Included in these are $400,000,000 for roads, $40,000,000 for forests, $105,000,000 for construction of dams and similar construction by the Interior Department, $346,405,QOO for river and harbor improvements and flood control administered by the army, and $44,000,000 for post-office buildings. Some of these federal projects have been carried out regardless of community, depression, and it is difficult to compile a figure which represents accurately the attempt of the New Deal to cope with unemployment and the depression by public works. But the total outlay on public works, whether by the PWA or other departments, was less than two-and-a-quarter billions, in over two years, and the cost to taxpayers was about half this amount, or $1,153,000,000. If, instead, we had spent six billions or, as some experts advised, eight or ten billions, we might today have been riding the crest of recovery without the cost to taxpayers being much greater than it is.
The Administration's policy is not like some of its other follies, which can be forgiven because of the real difficulties to be surmounted. When the President fails to induce a reactionary Congress to pass all his reform measures, and he has to snip and whittle from them to get them through, one may regret the necessity, or even doubt the advisability of compromise. But one recognizes that every battle cannot be won. Similarly when the President is confronted by a defiant business community, and decides that discretion is the better part of valor, criticism of compromise must necessarily be tempered. But Congress believed in public works, and the business community prayed for them. There never was any opposition to them on any front. The business community disliked the TVA and municipal power plants, but for a year it repeated in a chorus that the only hope for recovery was to stimulate the heavy industries. The difficulties in the way of public works have lain in the President's mind first of all, and to these he has added paralyzing strictures such as the security wage and the long-division method. These have not been errors of tactics but sheer economic incompetence.
A great danger now is that public works are so discredited in the mind of the average man that he may not be ready for orderly and constructive planning, by which a great public-works program remains ready to be expanded or contracted as the cycle of private business rises or falls. And without that reserve of public works the capitalist system may not be able to ride the cycles without going into deeper and still deeper depressions. The New Deal has missed making perhaps the simplest contribution it had to offer to its generation, a demonstration of intelligent control in an industrial civilization.
