People Must Live by Work. Steven Attewell
of both its contracts to general contractors and subcontractors and its orders to materials firms.
The PWA cannot be understood solely for its material benefits, however. Ickes, his subordinates, and especially the civil engineers who staffed the institution all traded on their own vision of political economy, their own ideology, and their own plan for action, rooted within the mainstream of New Deal policies. In every way, the PWA was an equal contender to the WPA.
The PWA’s Economic Theory
The vision of political economy that the PWA’s administrators shared was broadly in sync with a variety of economic theories shared by the New Deal Left. They embraced a relatively loose understanding of countercyclical action that in 1935 had yet to be transformed by the theories of John Maynard Keynes. They admired the Soviet Union’s Five-Year Plans that had achieved rapid industrialization and modernization. They were convinced that economic planning was the solution to the Great Depression.46 The common thread was an understanding of the Great Depression as a crisis primarily in production, and only secondarily in consumption.47
From the perspective of PWA administrators, industrial corporations had overproduced in the 1920s, especially in the realm of capital goods. Supplies used to construct new factories, railroads, and highways—all the goods needed for an expanding economy—were left on the sidelines without sufficient buyers. When demand for these goods failed to clear the market, a glut produced paralysis in the core sectors of the economy. Producers sat on overpriced stocks of material and then slashed production in response. The glut led them to stave off restarting production even when the economy started to improve. The economy was experiencing a “demand crisis” to which the only effective response was government purchasing to stimulate demand. Contracts for public works construction increased the demand for raw materials.
In contrast to the proposals of the WPA, the PWA would create jobs indirectly, “bubbling up” from the foundations of the American economy. As Ickes wrote, “Who is to say which is the more important—the laborer who pours the cement at the dam, the one who digs the limestone in the quarry, or the one who hauls the finished product? … In all three cases they are usually workmen who, if not for the PWA program, would be unemployed.… PWA is giving employment all down the line and any distinction between direct and indirect labor is both misleading and unimportant.”48
In addition to this immediate, countercyclical recovery effect, the PWA experts hoped that public works would also advance a different kind of public intervention into the economy: long-term economic planning led by government agencies whose actions would produce new avenues for growth and smooth out the business cycle.49 In the minds of PWA experts, public works would be both economically progressive and fiscally prudent.
The PWA’s “National Construction Plan” exemplifies the theory. It characterizes the Great Depression as primarily a failure in the construction market: “From 1925 through 1929 total dollar volume of annual construction was within the range of $[11 billion] to $[13 billion]…. It is estimated that private construction at the present time is at the rate of $[2.5 billion] to [3 billion] a year.”50 To reverse this trend, the PWA advocated boosting production, rather than enhancing consumer demand—“a government program of $[5 billion] a year would bring the total construction volume to the figure mentioned about as representing an adequate amount of construction to give a volume of employment equal to that prevailing from 1925–1929.”51 The emphasis here is on the material factors, the volume of construction, the works themselves, as the key factors driving the economy.
Back to Work: The Story of the PWA, Ickes’s account of the program’s history and importance, focuses on the multiplier and transformative effects of new production relative to new consumption: “Wide highways offer possibilities of easier and more profitable trade for the farmers; higher standard of living for his family,” he noted. “Upon roads depend the prosperity of millions…. [A]t the present time the greatest potential source of national wealth lies undeveloped in our rivers…. [E]ach gallon of water falls is a possible source of electric current, which possess the god-like qualities of heat, power, and light.”52 Public institutions had the capacity to expand and improve the physical and moral environment of the United States. As Ickes put it, “Roads bring civilization.”
FDR’s economic planners were all convinced that eliminating unemployment was critical. But the road to that end wound through different policies. The WPA sought to use direct job creation to lower joblessness, while the PWA thought the same thing could be done indirectly through the multiplier effect of public purchases. For the latter, public works would produce substantial numbers of government jobs (the PWA employed some 650,000 people in 1935, after all). But the real impact would come in “secondary effects” as moribund core industries fired up the plants to meet new orders and then brought back their old workers. This was the key argument of the “National Construction Program”:
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