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November 11, 1934 This memorandum will be confined to a discussion, of certain aspects of the particular projects which might tentatively be incorporated in the public works program* Direct governmental expenditures on public works are capable of being carried out with a. mlniffium of delay and upon a scale which will give & large impetus to the capital gooas industries 8.wi indirectly increase incomes throughout the whole economy. The fumes should bt used for projects which are useful ano socially desirable, but which are non-competitive with private business. It is understood that various governmental agencies have made surveys of possible projects and have detailed figures upon the amounts that can be efficiently spent in the near future. The total volume of spending in direct Federal projects sight be tentatively set at one and one-half billions for the next year, in addition to the present appropriations, W highways * In this field there are well ©quipped agencies, both State and Federal, that have numerous projects in the offing which could be quickly started if funds were available* As a as&tter of fact, the moot successful part of the public works program to cate in putting out money rapidly has been the work of the highway division• (b) Ep-iminayfrian of grade creasing*^ This is a highly desirable type of public expenditure both to stimulate business and to increase public safety* While railroads would benefit fro® such a program, the public interest is so large that tha government shoulo properly pay the total costs* The railroads could not ssake expenditures at present without rate increases, which mo lei nullify the benefits of the spenditig. Complete plans, cost estimates, etc., have already be&n made 30 the work could proceed rapidly under supervision of engineering departments of the railroads with the direction and approval of the Bureau of Aiblic Roads, If high speed trains are to b© used more in the future grade crossing elimination will assume greater importance* (c) flooi'.i and, erosion control, the possibilities should be thoroughly explored although there m&j be difficulties in actually getting projects started in the immediate future. (d)femBrgqncyConaervatian Qorpa- This highly beneficial work Eight well be extended to employ larger numbers of M S * These are merely suggestions &mi in no sense are an exhaustive list of &11 possible projects* Other jroposala should be currently submitted by the P.W.A. for consideration, accompanied by appropriate details on engineering feasibility. In other words, the program should be kept as flexible as possible so that it can be expanded or contracted as State and Municipal* Op to the present the public works allocations to State and mmiclpalities have been drawn down very slowly and this has been one of the most disappointing features of the public works program. However, the public works administration has been faced with ©any organisation and legial&tiv© difficulties* Soa© of these have been ironed out and if the program were now set up on a more liberal basis there would be prospects of more effective re ults. An additional two billion should be appro- priated to the P.W.A* for loans and grants Also, the HVF.C. should be required to set aside another 500 million dollars for the purpose of purchasiog bonds received by the P,I.A# (a) Loans? a,$4 granta to Sfett^r an£ -^m^igis&Xlfcl-fi,g.% Larger grants are vital to provide a greater incentive for municipal and State borrowing. This grant should be a minimi® of 40$ in all cases, with discretion in the hands of the Administrator to increase the percentage of grant to loan for coEaiaunities which are in need of public construction but do nut have the legal power to borrow. Provided, however, that the limitation on borrowing was in ths law at the time the bill Vias passed and not subsequently. The bonds for tltt rerainc'.er ahoulci be taken by the Public Works Administration on a 4% basis so that if the municipality's credit is good they would first seek private capital markets to float th#l? securities, Also, the Public Works Administration could sell the bonds which they so acquired later, provided we experience a period of falling interest rates and business recovery improves the credit position of certain communities which have borrowed from the ?.*\.A. Loans also might be granted upon the assignment of ielinqu©nt ta: es in & peiveentage to be determined b;/ the Administrator, In orcer bo facilitate rapid spenJlng certain mandatory features should be included in the loans and grants smcie by the Public %orku Administration. Applications foy approval should be handled within as short a time aa is reasonable, A condition of allocation sho'old be the requirement th&t contracts will b* let upon a basis which calls for completion by the end of 19:56, with heavy penalties on the contractor for non-ful fiilisent. However, exceptions sight be allowed by the Administrator if there appears to b© insufficient projects that can be co»plet@u on that 'basis or wlier© efficient construct loo is impossible. In such cases a relatively high miniums monthly expenditure should be required* Certain labor an..1 wage restrictions in the present law should be removed. Permission shoulc. b© given to o&y wages at 10 to %Q% less th&n the fttsttvd rates for similar types in the localities in question* In order to prevent contractors driving r.iown wage scales to abnormally low levels, there saight be some discretion all wed the Administrator in (.sealing v,ith wage and hour standards in regions where there is no W Q I I organized labor market at present* In order to avoid excessive price increases on business materials &nd supplies it would be well to remove the proaent production restrictions and price controls which have been built up under the N.R.A* If this were &MMj competition might b© expected to keep prices from rising to abnormal levels, in as such as we have excess capacity in wmy of the building supply industries* 0 0 Schools, More thought might be given to the problem of increasing school facilities in certain regions. There is no reason why the advantages of education should not be given on a aation*wide basis and the Federal Government grant si sable amounts to school - '.gtriets in order to praviue better educational facilities to its citizens* (c) Low cofft housing* This is i field in which there are great dif- ficulties in making Mich progress in i short length of time and I do not think it offers very go-oa prospects as a recovery lieasare* the Federal Government perhaps Oould give a bonus for the cost of deaoli tion of slum areaa provided projects are started by amnicip&litieg or private corporations and individuals which meet the approval of the Administrator* In addition, any such projects would, be eligible to receive the 20^ subsidy which will i discussed below under private construction, Private Copstructilo.q«, (a) Residential* If a subsidy of 200 of the eost were given on resi- dential modernization and new construction it ia likely that & considerable :®ount of private residential building would be fortaeoming• This subsidy should bo handled through the Federal Housing Administration which ha» a n&tion-wi^e organization which coula successfully determine bonus payments thus avoiding duplication of Federal agencies. Bur&l modernization tad construction sight be handled through advances sa.de by the Farm Credit Administration* arid also this agency could determine SJMt distribute the subsidy. The subsidy would be allowed only on building which is started after passage of the legislation and completed by the end of 1936* One billion dollars might be appropriated for this purpose which if fully taken up would mean a total of five billi ns spent for modernisation and construction* To BAJM the campaign more effective it would be desirable to attempt to get an agreement with the duilding trades to take a Iflf cut in wages for the period of the subsidy on all construction of all types of housing facilities, fhia concession on the part of labor would be in consideration for the fuller employment that will arise through an increase in building activi* ty« If it is cieeaied unwise to attempt to get an agreement calling for reduc- tion at least the government should receive a guarantee from union leasers that there will be no increase in wages during this period. Attached is a schedule of comparative wages of skilled building operatives in foreign countries in relation to those in the Suited States. This brings out strikingly the pressing need for a revision downward of union rates for building workers in this country, (b) &\iral electrification. In this program a maxima cost per eustoaier for installation should be established with the gftvUWBtttt supplying the rest of the cost with a subsidy of not to exceed 40% of the total cost* This would, be an equitable method of iTeiitttg with individual rural consumers. Arrangeaent3 should be ssade whereby the cost of installation which is horrm by the consumer nay be paid off at low over a period of 20 Th« progra® as oo-tlirisd aboire calls for a total Federal outlay of 4 billion dollars. Tfaft SO0 millions of %•?•€« funiis would be self-liquidatlag a@ the boa.GS received are paia off or sold. It is vdffiemit to determlwci in advance how ®ich of the 2. bil ion® of P.i.A. funds would b@ in the form of loans. A concervative estimate aiifht fc© 500 Billions* fnus, 5 bil, .Ions would not be self-»liquidating in any sera.se, Howevert the subsidy I d — shatild. bi'iag out a private capital expenditure of at least 4 or 5 billions more, thus bringing the tot&l MpWlliHllim on constructiaa to sroewhare approachlag the nor^il construction fig'!ires» Attached is a schedule showing construction expenditures of all classes bj the year sine© 1925* B&gl&nd Carpenters Bricklayers Painters Steaafitters St@&ttdTitters Helpers Plumbers Plumbers Helpers Building Helpers 40 as 40.13 29.5 40.15 23,5 29.5 France 38.£^ J8.2 36.5 37 33 57 33 31 43# 43 40 46 39 46 39 36 fhe above wages are only slightly higher than the b urly wages of skilled factory workers in the respective countries. In virici contrast, the differentials are smch greater in the united States. Comparable wages in the above trades are fro© tX#9D to Mitt per hour, i^iile skilled industrial workers receive to 90£ per hour. Source of Data! ^eatorandua to H*OaL»C* by C. M. ^oolley, London, y 17, 1354. BfJXftlTIfi WBS in itillion© of CosaBercial Factories T, .eatres,Club&,Locges, Religious & Meieori&l Far?- Benatr«eti#B 13£6 19£7 19S8 050 >.:365 8666 8QP8 968 100 1066 417 585 mMmw 1051 605 866 473 533 475 511 ££4 435 5565 C176 5416 4451 1571 K53 l£80 545 £05 618 812 194 1E7C JOS 73 & 194 IBS) 295S 2900 £65 2H6 470 TOTAL Plil Elec* Power Co. • 18 • • £07 Sub-Total» 1851 Pipe liilt Co, Qm® Co. Telegraph Go. 15150 not 300 511 846 166 U6 43 100 129 £58 4T 166 54 115 1781 7U U60 787 S54 4.78 400 186 £££ UT 604 166 464 866 38 100 15 463 165 M 75 187 ^7 Z$ 96 664 189 367 44 TOTAL &, R, & PDB. C, Goimtiea State® (£accl»F«fsi*Al<ji) Fed a r a l (In e l * fe<i ers-i TOTAL PUBLIC Sub-Totals GRURB TOTAL 1S98 77B 411 I&0E 678 404 245 ^?O 2717 6611 1482 885 4SS 14» 3£0 SOfc m 556 576 808 8046 30 1951 4062 £898 X * 3 : if *3 jk *•« >../ #» n 16 7?7 Vv Bm v 167 7u6 788 551 HO 400 100 ISO 800 1660 109805 10,911 11,152 11, S59 10,4^2 10,106 7,688 4,4^8 5,1E8 d cm report,: to tb© F. f. Dodge Corporation # to th@ E©psrt?:ent of Agriculture, the Bureau of the j j i i i m and the Federal Bttployaent S t e b l l i z e t l o n Bo^rcU mpiled I'j the Feci^r&l Bij>l<j 'Hit S t a b i l i s e t i o a Boe & r c h 50, Added fe«rch 1954.
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