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T N ?PA foxxrpprUtloii,

Tha WPA rolls* now at 2f300#000 era 775.000 lower than they *ere X
in Jkly* 1939* whan tha volnna of business activity w&s about tha m m *
as at present* Tha WPA m a t lay off another 800f000 by Jun* 30 to
kaap within th* prasant appropriation! 600,000 Bora batwaen July and
Hovaabsr to kaap within tha fiscal 1941 budget raconaandation and
leava soma room to m o t Viator naeds* If this progr&a la carried out
tha nuabsr of W?A Jobs provided In Mov^aber will ba 900.000 or laOQ.OOO
lees than at prasant and g>2Q0»0QQ lass than in July* 1939*
Tha sohadulad reduction £*oa preaant levala to Bovanbsr will out
off tha inooas of thraa million adults and ovar thraa nillion ohildran*
A out of such xa&gnituda would hava s$rloua political and acononic
affaota at any tii&s* Superimposed upon tha present sh&rp buoinasf
daolina (hiring which privata business has already laid off about lf500,- r
000 aan, tha results may ba disastrous*
Tha Budget raoomend&tion for WPA was prap&rad in tha optimistic
ataosphsra of a business booalat* This boocdet is now ovar# Produce
tion baa dropped to tha prewar level and is still falling* Optimist*
ara now hoping that tha daolina is t&paring off and that slow racovsry
will soon occur* Bat thasa views ara not hold with eoafidanca in any
ijuartar* A stora raallstio apprfds&l suggasts that so praclpit&ta a
daolina as wa hava experienced will carry us such lowar« Liquidation
of only part of the $1*4- billion of invantoriaa acousnlatad sines tha
outbreak of tha war would taka tha Federal Rsaarva Bo$*rd index of produetlom balow 90 &ud postpone tha racov#ry to the third quarter or
parh&ps cvan l&tar*
Froa 1956 to 1939 tha UFA program provided employment for 2$Jt of
tha total unemployed* S?vsa thosa who baliava that such provision 1*
adaqu&ta will agree that 1SPA aaploynont shcmld axpand whan prlv&ta ao~
ployiwmt contracts* At a tima whan privata asploymant is falling sharps
ly and tha business situation la particularly vulnerubla, a raduction
of tlf400»G00 in WPA amployment not only violataa tha princlplaa of nsad
but invitas cumul^tiva deflation*
Sufig^fft^ Profit
a) ftor balanea of fiscal yaar 19^0
Tha laast that prudanca diatatas is that tha federal Oovarnnant
should not at this tlma aocantn&t* tha daflationary foreaa by a out in
tha W A * It should at laast c&intsin tha rolla at 2f3QQ*000* ?or tha bal- ^
anoa of fiscal 1940* thia would raquira a daficiency appropriation of
000*000* But this la not aaough* fha Govarns&nt should do aora than staraly
abstain froa adding to tha increasing voluaa of nnanployBant* It should taka
©ncrgatio staasuras to halt tha daolina* fha EPA rolls should ba Incraaasd
as quickly a* possibla to 3»OOOfOQO» To raaah thia fignra by tha ml&dl*

of Kay would require a deficiency appropriation of $150*000*000*
fr), I9Y fiUWl ,l?4l
In contrast to earlier hopes* it 1* now dear that at the teat r e
~ >
the 1*1*1 of production for fiscal 1941 * i U not average nuoh above
(Federal B**erve Board lades) an ooepared with about U O in fiscal 1940%
this neatis an increase in private employment of 1*600*000 and
for the anriml expansion of 600,000 in available worker*
a reduction
in unemployment of no nore than 1*000*000* At boat tmenployaent will
decline f*oa an average of 10*000*000 in fiscal 1940 to an average of
9*000*000 in fiscal 194&* If the business decline ia not stopped
promptly the outlook for fiscal 1941 i* for an * r m g i roluae of unea~
ployment one to twotoillionin excess of the 10*000*000 in fiscal 1940*
the range of expected unemployment for fiscal 1941 ia therefore between
nine and twelve aillion*
the proposed $1*000*000*000 SPA appropriation will provide for an
average of 1*350*000 persons or between M a end l^i of the unenployad*
In Hcweaber 900*000 persons will be on the rolls or 9 f of the menploywd«
It the *PA is to provide for 25% of the unemployed ~ ae it hae f * « 1936
to 1939 the appreciation must be large enough to naintaln the roll*
at froa 2*2$0*009 to 3*000*000* this will require an appropriation of
fron $l,&7billion to 92*2 billion* Accordingly* unless a basic Sew
9eal policy ia to be abandoned* an appropriation of this alee should be

the proposed & 5 0 million deficiency appropriation tor fiscal 1940 oan
easily be net out of the excess of inoone tax collections o w the estimates
of Jaaeary* In fact* it now eee&s that the budgetary deficit for 1940 will
still be below the President1 a estimate of January despite this deficiency
the suggested WPA appropriation for 1941 raieee nor* difficult prot&ens*
Zt ia proposed that an apjxropriatisa of H M I H o n for the first seven
nonths of fieeal 1941 be requested* with the understanding that the prowl*
eion nade by the WPA for the unemployed should not fall below the etandard
established in 1936-39*
thie proposal hae the advantage of leaving the inooae administration
Are* to edopt its own work relief progran and appropriate for it*