AbstractsLaw & Legal Studies

The theory of public works as a recovery measure has been an important factor in the economic life of the United States since the advent of the Oreat Depression in the fall of 1929. Known in popular phraseology as "pump-priming" it has created wide discussion and divided economic thought mainly into two schools - those who find merit in the theory and those who do not. A knowledge of the American background of the theory; the details of the theory; its application to the New Deal's public works programs 1933-1937; and its relation to the recovery and the recession of business 1933-37 are essential to an understanding of "pump-priming". If such an understanding can be obtained, one is in a good position to appraise one of the major proposed remedies for the business cycle. The development of the theory of public works as a recovery measure in the United States has been promoted by the city, state, and Federal Governments, and by certain theorists and writers on the subject. It is in the cities that the origins of the theory are found. In their efforts to provide relief for the unemployed in periods of economic depression, cities as far back as the year 1855 provided public work for the jobless. The idea motivating the early municipal authorities was relief of distress, not the stimulation of business so that recovery from depression would come. As a result, the public work that was provided was primarily of the "relief" type - the projects were of questionable value, earnings were inadequate, and workers were inefficient as they were demoralized by the stigma attached to the receiving of relief. Such public work did not absorb very many of the unemployed and business did not feel any stimulus from the inadequate amount of purchasing power put into the hands of the unemployed. Not all of the cities executed such work, however, and as depression followed depression, greater experience in meeting the problem of unemployment was secured by public authorities so that by the depression of 1920-1922 the type of work provided for the jobless was in general better than in preceding depressions and the motive of stimulating business recovery was a factor underlying the work. The public works programs executed, though, really never attained the standards recommended by advocates of the theory of public works as a recovery, and when the Great Depression came with its great unemployment, municipal authorities found themselves ill-prepared to provide for the relief of unemployment or the stimulus of business recovery. The states entered into the development of the theory by becoming conscious of the inadequacy of municipal public works in meeting the problems created by depressions. At first unwilling to supplement the work of the cities, they later realized the necessity of doing so and also improving the nature of public work for the jobless. Although the early state legislation that was enacted did not embody all the high standards set by enlightened advocates of the theory, it marked an improvement over the municipal work…