Request for Authority to Expend Relief Appropriations.

My dear Mr. Speaker:

In submitting to the Congress my budget for the fiscal year 1941, I included an item for relief and work relief which provided the amount of approximately $975,000,000 for administrative expenses and the cost of project operation of the Work Projects Administration. This represented a reduction of approximately one-third from the amount which was made available for these purposes in the current fiscal year, and if used for the twelve months of the fiscal year 1941 will provide an average employment of only about 1,330,000.

In the message transmitting this budget, I commented upon the item for relief and work relief by saying: "If conditions fail to meet our hopes, additional funds may be necessary."

The preparation of the budget was completed in December, 1939, at which time industrial activity in the United States was at a very high level. I regret to inform you that the hopes which I entertained at that time and which were based on the industrial outlook then prevailing, have not been sufficiently realized and that it is therefore in my judgment now necessary to adopt measures for dealing with the situation which exists today and which may be quite confidently predicted for the next few months.

The industrial production index of the Federal Reserve Board for December stood at 128, an all-time high. In January it declined to 119, and in February to 109. The preliminary index for the month of March is 105. It is hoped that it will not go lower than this.

It is extremely difficult to predict at this time the volume of employment in private industry that will be provided through. out the whole fiscal year 1941. The present indications are that leaving out any violent fluctuations which may occur due to events abroad, private employment in the fiscal year 1941 will be as high as in the fiscal year 1940.

There is certainly at the present time no information available to justify a reduction in the program of the Work Projects Administration below that which has been carried on in the current fiscal year with an appropriation of approximately one and one-half billion dollars.

In my judgment the most logical action that the Congress could take at this time would be to appropriate the budget item for the Work Projects Administration but to lodge discretionary authority in me or in the Commissioner of Work Projects to expend this amount in the first eight months of the fiscal year, on condition that unemployment conditions in the country are such as to require such expenditure within that period. I can assure you that if this discretionary authority is provided in the Appropriation Act, the appropriation will not be expended within the eight months unless it is absolutely necessary to avoid suffering and hardship.

If the appropriation is made with the provision which I have just described, the incoming Congress will have the period from January third to March first, 1941, to deal with the question of the need of providing funds for the last four months of the fiscal year, if such need is then apparent. It may also be necessary, in connection with the consideration of this question, at that time, to give attention to the related question as to whether taxation will be necessary in order to provide the needed funds.

I should like to make it clear that I am asking only for authority to exercise a limited discretion in the expenditure of the appropriation, and that I am not asking that the principle of apportionment which is written into the current Appropriation Act be abandoned. I believe it is entirely proper and advisable for the Congress to include the apportionment principle in the Act, but this principle can just as logically be extended over the eight months period as over the entire fiscal year.

Very truly yours,

Honorable William B. Bankhead,

Speaker, House of Representatives,

Washington, D.C.