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Letter on Self-Liquidating Public Works.

June 21, 1939

Dear Senator Byrnes:

I have your letter of the 19th in which you ask my position as to the provision of the "Work Relief and Public Works Appropriation Act of 1939" as passed by the House of Representatives (H. Res. 326) which would allot $125,000,000 to the Public Works Administration for loans and grants for non-Federal public works.

I am opposed to this provision. It means simply that 165,000 men who are badly in need of work will have to be dropped from the Works Progress Administration rolls; men who in the great majority of cases are the sole support of families whose subsistence depends on this slender income. What will happen to most of these men is that they will be forced onto already overburdened direct relief rolls of cities, towns and counties, or, if these are insufficient to care for them, onto private charity.

I believe there is a better way to accomplish the laudable purposes of this bill. The great majority of people of this country have come to realize that there are certain types of public improvements and betterments which should be undertaken at times when there is need for a stimulus to employment. At such times the Federal Government should furnish funds for projects of this kind at a low rate of interest, it being clearly understood that the projects themselves shall be self-liquidating and of such a nature as to furnish a maximum of employment per dollar of investment.

There seems no reason why there should not be adopted as a permanent policy of the Government the development and maintenance of a revolving fund fed from the earnings of these government investments and used to finance new projects at times when there is need of extra stimulus to employment. Such times will recur in the future, as they have in the past, and there will always be need for public facilities and improvements in our natural resources which can be most profitably met by the use at times of greatest need of employment of the accumulated receipts of such a revolving fund.

At my suggestion, various departments and agencies of the Government have canvassed the situation to find projects which will meet genuine public needs—projects that can be put under way quickly and, of great importance, will be self-liquidating. They have found a variety of such projects which have stood the test of careful scrutiny and which hold the promise of a great volume of productive expenditure and employment. I believe this is a much sounder method of dealing with the problem than the diversion of $125,000,000 of work-relief funds. All can be financed through the issuance of guaranteed securities by Government agencies with good prospect of repayment of both principal and interest through earnings.

I have caused estimates to be made of the extent of the field for investment of funds in revenue earning channels on a self-liquidating basis and in no way competitive with private enterprise. The estimates are, I believe, conservative. The types of projects I have in mind are listed below, together with the sums which, it is estimated, can be put to work to provide employment for men and machines in diverse lines of industry within the coming fiscal year. These projects are in addition to programs already submitted.

This program would stimulate a greater amount of productive expenditure than is indicated by the total estimated loan disbursements of $870 millions for the fiscal year 1940. Some parts of it will involve additional local expenditures not financed by Federal funds, and other indirect expenditures will be generated.

Program Total Loan

Duration Amount Disbursements

of Fiscal Year

(years) Program 1940

I. Federal Works Agency

(a) Non-Federal public works: Projects of 2 $350,000 $150,000

the self-financing type to be financed by

loans at sufficiently low rates of interest to

stimulate borrowing for this purpose. The

type of projects would be water-works, sew-

age disposal plants, bridges, hospitals, and

other municipal projects.

(b) Express Post-Roads: Self-liquidating toll 4 750,000 150,000

roads: bridges, high-speed highways and

city by-passes.

(c) Railroad Equipment: Authority to put- 3 500,000 100,000

chase all types of railroad equipment which

is to be leased to railroads at a rate which

will return the cost to the United States over

a period of years. Carriers would have the

option to buy the leased equipment.

II. Department of Agriculture

(a) Rural Electrification: Expansion of pres- 7 460,000 20,000

ent rural electrification program to reach a

maximum of 1 1/4-million rural families

not now receiving electric service nor

likely to receive such service in

the near future.

(b) Farm Tenant Program: Expansion of 2 500,000 250,000

the self-liquidating portion of the program

of the Farm Security Administration for ten-

ant farm purchases, rehabilitation program,

loans for minor improvements and repairs,

loans to resettlement cooperatives, and loans

for water facilities.

III. Foreign Loam

Extension of short- and long-term loans to 2 500,000 200,000

foreign governments for the purpose of pro-

moting our foreign trade. The proceeds of

these loans would be spent in the United

States and would be used for development

and reconstruction purposes in the foreign

country.

TOTALS $3,060,006 $870,000

To give effect to the program outlined above, some supplementary legislation will be necessary. As a part, however, of the whole program for stimulating productive employment, I include another proposal which will not require legislation in addition to that now pending. This is the expansion of the public housing program of the United States Housing Authority through extending its borrowing power by $800,000,000. I have already indicated my approval of this legislation.

If you think well of such a program as I have outlined I shall be glad to confer with you and your colleagues and with Members of the House of Representatives. I am sending copies of this letter to the Chairman of the Appropriations, Finance and Banking and Currency Committees of the Senate and to the Chairmen of the Ways and Means, Banking and Currency and Appropriations Committees of the House.

Sincerely,

Franklin D. Roosevelt, Letter on Self-Liquidating Public Works. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/209723

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