<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Jason Scott Smith</p> <p>What do you do when you've lost your job and winter is coming? That's the dilemma now facing more than 13 million Americans who are out of work. It's also the dilemma that faced more than 10 million Americans in November 1933.</p> <p>By then, the Great Depression was four years old, the nation's new president, Franklin D. Roosevelt, had been in office for seven months, and the U.S. was about to enter one of the worst winters in its history.</p> <p>On Nov. 9, 1933, Roosevelt announced the creation of a new government agency, the Civil Works Administration, with an eye toward using government employment to jump-start job creation. The CWA's story resonates with our present moment, not least as an obvious example of government's ability to swiftly provide, as FDR put it, "a smashing answer for those cynical men who say that a democracy cannot be honest and efficient." The details of how Roosevelt and his administration made the CWA a success that winter -- and of how the CWA was ultimately killed off -- can help us grasp some of the political risks and possible benefits for politicians, like President Barack Obama, looking to use governmental authority to create jobs today.</p> <p>FDR had made the relief of mass unemployment a central focus of his first inaugural address. Although remembered today primarily for the statement that "the only thing we have to fear is fear itself," the speech also contained Roosevelt's brief for the New Deal. "Our greatest primary task is to put people to work," he declared.</p> <p>But FDR didn't simply call for the government to create employment for employment's sake. Rather, he argued that this employment should have a greater purpose. Jobs must be tied to "accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources."</p> <p>In short, the New Deal would fight unemployment with public-works programs.</p> <p>Roosevelt's first attempt to do this was through the Public Works Administration, created during the famous first 100 days of his presidency as part of the National Industrial Recovery Act of June 1933. The PWA was awarded a massive $3.3 billion appropriation -- the equivalent of 5.9 percent of gross domestic product. Relying on private contractors like Bechtel and Brown &amp; Root, the PWA was a great long-run success, eventually deploying its funds in 3,068 of the nation's 3,071 counties and helping to pay for projects like the Tennessee Valley Authority and Hoover Dam.</p> <p>The new agency was led by FDR's secretary of the interior, Harold Ickes, who carefully reviewed and selected projects for funding. A progressive Republican, Ickes wanted to get the best possible return on the government's investment while avoiding any hint of graft or waste. The downside to this approach soon became apparent: Ickes and the PWA took too long to inject the New Deal's stimulus into the economy. BusinessWeek criticized Ickes for leading the PWA as if he were "running a fire department on the principles of a good, sound bond house," and urged him to spend more freely.</p> <p>By autumn 1933, with unemployment still high and winter coming, FDR was ready to try something different. He used an executive order to modify the recovery legislation passed by Congress, taking a large slice of the PWA's appropriation -- $400 million -- and directing it to the CWA. He put Harry Hopkins, a social worker from Iowa, in charge.</p> <p>Hopkins and the CWA embraced an unlikely group of allies. Hopkins didn't turn to the network of social-work professionals that he knew so well. Instead, he recruited a range of experts, tapping members of the Army Corps of Engineers, civil engineers with expertise in construction projects, and local businessmen with deep experience in relevant fields such as road-building. In short, Hopkins ran the CWA more like a corporation than a charity -- matching authority with responsibility in its organizational structure and emphasizing efficiency. He drew on management experts far more than social workers, and the CWA treated its laborers as employees, not welfare recipients.</p> <p>Hopkins and his staff faced no shortage of logistical problems. The CWA was setting out to employ more people than the nation's 20 largest companies, combined, and in only a matter of weeks. To pay them, Hopkins needed help from the government's largest disbursement system, run by the Veterans Administration, which had a nationwide network of offices and a stock of check-writing machinery. The Government Printing Office had to go to three shifts a day to meet the CWA's paperwork needs.</p> <p>It was undeniably a success. The CWA was popular with its employees, as well as with the many small retail businesses that benefited from millions of workers spending their CWA paychecks. It employed just over 4 million people that winter, helping to speed the recovery. And the nation benefitted from a wealth of new infrastructure -- roads, bridges, schools, sewer systems and even airports. Thanks to the CWA and other New Deal initiatives, unemployment finally began to ease, dropping from 20.9 percent of the civilian labor force in 1933 to 16.4 percent in 1934. (It would fall to 9.9 percent in 1936, when FDR was reelected in a landslide.)</p> <p>But some of Roosevelt's more conservative advisers made a persuasive case that the CWA should conclude its emergency operations with the approach of springtime. Roosevelt, too, worried that people might become too dependent on prolonged government employment.</p> <p>Hopkins was able to persuade Congress to provide enough money to wind down the program in an orderly fashion, but he wasn't able to keep the CWA alive. Ironically, he was hamstrung by the managerial and engineering orientation that had made the CWA so effective. Staffed mainly by nonpartisan experts or by officials retained from the Hoover administration, Hopkins and the CWA lacked a political constituency with the clout to demand that Congress continue its funding.</p> <p>Although the CWA would serve as an important forerunner of the New Deal's Works Progress Administration, created in 1935 and also led by Hopkins, neither program has been viewed as a useful model by subsequent presidents. Postwar Republican presidents have objected to direct government employment as a matter of principle, and Democratic presidents have generally viewed it as too controversial, and not worth the potential political costs.</p> <p>In the midst of another prolonged period of elevated unemployment -- now about 9 percent -- Obama will have to weigh the political risks of waiting for economic recovery against the possible gains to be won for taking additional action. Perhaps he could use the power of the executive order to bypass Congress and find his own Harry Hopkins. As Obama himself put it in his 2008 inaugural address, "The question we ask today is not whether our government is too big or too small, but whether it works."</p> <p>Hopkins had a compelling answer to this question in 1933 -- one that led to electoral success for Roosevelt and economic success for the U.S.</p> <p>(Jason Scott Smith, an associate professor of history at the University of New Mexico, is the author of "A Concise History of the New Deal," forthcoming from Cambridge University Press. The opinions expressed are his own.)</p> <p>To reach the writer of this blog post: Jason Scott Smith at jssmith@unm.edu.</p> <p>To reach the editor responsible for this blog post: Timothy Lavin at tlavin1@bloomberg.net.</p> </body> </html>