Federal agency established in 1933 to create jobs, augment purchasing power, and revive industry by funding large public works projects.
The Public Works Administration (PWA) was formed under the aegis of the New Deal’s National Industrial Recovery Act on June 16, 1933, to fund public works projects including bridges, railroads, housing, hospitals, schools, and electricity-generating dams. An experimental institution, the PWA had the vague purview of “spending big bucks on big projects.”
The idea of public works as a palliative for unemployment did not originate with the depression-fighting programs of the New Deal. Two previous debates on public works merit particular attention. During the “general glut controversy” in Europe in the early nineteenth century, economists Jeremy Bentham of England and Sismondi (Jean-Charles Leonard Simonde de Sismondi) of Switzerland dissented from British economist’s David Ricardo’s self-adjustment doctrine by advocating countercyclical public works. More significantly, during Lloyd George’s electoral campaign for prime minister in Britain in 1929, the influential British economist John Maynard Keynes criticized the “Treasury view” that an increase in public expenditure would lead to a decrease in private expenditure (known as the “crowding out” problem). With Franklin D. Roosevelt’s election to the presidency in 1933, Keynes hoped that the New Deal would prove his argument.
Initially proposed by Labor Secretary Frances Perkins, the first woman to hold a cabinet post, the PWA was directed by Interior Secretary Harold Ickes from 1933 to 1939. Placing particular emphasis on the construction industry, the PWA exemplified the idea of the “brain trust” (Roosevelt’s Ivy League advisers) to prime the pump to stimulate economic growth. Although the PWA spent in excess of $6 billion during its tenure, it had only modest success in reducing unemployment and increasing industrial activity. It was constrained not only by Roosevelt’s aversion to deficit spending but also by Ickes’s desire to avoid corruption. Having been superseded by other recovery programs (most notably the Works Progress Administration), the PWA declined in importance in the late 1930s. It was officially abolished during the shift to a war economy in 1941.
See also: Volume One: Budget Deficits and Surpluses; Deficit Spending; Keynesian Economics.
Related Credo Articles
The Public Works Administration (PWA) was a jobs-creation program set up in 1933, as the second part of the National Industrial Recovery Act...
The New Deal was the name given to the policies enacted by President Franklin Roosevelt from 1933 onwards, to counter the depression . The...