University of Southern California Dissertations and Theses

The federal financing of unemployment relief

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The federal financing of unemployment relief

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Content THE FEDERAL FINANCING OF UN EM PLQYMEN T RELIEF
A Thesis
Presented to
The Department of Banking and Finance
University of Southern California
In Partial Fulfillment
of the
Requirements for the
Degree of Master in Business Administration
By
Dorothy T# Lewis
June 1939
UMI Number: EP43134
All rights reserved
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Dissertation Pubi sfeng
UMI EP43134
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This thesis, w ritten by
5prot^_Lewis
under the direction of hP.T. Faculty Committee,
and approved by all its members, has been
presented to and accepted by the Council on
Graduate Study and Research in partial fulfill
ment of the requirements for the degree of
Master of Business Administration
D e a n '
Secretary
D a te M .. ™
F a c u lty C om m ittee
Clwdtcrr^J3-:
I
' N
> n # l ? 1 ^673
— ---------- TABLE-OF-GONTENTS__________________
CHAPTER PAGE
I. THE PROBLEM AND DEFINITIONS OP TERMS USED . . 1
The problem 3
Statement of the problem ..»••••• 3
Importance of the study 3
Definitions of terms used ..«••♦••• 5
Relief • •••..•... ......... . • 5
Direct relief • • ••••••••«••• 5
Work relief • •••• •• »• •• .. •• 5
Cash relief • •••••••••.. • • • 6
Commodity relief ...••• • 6
Grants*-in-aid • ••••..«*•••.* 6
II. EVOLUTION OF RELIEF RESPONSIBILITY ..... 7
Early Nineteenth Century Relief Activities. 7
Private agencies •••••».••••• 8
State Action • • • * • • • ........... 12
III. FAILURE OP LOCAL RELIEF SYSTEM....... 16
Increase in Unemployment...........• ♦ • 16
Limited tax power and Constitutional
restrictions on bond issues for relief
purposes •*...•••• ••• 17
Decline in state revenues •••••... 18
CHAPTER PAGE
IV.*___DIVERSITY_GF_RELIEF__PROBLEMS _____ 21_
General policies adopted in Relief
Administrations *• •• *••. .•• *•• 21
Forms of relief adopted ••.••*•••« 23
Family status of client *»••.•••• 24
V. FEDERAL ACTION 1932-1935 .... • ..... 26
United States Employment Service * • . • • 26
Loans to states by Reconstruction
Finance Corporation • **•«•«**••* 27
Federal Emergency Relief Administration * . 32
Organization • • • • • • ............ . 32
Financing • • *• ••.• ••• ..• •* 34
Federal wage and Lour regulations * * • * * 35
Forms of relief provided *....*•* 36
Federal expenditures for period * . . . • 37
Civil Works Administration • *.••••* 39
Purpose and objectives ...•••••* 39
Organization* •••.* * •• •• •• •• 41
Work projects * • • • • ........... 43
Employment ♦ • • • • * * 44
Liquidation of Civil Works Administration 45
VI. CHARGES IN FEDERAL RELIEF PROGRAM........... 47
Return of Direct Relief Responsibility to
local governments • •• •• •• •* .• •• 47
More centralized control of expenditures* 48
Federal administration of Works Program * 49
CHAPTER PAGE
VII. PUBLIC WORKS PROGRAM FOR UNEMPLOYMENT RELIEF 51
Federal Emergency Administration of
Public Works • •« •« •• • . ... ••. 51
Policy • • • • • ...... 53
Administration • •••••••••... 54
Employment and expenditures • . 55
% ■
Works Progress Administration ..••••• 56
"Purpose • •••• •• •.. •• *». .. 56
Organization • ••••.•••••*.* 58
Financing . . . . 60
Employment • • .............. 61
VIII. FEDERAL YOUTH PROGRAM ♦ .............. . . 4 66
Youth. movement In United States ...••• 66
Program of National Youth Administration. • 67
Student-Aid • • ••• •••• ••. •. . 68
Work projects ................. • 69
Financing • • • • • • .............. .. 70
Emergency Conservation Work •••••... 71
Organization. • • • • • • • • .......... 72
Supervision of work projects ...... 73
Educational activities. •••• ......... 74
Employment and expenditures .«••••• 75
IX. CONCLUSIONS . . . . . . . . . . . . . . . . . 76
X. BIBLIOGRAPHY............................. . 81
LIST OF TABLES
TABLE PAGE
I WEEKLY MINIMUM WAGE RATES ESTABLISHED
BY FEDERAL EMERGENCY RELIEF ADMINISTRATION ♦ 36
II HOURLY WAGE RATES ESTABLISHED BY CIVIL
WORKS ADMINISTRATION 42
III SCHEDULE OF MONTHLY EARNINGS ESTABLISHED
BY WORKS PROGRESS ADMINISTRATION........... 63
IV FEDERAL EXPENDITURES FOR UNEMPLOYMENT
RELIEF • • » » . * • • • « ................. 78
.CHAP.TER_I.
THE PROBLEM AND DEPINITIONS OF TERMS USED
During the last eight years the problem of relief has
become one of the most vital factors in our social and
economic life# Prior to the Great Depression, aid for the
unemployed had been the sole responsibility of the states,
counties, mimicipalities, and private agencies, with the
possible exception of speeial forms of relief given by the
federal government to their own employees#
The rapid rise in social work since the middle of the
nineteenth century has proved that relief activities should
be, and must be, carried out by means of some well organized
plan, conceived and determined upon before the actual need
arises in a serious depression# It is doubtful that the
majority of citizens realized the seriousness of the problem
until the recent depression# Since 1930, however, the
increasing number of unemployed and the acute distress in
some ten millions of families in the United States have
forced the subject upon the minds and consciousness of the
American people# The advent of the federal government into
the field of relief, with the task of raising and distributing
millions of dollars of public funds for this purpose, has
awakened In the public a deep and justifiable interest in
the many phases of this intricate problem#
&great.amount._of__literature__ia_available^ on.jthe_____
welfare activities of state and local governments,
churches, philanthropic institutions, trade unions, and the
various organizations supported either in whole or in part
by community chest funds* To some extent all forms of
relief work are so closely allied, and in many instances
overlap each other, that it is difficult to separate
them* An effort will he made to adhere to the welfare
activities of the federal government alone, except in such
instances whieh necessitate mention of other relief units
in order to gain a clear understanding of the total problem*
The scope of this study is necessarily limited by
omission, first, of eny critical evaluation of the
advantages and disadvantages from a sociological or
psychological viewpoint of the different forms of relief
given; second, of relief brought about by means of
unemployment reserves or other means involving the
insurance feature; and, finally of government aid through
stabilization and regularization of industry* The latter
methods are fundamentally an effort to prevent unemployment
rather than to provide actual relief* Further, legislative
reform and suggested radical changes in society require
broader handling than is included under the title of
unemployment relief*
-the-federal_government~to_administer__or_supervise„_r.elief_____
activities* Each agency has been subjected to a considerable
amount of critical analysis in current literature, but to the
writer1 s knowledge, little has been done toward a complete
study of the entire federal relief program, since the
organization of the Reconstruction Finance Corporation to the
present* This era marked the advent of the federal
government into the field of unemployment relief for the
first time in the nation*s history*
I. THE PROBLEM
Statement of the Problem* £It is the purpose of this
study (1) to present the methods employed by the Federal
Government in financing relief activities; (2) the means
used in supplying funds to the local units of government;
(3) the various forms of relief given; (4) the responsibility
of the states and municipalities in the administration of the
relief program; (5) the controls exercised by the national
government over the expenditures of federal monies by the
local units; and (6) the total amount spent by the federal
government for relief purposes from 1932 through December
1937.
Importance of the Study * The economic and social
success or failure of any country is dependent in large part
upon its ability to render adequate services to all citizens
in the protection of life and property and the maintenance
of a high standard of living* This objective cannot be
attained as long as millions, able and willing to work,are
unable to find employment* Those who can and will not work
are also a problem, caused, not by the country*s economic
distress, but probably their own state of mind* Their
rehabilitation constitutes one of the principal objectives
of social workers, and upon them this responsibility must
rest* It has been estimated that two million of our total
population are permanently unemployed* They have been and
in all probability will continue to be cared for without too
severe a drain upon the national income. It is with those
desirous of obtaining employment that we are chiefly
concerned*
If, as many believe, each depression will leave in
its wake an increased number of permanently unemployed, some
definite program of relief is essential* During the recent
depression the methods used for the alleviation of distress
were conceived in haste due to the extreme emergency,and
consequently much waste was involved* It is hoped that by
presenting the federal governments financial policy in the
administration of relief in recent years, and the total cost
of the program during the period, information will be made
available from which some plan may be devised that will
retain any benefits of the present system, reject those
proven harmful, and place future activitlesion a sound social
and economic basis*
II* DEFINITIONS OF TERMS USED
Relief* For the purpose of this article the term
relief shall be interpreted to mean any form of aid given to
the unemployed who are physically able to work, but are
unable to find employment due to depressed business
conditions*
Direct Relief* 4s a general rule direct relief
constitutes any direct aid given to the needy in the form of
cash, commodities and other subsistence essentials, for
which no work or services are performed* At the present
time this form of relief is generally available only to
unemployables or those physically unable to work on
government projects; and not eligible for relief under the
Social Security Program or in various state and county
institutions*
Work Relief* This form of relief will be considered
to mean any relief given in regular money payments by cash
or check, more or less in the manner of wages, for services
rendered by an individual employed on work projects of
federal, state, or local governments, planned principally
for the relief of the unemployed*
Gash Relief, This term is used to designate any
payment of money made to a relief client by a public welfare
agency, by means of cash or check, for the purpose of
providing such client with food, rent, clothing, and other
necessities contained in the budget prepared by the issuing
agency• Under this form of relief, except for advice given
as to the proper amount to be apportioned to the various
items, the recipient has entire control of budget
expenditures •
Commodity Relief, As opposed to cash relief,
commodity relief is that form of aid rendered by the
distribution of food, clothing, medicines, and other
articles, either directly or by the use of groeery or credit
orders, issued to private merchants or government warehouses
by the welfare agency.
Grants-in-Aid, Some confusion might exist as to the
exact meaning of this term, but in this discussion it will be
applied to periodic payments from a central to a local
government for a specified purpose. Such funds become a part
of, and are merged with the other income of the recipient*
Money so received is expended by the local unit, under
certain conditions laid down by the donor. Control is left
almost entirely in the hands of the receiving unit except for
periodic reports required by the contributing government.
CHAPTER II
EVOLUTION OP RELIEF RESPONSIBILITY
Early Nineteenth Century Relief Activities* When
this country was almost entirely agricultural, relief was in
great part assured hy relatives and friends of those in need
of assistance, and the problem was not one of any great
community interest# Families lived together on farms where
there always seemed to be a place for one or more of their
less fortunate relatives* Further, in times of distress
many could migrate to new free land and virgin territory,
there to wrest a living from the soil and start life anew*
By 1892 this land was exhausted and such avenue of escape
was closed#
The exodus to the cities following the Industrial
Revolution destroyed to a large extent these family groups,
and such relief work as was necessary in the urban areas was
carried on by various churches, philanthropic organizations,
and private individuals#
The rapid change in this country from a primarily
agricultural nation to one of large scale industry and
commerce, the growth of large cities, and a steadily rising
population, led to an increasing need for some form of
organized relief in periods of depression. The state and
local governments provided for special classes in state and
8
county institutions, and administered cash relief to families
whose needs could not be met from private funds* Each
succeeding depression during the nineteenth century witnessed
hurriedly conceived measures for the relief of the resulting
unemployment* It is believed that the first concerted effort
toward relief administration according to some organized plan
was that of the numerous private agencies established in the
larger cities at the time of the 1857 depression*
In 1857 public outdoor relief was frequently found in
operation as well as so-called relief societies which opened
their doors for a few hours daily during the winter months*
There were also well established private relief agencies
already operating in several large cities* Probably the New
York Association for Improving the Condition of the Poor,
and the Union Benevolent Association of Philadelphia were
outstanding examples of the private agencies of that period*
Their work was financed entirely from private funds and their
staff of workers was both paid and volunteer. Whereas the
New York Association commented upon the generosity of its
contributors, in times of great stress it became evident
that the effects of the depression had fallen with fatal
force upon some of the best friends of the society, and some
of its most liberal subscribers.
In addition to the work of such private agencies in
all the large cities, with their efforts directed primarily
-toward-emergency_r.elief_measur.es_and_jthe_rehabilitation_of___
those whose morale was entirely broken due to long periods
of unemployment, the various cities established soup houses
and analagous modes of relief, because of their convenience
and supposed economy* Large sums were thus expended and
multitudes assisted but
• • • So revolting were the results both on the poor
and the community as to furnish conclusive proof that
false and dangerous methods of relief had been adopted
and the proper ends of true charity defeated* • • •
mendicity, vagrancy, and able-bodied pauperism with
their attendant evils increased to an alarming extent*1
In many cities, though recognizing the valiant efforts
made by private agencies to relieve the situation, the city
governments felt such efforts to be inadequate, and in many
parts of the country, public agencies were organized in an
effort to supplement the work being done by the private
organizations *
In some instances public money for relief was
entrusted to the existing agencies for disbursement, and in
others a public relief agency was established for this
purpose* The latter system raised doubts in the minds of
those concerned who claimed that such a system involved
political patronage which resulted in suffering on the part
1
Association for Improving the Condition of the
Poor, A*I.C*P* Semi-Centennial Fiftieth and Fifty-First
Annual Reports* Hew York, 1893 and 1894* p* 34
of- -the- needy*— Inadequately_equipped_public_officials_ were_„
entrusted with expenditures of large relief funds* The.
controversy over the superior advantages of public or <
private relief, which was prolonged over many decades, had
already begun*
It must not be assumed from the foregoing that the
private agencies provided the greater share of relief work
done during the latter part of the nineteenth century*
Work projects for relief of unemployment were carried out,
probably for the first time in this country, in 1857,
financed entirely from public funds*
Later, in the nineties, work relief emerged as one
of the major forms of helping the unemployed* Direct
relief had become associated with the concept of
incapacity, while work was believed to give "deserving”
unemployed a means of maintaining their independence and
morale* Outdoor labor on streets, parks, and quarries was
supplemented by indoor centers for both men and women where
laundering, rug weaving and sewing were done. It is
interesting to note the similarity of this plan to that of
the Works Progress Administration today*
Despite the activity of local governments in
unemployment relief during the nineteenth century, most of
the measures adopted were of an emergency nature only* Many
socially minded people were convinced that mass handling
11
— through emergency organizations was highly undesirable and
by 1907 and 1908 private agencies ! t had attained a status in
the eyes of the community which resulted in their domination
in the field of unemployment r e l i e f *2”
With private agencies dominant in the field of relief
during the early twentieth century, and local governments
employing some emergency measures during depressions, the
states up to this time had taken little part in the relief
programs* In each succeeding depression however it became
more difficult for the private agencies to raise funds
sufficient for their needs and by 1914 the necessity for
state action became apparent. Private agencies continued
their operations, and in fact many additional agencies have
been established since that time, and work among them has
been greatly coordinated and centralized. The establishment
of community chests in many of the large cities, as agencies
for the collection of funds by annual drives, and the
distribution of such funds to the various relief societies
organized to administer relief, has done much toward the
development of the charity organization movement which
started in this country in the late seventies.
2
Leah Hannah Feder, Ph.D., Unemployment Relief in
Periods of Depression. Hew York, Russell Sage Foundation,
1936. p. 338
12
In 1914 three states organized official state wide
committees on unemployment relief, since many felt that
city,or county units would he unahle to handle the hroader
problems which concerned the whole state*
In Massachusetts a committee was appointed and
undertook as its major responsibility to speed up
legitimate public and private employment* It also urged
local appropriations for public works and advised on work
relief programs. In many cities local planning groups were
created to raise relief funds or administer a special part
of the emergency program, such as work relief or care of the
homeless* Their efforts however were characterized by
decentralization of administration, the units being
financed and often managed by small groups in the neighborhood
or in the particular field of work*
In Colorado events prior to the depression of 1914
had created a serious situation, particularly in the coal
mining counties due to a protracted coal strike* Several
counties experimented with road building as a means of
providing work for the unemployed, but funds were so limited
that thousands of families were on the verge of starvation*
State action was necessary and the governor appointed a
Committee on Unemployment Relief to deal with the situation*
Ho means existed at that time to increase funds for relief
within the state* An appeal was made to the Rockefeller
13
Foundation for assistance, as the Rockefellers were already
involved through their interest in the Colorado Fuel and
Iron Company* From this source the committee obtained funds
with which an extensive road building program was carried on
for three months, the state and counties paying for materials
and supervision#
Space will not allow discussion of the plans evolved
by the numerous states at this time for relief, but
Californiafs problem was somewhat unusual and should be
briefly presented as the condition at that time was similar
to that existing today.
The state had been concerned for several years by a
large group of migratory workers, who remained after summer
work was over instead of seeking employment elsewhere* 4s
preparation against such migrations
4 conference of mayors who had gathered in San
Francisco decided during the summer upon a plan of action
including provision of work relief according to
individual needs, and the abandonment of the old method
of passing the non-resident unemployed along from city to
city#s
The governor later designated the existing State
Commission on Immigration and Housing as the proper agency to
3
"Handling Unemployment in California*w An Abstract
of the final reports and recommendations of the United States
Commission on Industrial Relations. The Survey. August 28,
1915, vol. 34, p. 483
14
.study- the- unemployment-problem*— Wittuno-attempt-to--------
interfere with local autonomy the Commission sought to
secure acceptance of an uniform plan elastic enough to he
adopted to local conditions* Under this plan work relief,
public works, and work tests were coordinated throughout the
state*
These three instances of state organization for
relief indicate the drift which set in toward larger units
than the municipality, or even the county* Resources within
smaller units were insufficient to meet hard times and
intergovemment planning developed common policies and joint
action for the solution of common problems*
State appropriations for public works or work relief,
state help in handling the non-resident unemployed,
statewide attack upon the whole problem, in the form of
committees appointed by governors, signified a trend in
relief measures toward integration of effort over
larger areas*4
During this period the local units also continued to
assume increasing responsibilities for the social welfare of
their communities* Many semi-official groups were appointed
by mayors in order to meet emergency needs* However, the
year 1914 definitely marked the entrance of the states into
relief activities, due in great part to the inability of
private agencies and local government units to raise
sufficient funds for relief purposes.
4
Peder, oj>* cit*. p* 235
15
Despite the efforts of the states to assist and
cooperate with other private and local relief agencies, and
to finance relief measures of the local units by grants-in-
aid, the burden became entirely too great during the
depression of the early thirties, and chiefly for financial
reasons the federal government actively entered the field
of relief in January of 1932*
CHAPTER III
FAILURE OF LOCAL RELIEF SYSTEM
Increase In Unemployment * Various estimates of the
number of unemployed in the United States, from 1929
through 1936, have been made, but there has been a wide
divergence of opinion, in some instances differing by some
four million* According to a study made by the national
Research League, unemployment rose sharply from slightly
over four million in 1929 to a peak of 16 J million in April
of 1933, and gradually decreased, except for sharp rises in
the winter months, to eleven million in October of 1936*
It is interesting to note that in a parallel study made by
the Alexander Hamilton Institute, the 1929 and peak year
figures were in close accord with those of the Research
League; but from 1929 to 1932 the former showed a much
greater number of unemployed during the rise and a smaller
number on the decline* Despite such variation in figures,
the general course of unemployment was similar in each
instance, a rapid rise from 1929 to 1933 and a much more
gradual decline through 1936*^
Dorothy C* Kahn* Unemployment and its Treatment
in the United States * Published by the American
Association of Social Workers, Hew York* 1937* p. 34
17
Limited Tax Power and Constitutional Restrictions
on Bond Issues for Relief Purposes# The unprecedented
unemployment following the crisis of 1929 and 1930 placed
increasing responsibilities upon the local units of
government# Relief and welfare work as carried on by local
governments was financed almost entirely from property
taxes# Early in the depression, a practical difficulty of
paying for relief from property taxes arose in the face of
shrinking property values, tax delinquencies, and tax
limitation laws# Further, this tax had been developed
before the depression to its political if not its economic
limit by most local governments. In some cities and states
the rates had approached the maxima permitted by law or
constitutions# Strong opposition had developed to further
increases as shown by taxpayers' suits, the formation of
taxpayers' associations, and agitation for tax limitation
laws, some of them successful in inserting clauses limiting
state or local taxes in state constitutions#
Under such circumstances an attempt to raise larger
property taxes for relief purposes was attended with
particular difficulty, both economic and political#
Furthermore, local governments generally lacked authority
to levy other than property and minor license taxes, so even
where new taxes would have been economically possible the
sources could not be tapped for legal reasons#
With further taxation as a source of revenue for
relief purposes practically impossible, the local units
turned to borrowing* Here, in many instances, difficulty
was encountered as local governments generally were more
restricted in their debt powers than states, since
constitutions or statutes have fixed their debt limits in
terms of valuations and some times in terms of long-term
debts for public works* The banking situation was also an
importance factor, since the banks could no longer finance
long-term and short-term debt operations of the
municipalities, during a period in which they were forced to
contract their loans and liquefy their assets* Thus, the
relief load was shifted about 1931, at least in part to the
states*
Insofar as the states were dependent upon property
taxes they faced the same difficulties as those of the local
governments* Other state revenues such as income, corporation,
and inheritance taxes fluctuate with the business cycle, so
that additional revenue could be raised only by sharp increase
in rates, which also met with strong opposition* Motor
vehicle and gasoline taxes were steadier producers of revenue,
but were generally ear-marked for state roads and highway
grants-in-aid* The states, however, were able to introduce
new taxes that produced much needed revenues*
State borrowing was also checked by constitutional
requirements* Only ten states could incur debt for relief
19
purposes without submitting the proposal to a referendum or
amending their constitutions. In fifteen states, while
there Is no limit to their debt, each borrowing must be
approved by referendum, and in twenty-three, constitutions
prohibit any new debt except to suppress insurrection or
repel invasion. In these states, relief debts could be
incurred only by the cumbersome process of legislative
action.2
Whereas the taxing power of the states was more
flexible than that of the local governments, the rising
relief costs could not be met from taxation, and in 1953, with
banks unable to finance bond issues, and the higher rates
required in order to sell such issues in the open market,
there was increasing agitation for federal aid.
State action during this time had not been uniform.
Half of the states did not participate in relief activities
until federal aid became available, and a considerable number
failed to make any substantial contribution to the cost of
relief in the entire period up to 1937.3
2
E.K. Shawe, "Analysis of the Legal Limitations on the
Borrowing Power of State Governments.1 1 F.E.R.&. Monthly
Report. June 1936. pp. 121-133
g
Table H-l “Sources of State Emergency Relief Funds“.
F.E.R.A. Monthly Report. July 1935. p. 64
2 0
The federal government was in a favorable position to
borrow since it was not hampered by constitutional
limitations, and it could sell its securities on favorable
terms to the federal reserve and other banks* Thus the
breakdown of the state and local relief system and increased
agitation for federal aid, combined to force the federal
government into the field of unemployment relief*
CHAPTER IV
DIVERSITY OP RELIEF PROBLEMS
General Policies Adopted in Relief Administrations»
The most important problems in relief administration have
been the determination of eligibility of relief recipients,
the amount of relief to be given, and the form relief should
take* In large part the solution of these problems depends
upon the amount of funds available, their distribution
geographically, and the family status of the client*
When the federal government entered the field, relief
was originally to be conferred upon those temporarily in
need, and the states were prohibited from using federal
money for the types of work normally included in welfare
programs such as care of the aged, mother's pensions, general
health and hospitalization* In actual practice it was
difficult however to distinguish between those whose need
was due to unemployment and those whose need was permanent,
the unemployables * When local funds became inadequate for
the care of the unemployables the federal government
relaxed its rule somewhat, but in the spring of 1936,
responsibility for their care was left entirely to the states*
Determination of eligibility was handled through the
ordinary methods of social case work, investigation of
applicants, and those reported in need of relief, checking of
22
statements and deciding upon the amount of relief necessary*
The federal government required the states and local
governments to keep central files and to reinvestigate cases
periodically*
The second requirement was that relief in each case
should be adequate, although wide latitude was allowed in -
the definition of adequacy, especially since funds were
limited* In general, adequate relief was considered to be
the difference between the cost of a minimum standard of
living and the resources available to the client. Pood
allowances were based upon budgets prepared by the Bureau of
Home Economics, although there was considerable variation
and some states did not employ any standard but left the
matter entirely to local discretion. At first rent
allowances were given only in case of eviction or when
eviction was threatened, but eventually allowances from five
to twenty-five dollars a month per family were given.
Additional allowances were made for food, clothing, fuel and
medical supplies* To some extent, commodity relief was
given by the Federal Surplus Relief Corporation*
For almost all states the relief benefits per family
increased in each year as more items were added to the
budgets* In May 1933 the average per family was $15*15,
with variations from four to thirty-three dollars: A year
later the average allowance rose to $24.53 and in May 1935
23
to #29*33, with variations from eleven to fifty-three
dollars.1
Relief payments could he made either in cash or *
commodities or partly in each, and secondly could he paid
to clients because of their need, without requiring services
in return, or paid as compensation for work on public projects*
The federal government permitted all four methods of relief
although it favored the policy of cash work relief.
Administratively, direct cash relief is the simplest form,
since after determining the amount of relief needed a check
is given to the client, who expends it through the ordinary
retail channels* This system allows the greatest freedom
to the individual client and permits him to exercise ehoice
in the purchase of commodities, hut many believe that it
leads to abuse and wasteful expenditures so that relief
families are not satisfactorily cared for*
Relief paid exclusively in commodities necessitates
central purchasing, storage in government warehouses, and
distribution-according to districts* This method of relief
has been open to severe criticism such as graft in purchasing,
standardization of commodities supplied without regard to
Mary Aylett Kicol, "Family Relief Budgets#"
Monthly Report F.E.R.A., June 1936, pp. 140-165. United
Scales Government Printing Office Washington D.C., 1936
24
dietary habits of various national and racial groups, and
delay and expense in providing materials* An attempt to
incorporate the advantages of both systems was made in the
issuance of food orders, rent orders, etc,, that
theoretically at least could not be expended for other
purposes, thus assuring proper expenditure but allowing some
freedom in purchasing* This form of relief has usually been
considered as "relief in kind11*
A few cities and states initiated work relief programs
before the federal government organized its relief program,
and such work projects were encouraged by the national
government* The basic argument for work relief is
• • • that employment on made work is less injurious
to the morale of workers than direct relief, secondly,
that the work performed is valuable in improvement and
maintenance of public property, and thirdly, that it
differentiates between employables and unemployables,
leaving the latter to other agencies***
The form of relief given is also dependent to some
extent upon the family status of the client* Gare of
resident families, and resident single men and women is
assumed by the state or local units; but the transient
unemployed provide a special problem* Transients are those
who are either homeless or do not fulfill residence
requirements to enable them to receive aid through the states*
2
Henry J, Bitterman, Fh*D*, State and Federal
Grants-in-Aid* New York, Mentzer Bush & Company, Chicago,
1938. p. 307
2 5
States and cities do not wish to pay for the cost of the
non-resident destitute, so that in practice their care had
to "be assumed by the federal government* Under the federal
plan, some transients are maintained in camps supported by
the states, others are returned to their homes, and a large
number employed on work projects*
As the federal plan for unemployment relief gradually
took form some of the above policies were replaced by those
better adapted to the changes in the national government’s
attitude toward the division of relief responsibility. Such
changes as were made from time to time will be embodied in
the report of the numerous organizations created by the
federal government for the administration of relief*
CHAPTER V
FEDERAL ACTION 1932-1935
United States Employment Service# Prior to the
entrance of the United States into the World War the
national government had little direct relationship with the
unemployed, except in the case of its own employees engaged
in interstate commerce# The depression in ,1921, though
mild, resulted in a commission on unemployment which gave
consideration to the development of an adequate system of
public employment offices in the United States# This plan
necessarily would require cooperation between the states
and the national government# The boom period following
this slight depression resulted in neglect of this
seemingly important problem and no adequate system was
developed at that time# When the Great Depression began in
1929 Congress passed the Wagner bill providing for a
nationwide system of employment services supported jointly
by the state and federal governments# President Hoover
refused to sign the bill and subjected it to a pocket veto#
When the Roosevelt administration took office the Wagner-
Peyser Act was passed by Congress providing for the
establishment of this cooperative system# This act was
considered to be permanent rather than temporary
legislation, and the new service was developed slowly on
2 7
this basis*
To provide for the emergency the President made an
allocation of $1,500,000 in 1934 and $4,000,000 thereafter
to establish a nationwide system of employment offices*
Grants-in-Aid were made to the states and local governments,
which in turn were required to match federal funds with
eadh state providing twenty-five per cent or a minimum of
$5,000 of its allotment*1
All persons in search of employment were urged to
register at their district employment offices and relief
clients were urged to do so* This system was used
extensively by both state and national governments in the
administration of the work program subsequently developed
by the federal government, and its expenditures were purely
administrative as no direct relief was involved* It may be
considered however as the first action taken by the federal
government in laying the ground work for federal unemployment
relief*
Loans to States by Reconstruction Finance Corporation*
The beginning of the federal financial responsibility for
unemployment relief may be dated from the Emergency Relief
United States Congress, Senate. Select Committee to
Investigate the Executive Agencies of the Government*
Preliminary Report to 75th Congress, 1st Session* Senate
Report 1275* Washington, D.C* Government Printing Office.
19377“ p. 5386
28
and Construction Act of 1932, approved by the President on
July 21 of that year* In the light of future developments
in 1933 and later the measure of responsibility assumed under
the act was not great* nevertheless the act of 1932 marked a
significant departure from the traditional role played by the
federal government. The granting of financial aid by the
federal government implied a recognition that state and local
responsibility was inadequate to meet the whole burden of
unemployment relief*
The modesty of the requests contained in proposals to
Congress in 1932 is probably explained by the lack of data
regarding relief needs, by the dominance of a balanced
budget policy, and by a hesitation to commit the federal
government too far in the financing of relief*
The increasing demands upon the Congress and the
President for federal aid were met by the passage of the
Emergency Relief and Construction Act of 1932. The purpose
of this Act was to relieve destitution, to broaden the
lending powers of the Reconstruction Finance Corporation,
and to create employment by providing for a public works
program.
The act was in reality an extension of the lending
powers of the Reconstruction Finance Corporation, which had
been established in February 1932 to provide emergency
financing facilities for financial institutions, to aid in
financing agriculture, commerce and industry, and for other
purposes*
Title I of the Act authorized the R*F.C* to make
available the sum ©f $300,000,000 to the states and
territories to he used in furnishing relief and work relief
to needy and distressed people and in relieving hardship
due to unemployment* Titles II and III of the Act provided
for the financing of self-liquidating projects undertaken
by public bodies and private bodies for public purposes
and for banking institutions, and for various federal public
works projects*
In the financing of relief we are primarily concerned
with that section of the Act making available the sum of
$300,000,000 for loans and advances to the states and
municipalities* These advances bore interest at the rate of
3 per cent and could be obtained by either of two procedures
(1) advances could be made to the governors of states upon
their certification of necessity and inadequacy of state
resources: or (2) loans could be made directly to cities and
counties through the instrumentality of the governors* In
case the former procedure was adopted, the sums advanced
were to be repaid to the R*F.C* by means of deductions from
future federal highway grants to the states* Loans granted
under the alternative arrangement represented bona fide
local obligations* It is significant to note that the bulk
30
of the appropriation was. advanced to the states against
future highway grants since many of the cities* as noted
before* were debarred by constitutional restrictions from
further borrowing*
An important feature of the part of the Act dealing
with relief financing was the requirement that no more than
15 per cent of the #300*000*000 could be made available to
any one state* This requirement was subsequently dropped
when it became evident that unemployment had not spread
evenly among the states* or in proportion to population*
The bulk of advances by the R#F#C. was made in 1933*
Although the Act went into operation in July 1932 only
about #80*000*000 of the total had been disbursed by the
end of that year*2 This was in all probability due to the
reluctance of many of the states to assume responsibility
for relief* Furthermore some governors* possibly to avoid
state responsibility* insisted that federal loans be made
entirely to the cities, and many states delayed application
in order to establish relief administrations with which to
handle funds obtained*
By the end of March however approximately
#240*000,000 had been authorized by the R.F.C. and by the
end of June 1933 all but. a small sum had been disbursed*
2
Report of Reconstruction Finance Corporation*
House of Representatives Document Ho* 426, 74th Congress* 2nd
Session* Washington, D.C. 1936* pp* 50-76
31
It was evident early in 1933 that the fund would shortly he
exhausted* Further relief to the states was essential and
the federal government launched its first relief program by
the establishment of the Federal Emergency Relief
Administration*
Of the $300,000,000 made available for work and work
relief under the Emergency Relief and Construction Act,
$299,984,999 was disbursed, $17,159,232 was repaid to the
Corporation by the states, and $282,825,766 of the
corporation^ notes were cancelled by the United States
Treasury*3
Under Title II of the same Act the R.F.C. was
authorized to loan to public and quasi-public authorities
for self-liquidating projects such as housing, bridges,
waterworks and other improvements, whose cost could be
repaid by rentals, tolls, or other charges. On these self-
liquidating projects $399,217,487 in loans were authorized,
$286,560,506 disbursed, $86,588,105 in repayments or other
deductions were made, leaving $231,236,644 outstanding on the
corporation^ books as of December 31, 1937*^
3
Reconstruction Finance Corporation, Report,
December, 1937* p* 32
4
Ibid., p. 41
32
The R.F.G. did not exercise any administrative
supervision over the local authorities beyond the steps
necessary to secure payments from tolls* special assessments,
and taxation, but did insist upon the strict legality and
soundness of each project considered separately#
Although the loans and advances of the R.F.C• may be
considered the first relief expenditures of the federal
government, nevertheless they differed materially from
subsequent expenditures for this purpose# Kot organized
primarily for the financing of unemployment relief, the
R.F.C# functioned as a lending agency of the federal
government only, and loans for relief practically ceased
when the Federal Emergency Relief Administration was
created#
Federal Emergency Relief Administration# When the
funds provided by the Emergency Relief and Construction Act
of 1932 were practically exhausted, in order to meet the
continuing relief needs Congress passed the Federal
Emergency Relief Act of 1933# This Act involved a significant
change in the organization of relief in this country, and in
the administrative and financial responsibility for relief#
The Federal Emergency Relief Act of 1933 greatly
altered the traditional organization of relief. The problem
facing the F.E.R.A# was extremely difficult# Little was
known of the state and local relief organizations, and in
33
some states and counties no such organizations existed.
Adequate' information concerning relief agencies, the numbers
of families receiving relief, and relief expenditures were
not readily available, and the national government had no
federal precedents to use as a guide in formulating relief
policies.
After the passage of this Act the relief organization
was developed in a pattern dictated by the federal system of
government. The main office of the F.E.R.A. in Washington
was concerned primarily with the granting of funds to the
governors of the states and in determining the general
conditions and standards by which these funds should be
disbursed. Thus it assumed only general administrative
functions to give direction to the use of grant funds. With
a few exceptions the P.E.H.A. did not directly administer
relief in the states.
The work of administering relief was vested in the
state emergency relief administrations or commissions. The
previous arrangement under the R.F.C. was modified in that
fimds provided by the federal government were in non-
re imbursable grants rather than repayable advances. Federal
funds were granted to the governors, to be made available to
their respective relief organizations. After the grants
were made the funds became the property of the state and
were thus beyond the direct administering control of the
F.E.R.A.
34
The county and local relief administrations were
responsible directly to the state emergency relief
administrations and had no contact with the F.E.R.A* The
local relief agencies were usually created by the state
organizations, for the special purpose of receiving federal
grant funds and state funds allotted by the state emergency
relief administrations. Thus the local relief organization
disbursed virtually all of the federal funds under the
F.E.R.A. and consequently they were the actively functioning
unit in the federal governments first relief program.
The Federal Emergency Relief Act of 1933 provided
that funds for relief purposes should be apportioned among
the states, territories and District of Columbia on two
different bases (1) funds were to be made available to the
states on a matching basis, with federal grants in any
quarter equalling one-third of the total public relief
expenditures in the preceding quarter: (2) another portion
of the fund was set aside for discretionary grants on the
part of the F.E.R.A.
It was difficult at least during the emergency period
to devise a simple formula for relief purposes. The F.E.R.A*
grants to the states were based upon detailed knowledge of
the relief situation in each state. The allocation of grant
funds in turn by states to the local relief administration
was not subject to federal control. Four major sources of
55
information were relied upon by the F.E.R.A* in making
grants to the states: (1) the form "Application for Funds"
submitted by the governors with a supporting statement
describing relief conditions in the states, (2) F.E.R.A*
field representatives who kept in close touch with all
relief operations in the states, (3) statistical reports of
relief activities in the states, and (4) direct contacts
with the states by the F.E.R.A. Assistant Administrator in
charge of state relations*
Previous mention has been made of a few instances in
which the F.E.R.A* directly administered relief, although
as a general policy it did not* The Act authorized the
Administrator to assume control of the emergency relief
administration in any state where in his judgment more
effective and efficient cooperation between state and
federal authorities might be secured* This right without
doubt gave the federal government some power over state
policies as the grants could be withheld if the states did
not live up to their part of the agreement*
Federal Wage and Hour Regulations * The F.E*R*A.
issued rules and regulations regarding wages and hours of
labor* Physical labor was limited to eight hours a day,
thirty-five hours in one week or one hundred and fifty
hours a month* Clerical employees could not work more than
eight hours a day or forty hours a week. The number of hours
36
a week allowed was limited to the amount necessary to
provide for the budgetary needs of the family* A minimum
weekly wage was established for communities according to
population as shown in Table I
TABLE I
WEEKLY MINIMUM WAGE RATES ESTABLISHED BY
FEDERAL EMERGENCY RELIEF ADMINISTRATION
ACCORDING TO POPULATION
250,000 2,500 ^Maximum
OVER TO TO UNDER
500,000 500,000 25,000 2,500
#15.00 #14*50 #14.00 #12 * 00#
Source: U.S. Government Manual 1936
Relief under this Act was given to all needy
unemployed persons and their dependents, and those whose
available resources were inadequate to provide the
necessities of life and maintain minimum living standards#
Work relief was provided on federal, state, and local
projects, not private projects, for all eligible persons
over sixteen years of age who were employable, regardless of
race, religion, or color. Those unemployable were given
direct relief under F.E.R.A., but subsequent federal relief
programs made such persons the sole responsibility of the
states and local units#
In addition to direct cash relief and work relief,
3 7
the federal government, through the Federal Surplus
Commodities Corporation, distributed surplus commodities to
relief clients in addition to, and not in lieu of, other
forms of assistance. This corporation was formed as a non
stock, non-profit corporation whose principal activities
were to assist the Agricultural Adjustment Administration
in its program for the distribution of such products to the
state relief organizations* The F.S.C.C. removed surplus
agricultural products from the normal channels of trade and
commerce through their purchase and distribution to the
needy and underfed. Commodities secured were only those in
which price depressing surpluses had developed, and were
donated to the states for distribution to the needy
unemployed.
The F.E.R.A. in all probability financed more
different relief activities of the states and local
governments than any other federal relief agency. Direct
and work relief and commodity relief were all financed by
means of federal funds. This was probably due to the
emergency existing in 1933, but the federal government
favored a work program and for this purpose the Civil Works
Administration was established in November of 1933 to remove
some of those on the F.E.R.A. direct relief rolls to
government payrolls.
F.E.R.A. grants to the states were almost entirely
38
terminated, by the end of December 1935* Only relatively
small grants for special programs were made during the
first half of 1936. Under the Emergency Relief
Appropriation Act of 1936 the Federal Emergency Relief
Administrator was directed to w ind up the affairs of the
F.E.R.A* and for this purpose funds were to be available
until June 30, 1937* With its liquidation the federal
government withdrew from the financing of direct relief
and entered upon a works program to relieve unemployment•
It would seem that the F.E.R.A. exercised less
control over the states, despite the large fund, than
other federal bureaus. This might have been due to the
emergency faced by the federal government, by the failure
of the states to supply adequate relief, and the f&et that
the work was hastily undertaken and extreme flexibility
was necessary, all of which factors possibly led to many
abuses. This apparent lack of control by the federal
government over funds supplied to the states and
municipalities probably was the cause of centralization by
means of federal administration under subsequent relief
programs•
Contrary to the policy of the federal government
under the R.F.C., grants to the states by the F.E.R.A. of
39
some §2,901,431,0005 from May 1933 through December 1937
must be classed as direct federal government expenditures
with no loan feature involved.
While the F.E.R.A. was not completely liquidated
until 1937, other relief organizations had been established
by the federal government during the period in which the
F.E.R.A. was operative* Gradually the functions of the
F.E.R.A. were entirely taken over by subsequent agencies,
or partially so, as in the case of the Civil Works
Administration organized in November of 1933*
Civil Works Administration, The C.W.A. was created
by the President on November 9, 1933 to provide work for
four million persons during the winter of 1933-34* With
the inauguration of this program the federal government
launched its first mass employment program. The C.W.A.
seemed to be in the form of an experiment in dealing with
unemployment and in stimulating the process of business
recovery. Despite its limitations, the C.W.A. demonstrated
the probable feasibility of establishing a federally
administered works program as a means of meeting many of
§
Unemployment and Relief* Hearings before a
special committee to investigate unemployment and relief*
United States Senate, 75th Congress, 3rd session, volume 2,
February 28 to April 8, 1938* United States Government
Printing Office, Washington, D.C. 1938. p. 1404
40
the numerous problems created by nationwide unemployment#
The immediate objectives of the Civil Works program
was to provide some four million persons with short time
employment on small public works projects during the
winter months of 1933-34* It was not designed as a
permanent program, and in the spring of 1934 when its
liquidation was ordered there was wide-spread pressure for
its continuance* This no doubt influenced the federal
government in the creation of a permanent, at least during
the depression period, work program, as later created
under the Works Progress Administration*
The decision to initiate a program of the C.W.A.
magnitude was prompted by a number of considerations#
The sharp business revival of the summer months had spent
itself, a reaction had set in industrial production,
employment had declined in the closing months of 1933, and
unemployment estimates again turned upward# The relief
rolls began to rise in October# The Administration^
public works program (to be discussed later) had not at
that time absorbed large numbers of unemployed. A great
deal of time had been consumed in getting the program
under way due to the planning, designing and reviewing
public work projects, of clearing up legal matters and
advertising for bids* For this reason the C.W.A. was
established quickly to get into operation small work
41
projects that would not require so much time in planning,
and would provide relief of winter unemployment and inject
a vast quantity of purchasing power into the system in a
short period of time#
Unlike the F.E.R.A* organization, the C.W.A* program
was federally operated* Complete authority for the
prosecution of the Civil Works program was vested in a
federal agency, the C.W.A. at Washington, and exercised
through its local subdivisions, the state, county, and
municipal C.W.A.fs* County G*W*A**3 were set up in the
majority of large counties, and in all cities of sufficient
size to set up a separate administration* The local
organizations were federal agencies and the administrators
sworn federal officials* The existing facilities and
personnel were used whenever possible and the state
emergency relief administrations and their staff were
appointed as state C.W.A* officials* In this way it was
possible for the work to be promptly under taken*
Under this first federally controlled works program
the states were instructed that allotments to political
subdivisions should be made by giving three-fourths of
employees and dollar allotments according to population,
and one-fourth according to their respective total relief
case load In the state* Preference was first given to
those already engaged on work relief regardless of
42
percentage of total, and second to direct relief cases up to
50 per cent of the total.6 All additional employees were to
be chosen through the re-employment service; and in order to
provide for the homeless whose care could not be assumed by*
the state, transients were made eligible for relief on
C.W.A. projects.
The requirements for eligibility and hours of work
were similar to those under F.E.R.A. In determining wage
rates the country was zoned, and the schedule in Table II
became effective for all engaged on Civil Works projects,
with the exception of those working on highways and roads
who were paid according to the wages determined by the State
highway departments.
TABLE II
HOURLY WAGE RATES ESTABLISHED BY CIVIL WORKS ADMINISTRATION
ZONE SKILLED LABOR UNSKILLED LABOR
SOUTHERN 1.00 .40
CENTRAL 1.10 .45
NORTHERN 1.20 .50
Source: U.S. Government Manual 1936
6
National Emergency Council. United States
Government Manual, 1934. United States Government Printing
Office, Washington, D.C. 1936. p. 63
43
The C .V/«A• further provided that where prevailing
rates or union rates exceeded this minimum the higher rates
must he paid* This was done in order to assure the full
cooperation of organized lahor with the program* Wages for
semi-skilled lahor were established in accordance with
wages prevailing for that group* The maximum hours of work
for project workers was thirty per week and one hundred and
thirty per month*
This wage and hour policy was modified in January of
1934 when the C.W.A* reduced the maximum hours per week to
twenty-four in cities of 2,500 and over and to fifteen in
the rural areas and in municipalities of less than 2,500#
This reduction in working hours was accompanied by a sharp
drop in weekly earnings and as a result many C.W*A. workers
were forced to apply for relief to supplement their reduced
earnings«
This reduction in hours was necessitated by the
depletion of C.W.A* funds, and in some states notably in
the south, wages paid^on work projects exceeded those
prevailing in private industry#
The bulk of the projects under the C.W.A. related to
construction or maintenance of highways, streets, public
buildings, schools and parks and those projects which gave
immediate employment to workers in the building trades and
common labor*
44
The projects operated under the Civil Works Program
were sponsored by localities, states and various federal
departments and agencies* The projects proposed by cities
and counties constituted the bulk of the program* These
were submitted to the various local C.W.A.'s and if approved
were forwarded to the state C.W.A. Approval by this agency
was final and meant that work could be started on the
project at once. Projects of statewide rather than local
interest required approval solely by the State C.W.A.
The state or local C.W.A. supervised the actual carrying on
of some projects, but generally speaking, the sponsoring
governmental unit was charged with the responsibility for
supervising the working force, paying supervisory
expenses, and supplying tools, equipment, and part of
material costs*
Federal projects were sponsored by federal agencies
in Washington and were approved by the Federal Projects
Division of the federal C.W.A* One major problem confront
ing any work relief program is to devise projects
sufficiently diverse to provide the varied occupational
groups with work in keeping with their training and experience.
These occupational groups differ widely between states and
within regions of any state, and necessarily impose a
responsibility upon administrators of providing many
different kinds of relief* Such was the case under the Civil
45
Works program, and in order to care for the unemployed who
were not fitted for work as laborers or semi-skilled labor,
a wide variety of administrative professional and clerical
projects were instituted. These included such projects as
personnel in various local C.W.A. offices, clerks and
machine operators in Weather Bureau statistics, surveying
and relocating boundary lines, and drafting charts, maps,
and diagrams.
Employment on Civil Works and. Civil Works Service
programs advanced rapidly. At the close of the first week
800,000 were employed and the total increased rapidly
through the third week in December* It was the intention
at the outset to employ three million on state and local
projects and one million on federal projects. By January
1934 employed on C.W.A. reached a peak of 4,264,000.
Thereafter employment declined as state employment quotas
were reduced in anticipation of the subsequent abandonment
of the program.?
Termination of the Civil Works program began during
February 1934. Employment quotas were reduced weekly by the
federal C.W.A. and advances cut down accordingly. This
program was designed at the outset as a winter work relief
7
L. Lazzlo Ecker-R. editor, "Financing Relief and
Recovery.1 1 The Municipal Year Book. Chicago, p. 427
46
measure, and It was expected that both private industry and
the Public Works Administration would reduce the need for
C.W*A* Further, the expenditure of $856,067,000® was
expected to stimulate business activity and thus reduce
unemployment and relief# The abandonment of C.W.A* in favor
of a work relief program hiring only the destitute unemployed
was considered to be a move in the direction of reduced
public expenditures* Accordingly the F.E.R.A. in
cooperation with the states established the Emergency Work
Relief Program to replace the C.W.A*
An evaluation of the accomplishments of the C.W.A.
program presents many difficulties* The current necessity
for such a program, the speed with which it was inaugurated,
and its termination four months later place it definitely as
a temporary organization* The sudden announcement of the
program made careful planning difficult and as a result some
projects may have been of doubtful value, nevertheless,
many useful projects were completed and others initiated,
the basis for a permanent federal works program outlined,
and local business was benefited by the large C.W.A. payrolls*
8 Ibid., p. 427
CHAPTER VI
CHANGES IN FEDERAL RELIEF PROGRAM
Return of Direct Relief Responsibility to Local
Governments♦ Since the beginning of the federal governments
participation in unemployment relief, its policy had been
directed toward the abandonment of direct relief and the
return of this responsibility to the states and local
governments* This drastic step was taken at the end of 1935
and federal relief expenditures were thereafter devoted
entirely to a program of works construction*
Federal relief had been intended as unemployment
relief and had not been intended to relieve the states and
local governments of the burden of caring for the aged,
disabled, and other dependent groups who could however,
scarcely be excluded from some form of direct relief*
Furthermore, it was believed that work expenditure would
increase the national income chiefly by stimulating the heavy
goods industries, and it would be possible to clearly
differentiate between the 1 1 employables” and "unemployables1 1 *
It is the consensus of opinion that the state and
local governments generally preferred direct relief as
cheaper, simpler to administer, and more in keeping with the
traditional policies of relief administration in previous
years* In any event the direct relief rolls included more
tlian two million cases every month from 1933 to 1936,
consistently more than half the total; and direct relief
cases dropped to 1*6 millions after this work was left to
the states**** From this it is evident that a considerable
percentage of these cases represented unemployables, and
since the federal government bore the bulk of the relief
costs, federal funds were being used to finance the care of
groups, who, it is believed were properly the burden of the
states, counties, and cities* Furthermore, the passage of
the Social Security Act provided relief for some of these
dependent groups*
There may have been administrative reasons as well
for the change in federal policy* Much criticism had been
directed toward the lack of control exercised over the
relief rolls by the national government, under the F.E.R.Ju
Another criticism had been that state choice of projects
had been far from satisfactory, consequently it was
determined that the new works program would be federally
administered* The failure of federal revenues to meet
expectations and the increasing opposition to the debt, made
conservation of funds increasingly important, and the
dropping from the federal rolls of direct relief cases was
Federal Emergency Relief Administration, o£. cit* *
Monthly Report January 1936* p* 56, June 1936* pp* 169-170
49
one way of accomplishing this end.
In order to achieve this change in policy, the
relief appropriation acts of 1935 and 1936 provided federal
funds for relief projects to be expended at the discretion
of the President, for specified types of work. The
President1 s program proposed to spend this on various work
projects, administered ny federal agencies. Three
organizations were created to control expenditure. The
Division of Applications of the National Emergency Council
was created to receive all requests for expenditures, and
to determine what projects were acceptable. The division
however does not have the power of ordering the work. The
Advisory Gommittee on Allotments composed of the Secretary
of the Interior (Harold L* Iekes, also Public Works
Administrator), the secretaries of agriculture and labor, and
the heads of bureaus and agencies chiefly interested in the
expenditure of relief monies, selects the projects to be
adopted and makes recommendations to the President who retains
the final power of decision. The third unit established, the
Works Progress Administration, was merely the P.E.R.A.
reorganized with slightly different functions. W.P.A* was to
exercise some general supervision over the other spending
agencies but its major function is to ! , recommend and carry
on small useful projects designed to assure a maximum of
employment in all localities.2”
Thus the federal governments policy in relief
activities, from 1935 to the present time, has been one of
federal administration and control.
2
0£. Git,, Federal Emergency Relief Administration,
Monthly Report May 1935, pp, 31-34
CHAPTER VII,
PUBLIC WORKS PROGRAM FOR UNEMPLOYMENT RELIEF
Federal Emergency Administration of Public Works ♦
Whereas the Federal Emergency Administration of Public Works,
hereafter referred to as ?«W«A*, was organized under Title
II of the Rational Industrial Recovery Act, and preceded the
other agencies previously discussed, it differed radically
from other federal relief agencies in that it was organized
on a more or less permanent basis, according to policies
which took some time to formulate, and it was not considered
a temporary relief emergency measure# While it is true that
it was one of the numerous federal agencies created for the
relief of unemployment, projects were to be chosen according
to their possible permanent value, rather than the abilities
of those on relief rolls in the various localities* The Act
envisaged a planned program of public works in terms of
recovery more than of unemployment relief *
Title II of the Rational Industrial Recovery Act
authorized the creation of a Federal Emergency Administrator
of Public Works and directed the administrator to prepare a
comprehensive program of public works* The Act then
empowered the President, through the administrator, to
construct and finance any public works project included in
the program* Loans and grants were to be made to states,
52
municipalities, and other public bodies for the construction,
repair or improvement of any such projects, to engage in
slum clearance and.low-cost housing projects; and to aid in
the financing of railroad maintenance and equipment approved
by the Interstate Commerce Commission*
A fundamental concept of the ?• W*A* has been that
each project should be useful and suitable to the community
which was to construct it* Another has been that each
community should contribute its share of the cost, and that
if that share is to be financed by a loan from the federal
government there must be a clear distinction between a loan
and a grant* One of the statutory requirements was that the
P*W#A* must be satisfied that any bonds purchased can
reasonably be expected to be repaid* The P.W*A. has
wherever possible fostered the use of private enterprise in
the construction of projects financed by it, has insisted on
the protection of labor, and has assumed the responsibility
of seeing that money was economically spent* In order to
accomplish these ends an organization was set up qualified
to pass on the plans and specifications submitted, the
legality of the security offered as collateral for loans,
the securities* acceptability from a financial point of view,
as well as a staff of inspectors and auditors to see that
construction was soundly done and the money economically
spent*
53
It was under this outline of policy that the P.W.A.
commenced operations* Although it was slow in getting
started, this was no doubt due to the limitations imposed
by statute under which it was organized, the lack of any
planned program and its fundamental purposes as set out in
the Act*
Funds of the P.W*A* are expended at the discretion
of the President, subject only to limitations as to amounts
spent for certain types of work such as highways and
buildings* Outright grants to states and municipalities
must not exceed 30 per cent of project cost (changed to 45
per cent in 1935) the balance to be paid in the form of
loans, on which 4 per cent interest is charged annually*^-
The projects are usually financed by purchase of the
borrower^ bonds by the P*W*A., or by sale in the open
market* Loans must be secured by collateral such as general
obligation, revenue, or special assessment bonds* Loans are
not limited to states and municipalities, but are also made
to private corporations and railroads for capital
expenditures and some housing operations*
The P.W*A. does not engage in any construction work
but merely acts as a coordinating agency for the approval of
projects and inspection of all works in progress* Federal
^ Bitterman, 0|>* cit*, p* 316
54
projects originate with the department, while state and.
local projects are submitted to a federally appointed state
P*W.A* engineer* All requests are submitted to special
divisions in Washington and examined as to their
engineering, legal and financial soundness* The division
reports are then presented to Harold L. Ickes, Secretary of
the Interior and Public Works Administrator appointed by the
President* He places these before a special board consisting
of the Secretaries of the Interior, War, Agriculture,
Commerce, Labor, the Attorney General, Director of the
Budget, and Assistant secretary of the Treasury* The board
determines which projects are to be approved and makes such
recommendation to the President who has final powers of.
approval*
Ten regional advisors assist the planning board of
P*W*A* in formulating plans for his region* There are no
block grants to the states as each project is examined
individually, thus in a strict sense P*W*A* grants are not
true grants-in-aid* Control over state policies may be
exercised however by withholding grants in order to affect
local administration*^
After a project has been accepted F*W*A* exercises
considerable control over the method of execution. Complete
2
BItterman, ojg* cit*, p* 319
55
plans and specifications must be submitted for approval and
all work on non-federal projects must be done by eontraets
let to the lowest responsible bidder subject to approval of
the state P.W.A. engineer* Contractors are required to give
bonds for performance and contracts must contain provisions
for payment of standard wages as set by the P.W.A. maximum
hour provisions* Further, contractors must allow the
inspection of their payrolls and records by P.W.A* Agents*
Whereas some employment for those on relief rolls
was afforded by the P.W.A., reduction of the number on relief
was not its purpose* The percentage of relief clients on
P.W.A. rolls was small as a great amount of skilled labor
and semi-professional and professional workers were required,
which excluded the majority of relief clients*
Direct employment supervised by P.W.A. was relatively
small in comparison with work relief programs. At a
high point the week ending March 28, 1936 P.W.A*
employment was only 77,464 persons of whom only 30,439
came from relief rolls*3
The Public Works Administration, from 1933 through
1936 employed 3,763,000 persons of whom 365,000 were not
from relief rolls*4 Expenditures from 1933 through 1937
2
United States Congress* Hearing Before the House
Committee on Appropriations, in charge of Deficiency
Appropriations, 74th Congress, 2nd session. Part II, pp.
254, 262-281*
4 Ibid,, p, 275
56
amounted to $2,940,840,000, for works of permanent value,
and $388,400,000 in loans and grants were made to the states• 5
The placement of P.W.A# within the Department of the
Interior, the care taken in its establishment, the rigid
requirements for all work projects, would seem to indicate
that it might become a permanent government agency, planning
for a public works program in prosperous times, and carrying
on construction in times of depression to stimulate the
heavy works industries and take up the slack in unemployment#
It is evident that the P.W.A* was more of a recovery
than a relief measure and created relatively small amounts
i
of new employment directly which necessitated the
organization of other agencies to provide work relief to the
increasing number of unemployed#
Works Progress Administration# In order to carry
forward an extensive unemployment relief program, made
necessary on the liquidation of the C#W#A* and the inability
of the P.W.A. to relieve unemployment on a large scale, the
Works Progress Administration was created in May 1935# With
the inauguration of this program the federal government
assumed the primary responsibility for providing employment
Annual Report of the Secretary of the Treasury, on
the state of finances for the fiscal year ending June 30,
1936# United States Government Printing Office, Washington,
D.C. 1936# p. 6
57
to several million unemployed persons, while the direct
relief responsibility, formerly a concern of the F.E.R.A*,
reverted to state and local governments*
The Works Program was the immediate program designed
to care for a large group of the unemployed until it was
hoped private employment would expand enough to absorb them#
A total of approximately forty federal agencies are
cooperating to provide employment and the W.F.A. is the
coordinating agency for this program and provides the bulk
of the employment*
When the W.P.A. was created on May 6, 1935 by
Executive Order its main functions included: (1) the
operation of useful work projects designed to provide
employment for relief workers in all localities; (2) the
scheduling of the W.P.A* and other projects so as to provide
a maximum of relief employment at all times; (3) the general
coordination of the entire program including assigning of
persons to employment, determination of policies relating to
hours of work, wages and condition of employment, review and
evaluation of proposed projects; (4) the compiling of data
or other research activities necessary or useful in carrying
out the works program*®
/>
Emerson Ross, ”The Works Progress Administration.”
The Municipal Year Book, 1937# The International City
Manager1s Association, Chicago, 1937* p. 433
In the organization of the W.P.A. every effort was
made to obtain as much flexibility as possible to meet local
unemployment needs* Centralized planning and responsibility
was planned through federal approver of projects initiated
locally, through federal wage and hour policy, and through
federal accounting of expenditures• Through a comprehensive
reporting system and by five field representatives who are
in charge of five regional offices, the Federal
Administrator keeps generally advised on the entire program*
The field representatives advise and instruct the state and
district offices, and make reports and recommendations to
the federal W*P*A*
In each state there is a W.P.A. organization in charge
of an administrator who is responsible for all matters of
policy, and for the efficient and economical operation of the
state W.P#A* The organization of the W.P*A. requires the
state and local governments to assume a large share of the
responsibility for the successful operation of the program*
The local agencies are almost entirely responsible for
the selection of workers* The original application for
assistance is made to a local relief agency, which is
usually operated under the supervision of the state
emergency relief administration* As a general rule applicants
are referred to the state agency from the county relief
organization, when they are presumably physically able to
59
work. If unemployable, applicants for aid are given direct
relief by the local county relief organization. The state
agency, within the rules of eligibility set up by W.P.A.
designates the eligible applicants for employment and
certifies them to W.P.A. This process of selection requires
the local agency to separate the employable from the
unemployable persons. The actual selection of certified
workers for assignment, however, is the responsibility of
the W.P.A.
Except for a few projects sponsored by the federal
W.P.A., all projects originate and are sponsored by local or
state agencies, which outline basic plans and draw up
specifications. Advice on technical matters may be obtained
from the W.P.A., but the detailed planning including the
engineering, architectural, legal, financial and employment
aspects, is the basic responsibility of the local body. All
proposals submitted to W.P.A. must contain a description of
the project, character of the work, cost estimates, and an
indication of the amounts to be met by the sponsor and the
W.P.A. The labor requirements and costs, estimated man-
months of work to be provided, number of’ relief workers and
total workers to be employed, and wages to be paid by W.P.A.
and local bodies, must all be submitted in considerable
detail#
All proposed projects are first submitted to the state
office where they are checked, and if approved are forwarded
with recommendations to the federal W.P.A# The latter
examines the proposals and forwards them to the President,
after clearance with the Bureau of the Budget# The projects
approved by the President are subject to final review by the
Comptroller-General to determine whether they come within
the purposes of the statutes# On acceptance the project is
referred back to the local unit, and supervisors provided
by the W.P.A# must respect the wishes of the sponsors in
matters pertaining to planning of work, interpretation of
plans, specifications, etc#
The Yiforks Program is financed by federal funds
appropriated by three Acts, the Emergency Relief
Appropriation Acts of 1935, 1936, and 1937# Federal
expenditures, however, do not measure the complete cost of
the W.P#A. program# The states and localities, functioning
as sponsors of projects, also provide funds to meet the cost
of projects operated within their jurisdictions# The
allotment of federal funds to the various projects, includes
allowance for labor based upon the number of employees and
their monthly earning schedules, and an- allowance for some
material purchases# The sponsor is required to furnish all
i
non-labor costs in excess of federal grants for such costs#
The proportionate share of the total cost assumed by
the sponsoring state or local agency varies with the type of
61
project, and from state to state* Sponsors pledged more
than 18 per cent of the total cost of all projects
selected for Operation through April, 1936* Funds of the
sponsoring agencies, approximately 86 per cent, were largely
spent for material, supplies and equipment, while of the
total federal funds, very nearly 78 per cent were disbursed
mainly for wages*?
As most of the sponsor^ funds are used for materials
and other non-labor costs, the variation between states of
sponsor^ funds contributed, depends upon the state*s
willingness to pay for heavier and better projects on
which the non-labor costs are substantially greater than
on lighter projects*
Since the primary purpose of the W.P.A* is to give
employment and
• * * evaluation of all other aspects of the program
must be related to the major criterion of the number
and character of useful jobs supplied to persons in
need*8
In order to be eligible for assignment to W.P.A.
projects, except for certain qualifications given below,
workers must have been certified as in need of relief by
7 Ibid., p, 439
8
Ibid*, p* 439
62
public relief agencies approved by the W.P.A. Eligibility
requirements are qualified by the following conditions:
1. No person accepted under eighteen years of age.
2. Ho person may be employed whose age or physical
condition is such as to make employment dangerous to
his health or safety.
3. No person serving sentence in a penal or
correctional institution* This does not include those
on probation or parole*
4* Only one member of a family group may be employed*
5* No aliens shall be employed on any Works Program
if such are illegally within the limits of the
Continental United States*
In most instances, only persons certified as eligible
in conformity with these requirements may be employed,
except for approximately 10 per cent of the workers on any
project who are permitted to be drawn from non-relief
sources* The non-relief workers are largely skilled
workers, technicians, and foremen who are needed to operate
the project*
The President, by Executive Order on May 20, 1935
established a schedule of monthly earnings for workers on
W.P.A. projects* The schedule divides the country into
three regions* Within each region wages vary according to
four occupational groups as shown in Table III*
63
TABLE III
SCHEDULE OF MONTHLY EARNINGS ESTABLISHED BY
WORKS PROGRESS ADMINISTRATION
ACCORDING TO POPULATION OF
LARGEST MUNICIPALITIES
Regions*
Over
100*000
50,000 25,000
to to
100*000 50*000
5,000
to
25*000
Under
5*000
UNSKILLED LABOR
Region I $55* $52* $48* $44 * $40*
II 45 48 40 35 32
III 40 38 36 30 26
INTERMEDIATE WORK
Region I $65* $60* $55* $50. $45
II 58 54 .40 44 33
III 52 48 43 36 30
SKILLED WORK
Region I $85* $75. $70* $63* $55.
II 72 66 60 52 44
III 68 62 56 48 38
PROFESSIONAL AND TECHNICAL WORK
Region I $94* $83* $77. $69. $61.
II 79 73 66
57 48
III 75 68 62 53 42
Source: U.S* Government Manual 1956*
^Region I: Arizona, California, Colorado, Connecticut,
Idaho, Illinois, Indiana, Iowa, Maine,
Massachusetts, Michigan, Minnesota, Montana,
Nevada, Nebraska, New Hampshire, New Jersey,
New Mexico, New York, North Dakota, Ohio, Oregon,
Pennsylvania, Rhode Island, South Dakota, Utah,
Vermont, Washington, Wisconsin, Wyoming*
Region II: Delaware, District of Columbia, Kansas, Kentucky,
Maryland, Missouri, Oklahoma, West Virginia*
Region III: Alabama, Arkansas, Florida, Georgia, Louisiana,
Mississippi, North Carolina, South Carolina,
Tennessee, Texas, Virginia*
64
When first organized in 1936, the W.P.A. allowed
project workers to receive their earnings regularly despite
temporary interruptions due to weather conditions or other
factors beyond their control* The workers received what was
designated as a “security” wage, determined without regard
to the specific hourly wage rate prevailing in the community*
Later this rule was changed and now payment is only made for
hours actually worked and the hourly wage must not he less
than the prevailing wage for each type of work* However,
hours are limited to a maximum of 140 hours for two
consecutive semi-monthly wage periods*
The W.P.A. began functioning in July 1935 and by
November of that year 2,484,000 persons were employed on
various work projects* Of this number 2,484,000 were
employed on projects operated by the W.P.A* alone* The peak
of employment was reached in February of 1936 when 3,036,000
persons were employed on work projects of the various
government units* Expenditures of the federal government
alone from May, 1935 through December, 1937 amounted to
$3,685,803,000, the greatest percentage of which was
utilized in the payment of wages *$
The national policy concerning federal participation
in relief, seems to be embodied in the program of the Works
9 Ibid.. p. 441
Progress Administration and affiliated agencies. The various
elements in the large problem of destitution have become
differentiated as subject to special treatment, as will be
recognized during the subsequent discussion of the National
Youth Administration and the Emergency Conservation Corps,
whose responsibility is for those not eligible for direct
relief from local agencies, or physically unable or
unqualified for employment on work projects* Further, the
two organizations mentioned above, while attempting to
relieve unemployment, seem to be concerned chiefly with the
future of this country1 s youth which the depression has
made so uncertain and unpredictable*
CHAPTER VIII
FEDERAL YOUTH PROGRAM
Youth Movement in United States* Whereas we are
primarily interested here in the federal financing of
unemployment relief, the National Youth Administration is
of great interest in that it represents the federal
government’s participation in the general youth movement in
this country* A number of youth-led organizations have
been established whose interest it has been to further the
interests of youths in special fields, such as student
organizations similar to the National Student Federation
and the Student Christian Association; religious organizations
such as the Catholic Youth Organization and Young Israel, and
many others too numerous to mention here*
The need to provide some care for the young people of
the country, unable to find jobs or continue their education,
during the depression caused the federal government to
formulate some plan to take care of this pressing problem,
which had become so aeute in 1935, and for this purpose the
National Youth Administration was created*
On June 26, 1935, President Roosevelt established the
National Youth Administration under Executive Order No* 7086*
The states assumed the major responsibility for the
successful operation of the program with the National Office
67
functioning as a coordinating and advisory unit*
Program of National Youth. Administration* The program
of the N.Y*A* is designed to give part time employment for
unemployed young persons, 18 to 24 years of age, inclusive,
who came from public relief families; and to enable needy
young persons 16 to 24 years of age inclusive, in accredited
high schools, colleges, and post-graduate schools, who would
otherwise find it necessary to discontinue their education,
to remain in school by supplying them with part-time work on
student-aid projects* Further, educational and work
opportunities are supplied needy young women through the
establishment of educational camps, where educational and
vocational guidance is given, and provisions are made
elsewhere to provide training of young people for private
employment •
Accredited high schools, colleges, universities and
professional schools have received appropriations from the
federal government for the distribution of N*Y.A. student
aid* Maximum payment per student is $6*00, $20*00, and
$40*00, for high school, college, and graduate aid
respectively but the average in the latter two classes cannot
exceed $15*00 and $30*00 in each school*-*- All students are
Mary Rodgers Lindsay, Assisted by Alexander Ranchman*
Directory of Youth Organizations * National Youth
Admin is t ra t i on * New York City* April 1937* p* 66
68
required to do part-time work in return for N.Y.A. student
aid# The N.Y.A. program embraces two main activities: (X)
Student Aid; (2) Work Projects#
For institutions participating in the student aid
program, employment quotas are established by individual
schools within the states on the basis of relative relief
needs of particular localities or regions of the state and
school enrollments#
Officials of participating schools decide on the
eligibility of students according to the general requirements
of the N.Y.A* Primary consideration is given to the question
of whether or not the student needs assistance in order to
be able to enter or remain in school# Additional
requirements are citizenship or intent to become a citizen,
good character, ability to perform good scholastic work
while receiving student aid, and the carrying of at least
three-fourths the normal scholastic schedule. The work
performed by the students must be practical and useful, and
may be supplemental to the usual work of the institution but
must not result in displacement of workers normally paid
from other funds. Within these limitations and with the
approval of the state N.Y.A. director, selection of work to
be done and assignment of eligible students to work is the
responsibility of school officials# Various types of work
are performed under the supervision of teachers and other
69
school employees including clerical, construction, library,
mimeographing, ground and building maintenance, and
research*
In addition to the student-aid program the N.Y.A.
provides part-time employment on work projects to needy
young people between the ages of 18 and 24 who are no longer
in school. Preference in employment is given young persons
certified by public relief agencies as in need of relief,
and at least 90 per cent of the workers on each project
must be so certified#2 Non-certified persons are employed
chiefly in supervisory capacities#
A State Youth Director appointed in each state has
the responsibility of working out arrangements with the
relief agencies to determine the size of the employable load
of persons eligible for N.Y.A. employment. Eligibility is
dependent upon a youth*s being a member of a family in need
of relief# Initial assignments of young persons to projects
is made by the W.P.A. Division of Employment, and the
director gives consideration to individual need for
rehabilitation, work experience and training.
The N.Y.A. work program involves various types of
2
Harry L. Hopkins, MReport on Progress of the W.P.A.
Program.w submitted to President Roosevelt, June 30, 1938.
p. 63
projects covering both, construction and non-construction
activities. Construction projects include highway, road,
street work and remodeling of public buildings. Non-
eonstruction activities include sewihg, recreational
leadership, museum work, clerical work, and the like.
N.Y.A. project workers may not exceed a maximum of
eight hours of work a day, forty hours a week, and with the
exception of supervisory and administrative employees,
seventy hours a month. Workers averaged about 45 hours a
month during 1937, and in recent months about 48 or 49
hours .3 Wage rates vary with the degree of skill required
for the job, the region of the country, and the degree of
urbanization of the county in which the project is
prosecuted*
The financing of the National Youth Administration
follows that of the W.P.A. as it was created within the
W.P.A., but authority is vested in an executive director
appointed by the President, who serves with an executive
committee in the formulation of all policies. Each state
has a federally appointed State Youth Director who serves
with a voluntary state advisory committee. This organization
is directly administered by the federal government. No loans
ibid., p. 67
71
or grants are made to municipalities, and payments made for
services come directly from the federal agency*
During December, 1937 there were 2,609,151 young
people enrolled in the student-aid program and 1,115,185
employed on work projects of the H*Y*A*4 For the period
from June, 1935 through December, 1937, the federal
government expended $57,660,000 for student aid and
$63,932,000 on work projects, a total of $121,592,GOO*5
The possible permanency of the organization can be
at this time but a matter of conjecture, but it is
interesting to note that in a recent report (June 1938) of
Harry Hopkins, at that time Works Progress Administrator,
he states
* * * Of the 271,418 young persons who had
registered in M*Y.A* placement offices by May, 1938 a
total of 109,038 had been placed in private industry*6
Emergency Conservation Work* It is difficult to
determine the exact relief classification into which the
Civilian Conservation Corps should be placed* Unemployment
relief for those physically able to work, has been provided
by the federal government since 1935 on various work
projects* However, young men between the. ages of 18 and 25
Ibid., p. 67
5 I
Unemployment and Relief* op* cit** p* 1419
6 Loc. Cit.
72
who had. either finished their education or been forced to
leave school for financial reasons, found it almost
impossible to secure employment# Thousands moved from state
to state in search of work, and their care constituted one
of the most serious problems of the depression#
In order to make some provision for this group the
Emergency Conservation Work organization, frequently referred
to as the Civilian Conservation Corps, was authorized by
Public Act No# 5 known as the Reforestation and Relief Bill#
This Act gave the President authority to arrange for a
nationwide chain of forest camps where unemployed young men
could be put to work protecting and improving the nation *s
forested lands#
The entire program was placed under the Emergency
Conservation Director# The Department of Labor, through
the United States Employment Service set the standards of
selection for men, and the State Relief Administrations
were designated to select the men to fill the quotas which
were fixed according to population, with the Army having
final selection after physical examinations# Army officers
were placed in charge of work camps although enrollers were
not given military training or subject to military discipline#
The great majority of men connected with Emergency
Conservation Work are enrolled men to the total authorized
number of 369,838# Of this number approximately 285,000
73
must be between 18 and 25 years of age (now 17 to 28) and
are called junior enrollees* Approximately 35,000 are
classed as local experienced men and may be of any age*
Approximately 33,000 are veterans, and 14,800 Indians*^
Enrollees receive a basic cash allowance of #30*00
per month* Five per cent of the enrollees may receive
#45*00 a month as leaders and eight per cent may receive
#36*00 a month as assistant leaders* From his pay the
average enrollee allots #25*00 a month to dependents*®
Such allotment is a condition precedent to the enrollment of
all junior enrollees* In addition to the cash allowance the
enrollee is provided with all necessities including food,
housing, clothing, medical care, supervised recreation and
an opportunity to better himself through educational
programs carried on in each C.C.G* camp* Further all
enrollees are selected from families in which grave economic
needs exist*^
Any department of national or local government may
request the Director of the C.C.G* to furnish labor for a
7
Third Report of the Director of Emergency
Conservation Work* United States Government Printing Office,
Washington, D.C* June 1934* p* 3
8 Ibid*
9
Ibid*, p* 5
74
proposed project* If the project is found worthy the request
is granted* The Army then selects the camp site, erects the
necessary buildings, and details the needed number of men*
The department of government for whom the work is to be
done is entirely* responsible for all the details of the work
project and for the enrollees engaged upon it from the time
they leave camp until they return*
There is no division of responsibility as the Army
t
is in complete charge of the camp which is considered as a
Military Reservation of the United States*
In order to realize the difference between the
objectives of the Works Progress Administration, whose main
purpose is made work for ^^employables, and the Emergency
Conservation Work program, one particular feature of the
latter should be mentioned* As first conceived the plans
for a Civilian Conservation Corps made no definite provision
for educational activities* This was to be expected under
the circumstances, the organization of such a large
undertaking in a few short months precluded any attention
to other than absolutely essential details* Within a year
after the organization of the C.C.C* the President approved
plans for a definite educational program, headed by an
Educational Director appointed by the President, and under
him nine Educational Advisers appointed by the Office of
Education* Each company has a Camp Educational Adviser
75
who is responsible to the commanding officer of his company
for the educational program of the camp.
The programs are made to fit the conditions found in
each camp and the program is not hound in any way to
academic traditions or requirements* The subjects offered
are those in which enrollees of a camp are interested#
Since its organization, the C.C.C* has had an average
yearly enrollment ©f 374,000 men employed for the most part
in conservation of the country^ natural resources* Funds
have been provided entirely by the federal government and
during the period from 1933 through 1937, #1,864,150,000
was spent* Expenditures of the last two years have shown
considerable decrease over the preceding y e a r s*^0
It is difficult to hazard an opinion as to the
possible permanency of the G.C.C., but it is possible that
it will be continued in skeleton form when the emergency
situation, which brought it into being, no longer exists.
Unemployment and Relief, op. cit.* p. 1405
CHAPTER IX
CONCLUSIONS
The characteristics of federal financial assistance
to the states and cities since 1932 have undergone marked
changes in the means employed of supplying funds to the
local units, administration and control, and the eligibility
of relief clients for federal assistance*
The government’s first policy of loans to local units,
through the Reconstruction Finance Corporation for work
projects, a great number of which were of a self-liquidsting
nature, proved inadequate as the depression deepened, due to
the restricted taxing and borrowing power of many states and
municipalities•
The use of the grant-in-aid, although increasing the
amount of funds available for relief, proved unsatisfactory,
chiefly because of ladk of central control and administration
of federal funds disbursed by the states* Further, some were
of the opinion that the states were using federal funds for
relief of strictly unemployable persons. In all probability
for these reasons the federal government in 1935, dropped
direct relief cases from federal rolls, made grants to the
states, controlled however from Washington, and work
projects were brought under federal administration* With
the exception of loans granted under the Public Works
77
Administration, relief expenditures on works program of
W a t the present time are made in the form of
federally controlled grants to the states for work projects,
with the federal government paying labor costs and the
states and municipalities a large part of non-labor costs*
From February, 1932 through December, 1937 the
federal government made direct loans and grants to the states
of $982,145,505, and of this amount $362,753,120 has been
repaid in the form of reimbursements by the borrowing unit,
or cancellation of the Reconstruction Finance Corporation^
notes by the United States Treasury# Through grants-in-aid
the states have spent $2,901,431,000 of federal monies, and
the national government has made direct expenditures for
unemployment relief of $9,894,756,000, bringing the total
cost to the federal government of employment relief to
$13,778,332,505 over a period of approximately six years#
(See Table IV)
It is evident that the federal government will in the
future assume some responsibility for the countryfs
unemployment relief problem# Any opinion as to the extent
of such relief activities would be difficult to state with
any degree of finality, but certain tendencies are apparent
which might throw some light upon the future policy of the
federal government in the field of relief*
?8
TABLE IV
FEDERAL EXPENDITURES FOR UNEMPLOYMENT RELIEF
ACCORDING TO.ADMINISTRATIVE AGENCIES
AND METHODS OF FINANCING
AGENCY GRANTS-IN-AID
DIRECT
EXPENDITURES
LOANS
AND
GRANTS LOANS TOTAL
Reconstruction*
Finance
Corporation
Work and
Work Relief
$299, 98k , 999
S e If - Li qui da t i ng
Projects ______ 1 2 9 3 ,7 6 0 ,5 0 6
.....1 893, 7k 5,505
Federal Surplus
Commodity
Corporation
t 1426 , 3014,000 k 2 6 ,3 0 k ,0 0 0
Federal Emergency
Relief
Administration
12,901,14.31,000 2 ,9 0 l,k 3 1 « 0 0 0
Civil Works
Admini s tra t i on 8 3 6 ,0 6 7 ,0 0 0 8 5 6 ,0 6 7 ,0 0 0
Works Progress
Administration _________ 3 ,6 8 5 ,8 0 3 ,0 0 0 ____ 3 ,6 8 5 ,8 0 3 ,0 0 0
Public Works
Admini s trat ion* 2 , 9k 0 , 8k0,000
388,1*00,000 3, 329, 2k0,000
Civilian
Conservation Corps . 1 ,8 6 k ,150*000 1, 66k , 150,000
National Youth
Administration 121, 592,000 121, 592,000
TOTAL .. f 2 9 0 1 ,1 *3 1 , 000 _ .................. 19 , 89k , 756,000
1688, 38k, 999 .. ___1292* 7 .60, 5.06 _ 1 1 2 * 218.*2 .3.2,.505
Public Works Administration Data. Other Agencies: Report of Special Committee on Unemployment and Relief
submitted to Seventy-Fifth Congress
79
Of the many agencies created for relief or quasi
relief purposes in the last five years, it seems possible
that the Reconstruction Finance Corporation and the Public
Works Administration will become permanent agencies# The
activities of the National Youth Administration may be
transferred, in modified form, to the federal Office of
Education, under whose direction the government has for
years given aid to students desiring to pursue some
special course of study# The Civil Works Administration
and the Federal Emergency Relief Administration have already
been liquidated# The Works Progress Administration has very
recently attempted to conserve funds by the dismissal of
thousands of workers, and it was hoped that industry would
be able to take up the slack so that this agency, which was
created as a temporary measure, might be liquidated in the
near future# However, the President’s recent message on
reorganization would seem to indicate the possibility of the
W#P#A#, the F#W#A«, and the C #C #C • being consolidated under
one independent agency# The Civilian Conservation Corps*
members have diminished in numbers the last two years
although no steps have been taken as yet to reduce the
operations of this organization; nor in all probability will
such effort be made in the very near future, as public
opinion seems very favorable to this venture of the federal
government*
It may well be that the federal government will
continue permanently to make grants of federal funds to the
states and municipalities for useful work projects to
relieve unemployment* operating on a small seale and
mapping future work programs during prosperity; and carrying
out such plans in times of severe depressions and consequent
unemployment* The responsibility of direct relief for those
who are not eligible for assistance under the Social
Security Act* will no doubt continue to rest in the states
and municipalities as the federal government appears to be
definitely coimnitted to unemployment work relief only#
B IBLIOGRAPHY
BOOKS
Bitterman, Henry J* # State and Federal Grants-in-a id* New
York: Mentzer Bush, and Company, Chicago, 1938* 550 pp* .
Cahn, Frances*, and Valeska Bary, Welfare Activities of
State and Local Governments in California 1850-195¥»
Berkely, California: University of California Press,
1936* 422 pp*
Cole or d, Joanna C», - Cash Relief* New York: Russell Sage
Foundation, 1936* 263 pp*
Colcord, Joanna C*, William C. Koplovitz, and Russell H*
Kurtz, Emergency Work Relief * New York: Russell Sage
Foundation, 1932• 286 pp*
Douglas, Paul H*, Social Security in the United States*
New York: McGraw Hill Book Go*, 1936• 384 pp*
Feder, Leah Hannah, Ph* D,, Unemployment Relief in Periods
of Depression* New York! 3?he Russell Sage Foundation,
I§»36. 359 pp*
Hubbard, J*B*, Current Economic Policies* New York: Henry
Holt and Company, 1934* 691 pp*
Ickes* Harold L** Back to Work* New York: Macmillan Company*
1933* 276 pp.
Kelso, Robert W*, The Science of Public Welfare* New York:
Henry Holt and Co*, 1938* 428 pp*
Love, Robert Alonzo, Federal Financing* New York: Columbia
University Press• London! P*S* King and Son, Ltd* 1931*
261 pp*
Mangold, George B., 0rganization for Social Welfare* New
York: Macmillan Company, 1934* 494 pp*
Odum, Howard Washington, Systems of Public Welfare * Chapel
Hill: University of Korth Carolina Press, 1925. 302 pp*
_____, An Approach to Public Welfare and Social Work*
ChapeTT*Hill: University of North Carolina Press*
London: H. Milford, Oxford University Press, 1926* 178 pp.
82
GOVERNMENT REPORTS AND PUBLICATIONS
Annual Report of the Director of Emergency Conservation Work
1935-1936-T937• (fiscal yearsT* United States Government
Printing Office, Washington D.G*
Annual Report of the Secretary of the Treasury, on the state
of finances for the fiscal year ending June 30, 1937*
United States Government printing office, Washington,
D.C., 1938*
Burns, Arthur E*, and Edward A# Williams, A Survey of Relief
and Security Programs* Division of Research, Works
Progress Administration, Washington, D.C., 1938* 102 pp*
Congressional Record* Volume 83, part 5, pp* 4703-5887*
75th Congress, 3rd Session, April 5 to April 27, 1938*
Federal Emergency Relief Administration* Monthly reports,
1933 through 1937* United States Government Printing
Office, Washington, D.C^,
“Handling Unemployment in California", an abstract of the
final reports and recommendations of the United States
Commission on Industrial Relations*
The Survey, August 28, 1915, col* 34, p* 483*
Investigation of Executive Agencies of the Government*
Preliminary report of the select committee to investigate
executive agencies of the government* Presented by Mr*
Byrd*
United States Government Printing Office, Washington,
D.C., 1937
National Emergency Council* The United States Government
Manual* United States Government Printing Office,
Washington, D*C., 1937*
Reconstruction Finance Corporation, quarterly reports to the
Congress, submitted by Jesse H* Jones, Chairman, and
George R* Cooksey, Secretary* United States Government
Printing Office, Washington, D.G*
State Relief Administration of California, Review of
Activities of the State Relief Administration of
California,~T933-1935» Sacramento, Ca1iforniai State
Printing Office, April, 1936* 332 pp.
83
Unemploymen t and Reliefs Hearings before a special committee
to investigate -unemployment and relief, United States
Senate, 75th Congress, 3rd Session, volume 2, February
28 to April 8, 1938#
United States Government Printing Office, Washington,
D*C*, 1938* 1664 pp*
United States Congress* Hearing before the House Committee
on Appropriations, 74th Congress, 2nd Session* Part.II*
pp* 264, 262-281*
Works Progress Administration* Report on Progress of the
Works Progress Administration Program* Submitted by
Harry L* Hopkins to the President of the United States,
June 30, 1938* (Publisher unnamed)
PAMPHLETS
American Public Welfare Association, Poor Relief Laws: A
Digest* Chicago: Public Administratibn Service, 1934*
25 pp*
Jeter, Helen R*, The Administration of Funds for Unemployment
Relief by the Los Angeles County Department of Charities,
Prior to November §4, 1933*
Lindsay, Mary Rodgers, compiler, assisted by Alexander
Ranchman, Directory of Youth Organizations * National
Youth Administration, 265 West 14th. St*, New York City,
1937. 113 pp*
Lowe, Robert C., and John L* Holcombe, Legislative Trends in
Public Relief and Assistance* Washington, D• C•, Works
Progress Administration, 1936 • 41 pp.
Stewart, Maxwell S*, This Question of Relief* Public Affairs
Pamphlet No* 8, Washington, D.C*, 1936* 33 pp*
Works Progress Administration Division of Research, Statistics
and Records, Public Welfare Organization in the United
States* A Synopsis of Opinion* March, 1937• 275 pp•
84
PUBLICATIONS OF LEARNED SOCIETIES AND ORGANIZATIONS
Bacon, Josephine, “Present Relief Situation in the United
States# Proceedings of the National Conference of
Social Work# 1956# pp# 4^=33^
Bemis, George W#, Public Relief Administration in Los Angeles
County# Bureau of Government Research, University of
California at Los Angeles# May, 1938#
Carothers, Doris, Chronology of the Federal Emergency Relief
Administration, May 12, 1955# United States Government
Printing Office, Washington, D.C*, 1937# 163 pp#
Ecker-R, L# Lazzlo, editor, “Financing Relief and Recovery#1 1
The Municipal Year Book, .1937# Chicago: The
International tiity Manager*s Association# pp# 370-472
Harris, Joseph P#, “Public Support of Social Work Through
Taxation”, Federal Grants-in-Aid and State Participation#
Proceedings of National Conference on Social Work, 1935#
pp# 748-52
Kahn, Dorothy G#, “The Use of Cash Orders for Goods, or
Relief in Kind in a Mass Program# “ Proceedings of
National Conference on Social Work, 1933# pp# 27(5-79
, Unemployment and Its Treatment in the United States#
Published by the American Association of Social Workers,
New York, 1937# 105 pp#
Krout, John A#, editor, Expenditures of the Federal
Government# A series of addresses delivered at the
meeting of the Academy of Political Science, November 10,
1937* Academy of Political Science, Columbia University,
1938# 137 pp#
Reed, Ellery F#, Ph#D#, Federal Transient Program# An
evaluative survey# Published by Committee on Care of
Transient and Homeless# New York City, N#Y., 1934# 143 pp*
Reynolds, Wilfred S#, “Organizing Government Agencies for
Unemployment Relief*” Social Service Review# September,
1933# pp. 365-74#
Stevenson, Marietta and Susan Posanski, Welfare Relief and
Recovery Legislation, Federal and State 1953-19317
Public administration Service, Publication No# 45, Chicago,
Illinois, 1935# 19 pp#
85
Wh.it©, R. Clyde, and Mary K. White, Research Memorandum on
Social Aspects of Relief and Policies in the Depression♦
Prepared under tHe direction of the Committee on
Studies in social aspects of the depression, with the
cooperation of the Committee on Social Security*
Social Science Research Council, 230 Park Avenue, Hew
York, N.Y., 1937. 173 pp.
UNPUBLISHED WORKS
Sarment, Harles R., Loaning Activities of the Reconstruction
Finance Corporation. A thesis presented to the faculty
of the Department of Political Science, University of
Southern California, March, 1938. 57 pp.
Piper, Charles Erwin, A Study of the Administrative Controls
and Techniques Used in PubXic Welfare Agencies, with
Particular Reference to Thos"e Rendering Outdoor Selief.
A Thesis presented to the faculty of the Department of
Political Science, University of Southern California,
April, 1938. 320 pp.
INDIVIDUAL REPORTS MADE FOR THIS STUDY BY FEDERAL AGENCIES
Works Progress Administration
Harry L* Hopkins, Administrator
Public Works Administration
Harry L* Ickes, Administrator
Reconstruction Finance Corporation
Jesse H« Jones, Chairman
George R. Cooksey, Secretary

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Asset Metadata

Creator Lewis, D. T. (author)

Core Title The federal financing of unemployment relief

Degree Master of Business Administration

Degree Program Business Administration

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag economics, general,OAI-PMH Harvest,sociology, public and social welfare

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Jordan, Harry J. (committee chair), Campbell, H. Dean (committee member), Rodee, Carlton C. (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c20-109034

Unique identifier UC11261064

Identifier EP43134.pdf (filename),usctheses-c20-109034 (legacy record id)

Legacy Identifier EP43134.pdf

Dmrecord 109034

Document Type Thesis

Rights Lewis, D. T.

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA