Dear Bill:
Dear Joe:
In recent press conferences I have stressed the point that in the current economic situation, certain kinds of governmental measures, including the acceleration of planned and needed public improvements, can be helpful in promoting increased growth of the economy.1
I have also stressed this point: the course of our huge, complex economy mainly depends upon what individual citizens do--upon their creativity, their productivity, their initiative and enterprise, and the millions of economic decisions which they freely make each day. The proper relation of government to the growth and vigor of such an economy must necessarily be to stimulate private production and employment, not to substitute public spending for private spending, nor to extend public domination over private activity.
I am concerned over the sudden upsurge of pump-priming schemes, such as the setting up of huge Federal bureaucracies of the PWA or WPA type.2 That kind of talk evidenced lack of faith in the inherent vitality of our free economy and in the American as an individual. Schemes of that kind reflect the fallacy that economic progress is generated not by citizens wisely managing their own resources, but by the wholesale distribution of the people's money in dubious activities under Federal direction. Unsound programs of that kind would do great damage to America rather than contribute to our economic strength.3
My February 12 economic statement emphasized a number of important considerations:4
First, that current economic developments, including increased unemployment with its severe hardships for those individuals temporarily out of work, are of deep concern to us all;
Second, that the basic factors making for economic growth remain strong, justifying expectations of early economic improvement;
Third, that numerous governmental policies and programs already underway and projected will help achieve an early resumption of economic growth; and,
Fourth, that should additional governmental measures be needed, they will be taken by the Executive Branch or proposed to the Congress.
In that statement I cited a number of governmental activities currently aiding the economy. These include measures by the Federal Reserve authorities to ease credit,5 various steps to stimulate home-building,6 a $600 million increase in Federal aid highway expenditures next fiscal year,7 sharply increased activity under the urban renewal program,8 and a more than $5 billion increase in defense procurement and construction during the first six months of this calendar year over the preceding six months.9
A number of Administration recommendations for new legislation which could be of great help in stimulating the economy are already pending before the Congress. Again I urge the Congress to act promptly on such measures as (a) authority for additional insurance of FHA mortgages of $3 billion per year for the next five fiscal years;10 (b) adjustment of those statutory interest rates which stifle private investment; (c) special assistance to areas of high and persistent unemployment;11 (d) tax relief for small business;12 (e) removal of the statutory limit on the life of the Small Business Administration and provision of new authority for loans to small business;13 (f) a $2 billion increase in the lending authority of the Export-Import Bank;14 and (g) a $2 billion program to modernize post office buildings and equipment.15
Since my February 12 statement the Administration has been developing additional orderly accelerations of programs that are genuinely needed in the public interest, have long been planned, and are already approved. I cite here some of the additional actions I have directed since February 12:
1. The Director of the Bureau of the Budget, on my instruction, has directed the executive departments and agencies to accelerate where practicable the construction of projects for which appropriated funds are available. Acceleration of civil projects alone, many of which are already in planning and engineering stages, will result in the expenditure of nearly $200 million several months earlier than previously planned. This earlier expenditure will step up such construction programs as Corps of Engineer civil works, the improvement of roads and facilities in National Parks, and the Bureau of Indian Affairs' road building and maintenance activities.
2. Additionally, certain water resource projects have been accelerated in the present fiscal year and the affected departments are submitting such amendments to the budget as are needed to continue this higher construction rate in 1959. Amendments, to be transmitted to the Congress next week, will involve increased appropriation requests as follows:
In millions
Department of Interior
Bureau of Reclamation. . . . . . . . . . . . . . $ 46
Department of the Army
Corps of Engineers, Rivers and
Harbors and Flood Control. . . . . . . . . . 125
Department of Agriculture
(Watershed Protection and
Flood Prevention Projects). . . . . . . . . . 15
_______
Total.............$ 186
In addition, an amendment to the Department of the Interior Budget will be presented to the Congress to allow an early start on small reclamation projects which were authorized by the 1956 Small Projects Act.16
3. The Director of the Bureau of the Budget has just released an additional $200 million to the Administrator of the Housing and Home Finance Agency. These funds will be used by the Federal National Mortgage Association to stimulate construction of homes for citizens of modest means and to implement other authorized programs. They will provide additional employment throughout the country. Should experience establish a need for more of these funds, they will be requested of the Congress.
4. In the next few days the Administration will ask the Congress to amend the Highway Act to suspend certain expenditure limitations for three years. If enacted this amendment will permit apportionments to the States of an additional $2.2 billion of Federal funds, all of which will be placed under contract during the calendar years 1958 - 1961. Adoption of this amendment will permit the apportionment during each of these years of a total of $2.2 billion of Federal funds for interstate highway construction alone.17
5. The military departments, on my instruction, have in recent days acted to award more procurement contracts in labor surplus areas, with first priority to small business concerns in such areas. A new clause is being inserted in future contracts urging prime contractors to give preference to qualified subcontractors in labor surplus areas to the full extent permissible under existing law. The Services are also reexamining their procurements to assure that the maximum number of contracts are available to small business generally as well as to labor surplus areas.18
6. The Veterans Administration has acted to make private funds more readily available to veterans for acquiring home ownership under the G. I. Loan Guaranty program, and the Federal Home Loan Bank Board has launched a program to increase the availability of funds for investment in home mortgages in areas that in recent months have experienced a shortage of such funds.
7. I deeply believe that we must move promptly to meet the needs of those wage earners who have exhausted their unemployment compensation benefits under state laws and have not yet found employment. I have requested the Secretary of Labor to present to me next week a proposal which, without intruding on present state obligations and prerogatives, would extend for a brief period the duration of benefits for these unemployed workers. This would enable eligible unemployed individuals to receive weekly benefits for a longer period than is now permitted under state laws and thus enable them to continue to seek jobs with a greater measure of security. I shall shortly place such a proposal before the Congress.19
Finally, it should be understood that other programs and measures are under study and, as circumstances may require, will be administratively set in motion or proposed to the Congress. Sincerely
