of intensity, hundreds of thousands of farmers lost their means of livelihood. There was no feed for the cattle and no seed to plant late forage crops or for next year's wheat crop. The Agricultural Adjustment Administration purchased some 7,500,000 head of cattle and those fit for processing were turned over to the Federal Surplus Relief Corporation either for processing and distribution to families on the relief rolls throughout the country or to be shipped to other areas for grazing pending later slaughter or distribution to farmers in connection with the rural rehabilitation program. Feed supplies were made available to farmers to enable them to retain foundation herds. The Farm Credit Administration made loans for this purpose to farmers having sufficient credit. Both feed and seed were furnished other farmers through the State and local relief administrations. The drought is responsible for approximately 300,000 families on the present relief rolls. In South Dakota, one-third of the population of the State is now receiving emergency relief through local relief agencies. In most other drought States, from one-fourth to one-fifth of the population is on relief. The method of granting relief in these areas is typically in the form of work on projects of a water conservation nature. These include the construction of small dams, digging and drilling wells, and the construction of pipelines.

It is believed that a considerable acreage of land in the drought area brought into cultivation during the war period is not suited for cultivation and over a period of time will not support the population. It is the intention of this administration to purchase large amounts of this submarginal land in this and other sections of the country and either retire it from production or adapt it to purposes for which it is better suited. Up to the present time over 2,500,000 acres have been optioned. The problems of relief are obviously entirely different in rural agricultural areas than in the large centers of industrial unemployment. Here the families face a permanent loss of income and relief policies involve the rehabilitation of the family on at least a self-sustaining basis on the land rather than the granting of direct relief or the furnishing of employment on a work program. A beginning has been made in a program of rural rehabilitation. Corporations have been formed in each State as the directing administrative agency. Although general policies of the program are established by the Federal Emergency Relief Administration, considerable latitude is allowed the State corporations to meet the multiplicity of local problems. More than 60,000 families have been transferred from the general relief program to the rural rehabilitation program.

This program is directed toward the hundreds of thousands of families in rural areas who are now dependent on relief and most of whom, unaided, will never be able to get along on their own resources. These families are facing permanent destitution due to poor land, loss of capital equipment, the breakdown of landlord-tenant relationships, or for various other reasons. The method of rehabilitation to promote economic self-sufficiency at a reasonable standard of living must be diversified to meet the varying problems in different sections of the country. In general, the program involves making available skilled supervision, feed and seed, farm stock, and equipment, housing, and land-the extent to which the above facilities are made available varying in accordance with the problem of the individual family. In the

most extreme case, that of the family living on land where the soil is so poor as to preclude the possibility of it ever yielding a living, it will be necessary to furnish most or all of the facilities listed above. This program also includes the establishment of rural industrial communities of from 100 to 500 families. Each family would be provided with a house with sufficient land immediately adjacent to provide the annual food requirements for the family. It is intended that cash income be provided by means of part-time work in local industries. The most important and significant of all the policies and accomplishments of the Federal Relief Administration has been the development of a work program as a method of meeting the unemployment problem. Up to the time the civil works program started in the middle of November 1933, a rather ineffective program of work relief was in operation under the auspices of the various States and localities. All of the persons on work relief, and the projects were transferred to the Civil Works Administration at the start of the CWA program, and with the wholehearted cooperation of State and local officials a large work program with effective supervision was put into effect almost immediately. By the middle of December over 2,500,000 persons were working and by the middle of January, at the peak of the program, 4,100,000 persons were at work with a weekly payroll of $62 million. Reduction in personnel began about the middle of February and proceeded each week until the program was ended on March 31, 1934. The total cost of the CWA was approximately $1 billion, of which the Federal Government furnished $825 million and States and localities $175 million. About $750 million was expended directly for wages and $250 million went into other expenditures, including materials. The immediate purpose of the civil works program was to meet the crisis during the winter of 1933 and there is no question but that it accomplished this purpose. From a long-term standpoint, however, the chief value of the civil works program may very well prove to be that of effectively demonstrating the possibilities of public work as a means of meeting the needs of millions of destitute unemployed.

Under the handicaps of very little advance planning of projects, the speed with which the program was put in operation, and the especially adverse weather conditions during last winter in the Northern States, the quality of the projects under CWA was surprisingly good. The projects were required to be socially and economically desirable but were to be outside the ordinary functions of State and local governments and work which would not otherwise have been undertaken. Projects covered almost every conceivable sort of work ranging from construction and repair of State roads and highways and the construction and repair of water systems to such research studies as housing surveys, tax delinquency studies, and a census of American business.

During the early part of the civil works program a maximum 30hour week and a maximum 8-hour day was established for all employees working at manual labor. Clerical and professional workers were on a 39-hour week. The wage scale was that established by the Public Works Administration for skilled and unskilled labor. For clerical, professional, office, and statistical workers the prevailing rate of the community was paid but minimum rates were established rang

ing from $12 per week for unskilled and clerical workers in the South to $24 to $45 a week for professional workers in the North.

As the program proceeded certain changes were made in these policies, Effective January 18, the work hours were reduced from a maximum of 30 hours per week to a maximum of 24 hours in urban areas and to 15 hours per week in rural areas. In the middle of February the public works wage scale for skilled and unskilled labor was abandoned and the policy of local prevailing rates for the type of work undertaken was established, with the minimum rate of 30 cents an hour.

Coincident with the demobilization of the civil works program at the end of March 1934 an emergency work program was inaugurated under the Federal Emergency Relief Administration. This emergency work program has proved to be considerably more effective than the old work relief system before civil works. The projects and the administrative experience gained under civil works was carried over to the new program. Planning activities inaugurated under civil works were expanded, systematized, and made an integral part of the new program. A staff of engineers having supervision over the selection and the progress of work projects became a part of State and local relief organizations. Much more effective control by the Federal Emergency Relief Administration was established by the appointment of regional engineers in general charge of groups of States and experiences in one State were thus made available to others.

The quality of projects has been continually improved. The problem of providing jobs conforming as closely as possible to the capabilities and past job experience of individuals was given special consideration. A new division was established to provide projects for women, professional and clerical workers received special consideration, and, in general, efforts were concentrated toward getting into widely diversified types of projects. The number of person working under this work program has increased from 1,200,000 in April to approximately 2,200,000 at the present time.

The wage policy under the emergency work program provides for the payment of local prevailing hourly wage rates for the type of work performed. The hours of work are adjusted for each worker so that total monthly earnings are the equivalent of budgetary deficiency of the family as established by caseworkers. The local machinery for determining the prevailing rate of wages for the different occupations is typically a committee consisting of one representative from organized labor, one from the local relief administration, and a third member from local business or professional groups selected by the first two.

For the immediate future, there are three major directions which a program for the assistance of the unemployed might logically take. For the 1 million cases now classified as unemployable, including the aged, the mothers with dependent children, and those in need because of mental or physical disability, a program of direct assistance in the home through permanently established public welfare agencies seems to offer the most satisfactory solution. For families in rural areas, direct relief should probably be abandoned and in its place the present rural rehabilitation program should be continued and expanded. The unemployed in the urban industrial centers, however, represent the most important of these problems. After 18 months of experience with

all phases of relief those of us in the Federal Emergency Relief Administration are definitely of the opinion that aid for the urban unemployed should be divorced insofar as possible from a relief basis and should take the form of real jobs on useful and worthwhile projects. From a long-term standpoint, we can look forward, I hope, to unemployment insurance, old-age pensions, mothers' pensions, and possibly old age and health insurance, as providing systematic assistance against insecurity. We must not be misled, however, into the fallacy of believing that the needs of the unemployed will be entirely met by the enactment of this social legislation. There will remain for many years to come large groups of people in destitute circumstances falling outside the range of this legislation for whom work assurance should be provided.

[From the American Economic Review, March 1935]

THE NIRA AND STABILIZATION

(BY OTTO NATHAN, PRINCETON UNIVERSITY)

Among other objectives, the National Industrial Recovery Act purported to provide measures for greater stability in business. The law itself gives hardly any indication of how stabilization is to be promoted. The act, as a means toward stabilization, can serve only as one link in a whole chain of varied economic measures. Entire stabilization of our economic system is impossible to achieve; however, economic policy should attempt to attenuate and smooth cyclical fluctuations. The National Industrial Recovery Act may provide machinery to assist in such a policy. Such measures, chiefly for regulating new investments during a boom and influencing the process of readjustment during a depression, seem possible under the act only if its present provisions are interpreted in such a way as to permit regulation of production and productive capacity as well as fixing of prices. The results to be hoped for will, at best, be very moderate in the near future. Constructive economic policy will not be possible without a board continuously studying and analyzing economic developments and advising the government.

I

The National Industrial Recovery Act was directed, in addition to immediate relief and social welfare, toward two main objectives: First, it was considered to be a vigorous attack against the present economic depression. Its second objective was much broader. For the first time in the history of the United States, the desire for greater stability in business was supposed to find expression in a law which is now, at least until June 16, 1935, on the statute books of this country. This law was intended to provide measures necessary to make production and employment, once they had returned to "normal," more continuous than they have been in the past. At the hearings before the Committee on Finance of the U.S. Senate,1 Senator Robert F. Wagner, who was partially responsible for the original draft of the bill, declared "the widespread and permanent reemployment of workers at wages sufficient to secure comfort and decent living" to be the single objective of the bill which "marks a far-reaching departure from the philosophy that the Government should remain a silent spectator while the people of the United States, without plan and without organization, vainly attempt to achieve their social and economic ideals." And the President of the United States expounded the purpose of the act even more clearly. In affixing his signature to the act, he declared that "it represents a supreme effort to stabilize for all time the many

2

1 Hearings before the Committee on Finance, U.S. Senate, 73d Cong., 1st sess. on S. 1712 and H.R. 5755, p. 1. See also the similar statement by Senator Wagner before the Committee on Ways and Means (hearings before the Committee on Ways and Means, House of Representatives, 73d Cong., 1st sess., on H.R. 5664, particularly p. 95) in which he emphasized the importance of sec. 2(b) in regard to "an orderly organized economic system."

Italics by the author.