Large Dams and Reservoirs of the New Deal

The Public Works Administration (PWA), part of the New Deal of 1933, was a large-scale public works construction agency in the United States headed by Secretary of the Interior Harold L. Ickes. It was created by the National Industrial Recovery Act in June 1933 in response to the Great Depression. It built large-scale public works such as large dams and reservoirs, bridges, hospitals, and schools. Its goals were to spend $3.3 billion in the first year, and $6 billion in all, to provide employment, stabilize purchasing power, and help revive the economy. Most of the spending came in two waves in 1933-35, and again in 1938. Originally called the Federal Emergency Administration of Public Works, it was renamed the Public Works Administration in 1935 and shut down in 1944.

Large Dams and Reservoirs: Effective Economic Stimulus?

The New Deal’s admirers claim that FDR’s massive spending projects provided jobs and economic stimulus. But opponents argue such jobs are funded by taking money from some people (taxpayers) and giving it to others, so there is no net stimulus; in fact, such programs are positively bad in that they divert capital from the private sector and inhibit healthy job creation. Economists John Joseph Wallis and Daniel K. Benjamin found that the public sector jobs “created” by New Deal spending programs either simply displaced or actually destroyed private-sector jobs. The various public works programs that FDR established and the billions of dollars he devoted to them only dried up capital in favor of government projects that were inherently wasteful, since they lacked the kind of profit-and-loss test that guides entrepreneurs in their investment decisions.