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Rh In the 4 years from 1935 to 1938, the normal public construction expenditure, expressed as a percentage of national income, actually fell off sharply, and but for the increase in Federal work relief would have produced, with the still sluggish private construction program, a new low record for the total construction ratio. The Federal relief program, then at its height, doubtless played a significant part in the increase of national income, which falteringly began in this period.

But it was not until the last 4-vear period, 1939-42, that the recovery trend of national income was firmly established, and, significantly, in this period the ratio of total construction expenditure rose to its highest point since the onset of the depression. Averaging 14.8 percent of the national income for the entire period, as shown in table 22, the total construction ratio did not fall below 14 percent in any year of the period, and in 1941 rose to a maximum of 16 percent coincidentally with a sharp increase in the national income from seventy-seven billion to nearly ninety-five billion dollars.

In the first 2 years of the period, reviving private construction combined with a stronger public construction program and large Federal work-relief expenditure to produce the greater total construction ratio. In the last 2 years, with Federal relief expenditures declining, private construction yielded to the mounting public construction incident to preparation for the war; and after Pearl Harbor, public construction reached its highest point of the 28-year period with an expenditure equal to 9.5 percent of a national income of nearly $120,000,000,000. With Federal work relief at the vanishing point, the country experienced in this first year of the war its nearest approach to full employment in more than a decade. Significantly, the year 1942 provided the sole example of public construction in sufficient volume to offset a reduced volume of private construction, and, this was for purposes of destruction.

The course of these changes in the character of construction activity and in the national income and construction-income ratio is clearly shown in table 23.

Precepts for stabilizing the economy.—From the foregoing discussion, three definite precepts emerge to form a basic consideration in the maintenance of a stabilized economy.


 * 1. The principle of employing needed public works to stimulate a waning private economy is demonstrably sound.