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Rh of the enlarged expenditure for construction and of other expenditures for arms and ammunition, was practically to erase unemployment and raise the national income to an unprecedented high level.

HIGHWAYS AND CONSTRUCTION ACTIVITY

Federal versus local government expenditures for highways.—In respect to highway construction and maintenance, table 24 shows that the average total expenditure by all agencies of government increased steadily from one of the 4-year periods to another prior to 1931, both in the absolute amount of the expenditure and in percentage of the national income, reaching a maximum predepression level of nearly 1.9 billion dollars and 2.5 percent of the national income. Through all these periods the Federal highway expenditure averaged only about 0.1 percent of the national income.

With the onset of the depression, in the period 1931–34, the Federal Government increased its regular highway-construction expenditure to an average for the period equal to 0.4 percent of the national income, and to this added highway work relief expenditures averaging for the period 0.2 percent of the national income. The total Federal increase, equal to 0.5 percent of the national income, was partially offset by a decrease in the expenditure of local governments so that the net increase, expressed as a percentage of the national income, was only 0.4 percent, and this was insufficient to prevent a decline in absolute expenditure which reduced the total to less than 1.5 billion dollars.

In the following period, regular Federal expenditures remaining at 0.4 percent of the national income, work-relief expenditures on highways increased to an annual average of 0.8 percent of the national income, a Federal increase representing 0.6 percent of the national income which was completely offset by an identical decrease in the ration of highway expenditures by local governments, so that the total ratio remained at 2.9 percent of the national income, the same as in the preceding period. In absolute amount, however, the total expenditure increased, with the national income, from less than 1.5 to a little more than 1.8 billion dollars, an amount slightly less than the average expenditure of the last predepression period.

In the last period, 1939–42, regular Federal expenditures for highway construction were reduced to an amount representing 0.2 percent of the national income and work relief highway expenditures to 0.5 percent of the national income, a total Federal reduction equal to 0.5 percent of the national income, which, with a further reduction in local government expenditures, dropped the total highway expenditure for the period to an average of 2.2 percent of the national income, equivalent to an absolute expenditure above 1.9 billion dollars.

Reduction in local expenditures offset Federal increases.—Throughout all of the first two 4-year periods from 1931 and for at least half of the final period, there was need to increase public construction and maintenance expenditures to offset the decline in private expenditures and provide employment for idle workers and idle industry. But the substantial efforts of the Federal Government to accomplish this result, in part by the stimulation of highway-construction activity, were inffective because of reductions in focal highway expenditures.

Nor could these reductions in local expenditure be justified on grounds of reduced need of expenditure. Throughout all three 4-year