Full Employment Act 60 Stat. 23 (1946)

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FULL EMPLOYMENT ACT 60 Stat. 23 (1946)

Despite the post-world war ii desire to shake off wartime economic controls, Congress passed a Full Employment Act in February 1946, establishing a new concept of the relation of the government to the national economy. The measure declared officially that it was the responsibility of the national government to insure effective operation of the country's economic system and maintain maximum employment, production, and purchasing power. Through a newly created three-person Presidential Council of Economic Advisors, the nation's economic patterns were studied and analyzed with the government responsible for evolving new controls essential to the nation's economic security. These included: tax rates designed to produce a predetermined deficit or surplus based on whether the administration sought to stimulate or cool off the economy; controlling the ease or tightness of credit; raising or lowering public spending levels; and maintaining wage and price guidelines. Such use of deficit financing, public works, and economic controls might alleviate the negative effects of the business cycle and avoid another major economic depression.

The measure was a constitutional landmark. It formally rejected the concept that the government's main role in the economic sphere was negative: to maintain a free enterprise system by preserving, through laws and court decisions, a hands-off policy toward American economic activities.

Paul L. Murphy


Bailey, Stephen K. 1950 Congress Makes a Law: The Story Behind the Employment Act of 1946. New York: Columbia University Press.