IN ANTICIPATION of the problems that the end of a major war brings, much consideration is being given to postwar planning. A public works program, whether planned or unplanned, will surely be a part of any policy aimed at postwar economic stabilization. While we are still in the planning stage, a careful examination of the development of the public works theory should be of more than usual interest. The primary purpose, therefore, of this article is to give a rather exhaustive history of the development of this particular theory of public works policy. The pump-priming theory has, in general, passed through three stages. The first stage was characterized by a recognition that public expenditures tend to stimulate private industry and that this stimulus, once started, spreads from industry to industry. There was no careful analysis, however, of just how and to what extent public works expenditure could be expected to stimulate private industry. The second stage, beginning about I930, was characterized by careful attempts to describe the process of secondary expansion initiated in private industry and, under certain stated assumptions, to measure the magnitude of this expansion. During the last few years there has been a growing recognition that the principle of secondary effects explains only how public works expenditure may be employed to ''pump private industry up to a certain level. To maintain the higher level without continuing the primary expenditure, favorable tertiary effects-i.e., induced expansion in private industry in addition to the secondary effects-are necessary.