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The Works Projects Administration (WPA) was established by Franklin D. Roosevelt in 1935 as part of the New Deal attempt to combat the Depression. This included the Federal Theatre Project (FTP), an attempt to offer work to theatrical professionals. Harry Hopkins, hoped it would also provide "free, adult, uncensored theatre". Hallie Flanagan was named national director.

Over a thousand theatre productions took place in twenty-two different states. Many of these were given free in schools and community centres. Although performers were only paid $22.73 a week, the FWP employed some of America's most talented artists. In 1934 Orson Welles directed Macbeth for the Negro People's Theatre. He also directed The Cradle Will Rock, a musical by Marc Blitzstein.

Elmer Rice was placed in charge of the Federal Theatre Project in New York. In 1936 alone, the FTP employed 5,385 people in New York. Over a three year period over 12 million people attended performances in the city. One of Rice's innovations was the Living Newspaper (plays which were essentially theatrical documentaries). The first of these plays, Ethiopia, which dealt with Mussolini's invasion of the country, was banned by Harry Hopkins. The most successful of the Living Newspapers was Arthur Arent's account of poverty in the United States, One Third of a Nation (1938).

One play, It Can't Happen Here, by Sinclair Lewis, in 1936, was produced simultaneously in 22 cities. The Lost Colony (1937) by Paul Green, was an outdoor historical pageant that was performed in a Works Projects Administration built theatre on Roanoake Island. As Harold Clurman commented, the Federal Theatre Project was: "The most truly experimental effort ever undertaken in the American theatre."

During its four years existence the FTP launched or established the careers of such artists as Orson Welles, John Houseman, Will Geer, Arthur Miller, Paul Green, Marc Blitzstein, Canada Lee and Elmer Rice.

Some politicians objected to the idea of subsidized theatre. J. Parnell Thomas, an influential Republican Party politician, also objected to the radical message in some of these plays. Thomas claimed that: "Practically every play presented under the auspices of the Project is sheer propaganda for Communism or the New Deal." As a result of these complaints, Congress abolished the project.