The Ohio State Arsenal, whose four octagonal towers overlook the Scioto River minutes from the capitol building, was built in 1861 on the site of what had been the state's first penitentiary.

To keep costs down, state officials used convict labor. Apparently they succeeded: 116 years ago, the four-story building and courtyard cost only $14,000 to build.

Today, at a cost of $1.73 million, the arsenal is being remodeled into a cultural arts center for the city of Columbus.

Its horse barn will become a sculpture studio. The first floor will be gerrymandered into a series of remodeled workrooms for enameling, jewelry and pottery-making and metalworking, according to Melvin B. Dodge, director of recreation and parks for the city. Paintings will be displayed on the outdoor patio which, until recently, was a courtyard where Ohio National Guardsmen drilled.

Most of the swords-into-paintbrushes renovation is being paid for by the federal government.

"JOBS for your community" a red, white and blue Commerce Department sign proclaims outside the Italiante-style arsenal on the city's near west side. The federal agency's self-advertisement overshadows a small plague attached to the red-brick outer wall that asserts proudly, although now incorrectly, that the arsenal is the "oldest building in Ohio still used for its orginal military purpose."

The federal government will pick up 80 per cent of the $1.73 million it costs to refashion the old arsenal, one of more than 2,000 projects authorized under a $2 billion, anti-recession program designed last year by Congress.

The program was supposed to stimulate employment mainly in the beleaguered construction industry, and at the same time help out state and local governments that had been forced to postpone many public works projects because of a decided lack of tax dollars.

Congress was so pleased with the notion of easing unemployment problems by providing funds for public works that last May it voted $4 billion more to fund a second round of projects, although it made some important changes in the program to insure that the communities with the worst unemployment problems got the most money.

Most of the projects approved in the first round of the so-called accelerated local public works program, like the arsenal renovation, are well under way, according to Robert T. Hall, assistant secretary of Commerce for economic development. The public works program was designed to get money flowing into the economy quickly and projects were supposed to start within 90 days of approval.

The arsenal renovation, for example, has been on the drawing boards for a while (the state gave the city the building as a gift a year and a half ago) and the city already had cleaned and renovated the brick, paid for the architect and started some first-floor renovation at a cost of about $400,000.

But further work was stalled until the local public works money became available early this year. Columbus submitted the arsenal renovation and several other projects to the federal government.

Like many of the projects authorized in the so-called accelerated public works program, the arsenal renovation in this city of $580,000 is denting the unemployment problem at a high cost per job part of the reason former President Ford opposed public works money.

And the job-creating zeal of Congress sometimes is lost on local officials.

Columbus officials, for example, are vague on how many jobs have been created by the renovation, one of four public works projects under way in the Ohio capital as a result of the first round of the federal program.

Phillip Lomax, director of economic development for the city, said that while city officials are concerned with unemployment, they are equally concerned with overall economic development of the Ohio capital and with getting needed public building projects completed.

Lomax admits that may be one of the major attitudinal differences between the city and the Congress. "Our concern primarily is with getting things done," he said. "I can't give you a head figure" on the number of persons at work! Lomax said.

But Lomax likes the accelerated public works programs because the city is not severely constrained in the projects it can propose and because the jobs that are created are real ones, not what he contemptuously calls "make work" public service jobs that Congress also is enamored of.

The Commerce Department demands that at least 30 per cent of the public works money be spent for labor. Dodge estimates that 55 per cent of the expenditures for the arsenal renovation have been for wages and benefits and the rest is for materials.

Phillip F. Lavelle, the Commerce Department's economic development representative in Ohio, agrees that local officials are often more concerned with getting their projects built than with the employment-creating effects of the program. "But that's the beauty of it," Lavelle says. "It is the best of both worlds. The $6 billion has some employment impact while at the same time it gives localities the means to continue to provide general public facilities. We still use some WPA facilities in this part of the country."

Unlike some other towns, apparently there has been little controversy in Columbus over what projects ought to be submitted to the federal government for approval. Bob Wade, of Columbus's Urban League, wonders whether renovating an arsenal, which was picked by the Commerce Department from many submissions made by Columbus, is the best way to spend public funds, but admits that under the requirements of the program it is hard to pick the kinds of projects that would most benefit the poorest areas of the city.

Merchants, in the main, seem willing to put up with the noise and inconvenience of another project which has put 10 men to work converting two downtown cross-streets into a brickwork mall closed to through traffic and aimed at attracting pedestrians and increasing downtown business.

Both these projects, and the others, do create jobs, often high paying ones. The average wage at the arsenal construction is about $10 an hour plus fringe benefits, construction supervisors said.

Jon Altman, a partner in the general contracting firm of Altman-Coady that is handling the arsenal renovation, estimated that the $12 million actually being spent on construction (some of the $1.37 million of federal money went to pay architectural fees, will create 35 to 40 full-time jobs for the 8 to 10 months the remodelling is supposed to take.

That is the equivalent of about 33 job-years, which means the arsenal project created jobs, all of them union, at a cost of about $36,000 a slot.

Jesse Carter and Jim Bond are two who found work on the project, Carter was lifted off the unemployment rolls while Bond avoided joining the jobless ranks.

Carter said he had been out of work for four months when the arsenal job came his way. "I'd worked for (Altman Coady) for 16 or 17 years as a laborer. But when they got no work, neither do I, I started working here last May. I hope it lasts for a long time," Carter said.

Jim Prosser, an Altman-Coady official, said a laborer like Carter makes $7.94 an hour plus fringe benefits.

Bond, a 44-year-old foreman who smiles slyly to acknowledge the similarity of his name to that of the fictional British super-spy, was spared either a spell of unemployment or a separation from his family.

A father of five and grandfather of two. Bond said he had just been laid off by the plumbing and heating frim where he had been a foreman for five years. R. H. Reeb Co., the plumbing and heating subcoatractor on the arsenal project, "found out I just got laid off and called me the next day," Bond recalled. "If I hadn't gotten this job, I'd have probably had to go out of town to find work."

On a recent day, there were 16 laborers and other workers plus 3 men working for a subcontractor who had just come in to put down flooring, according to project foreman Karl Schuler.

Altman said the renovation will provide business for about 20 to 25 sub-contractors, such as Bond's employer, and for 20 or so suppliers of materials, from the builder of the 30-foot kiln for pottery to the manufacturer of insulation for the walls.

While work continues on the first $2 billion batch of the first round of public works projects, Columbus and thousands of other state, local and county governments are awaiting allottment of federal money for the $4 billion second round.

The Commerce Department's Economic Development Administration is sifting through application for the second round now and hopes to have all projects approved by Sept. 30, according to Robert T. Hall.

The city submitted nine projects to the Commerce Department Lomax said he is confident that the five that were not selected for Round One will be approved in Round Two.

While Columbus's unemployment problems never approached those of, say, Pittsburgh, the much smaller Ohio city collected $2.7 million for four projects early this year, while Pittspurgh garnered no funds at all. Part of Columbus's relative success can be traced to the way the program was first designed by Congress and part, according to the Commerce Department's Lavelle, to the city's relatively well-organized approach to economic development.

Unlike many cities of its size, Lavelle said, Columbus had many projects in the mill that were already designed and could be started up in 90 days.

Lomax said the city has spent much time planning an entire developments strategy - aimed mainly at downtown - and was not, he says boastfully, forced to scramble to put together projects to meet federal deadlines as were some other cities.

In addition, although Columbus's 6.7 per cent unemployment rate was far lower than many of the nation's bigger, more industrial cities (Columbus's economy is broad-based with government and Ohio State University major employers). Congress designed the first round of public works to insure that 30 per cent of the money went to cities whose unemployment rates were lower than the national average although above 6.5 per cent).

So some hard-hit cities like Pittsburgh got no money because the 70 per cent of the $2 billion allotment ran out before it got to them while better-off cities like Columbus cashed in on the 30 per cent set-aside. That 70-30 differential was erased from the law last May, and the Economic Development Administration is treating the two rounds as if they were one, so that cities that lost out in Round One get relatively more money from Round Two.

Even so, Columbus has been told it will receive $6.6 million more for Round Two and knows what projects it wants to build. It wants to light eight streets, build an addition to the women's correctional institution, put up a library, build a special school and erect four special recreation complexes that can accomodate four simulataneous indoor basketball, tennis, or volleyball games.

One of these special complexes - modelled on similar facilities Ohio State University has built near student dormitories - is being built as part of Columbus's first round of projects.

The Commerce Department already has approved one of the sports complexes and the lighting project, Lomax said.

Even the best-organized economic development plans can hit snags, city finance director Michael J. Gable acknowledges.

Columbus hoped to use some public works money to build an administrative-educational complex at the zoo (based on a similar plan developed by the Knoxville, Tenn., zoo).

Public works rules permit a city to spend money at city-owned facilities outside the city limits. But the funds have to be spent within the same county. The city is in Franklin County, the zoo is in Delaware County, Columbus scrapped the request. CAPTION: Picture 1, Workers Jesse Carter and Lee Evans prepare to lay brick outside the former arsenal in Columbus, Ohio, that is being transformed into an arts center at a cost of $1.73 million. Associated Press; Picture 2, Worker Eddie Turner carries a plank through the renovation site. Associated Press