THE NEW DEAL
SOCIAL
and ECONOMIC CHANGE
1933-1939
Richard
J. Garfunkel
January
20, 2009
I.
The Crash 1929 and Its
Aftermath
A.
The economy 1919-29
1.
The boom after WWI
2.
Growth of National Income in
the early 1920’s
3.
WWI debt owed to the United
States by the Allies
4.
Recurring business cycle
B.
The Stock Market Collapse of
1929
1.
Overvalued stocks
2.
Margin debt owed to brokers
3.
Stock Market value in 1932;
17% of Sept ’29 value
4.
Reduced consumer spending
5.
Over-saturated automobile
market
6.
Reduction of immigration-
reduced housing
C.
The Depression
1.
Collapse of raw material
prices
2.
Decline of exports
3.
Collapse of German economy
4.
The Smoot-Hawley protective
tariff
5.
Retaliatory foreign tariffs
and trade restrictions
6.
British withdrawal from the
Gold Standard
7.
Liquidity crisis over the
Federal Reserve’s policies
II.
The Aftermath 1929-32
1.
Business Failures per
100,000 concerns
a.
1928 -109
b.
1929- 104
c.
1930- 122
d.
1931- 133
e.
1932- 154
f.
1933- 100
g.
1934- 61
h.
1935- 62
2.
Gross Nation Product (Goods
and Services of U.S.A.)
a.
1929- 103.8 Billion
b.
1930- 90.7
c.
1931- 75.9
d.
1932- 58.3
e.
1933- 55.8
f.
1934- 64.9
g.
1935- 72.2
h.
1936- 82.5
i.
1937- 90.4
j.
1938- 84.7
k.
1939- 90.5
l.
1940- 99.7
m.
1941- 124.5
2
3.
Employment and the %
Unemployed (thousands)*
a. 1928- 46,057 4%
b.
1929- 47,925 3
c.
1930- 46,081 6.3
d.
1931- 42,727 16.5
e.
1932- 38,727 29.4
f.
1933- 38,827 30.5
g.
1934- 41,474 23.3
* US
Bureau of the census, “Historical Statistics of the United States 1789-45
Washington,
DC, US Government Printing Office 1952
3.
Labor
Force and its Components & the % of Unemployed **
Civilian labor force and
Non-farm Employees
a. 1928 4.2 6.9
b. 1929 3.2 5.3
c. 1930 8.9 14.2 +168
d. 1931 16.3 25.4 +55
e. 1932 24.1 36.3 +43
f. 1933 25.2 37.6 -.04
g. 1934 22.0 32.6 -14
h. 1935 20.3 30.2 -8
I 1936 17.0 25.4 -16
J. 1937 14.3 21.3 -13
(1933-37 -44%)
k. 1938 19.1 27.9 +31
l 1939 17.2 25.2 -10
m. 1940 14.6 21.3 -16
n. 1941 9.9. 14.4 -34 (1933-41 –62%)
**The Statistical History of the United States-by Ben
Wattenberg ,Basic Books, 1976, page 126
1 5 All Production Workers Average hourly
earnings and weekly earnings
a. 1928 .579 $27.80
b.
1929 .590 $28.55
c.
1930 .589 $25.84
d.
1931 .564 $22.62
e. 1932 .498 $17.05
f. 1933 .491 $17.71
g 1934 .580 $20.06
h. 1935 .599 $22.23
i. 1936 .619 $24.39
j.
1937 .695 $26.80
k. 1938 .716 $24.43
l. 1939 .720 $27.05
m.
1940 .739 $28.54
n.
1941 .814 $33.62
III.
The Social Atmosphere
1.
National Conditions:
a.
Vast unemployment
b.
Collapse of commodity prices
c.
Failure of the farms
d.
Immigration from the farms
to the Coasts
e.
Breadlines
f.
Bank failures
g.
Social unrest
2.
Political Consequences
a.
Shift in power
b.
1860-1932 GOP the dominant
party
1.
Controlled the Senate for 62
years
2.
Controlled the House for 46
years
3.
Two Democratic Presidents
(16 years) Cleveland
and
Wilson
4.
Loss of Congress and the
Presidency
5.
GOP unused to minority
statue
c.
Senate
Dems Reps Other
1.
1933-4 60 35 1
2.
1935-6 69 25 2
3.
1937-8 76 16 4
4.
1939-40 69 23 4
d.
House
1.
1933-4 310 117 5
2.
1935-6 319 103 10
3.
1937-8 331 89 13
4.
1939-40 261 164 4
e.
Presidency- Electoral Votes
and %
1.
1932 472 57.4
2.
1936 523 60.8
3.
1940 449
53.5
IV.
The
Rise of the New Deal- (Phrase written for FDR’s
acceptance speech at 1932
Democratic National Convention in Chicago. Theodore Roosevelt’s Square Deal,
Woodrow
Wilson’s New Freedom)
1. The First New Deal 1933-4
Aims ( The first Hundred Days) 1.
a.
Unemployment and poverty
relief
b.
Economic Recovery
c.
Economic and Social Reform
2.
Phase One- Stop the Panic-
Bring back confidence in the government
a.
The Hundred Days-
Legislation- 1933
1.
Unemployment relief- jobs-
CCC, PWA, FERA
2.
Banking and Security
Reform-FDIC
3.
Regional Development- TVA,
CWA
4.
End of Prohibition- Repeal
of the Volstead Act
5.
National Planning- NRA , NLB
6.
Farm Relief- AAA, FCA
b.
Executive Action
1.
Fireside Chats
2.
Publicity
3.
Bank Holiday
4.
Reversing the panic
5.
Support of Business
6.
Phase Two- Social Change and
Reform- 1934
a.
The Emergence of Labor, Federalization and Regulation
1.
Labor Laws- NRB, NLRB
(Wagner Act)
2.
Housing- FHA
3.
Regulation- FCC-SEC
4.
Transportation- NRAB-
railroads
7.
The NRA- National Recovery
Administration
a.
Government and Business
Cooperation
b.
AAA factories couldn’t
prosper while farms were in a
depression.
c.
Pump- Priming
1.
PWA- Harold Ickes- Interior
Dept.
2.
FERA- Harry Hopkins –
3.
Monetary Expansion- going
off the Gold Standard
deficit
spending- Keynsian economics.
d.
Electoral Support- first and
only time Presidential Party gains
seats in
both Houses
8.
Criticism over the pace of
progress
a.
Thunder on the Left and the
Right
1.
The Left:
a.
Huey Long
b.
Father Coughlin
c.
Francis Townsend
d.
Norman Thomas
e.
Upton Sinclair
f.
The LaFollettes
2.
The Right
a.
Herbert Hoover
b.
The Liberty League
c.
Business community
V.
The 2nd New Deal
1935- Response to Criticism
1.
New Legislation and its
Impact
a.
Social Impact- REA- rural
electrification
b.
Soil Conservation- SCS-
helping farmers
c.
National Youth Act- NYA-
social involvement
d.
Old Age Pensions- SSB-
Social Security
e.
Employment- WPA- helping
employ non factory labor
f.
Bituminous Coal Labor Board-
labor in the minds
2.
Judicial Review
a.
Supreme Court rules NRA
unconstitutional
b.
Other laws (Social Security, NLRB, Tax reform,
utility
dissolution threatened by Court review
3
Electoral Coalition
a.
Political referendum of 1936
1.
Landslide- winning 46
states- 60.8% of the vote
2.
Uniting different groups
a.
Urban workers
b.
Farmers
c.
Ethnic and racial minorities
d.
Intellectuals
e.
Southern poor
b.
Consequences
1.
Legislative dominance 1936
to the 1970’s
2.
New constituencies and
favored legislation
a.
Labor laws
b.
Farm subsidies
c.
Welfare
d.
Religious and ethnic
toleration- job set-a-sides
e.
Educational opportunities
f.
Medicare, Medicaid
5
V.
The Third New Deal- 1937-8
1.
Electoral success versus
Judicial Review
a.
Court Re-organization
1.
Legislation to expand the
Court from 9 to 15 members
2.
Age criteria ( many of the
Justices were over 70 years old, 7 were appointed by Republican Presidents and
most were conservative)
3.
Congressional Coalition
halts plan
4.
Justices retire
5.
Legislation upheld
b.
Roosevelt eventually
appoints all new court
2
Third New Deal Legislation
a.
Farm Security- FSA- 1937,
Fed. Crop Ins. Corp. FCIC 1938
b.
Housing -USHA- Housing
Authority -1937
c.
Regulation- CAA- Civil
Aeronautics -1938, Maritime Labor Board- MLB Fair Labor Standards Act
d.
Federal Reorganization- BOB-
Bureau of the Budget, Federal
Security Agency,
FSA
3.
Electoral Purge of 1938 and
political set-backs
VI-
Evaluation
of the New Deal
1.
Criticism from the Right
a.
Government intervention in
the economy and society had gone
to far.
b.
Market mechanism impaired
c.
Too much reliance on
government
d.
Too much concentration of
power in Washington
2.
Criticism from the Left
a.
New Deal saved a
capitalistic system that failed
b.
Achieved only minor reforms
c.
Recovery did not really come
until WWII
d.
Inequalities of income were
not noticeably narrowed
e.
Relief from poverty was
stingy and limited
3.
Both sets of these arguments
were rejected by a majority of the electorate and
historians.
4.
Programs universally
applauded: CCC, FDIC, TVA, Social Security
5.
WPA was on one hand the most
popular and the most unpopular!
6.
Much of the New Deal was
unknown to most of the public.
7.
The New Deal enmeshed
politics and economics- regulated or “safety-net capitalism
8.
Did not bring full economic
recovery! Unemployment remained high and economic activity never fully
recovered to 1928 levels.
In
Roosevelt’s own words this introduction to the first volume of his collected
papers and addresses possibly sums up his thoughts on the philosophy of the New
Deal:
There were inconsistencies of methods…inconsistencies
born of insufficient knowledge. There were
inconsistencies springing from
the need of experimentation. But through them all, I trust that there
also be found a consistency and
continuity of broad purpose.
Consistently I have sought to
maintain a comprehensive and efficient functioning of the representative
form of democratic government in
its modern sense. Consistently I have sought through that form of
government to help our people to
gain a larger social justice.
Basically
we aim at the assurance of a rounded, permanent national life. Change from what
historian Arthur Schlesinger called “single-interest” government, to the goal
of a comprehensive and efficient functioning of the representative form of
democratic government. FDR’s desire for a “rounded permanent national life,”
expressed his idea of a stronger sense of community mutuality and obligation,
man to man, and man to land, which were in his view the only basis of a lasting
security. Probably the most central concept of the New Deal, at least in terms
of frequency was interdependence. In private, FDR mixed the satisfaction of
achievement with disappointment that the New Deal system had not come closer to
his intentions. But he often acknowledged its flaws as democracy’s price.
After
the war, he said, there must be renewed efforts to achieve resource and public
works planning… In the meantime, shortcomings should be noted in the spirit of
a remark he made in 1936, so often quoted.
The immortal Dante tells us that divine justice
weighs the sins of the coldblooded and the sins of the
warmhearted in different scales.
Better the occasional faults of a government that lives in the spirit
of charity that the constant
omissions of a government frozen in the idea of its own indifference.
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New Deal vs |
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Billions |
National |
Defense |
Unem |
Civil |
Em- |
WPA |
Increase/ |
GDNP |
Increase/ |
Def % |
Defense |
|
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|
Year |
US |
Debt |
Spending |
% |
Labor |
ployed |
|
Decrease |
|
Decrease |
Budget |
As % of |
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Budget |
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Force |
millions |
Mill |
% change |
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% change |
|
GDNP |
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|
1928 |
3.7 |
17.6 |
1.3 |
4.2 |
47.1 |
45.12 |
na |
|
97.4 |
|
0.35 |
0.01 |
|
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|
1929 |
3.8 |
16.9 |
1.4 |
3.2 |
47.78 |
46.21 |
na |
-24 |
103.6 |
6.3 |
0.37 |
0.01 |
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1930 |
4 |
16.2 |
1.5 |
8.8 |
48.52 |
44.18 |
na |
175 |
91.2 |
-11.9 |
0.38 |
0.02 |
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1931 |
4.1 |
16.8 |
1.6 |
16.3 |
49.35 |
41.3 |
na |
86 |
76.5 |
-16.1 |
0.39 |
0.02 |
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1932 |
4.3 |
19.5 |
1.7 |
24.1 |
50.1 |
38.03 |
na |
48 |
58.7 |
-23.3 |
0.40 |
0.03 |
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1933 |
5.1 |
22.5 |
1.4 |
24.9 |
50.88 |
38.05 |
na |
4.4 |
56.4 |
-3.9 |
0.27 |
0.02 |
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1934 |
5.9 |
27.5 |
1.1 |
21.7 |
51.65 |
40.31 |
na |
-12.9 |
66 |
14.5 |
0.19 |
0.02 |
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1935 |
7.6 |
28.7 |
1.1 |
20.1 |
52.28 |
41.67 |
na |
-7.3 |
73.3 |
11.1 |
0.14 |
0.02 |
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1936 |
9.2 |
33.8 |
2.7 |
16.8 |
53.02 |
43.99 |
1.995 |
-16.4 |
83.8 |
14.3 |
0.29 |
0.03 |
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1937 |
8.8 |
36.4 |
2.2 |
14.3 |
53.77 |
46.06 |
2.227 |
-14.8 |
91.9 |
9.7 |
0.25 |
0.02 |
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1938 |
8.4 |
37.2 |
1.7 |
19 |
54.32 |
44.12 |
1.932 |
38 |
86.1 |
-6.3 |
0.20 |
0.02 |
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1939 |
9.3 |
40.3 |
1.9 |
17.2 |
55.22 |
45.74 |
2.911 |
-9.5 |
92.9 |
7.9 |
0.20 |
0.02 |
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1940 |
10.1 |
43 |
2.2 |
14.6 |
55.64 |
47.52 |
1.971 |
-15 |
101.4 |
10.2 |
0.22 |
0.02 |
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1941 |
14.2 |
49 |
7.1 |
9.9 |
55.91 |
50.35 |
1.638 |
-33 |
126.4 |
24.7 |
0.50 |
0.06 |
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1942 |
35.5 |
72 |
27.1 |
4.7 |
56.41 |
53.75 |
na |
-52.5 |
161.9 |
28 |
0.76 |
0.17 |
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1943 |
83 |
137 |
70.4 |
1.9 |
55.54 |
54.47 |
na |
-55.3 |
198.6 |
22.7 |
0.85 |
0.35 |
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1944 |
100 |
201 |
86.1 |
1.2 |
54.63 |
53.96 |
na |
-41.6 |
219.8 |
10.7 |
0.86 |
0.39 |
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1945 |
106 |
259 |
93.7 |
1.9 |
53.86 |
52.82 |
na |
63 |
223.1 |
1.5 |
0.88 |
0.42 |
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1946 |
66 |
269 |
53.3 |
3.9 |
57.52 |
55.25 |
na |
105 |
222.3 |
0 |
0.81 |
0.24 |
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a) Unemployment dropped 57% from 1933 |
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b) A cutback in spending (C18) and a tightening of the Federal |
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c) Aggressive spending reduced the |
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d) WPA employment 1935-6 thru 1941 |
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total unemployment was in the single |
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adding to the total employment. (I18) |
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e) The percentage of the defense |
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Defense spending as part of the |
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was 14.6%. If one includes 2 million |
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f) Total spending during the New Deal |
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g) Spending during WWII 1942 through |
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5.3 times the amount in approximately |
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h) The National Debt doubled from |
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i) NA – WPA was created in 1935 and |
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