Farangis Abdurazokzoda Some scholars see the New Deal as a radical break from America’spast political tradition, while others argue that at its heart,the New Deal was actually quite conservative. What evidence do yousee for each of those positions, and where do you ultimately comedown on the question?
U n i o n C o l l e g e , N YF a l l 2 0 1 2 W o r d C o u n t 2 , 9 3 6
Depression & New Deal
Never doubt that a small group of thoughtful, committed citizens can change the world.
Indeed, it is the only thing that ever has.
~ Margaret Mead
It was not hard for a young, always smiling, Democrat
Franklin Delano Roosevelt to outrun Republican Herbert Clark
Hoover, whose perpetual promises of “prosperity” being “just
around the corner”1 became immensely unpopular towards the end
of his administration. While campaigning in the 1932
Presidential elections, Roosevelt widely advertised the New
Deal, a project that promised to replace Adam Smith’s
“invisible hand”2 as a self-correcting mechanism in which
Hoover and conservatives had almost a religious belief.
Roosevelt offered people a “visible” support. Direct
assistance was precisely what voters sought for and lacked.
Promising a reform in his policy, Franklin D. Roosevelt won by
a landslide with only 5 states voting Republican and the rest
Democrat3. Yet, the newly elected President had only a vague
1 Andrew Morris, Lecture, HST 121, September, 17.2 Andrew Morris, Lecture, HST 121, October, 5.3 Andrew Morris, Lecture, HST 121, September, 24
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sense of what the New Deal meant at that point,4 as well as
what it was going to turn out to be later in the future.
Many have critiqued the “ideological innocence”5 of the
New Deal both before and after Roosevelt took office. But, the
New Dealers held a different opinion. Inspired by the room for
innovation created during the Great Depression, they hoped to
repair not only the economic, but also the political breakdown
of the 1920s through the early 1930s.6 The New Dealers shared
a conviction that organized social intelligence could shape
society, and it was with a colossal amount of research and
dedication to the project that Roosevelt and his intellectual
advisors, also known as the “Brain Trust”, tried to derive
instrumentalities for “central direction of the economy.”7
Members of Roosevelt’s Brain Trust sharply differed in their
views of government and business cooperation and had their own
interpretation of the word “cooperation.” For instance,
4 Andrew Morris, Lecture, HST 121, September, 26.5 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (NewYork: Harper Torchbooks, 1963), 33.6 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (NewYork: Harper Torchbooks, 1963), 335.7 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (NewYork: Harper Torchbooks, 1963),33.
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Raymond Moley, on the one hand, wanted government cooperation
with the businessmen; on the other hand, Rexford Guy Tugwell
distrusted the businessmen and wanted to expand the role of
federal governments in administering the economy. Yet, their
shared disgust with “laissez-faire, trust-busting, and
socialism”8 made it possible for them to work as a team in
order to shape the economic and political instrumentalities
that marked the next twelve years of Roosevelt’s
administration.
It is inarguable that Roosevelt’s presidency and
philosophy of the government was very different from that of
Warren Harding, Calvin Coolidge, and Herbert Hoover. Coolidge
inherited the conservative theme of Harding’s administration
“return to normalcy” movement: pro-business, free-market
ideology, tax cut policies. He maintained status quo for the
benefit of business,9 often at the expense of the working
8 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (NewYork: Harper Torchbooks, 1963), 35.9 Frederick Lewis, Allen. University of Virginia, "Only Yesterday: An Informal History of the 1920's." Last modified January 11, 2001. Accessed November 14, 2012. http://xroads.virginia.edu/~hyper/allen/ch7.html.
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class. Coolidge spent an enormous amount of effort not to
hinder the trust of the industrial and banking community. His
veto on the McNary-Haugen bill, even though the bill passed
the second time in 1927, serves as evidence. The bill would
put an inflationary pressure on the economy, and for business
communities the very notion of inflation was dreadful:
inflation would lead to an increase in relative price
volatility; the depreciation of currency would also make
borrowers better off at the cost of lenders (banks).
After Hoover shattered the image of bankers, blaming them
for the 1929 Great Crash, over 9,000 banks across the country
collapsed, wiping out the lifetime savings of 900,000
depositors.10 Thus, Franklin D. Roosevelt was particularly
sensitive about the banking sector, which, if properly
managed, is essential in “keeping the wheels of industry and
agriculture turning around.”11 Realizing that “the word
inflation grates harshly on the ears of many bankers,”12 Irving10 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal, (NewYork: Harper Torchbooks, 1963), 38.11 “First Fireside Chat: Banking Crisis (1933),” by F.D. Roosevelt, Banking Message, 03/09/2012, iTunes12 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal, (NewYork: Harper Torchbooks, 1963), 38.
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Fisher’s doctrine of “reflation,”13 a euphemism for boosting
prices until they are stabilized, was espoused. FDR extended
federal government assistance to private bankers.14 He
appointed a Texas banker Jess Jones15 to ameliorate the
Reconstruction Finance Corporation, which under Hoover made
banks more indebted, and which Jones converted into an agency
that would recapitalize banks via buying the banks’ preferred
stocks and further bolstering their capital. Roosevelt also
insured depositors in the safeness of their deposits. Agencies
that would protect consumers’ interests such as the Federal
Deposit Insurance Corporation (FDIC) insured people’s
deposits; the Securities and Exchange Commission (SEC)
eliminated information asymmetry between buyers of securities
and their sellers, which returned people’s trust in the
financial industry.16 Roosevelt was said to “save capitalism in
13 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal, (NewYork: Harper Torchbooks, 1963), 38.14 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal, (NewYork: Harper Torchbooks, 1963), 43.15 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal, (NewYork: Harper Torchbooks, 1963), 71-72. 16 Andrew Morris, Lecture, HST 121, October, 3.
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eight days.”17 It is argued that these were conservative
actions to encourage conservative investment, since the
emergency Banking Act of 1933 was largely the work of bankers
and Hoover’s Treasury officers; Roosevelt and his Brain Trust
continued to run it, but also redirected the course of those
agencies in a different way.
During the 1920s, a period known as “Coolidge
prosperity”, middle-class Americans indulged themselves in the
splendors of consumerism, and advertisements homogenized the
people, while unskilled and semi-skilled workers saved rather
than consumed. As historian Edward A. Zivich wryly noted, “the
struggle for security, not the struggle to keep up with
Joneses, dominated working-class life in the prosperity
decade.”18 For the working class, “coal-miners, textile-
manufacturers, ship-builders, and shoe and leather
manufacturers,”19 as well as for farmers, prosperity was not a
17 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (New York: Harper Torchbooks, 1963), 338.18 Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago 1919-1939 (Cambridge: Cambridge University Press), 102.19 Frederick Lewis, Allen. University of Virginia, "Coolidge Prosperity,” Only Yesterday: An Informal History of the 1920's. http://xroads.virginia.edu/~hyper/allen/ch7.html.
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reality. The economic downturn during the Great Depression
only worsened their living conditions.
Farmers constituted 27%20 of the American workforce in the
1920s; thus their participation in the economy was essential
in terms of consumption - the largest factor of aggregate
demand that leads to economic growth. Enormous surpluses in
the aftermath of World War I hugely deflated prices on
agricultural commodities and significantly decreased farmers’
purchasing power. The McNary-Haugen Bill21 attempted to fight
deflating agricultural products; it was proposed twice during
the Coolidge administration, and twice it had been vetoed.
Conservatives’ belief in self-regulating market mechanisms
prohibited the idea of government intervention in the realm of
free markets in any way, shape or form.
Despite a myriad of evidence that the invisible hand did
not work for either farmers or manufacturers, it was
20 Growing a Nation. The Story of American Agriculture, "Historical Timeline- Farmers & the Land." Accessed November 15, 2012. http://www.agclassroom.org/gan/timeline/farmers_land.htm.
21 Paul Conkin, “A New Deal For Agriculture,” Major Problems in American History (Boston: Wadsworth, 2011), 259-261.
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unthinkable for Coolidge or Hoover to “manipulate the prices”
or control production. Instead, Coolidge favored Hoover’s
mechanization22 project for agriculture. In order to be
competitive, many farmers bought machinery on installment.23
Machinery provided them with a greater efficiency and
strengthened the farmers’ “natural impulse”24 to produce more.
Further increases in the volume of production only worsened
farmers’ conditions; they now also faced waves of
foreclosures, unable to repay loans on purchased machinery.
The resulting overproduction is argued to be one of the
reasons for the persistence and the magnitude of the Great
Depression.25 Roosevelt sought the replenishment of democracy
and restoration of the face of the federal government;
breaking the long tradition of laissez-faire, FDR marked the
end to a passive government role, and granted the federal
22 Frederick Lewis , Allen. University of Virginia, "Coolidge Prosperity,” Only Yesterday: An Informal History of the 1920's. http://xroads.virginia.edu/~hyper/allen/ch7.html.23 Andrew Morris, Lecture, HST 121, October, 5.24 Andrew Morris, Lecture, HST 121, October, 5.25 Robert Himmelberg, “Understanding the Depression,” Major Problems in American History (Boston: Wadsworth, 2011), 196.
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government the new role of interventionism and attention to
the needs of the underprivileged.
Even though critics stamped the Roosevelt administration
a “labor government,” the New Dealers had more interest in
reforms in the agricultural sector. 26 Rexford Tugwell, who
was appointed as Undersecretary of the United States
Department of Agriculture in 1934, was particularly concerned
with the “wrongs of famers.”27 The focal point, however, was
restoring the balance between industry and agriculture, which
required raising farm prices. To achieve this equilibrium,
there was a need to cut production in the agricultural sector.
In contrast with Hoover’s efforts to reduce production, the
Agricultural Adjustment Act (AAA) of 1933 paid farmers to plow
under millions of acres of cotton and to slaughter millions of
baby pigs.28 The benefit payments, farm credit, and debt
adjustment all provided farmers with the assistance that
26 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (New York: Harper Torchbooks, 1963),35.27 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (New York: Harper Torchbooks, 1963),35.28 Andrew Morris, Lecture, HST 121, October, 5.
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Hoover’s Federal Farm Board had failed to give.29 These
government measures to reach balance in agriculture outraged
many conservatives. Nevertheless, this period up to the
beginning of World War II was the “golden age” for farmers in
the U.S.
Similarly, the National Recovery Administration (NRA),
headed by General Hugh Johnson, was set up to secure the
agreement of major industries to government-backed codes,30
which were designed to stop the deflationary spiral. The major
industries had been offered powers to set prices and
production limits if they consented to put a floor under wages
and limit working hours up to 35 hours a week.31 Johnson relied
on a massive publicity campaign to achieve his goals; he
plastered the NRA symbol across the country, a stylized blue
eagle, organized parades and appealed to the patriotism of
both businesses and consumers, inducing them “to do their
29 Anthony J. Badger, The New Deal. The Depression Years, 1933-1940, (Chicago: Ivan R. Dee, 1988), 300.30 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (New York: Harper Torchbooks, 1963), 64-68.31 Andrew Morris, Lecture, HST 121, October, 15.
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part.”32 Unlike Hoover’s vain exhortations to keep wages up,
the NRA “put a statutory floor under wages, checked the
downwards-deflationary spiral and halted the relentless
erosion of labor standards.”33
However, it was not groundless for the Roosevelt
administration to be titled as a “labor government.” During
his administration, Roosevelt provided “unemployable workers”
with direct relief through the New Deal’s Federal Emergency
Relief Administration (FERA) in 1933-1935, and its subdivision
Civil Works Administration (CWA), and provided jobs through
projects such as the Work Project Administration (WPA) as well
as Work Pays America (WPA),34 which employed a broad range of
blue-collar workers, artists, and writers. Roosevelt also
worked out a Civilian Conservation Corps in 1933 for the young
men. All of these were essential to live through the
depression. The Wagner Act, introduced in 1935, strengthened
the NRA’s section 7a,35 which reflected the support of labor;32 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (NewYork: Harper Torchbooks, 1963), 65-68.33 Anthony J. Badger, The New Deal. The Depression Years, 1933-1940, (Chicago: Ivan R. Dee, 1988), 300.34 Andrew Morris, Lecture, HST 121, October, 12.35 Andrew Morris, Lecture, HST 121, October, 29.
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it allowed for unionization, gave unions the right “to bargain
in good faith”, and gave workers the right to sue their
employers if they faced unfair labor practices.36 The New Deal
welfare programs provided direct assistance to about 35 per
cent of the population.37 As a result, Roosevelt gained long-
lasting loyalty from the lower-income voters whom the New Deal
provided with essential benefits.
In contrast with labor, the relationship between the
government and the business class had deteriorated. The NRA
was hardly tolerated among the corporate elite, who most hoped
for its demise.38 Companies such as General Electric (GE)
undertook a “silk-glove” approach and promoted rather than
fired those who attempted to unionize. Auto-industries such as
Ford and General Motors (GM)’s “iron-fist” approach paid
workers to inform on those who attempted to unionize.39 Direct
relief programs and Social Security were considered by many to
be a slippery slope towards socialism. Conservatives36 Andrew Morris, Lecture, HST 121, October, 17.37 Anthony J. Badger, The New Deal. The Depression Years, 1933-1940, (1988), 301.38 Anthony J. Badger, The New Deal. The Depression Years, 1933-1940, (1988), 302.39 Andrew Morris, Lecture, HST 121, October, 19.
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criticized Roosevelt’s radical expansionist measures in the
New Deal projects such as AAA, NRA, the Wagner Act, and TVA or
Tennessee Valley Authority Act, which Roosevelt
enthusiastically embraced and which Hoover condemned, since to
him it was unthinkable to allow intrusion of the government
“where the private sector should operate.”40
The New Deal’s flaws were self-evident. The NRA failed to
inject additional purchasing power, resulting instead in
price-manipulating monopolies and NRA cynics. AAA helped only
large farms; reduction in the cotton acreage marginalized
African American tenants and sharecroppers,41 who had to move
to urban areas and faced segregation and all the vices of
unequal economic opportunity.42 Unemployment never dropped
lower than 14 percent43 in the 1930s. Numerous uncertainties,
as well as the benefits of the Wagner Act invigorated waves of
strikes and protests across the country in the “turbulent”
40 Andrew Morris, Lecture, HST 121, October, 5.41 Anthony J. Badger, The New Deal. The Depression Years, 1933-1940, (Chicago: Ivan R. Dee, 1988), 305.42 Cheryl Greenberg, Or Does It Explode? : Black Harlem in the Great Depression, (Cary, NC, USA : Oxford University Press, 1997), 114.43 Andrew Morris, Lecture, HST 121, November, 8.
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1930s. However, workers did not wish for an alternative
system. German Nazism, Italian Fascism, and Soviet Communism
did not hold allure for them. 44 Machiavelli would explain the
unattractiveness of an alternative system being the reason
that “most people refuse to believe in anything they have not
experienced,”45 but the New Haven worker better explained his
resistance to Socialism: “As a Democrat or a Republican, at
least once in a while he [the worker] could get drunk on
election night […] but Socialists […] when do you think
they’re goin’ to have a chance to get drunk?”46 The New Dealers
did predict radicalism in due course if no steps were taken to
improve the conditions of the poor; the threat of disorder was
also a useful spectre to raise before the eyes of conservative
politicians.47 But if anything, the New Deal stimulated rather
than defused disorders. Demonstrations by the unemployed were
mostly unavailing efforts to prevent cuts in the New Deal. The
workers did not want a change in the system per se, despite
44 Melvyn Dubofsky, "Not So Turbulent Years" (Albany, NY, 1986): 21645 Melvyn Dubofsky, "Not So Turbulent Years" (Albany, NY, 1986): 21746 Melvyn Dubofsky, "Not So Turbulent Years" (Albany, NY, 1986): 21847 Anthony J. Badger, The New Deal. The Depression Years, 1933-1940, (Chicago: Ivan R. Dee, 1988), 303.
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the fact that the New Deal’s deficiencies were glaring, but
they wanted them improved.
In 1933-1935 Roosevelt felt a threat to his political
standing and political system itself coming from the left:
socialist and communists parties.48 During those years Upton
Sinclair, Francis Townsend, Huey Long and father Coughlin
became popular figures. They called out the failures of the
New Deal, addressing the issues of poor wealth distribution,
lack of economic security and social justice.49 And despite the
fact that the content of their addresses was often overly
simplistic and even incoherent, they gained enormous support
from the people. Although Townsend’s plan was impractical, and
the speeches of Long and Coughlin were described as “a
demagogic attempt to delude the public with empty, impractical
promises,”50 they were not entirely incorrect. Townsend, Long,
and Coughlin exploited current concerns basing it off some of
48 Andrew Morris, Lecture, HST 121, October, 3.49 “Huey Long and the Share Our Wealth Society, 1935,”Major Problems in American History (Boston: Wadsworth, 2011), 39650 Alan Brinkley, “Dissidents and Demagogues,” Major Problems in American History (Boston: Wadsworth, 2011), 404.
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the oldest and deepest impulses in American political life.51
There were real problems that people were facing: no insurance
or pensions for the old and disabled, unequal opportunity in
education, unjust tax policies and so on. Such movements
particularly Townsend’s movement, influenced the development
of the reformist policies of the Second New Deal. Projects
such as WPA, and the Social Security Act, Old Age Insurance
(OAI), unemployment insurance programs and others were
created. They provided a safety net for over 30 million
people,52 and demolished any Socialist leanings. It could even
be said that Roosevelt saved Capitalism for the second time.
The New Deal politics, paradoxically, served to vitiate
radicalism, and Roosevelt’s Democratic party had in effect
become the political expression of America’s working class.53
What Hoover and Roosevelt did share in common is a
political-economic stand with regards to fiscal policies.
Hoover’s fiscal conservatism prevented a faster and more
immediate recovery from the Depression in the beginning; the51Alan Brinkley, “Dissidents and Demagogues,” Major Problems in American History (Boston: Wadsworth, 2011), 405.52 Andrew Morris, Lecture, HST 121, October, 31.53 Melvyn Dubofsky, "Not So Turbulent Years" (Albany, NY, 1986): 221
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same argument applies to Roosevelt’s administration. Moreover,
budget brinkmanship led to a recession within the depression
in 1937, which was called the “Roosevelt Recession.”54 Having
had slight signs of recovery, Roosevelt took an opportunity to
cut down on some of the relief programs. This instantly showed
up as a decline in growth. It was not until the federal
spending soared, and national debt increased $45 billion in
1939 to $250 billion by 1945,55 that the U.S.’s economic growth
became significantly positive and the unemployment rate
reached zero. The World War accomplished what conservatives
would never let happen.
Before Roosevelt’s administration, Republicans were the
party of government activism and the Democrats the party of
conservatism.56 Hoover serves as a real life example of a
Progressive Republican. As it was depicted in many of the
cartoons, he employed all his energy to address socioeconomic
problems that needed to be addressed by a deliberate federal
action, but not directly employing the federal government to
54 Andrew Morris, Lecture, HST 121, November, 5.55 Andrew Morris, Lecture, HST 121, November, 8.56 Andrew Morris, Lecture, HST 121, September, 24.
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avoid centralized bureaucracies.57 Hoover was one of the most
zealous critics of the New Deal. The big government and
centralization that it invoked was absolutely unacceptable for
him and other conservative reactionary opponents. Even many
New Dealers themselves often opposed centralized government.58
The political constraints on centralized planning or purely
federal programs were formidable, and forces of localism very
powerful. As during the Hoover administration, the New Deal
agencies were often run by local officials, who barbarically
discriminated against the rural poor.59
The New Deal was not static, it improved over the course
of the years, as more and more deficiencies were identified.
Change was most obvious in racial attitudes. Similar to low-
income workers, African-Americans had been long ignored.
African-Americans were deprived of equal opportunity for
relief, the argument being “they are used to being poor, and
don’t need as much as white people to live on.”60 Meanwhile,57 Andrew Morris, Lecture, HST 121, September, 7.58 Anthony J. Badger, The New Deal. The Depression Years, 1933-1940, (Chicago: Ivan R. Dee, 1988), 306-307.59 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (NewYork: Harper Torchbooks, 1963), 332.60 Andrew Morris, Lecture, HST 121, October, 5.
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tenants and sharecroppers were continuously exploited in the
South. Slowly, progressive liberals like Eleanor Roosevelt
became aware and addressed the problems African-Americans
faced, which could not be eradicated by only addressing
poverty. There was a need to change the mentality that had
preoccupied the administration up until the 1930s. Eleanor
Roosevelt drew attention to the need to change racial policies
in the New Deal’s WPA, PWA, and Farm Security Administration61
projects, which was necessary to help African-Americans.
FDR brought radical changes to the role of the federal
government, which strongly contrasts with the policies of
Harding, Coolidge and to a lesser degree the progressive
Hoover administration. Not only the role of the federal had
been altered by Roosevelt’s progressivism, but also changes in
racial attitudes. While his uncle “Theodore Roosevelt had
founded a lily-white party in the South, and Woodrow Wilson
had introduced segregation into the federal government,
Franklin and Eleanor Roosevelt brought African-Americans into
61 Anthony J. Badger, The New Deal. The Depression Years, 1933-1940, (Chicago: Ivan R. Dee, 1988), 305.
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the New Deal coalition.62 Prominent figures such as Mary McLeod
Bethune, who was a dedicated American educator for African-
American students, formed Roosevelt’s “Black Cabinet.”63
Eleanor Roosevelt played a very special role the lives of
African-Americans. When a distinguished African-American
contralto Marian Anderson was denied a concert hall in
Washington, Mrs. Roosevelt arranged for her to perform at the
Lincoln Memorial.64
While, the New Deal Coalition envisioned a more utopian
goal for its programs and a greater influence to fight the
Depression it was still immensely popular among the
businessmen who extracted many concessions from government,
farmers who had been heavily subsidized, industrial workers
who wanted to unionize, artists and performers employed by
WPA, as well as various ethnic communities and African
Americans. Thus, New Deal did make a change. As Eleanor
eloquently put it “[…] things have been done. They helped but
62 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (NewYork: Harper Torchbooks, 1963), 332.63 Andrew Morris, Lecture, HST 121, October, 22.64 William E. Leuchtenberg, Franklin D. Roosevelt and The New Deal , (NewYork: Harper Torchbooks, 1963), 332.
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did not solve the problem.” The New Deal, although at times
conservative, laid down the building blocks for the
development of American Liberalism and for many FDR is an
epitome of liberalism and progressivism.
22
