By Dr. Frank J. Collazo
Introduction: The scope of the report addresses the achievements and actions impacting the economy during the Hoover administration. The causes and consequences of the depression are outlined for the nation and highlight the state’s hardships during this period. The election of Franklin Delano Roosevelt who is responsible for the new deal and second deal in the 1930’s is addressed. The New Deal program was the remedy to initiate the recovery from the depression. President Roosevelt asked the Congress to pass legislation to provide an immediate remedy to the economic problems of the nation.
Several acts were passed, but the Supreme Court declared some unconstitutional. Excessive government spending during the end of the depression because of WWII emerged to “jump start” the economy to completely recover from the depression as predicted by Marshall Keynes, the British Economist. The excessive government spending took the country out of the depression.
Herbert Clark Hoover Achievements
Introduction: Hoover, Herbert Clark (1874-1964), 31st president of the United States (1929-1933). Hoover was a highly successful mining engineer and a relief administrator in war-ravaged countries. His election in 1928 as president won the overwhelming approval of the American people, yet within two years Hoover was condemned by most as a reactionary unable or unwilling to soften the effects of the Great Depression. In fact Hoover was the first president to use the federal government to fight the effects of a depression. Even though he was not successful, it helped prepare the country for the government intervention of the New Deal policies of President Franklin Roosevelt when he succeeded Hoover in 1933.
Trigger of the Depression: In 1929, Hoover’s first year as president, the prosperity of the 1920s capsized. Stock prices climbed to unprecedented heights, as investors speculated in the stock market. The speculative binge, in which people bought and sold stocks for higher and higher prices, was fueled by easy credit, which allowed purchasers to buy stock “on margin.” If the price of the stock increased, the purchaser made money; if the price fell, the purchaser had to find the money elsewhere to pay off the loan.
More and more investors poured money into stocks. Unrestrained buying and selling fed an upward spiral that ended on October 24, 1929, when the stock market collapsed. The great crash shattered the economy. Fortunes vanished in days. Consumers stopped buying, businesses retrenched, banks cut off credit, and a downward spiral began. The Great Depression that began in 1929 would last through the 1930s, the beginning of WWII.
Early Life: Hoover was the son of Jesse Clark and Huldah Minthorn Hoover and was born in West Branch, Iowa. Both his parents were Quakers. His father worked as a blacksmith and storekeeper, and died when the boy was six. His mother died two years later. Relatives cared for Herbert, his brother Theodore, and his sister, May.
When Herbert was ten, his uncle took him to live in Newberg, a Quaker settlement in Oregon's Willamette Valley, where he worked on a farm and attended school. Later he worked as an office boy in a land settlement business in nearby Salem and studied mathematics in a business school. A chance meeting with an engineer in Salem resulted in his determination to study engineering.
A professor of mathematics, Joseph Swain, helped Hoover gain admittance to the new Leland Stanford Junior University in Palo Alto, California. In 1891, Hoover was admitted as a freshman to Stanford's first class. He supported himself by typing, operating a laundry agency, and working as a secretary for a geology professor. In 1895, Hoover received his bachelor's degree in mining engineering.
During his senior year at Stanford, Hoover had met Iowa-born Lou Henry, a young woman who was also studying geology at Stanford. On his way to China in 1899 he stopped in California and they married. The couple had two sons, Herbert, Jr., and Allan Henry.
Foreign Assignments: Hoover became chief engineer in the Chinese government's imperial bureau of mines. In China, a group known in the West as the Boxers opposed European and Japanese influence in that country. In 1900, these Chinese nationalists launched the Boxer Uprising, an attack upon foreigners living in Beijing, and the Hoovers were nearby in Tianjin (Tientsin) when the rebellion broke out. The foreign residents took refuge in their district of the city, and Hoover and fellow engineers built a protective wall against the attackers. He and his wife risked their lives to transport food and medical supplies to the wounded and besieged.
Later in 1900 the Hoovers went to England. There he was given a one-fifth interest in Bewick, Mooring and Company, which then possessed gold, silver, tin, copper, coal, and lead mines in Australia, New Zealand, South Africa, Canada, and Nevada. They also owned a turquoise mine in Egypt. Hoover became a world-renowned consulting engineer, accepting commissions to revive unproductive mines. By 1914 he was managing director or chief consulting engineer in a score of mining companies, and he was becoming a wealthy man.
Published the Principles of Mining Book: Hoover also wrote numerous articles for engineering journals. In 1909, these articles were published in book form under the title Principles of Mining, which became a standard engineering school text on ore extraction. In collaboration with Mrs. Hoover, he translated Georgiou’s Agricola's De Re Metallica into English. Originally published in Latin in 1556, this treatise dealt with mining and metallurgical processes. Hoover checked and deciphered the symbols, and his wife translated the text.
Feeding the Hungry-Stranded Americans in Europe: “I am interested in some kind of public service,” Hoover often declared, and his public-spirited wife agreed with his desire to aid his fellow citizens. Hoover's opportunity came with the outbreak of World War I in 1914, when he was in London looking after his business affairs. The U.S. Ambassador asked Hoover to organize the return of Americans stranded in Europe. So efficiently did he perform this work that he was assigned the gigantic task of getting food, shelter, and clothing to thousands of homeless and hungry European civilians. Hoover resigned from all his executive positions, and for the next five years paid his own expenses and accepted no salary or fee.
Belgian Relief Commissioner: As chairman of the commission for relief in northern France and Belgium, which were overrun by German armies, Hoover supervised the distribution of millions of tons of food and clothing to French and Belgian refugees. He operated behind the lines of hostile armies and moved through naval blockades. As he put it, “I moved constantly in and out behind the trenches on both sides ... My duties required that I meet constantly with high military and civil officials in England, Germany, France, and the neutral countries.”
US Food Administrator: After the United States entered the war in 1917, President Woodrow Wilson summoned Hoover from Europe to be U.S. food administrator. Military victory depended largely on the American capacity to feed the Allied armies. Although he was given wide powers, Hoover depended more on propaganda and voluntary cooperation than on coercion. Americans became used to words like “to hooverize,” which meant conserving important foods like meat and wheat. His organization and administration of the Grain Corporation, the Food Purchase Board, and the Sugar Equalization Board conserved and encouraged production of agricultural products.
Post War Assignment: Even after the armistice, the Allies continued their blockade around Germany. Hoover, in Europe again, worked to have it relaxed. He was appointed chairman of the American Relief Administration to assist in the economic restoration of Europe, receiving from the U.S. Congress $100 million to fight famine and plague. In this official role, and afterward as a private citizen, Hoover oversaw the distribution of 46 million tons of food to people in 30 countries. He controlled shipping, directed railways and coalmines, and reopened ports and canals closed by war. When the American Relief Administration was terminated, Hoover organized the European Children's Fund to care for millions of orphaned children in central and Eastern Europe.
Secretary of Commerce: When Ohio Senator Warren G. Harding became president in 1921, he appointed Hoover secretary of commerce, a small office that Hoover strengthened until he resigned in 1928. During his seven years as head of the Department of Commerce, Hoover extended its control over mines and patents. He promoted the growth of trade associations and chambers of commerce to make industry more efficient. Hoover did not believe in either the traditional “laissez-faire” policy, in which the state had no involvement in the economy, or in government intervention in the economy. Instead he preached a doctrine of voluntary cooperation in which private citizens would organize to achieve a goal. The government would support but not control these organizations.
He did, however, expand government regulation in two areas involving new technology, radio broadcasting and commercial aviation. He made federally collected statistics more available and encouraged manufacturers to standardize parts and supplies. Hoover saw the Department of Commerce as an important support for the expansion of American business overseas, and in the area of foreign commerce the department expanded its operations tremendously—at the expense, some felt, of the State Department's traditional role.
Hoover did not lose his reputation as a humanitarian. During the Russian famine of 1922 and 1923 he organized the distribution of millions of dollars' worth of American food, and he directed relief after the Mississippi River flood of 1927.
Elections of 1928: President Calvin Coolidge's withdrawal from the 1928 presidential race left the Republican Party nomination wide open. Hoover had been making plans to seek the presidency, and his personal organization began an active hunt for delegates. When the national convention assembled in Kansas City, Missouri in June 1928, the delegates and their bosses recognized the attractiveness of Hoover's name to voters and nominated him for president on the first ballot. Hoover received 837 votes to only 74 for his nearest rival, former Illinois Governor Frank O. Lowden.
The convention adopted a conservative platform and chose United States Senator Charles Curtis of Kansas as the Republican candidate for vice president. Hoover had previously declared himself in favor of vigorous enforcement of the 18th Amendment (which banned alcoholic drinks) “a great social and economic experiment, noble in motive and far-reaching in purpose.”
Opposing Hoover was the Democratic nominee, Governor Alfred E. Smith of New York. Smith was a product of New York City's Tammany Hall, a political organization whose name had become synonymous with corruption. He was also Roman Catholic and considered a handicap in the preponderantly Protestant nation. Smith also opposed the 18th Amendment, which made him unacceptable to numerous rural regions in the South and West.
In contrast, Hoover's name was known everywhere, and he rode on the crest of Republican prosperity, for which Hoover, as secretary of commerce, was the symbol. In November, Hoover won in a landslide, with 444 electoral votes to Smith's 87, and 21,437,277 popular votes to Smith's 15,007,698. Hoover carried every Northern state except Massachusetts and Rhode Island. He also broke the traditional hold of the Democratic Party on the South by winning five Southern states: Virginia, North Carolina, Florida, Tennessee, and Texas.
Farm Legislation: Hoover was inaugurated on March 4, 1929, and during the first six months of his administration, the economic prosperity that had characterized the country during the 1920s continued. One industry, however, did not enjoy the fruits of this economic success: agriculture. An increase in efficiency and in the amount of land being farmed around the world had driven prices down. Farmers desperately tried to produce more crops to maintain their standard of living, but further increases in efficiency only made prices lower.
In response to the plight of farmers, Hoover called Congress into special session in April 1929 to enact farm relief legislation and to revise the tariff. His farm program, embodied in the Agricultural Marketing Act of 1929, established the first large-scale government system to aid the farmer in peacetime, but it avoided production control. The act set up the Federal Farm Board of eight members to make loans to marketing cooperatives. The board could also establish corporations to buy farm surpluses and thus to raise prices.
Within six months, however, the Great Depression sent farm prices to new lows. Until the summer of 1931, wheat and cotton prices were kept slightly higher than world levels. By 1932, government funds had been spent, and the Farm Board warehouses were full. Farm prices plunged to a new low.
Hawley Smoot Tariff: Congress also passed the Hawley-Smoot Tariff Act, which raised agricultural duties and tariffs, or import taxes, on manufactured goods. Economists generally protested against the Hawley-Smoot tariff, warning that it would invite retaliation by European powers, but Hoover signed the tariff into law in June 1930.
Stock Market Crash: Following a short recession after World War I (1914-1918), the United States had enjoyed an economic boom in which both production and consumption increased. During this period many citizens had invested savings and earnings in speculative ventures, particularly the buying of stocks “on margin.” In these cases, the buyer put up as little as 3 percent of a stock's price in cash and borrowed the remainder from the broker. The growing demand for stocks and the prosperous state of the nation as a whole caused stock prices to rise, which in turn encouraged more stock purchases.
Stock prices reached their height in the so-called “Hoover bull market” during the first six months of the Hoover administration. Individuals invested billions of dollars in the stock market, obtaining money by borrowing from banks, mortgaging their homes, and selling solid government securities, such as Liberty Bonds.
Buying stock on margin was a risky bet that the price of that stock would continue to increase. In August 1929 approximately 300 million shares of stock had been purchased on margin. During normal business periods a share of stock would be purchased mostly for the dividend it paid, but during the bull market people bought stocks in order to sell at a higher price. Unfortunately, industry sales had begun to slow down, an indication that stock prices might drop because companies would pay smaller dividends. In September 1929 some investors began selling stocks, and stock prices began to fall. The decline in prices especially threatened those who had purchased on margin, because they owed their broker the amount of the original price of the stock—even if that stock was now worth only half as much.
By October the feverish buying had given way to desperate selling. Prices dropped rapidly, and thousands of people lost all they had invested. Many were completely ruined financially. On October 29 the New York Stock Exchange, the largest in the world, had its worst day of panic selling. By the end of the day stock values had declined by $10 billion to $15 billion.
Great Depression: Hoover had been in office less than eight months when the Wall Street crash occurred. At first the president treated this financial catastrophe and the decline in business and employment that followed as a speculative panic, and said that the economy was sound and would soon be normal again. In March 1930 he assured the nation that the crisis would be over in 60 days. He repeated similar opinions to restore public confidence in the face of business failures and mounting unemployment.
Public confidence was not restored. Although earlier declines in the stock market had not caused depressions (periods with low sales and production, many business failures and high unemployment) this stock market crash highlighted important weaknesses in the economic structure of the country. In the agricultural sector prices for farm goods dropped, and farmers were less able to purchase manufactured goods. Although industrial productivity had increased, industrial wages had not kept pace with the rise in efficiency. Here, too, more products were produced, but not many more could be purchased.
Finally, the benefits of the economic growth of the 1920s were distributed unequally. Farmers were losing ground and industrial workers were improving their standard of living only slowly, while the top 5 percent of the population received 30 percent of the income of the entire country. These wealthy families could not purchase all of the goods that were being produced by the increasingly efficient industries or all the food grown by the increasingly efficient farms.
Democrats found in the Great Depression the issue they had been lacking two years earlier. They campaigned vigorously in the fall elections of 1930, won a small majority in the House of Representatives, and elected several governors. From this point on, Congress began to harass the president.
By the time Congress met in December 1931, Hoover had abandoned his reliance of private measures and began proposing direct action by the government to defeat the depression. The Reconstruction Finance Corporation was created in 1932 to provide emergency financing for troubled banks, insurance companies, and other associations, and by the end of 1932 it had loaned out $1.5 billion.
The Glass-Steagall Act extended more credit and released some of the government's gold reserves to aid industry. The Federal Home Loan Bank Act created discount banks to help refinance private homes and prevent foreclosures. Hoover also encouraged the reform of bankruptcy laws to aid the speedy reorganization of businesses and the settlement of overwhelming debts. He supported a loan of $300 million to states for direct relief, further expansion of public works, and drastic cutbacks in the federal government. However, Hoover refused the demand of Democrats in Congress, who pleaded for the government to distribute money to the unemployed.
Bonus March: A march by World War I veterans on Washington, DC in 1932. Walter V. Waters and other veterans in Portland, Oregon formed the Bonus Expeditionary Force (BEF) known as the Bonus Army. They demanded payment of a bonus promised to them in 1924, but it was not available until 1945. The veterans were suffering through the Great Depression and needed the bonus immediately.
The Bonus Army left Portland, added thousand of recruits along the route, and arrived in Washington at the end of May. About 20,000 veterans gathered at Anacostia Flats and demanded that the United States Congress provide immediate payment of the bonus. In June the House of Representatives agreed to immediate payment, but the Senate defeated the legislation. Many veterans then left the capital.
More than 4000 veterans remained in Washington, DC, however, and they rioted on July 28. President Herbert Hoover ordered federal troops under General Douglas Macarthur to end the riot. The Bonus Army was driven away by cavalry, tanks and infantry armed with tear gas, and their camp was destroyed. The group left Washington after Congress appropriated $100,000 to send them home. In 1936 Congress passed legislation providing for cash payments of the veterans’ bonuses.
Foreign Affairs: As a Quaker humanitarian and a man who had seen the ravages of war, the president strove for peace in his pursuit of foreign affairs. His Secretary of State, Henry L. Stinson, cooperated with the disarmament efforts of the League of Nations, but Hoover did not favor U.S. membership in the league. At the London Naval Conference of 1930, the United States, Britain, and Japan agreed to limit the number and size of warships they would build. Under Hoover the nation also attended a world disarmament conference at Geneva, Switzerland in 1932, but the meeting was less successful than the London conference.
When a financial crisis developed in Austria and spread to Germany in 1931, Hoover proposed a one-year moratorium on the payment of debts to foreign governments and on war reparations, which Germany had been forced to pay to the victors of World War I as compensation for the damage caused by the war.
President Hoover initiated toward Latin America what was to be called the good-neighbor policy under his successor. Hoover wanted to persuade Latin American countries that the United States took their interests into consideration as well as its own. To do that he paved the way for the removal of U.S. Marines from Haiti, and he withdrew them from Nicaragua. The depression toppled numerous regimes throughout Latin America. Hoover recognized the new regimes without questioning the means by which they came into power.
Hoover did not agree with Secretary of State Henry L. Stinson over the best response to Japan's invasion of Manchuria. The president did not believe that the United States should go beyond expressions of disapproval, but the secretary of state wanted to initiate strong sanctions against Japan, whatever the consequences. The League of Nations finally agreed with Stinson, but in response Japan withdrew from the league.
1932 Re-Election: When Hoover ran for reelection against Governor Franklin D. Roosevelt of New York in 1932, the outcome was a foregone conclusion. For two years the Democrats had conducted a vigorous campaign, blaming the president and his Republican supporters for the depression. The Republicans were branded as the “party of hard times” and burdened by an ambiguous stand on the 18th Amendment, which the Democrats favored repealing. In November Roosevelt captured 472 electoral votes to Hoover's 59. The popular vote was: Roosevelt, 22,829,501; Hoover, 15,760,684.
As president, the world-renowned and financially successful Hoover could neither adapt to the give-and-take necessary to political life, nor could he completely embrace the transition to a government-regulated economy, a move he had reluctantly initiated. Never having campaigned for elective office before 1928, he never learned to reach the people at large, but it was the depression that doomed his administration.
Final Years: Retired from the presidency, Hoover settled in his Palo Alto, California, home. He built up the Hoover Library on War, Revolution, and Peace to 200,000 volumes and donated it to Stanford University.
Hoover did not forget politics, however. He attacked President Roosevelt's New Deal in his book The Challenge to Liberty (1934). Early in 1938 the former president visited Europe. He talked with German dictator Adolph Hitler and became convinced that Germany had designs on territory to the east. The following year, Hoover organized a relief fund to help Finland defend itself against the Union of Soviet Socialist Republics (USSR). He figured prominently in the 1940 Republican National Convention, but he remained cool to the presidential candidacy of Republican Wendell Wilkie.
During 1940 and 1941, Hoover publicly criticized President Roosevelt's policy toward World War II. In 1942, after America entered the conflict, he published two books on foreign policy, America's First Crusade and, with Hugh Gibson, The Problem of Lasting Peace.
After the war, Hoover made several trips abroad at the request of President Harry S. Truman, to assess the need for food and to recommend ways of averting a postwar famine. In 1947, Truman again made use of the former president by appointing Hoover chairman of the Commission on Organization of the Executive Branch of the Government, commonly called the Hoover Commission. Its purpose was to recommend ways of simplifying and economizing the administrative structure of the government. Two years later the Hoover Commission issued several reports, and Congress enacted some of its recommendations into law. Several years later, Hoover published his Memoirs (1951-1952) in three volumes.
In 1953 President Dwight D. Eisenhower appointed a second Hoover commission, with the former president as chairman. When the commission completed its work in 1955, Hoover, at 81, retired from public service.
Hoover maintained his lifelong interest in young people. In 1962, excerpts from his correspondence with boys and girls appeared in his book On Growing Up. Hoover died in 1964 in New York City.
Accomplishments of Franklin Delano Roosevelt
Franklin D. Roosevelt: Assuming the Presidency at the depth of the Great Depression, Franklin D. Roosevelt helped the American people regain faith in themselves. He brought hope as he promised prompt, vigorous action, and asserted in his Inaugural Address, "the only thing we have to fear is fear itself."
Born in 1882 at Hyde Park, New York--now a national historic site--he attended Harvard University and Columbia Law School. On St. Patrick's Day, 1905, he married Eleanor Roosevelt.
Following the example of his fifth cousin, President Theodore Roosevelt, whom he greatly admired, Franklin D. Roosevelt entered public service through politics, but as a Democrat. He won election to the New York Senate in 1910. President Wilson appointed him Assistant Secretary of the Navy, and he was the Democratic nominee for Vice President in 1920.
Thirty-Second President: 1933-1945
Born: January 30, 1882 in Hyde Park, New York
Died: April 12, 1945 in Warm Springs, Georgia
Married to Anna Eleanor Roosevelt
In the summer of 1921, when he was 39, disaster hit. He was stricken with poliomyelitis. Demonstrating indomitable courage, he fought to regain the use of his legs, particularly through swimming. At the 1924 Democratic Convention he dramatically appeared on crutches to nominate Alfred E. Smith as "the Happy Warrior." In 1928 Roosevelt became Governor of New York. He was elected President in November 1932, to the first of four terms. By March there were 13,000,000 unemployed, and almost every bank was closed. In his first "hundred days," he proposed, and Congress enacted, a sweeping program to bring recovery to business and agriculture, relief to the unemployed and to those in danger of losing farms and homes, and reform, especially through the establishment of the Tennessee Valley Authority.
By 1935 the Nation had achieved some measure of recovery, but businessmen and bankers were turning more and more against Roosevelt's New Deal program. They feared his experiments, were appalled because he had taken the Nation off the gold standard and allowed deficits in the budget, and disliked the concessions to labor. Roosevelt responded with a new program of reform: Social Security, heavier taxes on the wealthy, new controls over banks and public utilities, and an enormous work relief program for the unemployed.
In 1936 he was re-elected by a top-heavy margin. Feeling he was armed with a popular mandate, he sought legislation to enlarge the Supreme Court, which had been invalidating key New Deal measures. Roosevelt lost the Supreme Court battle, but a revolution in constitutional law took place. Thereafter the Government could legally regulate the economy.
On the Platform: The primary point to remember about Roosevelt's standing to deliver a speech is that he was in discomfort due to his handicap of paralyzed legs from an attack of poliomyelitis in 1921. Donald Richberg, a collaborator with Roosevelt's speech staff in the mid- 1930s, believed that Roosevelt spoke in "actual pain." During World War II, FDR infrequently utilized his leg braces. He did determine to deliver his Fourth Inaugural Address standing, but he delivered his famous 1944 Teamsters' Union speech seated, and he sat down to address Congress on Yalta, March 1, 1945. In the introduction to the latter speech, he alluded to his handicap with a sympathy appeal: "I hope that you will pardon me for the unusual posture of sitting down during the presentation of what I want to say, but I know that you will realize it makes it a lot easier for me not having to carry about ten pounds of steel around on the bottom of my legs."
Actually, by this time FDR had aluminum braces that were considerably lighter than the steel ones, but his point is well taken. Also, this was the first time he ever publicly referred to his handicap in a speech.
The leg braces the president wore are in the Library. When he stood in them, he was in effect sitting in a padded leather saddle-like seat that depended from a circular frame about his waist. His body weight was thus supported by the braces, which hinged at the knee and could be unlocked by a catch. The braces bore his weight to the floor through his shoes, which were firmly attached to the braces. As furniture craftsmen long ago realized, a three-legged table will stand well on uneven surfaces; hence, FDR needed a triad to stand to deliver an address. The braces supplied two-thirds of the triad; the other one-third came from his grasping the podium or holding on to a railing.
An interesting portable podium-like device was observable at the 1936 Chautauqua, New York, speech and on the rear platform of a railroad observation car. Because photographic lighting was then often poor, one cannot say with certainty that these devices were identical, nor have such devices apparently survived, but they too looked like the same portable speaking podium. The portability of such a podium would have insured for FDR the predictability of the speaking situation. At Chautauqua, the device seemed to be attached to a speaker's stand already on the stage. This portable podium had a slanted surface for the manuscript and protruding rails on both sides that Roosevelt could grasp.
The railroad car apparatus appeared to be the same podium, bolted to the brass observation rail. Roosevelt was still in the era when politicians, movie stars, and presidents were fashionably photographed on the rear platforms of elegant Pullman observation cars. When politicians, including the president of the United States, addressed whistle-stop crowds from the rear platform, this portable podium would have enabled Roosevelt to speak to crowds while standing.
Summary of Roosevelt’s New Deal: The New Deal was the name given to the peacetime domestic program of the United States under president Franklin D. Roosevelt, and especially to the innovative measures taken between 1933 and 1938 to counteract the effects of the Great Depression.
Civilian Conservation Corps: These workers of the Civilian Conservation Corps (CCC) blast through solid rock to place a telephone-line conduit in Glacier National Park in northwestern Montana. Set up in 1933 as a part of the New Deal program of United States President Franklin D. Roosevelt, the CCC provided training and jobs for unemployed young men during the Great Depression of the 1930s.Culver Pictures
Both Roosevelt and the Congress of the United States, in trying to reduce unemployment and restore prosperity, endorsed a wide spectrum of new federal programs and agencies, most popularly identified by acronym titles. Roosevelt, a skillful political leader, helped win support for an unprecedented array of new services, regulations, and subsidies. Yet no single political philosophy or set of coherent goals ever unified these disparate programs, most of which he developed with the aid of an informal group of advisers known as the Brain Trust. These individuals from outside government included professors, lawyers, and others who came to Washington to advise Roosevelt, in particular on economic affairs. The central legacy of the New Deal was increased government involvement in the lives of the people.
Roosevelt at Work: President Franklin Delano Roosevelt first achieved national attention when he gave a rousing speech at the Democratic Party’s 1924 national convention. Roosevelt is heard here giving one of his “fireside chats,” informal speeches he regularly delivered to the nation by radio.
Democrat Franklin Delano Roosevelt steered the nation out of the Great Depression and through World War II, and he held the presidency longer than anyone in history. Roosevelt’s New Deal, a wide-range program of social welfare policies, made an indelible mark on American society and earned him a place as one of the 20th century’s most influential presidents.
Roosevelt came to office in 1933 in the midst of the worst economic crisis in the country's history. Like Abraham Lincoln, he felt compelled to fashion new means of dealing with unprecedented events. As part of the New Deal, Roosevelt pushed for legislation to create scores of new agencies to confront the economic crisis: the Tennessee Valley Authority (TVA), the Securities and Exchange Commission, the Rural Electrification Administration, the Federal Communications Commission (FCC), and the National Labor Relations Board. Roosevelt also prodded Congress to create the Social Security Administration to provide old-age pensions, and he pushed for an unemployment insurance system to support the millions of people without jobs.
Under Roosevelt’s leadership, the government built a network of agencies and programs to ensure that the poor, unemployed, and aged could live with dignity and self-respect. “Better the occasional faults of a government that lives in a spirit of charity,” Roosevelt said in 1936, “than the constant omission of a government frozen in the ice of its own indifference.”
The Rhetorical President: As a rhetorical president, Roosevelt exploited the technology of his time to its fullest potential. By radio, he spoke to the entire nation in his major addresses and in the prototypic Fireside Chats. By means of the motion picture newsreels, selected segments of his major addresses or staged retakes of important Fireside Chats and radio addresses portrayed his ebullient, confident delivery and infectious Roosevelt’s grin; thus, the sound of his superb voice was reinforced by the visual dynamism of his delivery.
FDR also used the press conference in an unprecedented manner to guide, as best he could, reporters' perceptions--and hence to some extent the nation's perceptions--of him and his administration. Although not the first president to use speechwriters, FDR unabashedly assembled a talented staff of thinkers and writers who, in tandem with him, produced his oratorical gems. Thus, in many significant respects, Franklin Roosevelt was an archetypal rhetorical president. But what is a rhetorical president, or for that matter, what is presidential rhetoric?
What Triggered WWII?
US Aid to Britain: The U.S. abandoned strict neutrality in the European war and approached a confrontation with Japan in Asia and the Pacific Ocean. U.S. and British conferences, begun in January 1941, determined a basic strategy for the event of a U.S. entry into the war, namely, that both would center their effort on Germany, leaving Japan, if need be, to be dealt with later. In March 1941 the U.S. Congress passed the Lend-Lease Act and appropriated an initial $7 billion to lend or lease weapons and other aid to any countries the president might designate. By this means the U.S. hoped to ensure victory over the Axis without involving its own troops.
By late summer of 1941, however, the U.S. was in a state of undeclared war with Germany. In July, U.S. Marines were stationed in Iceland, which had been occupied by the British in May 1940, and thereafter the U.S. Navy took over the task of escorting convoys in the waters west of Iceland. In September President Franklin D. Roosevelt authorized ships on convoy duty to attack Axis war vessels.
Friction Between the U.S. and Japan: Meanwhile, American relations with Japan continued to deteriorate. In September 1940 Japan coerced Vichy France into giving up northern Indochina. The U.S. retaliated by prohibiting the exportation of steel, scrap iron, and aviation gasoline to Japan. In April 1941, the Japanese signed a neutrality treaty with the USSR as insurance against an attack from that direction if they were to come into conflict with Britain or the U.S. while taking a bigger bite out of Southeast Asia. When Germany invaded the USSR in June, Japanese leaders considered breaking the treaty and joining in from the east, but, making one of the most fateful decisions of the war, they chose instead to intensify their push to the southeast. On July 23 Japan occupied southern Indochina. Two days later, the United States, Britain, and the Netherlands froze Japanese assets. The effect was to prevent Japan from purchasing oil, which would, in time, cripple its army and make its navy and air force completely useless.
The Persuader: Franklin Delano Roosevelt was a pre-eminent presidential persuader. FDR's spoken record reveals his rhetorical eloquence during four terms in office. The First Inaugural Address, the acceptance speech at Franklin Field in Philadelphia in 1936, the 1937 Victory Dinner Address on the Supreme Court fight, the War Message to Congress on December 8, 1941, and the 1944 Teamsters' Union speech are orations of the first order, and they stand secure as paramount examples of their oratorical genre. In rhetoric of the second rank are the 1932 speech to the Commonwealth Club in San Francisco, the Second Inaugural Address, the 1937 "Quarantine" speech at Chicago, the "Four Freedoms" speech in 1941, and perhaps the Fourth Inaugural Address.
His phrases, which coaxed the consciousness of his contemporaries and still caress our collective memories, evoked Roosevelt, the Depression and his New Deal, and World War II: the "forgotten man;" "the only thing we have to fear is fear itself;" the "economic royalists;" "This generation of Americans has a rendezvous with destiny;" "I see one third of a nation ill-housed, ill-clad, ill-nourished;" "the hand that held the dagger has struck it into the back of its neighbor;" and "Yesterday, December 7, 1941--a date which will live in infamy."
Roosevelt's Fireside Chats: To forget that words on a printed page were once spoken by FDR to his fellow Americans is to miss the point of why he delivered addresses and Fireside Chats. He communicated the subtle range of his feelings in a manner that imparted directness and sincerity to his listeners. FDR talked to, not at, the American people. Yet, except for Earnest Brandenburg and Waldo Braden's essay on Roosevelt's voice and pronunciation, little has been written about FDR's platform presence, voice management, gestures, use of speech manuscripts, eye contact, or the effect of his physical handicap. Indeed, Gail Compton noted the need to investigate FDR's delivery: "Studies of Roosevelt's speaking during his twelve years as President tend to center more on issues and less on the other rhetorical elements of speech preparation, style, persuasive techniques and delivery. These elements, particularly delivery, impelled FDR's rhetorical presidency.
The materials for a study of FDR's delivery are the audio-visual archives in the Franklin D. Roosevelt Library. Surprisingly, there are only enough film materials to criticize sixteen speeches, and these films are really excerpts of varying lengths from motion-picture newsreels. The audio recordings for Roosevelt's voice are more numerous. These sources are the foundation for an analysis and criticism of President Roosevelt's delivery.
Good Neighbor Policy: Roosevelt had pledged the United States to the "good neighbor" policy, transforming the Monroe Doctrine from a unilateral American manifesto into arrangements for mutual action against aggressors. He also sought through neutrality legislation to keep the United States out of the war in Europe, yet at the same time to strengthen nations threatened or attacked. When France fell and England came under siege in 1940, he began to send Great Britain all possible aid short of actual military involvement. When the Japanese attacked Pearl Harbor on December 7, 1941, Roosevelt directed organization of the Nation's manpower and resources for global war.
Foreign Affairs: Roosevelt’s leadership in foreign affairs was just as important to the nation. Remembering Woodrow Wilson's failure to sustain public backing for involvement in the League of Nations, Roosevelt took care to build domestic support for his diplomatic initiatives. This approach accounts for his success in leading the country into World War II. His attention to the worries and fears of Americans also helped him maintain support for his military strategy during the war, and then for abandoning American isolationism in favor of involvement in the United Nations and a larger role in global affairs.
Feeling that the future peace of the world would depend upon relations between the United States and Russia, he devoted much thought to the planning of a United Nations in which, he hoped, international difficulties could be settled.
People Love President Roosevelt: Most Americans loved Roosevelt, voting him to an unprecedented four terms as president. Much of his success rested on his charismatic leadership—his ability to give people hope and renewed confidence in the American system of government. Roosevelt spoke directly to the public through frequent radio addresses. These “fireside chats” brought his warm, reassuring personality into millions of homes and made him an anchor in national life through the Depression and World War II. After he died in 1945, someone told his wife, “I miss the way your husband used to talk to me about my government.”
Summary of Roosevelt’s Accomplishments during the Depression: Roosevelt's overwhelming victory in the 1932 election, coupled with the urgency of the worst economic collapse in U.S. history, opened the way for a flood of legislation in 1933. Almost immediately after taking office, Roosevelt called on Congress to convene and began what would be known as the Hundred Days, which lasted until June 16, 1933. On March 6 Roosevelt called a nationwide bank holiday, and on March 9 Congress passed the Emergency Banking Act, which provided for federal bank inspections. In the summer of 1933, the Glass-Steagall Act set much more stringent rules for banks and provided insurance for depositors through the newly formed Federal Deposit Insurance Corporation (FDIC). These acts helped to restore popular confidence in the wake of widespread bank failures. Two acts, one in 1933 and one in 1934, mandated detailed regulations for the securities market, enforced by the new Securities and Exchange Commission (SEC).
Several bills provided mortgage relief for farmers and homeowners and offered loan guarantees for home purchasers through the Federal Housing Administration, or FHA (see Housing). The Federal Emergency Relief Administration, which was headed by Harry Hopkins, a social worker appointed by Roosevelt, expanded existing relief grants to the states and resulted in assistance for more than 20 million people. The Civilian Conservation Corps (CCC) provided work relief for thousands of young men under a type of military discipline. The CCC emphasized reforestation, among other projects. Congress established the Tennessee Valley Authority (TVA) to develop the Tennessee River in the interest of navigation and flood control and to provide electric power to a wide area of the southeastern United States.
Sidebar: HISTORIC HEADLINES - Roosevelt closes all banks after his inauguration. President Franklin Delano Roosevelt moved quickly and decisively to end the Great Depression by instituting his New Deal programs. One of his first acts was to address the problems of the country's financial system by declaring a nationwide bank “holiday.” Roosevelt succeeded in stopping panicked runs in the banks and gave Congress enough time to prepare relief measures for the banking industry. As the war drew to a close, Roosevelt's health deteriorated, and on April 12, 1945, while at Warm Springs, Georgia, he died of a cerebral hemorrhage.
The Great Depression: The depression in the US was the worst, longest economic collapse in the history of the modern industrial world, lasting from the end of 1929 until the early 1940s. Beginning in the United States, the depression spread to most of the world’s industrial countries, which in the 20th century had become economically dependent on one another. The Great Depression saw rapid declines in the production and sale of goods and a sudden, severe rise in unemployment. Businesses and banks closed their doors, people lost their jobs, homes, and savings, and many depended on charity to survive. In 1933, at the worst point in the depression, more than 15 million Americans—one-quarter of the nation’s workforce—were unemployed.
The depression was caused by a number of serious weaknesses in the economy. Although the 1920s appeared on the surface to be a prosperous time, income was unevenly distributed. The wealthy made large profits, but more and more Americans spent more than they earned, and farmers faced low prices and heavy debt. The lingering effects of World War I (1914-1918) caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression: the disastrous U.S. stock market crash of 1929, which ruined thousands of investors and destroyed confidence in the economy. Continuing throughout the 1930s, the depression ended in the United States only when massive spending for World War II began.
The depression produced lasting effects on the United States that are still apparent more than half a century after it ended. It led to the election of President Franklin Delano Roosevelt, who created the programs known as the New Deal to overcome the effects of the Great Depression. These programs expanded government intervention into new areas of social and economic concerns and created social-assistance measures on the national level. The Great Depression fundamentally changed the relationship between the government and the people, who came to expect and accept a larger federal role in their lives and the economy.
The programs of the New Deal also brought together a new, liberal political alliance in the United States. Roosevelt’s policies won the support of labor unions, blacks, people who received government relief, ethnic and religious minorities, intellectuals, and some farmers, forming a coalition that would be the backbone of the Democratic Party for decades to come.
On a personal level, the hardships suffered during the depression affected many Americans’ attitudes toward life, work, and their community. Many people who survived the depression wanted to protect them from ever again going hungry or lacking necessities. Some developed habits of frugality and careful saving for the rest of their lives, and many focused on accumulating material possessions to create a comfortable life, one far different from that which they experienced in the depression years.
The depression also played a major role in world events. In Germany, the economic collapse opened the way for dictator Adolph Hitler to come to power, which in turn led to World War II.
Business Cycle: Besides differing in length, business cycles differ considerably in degree, especially in the severity of contractions. The most significant contraction in American economic history occurred during the 1930s. This contraction was so severe that it became known as the Great Depression. The NBER marks August 1929 as the start of the Great Depression with an initial contraction that lasted for 43 months. During this downturn the unemployment rate rose from about 3 percent to 25 percent while the production of goods and services fell by 30 percent. A very modest recovery began in March 1933, but the economy experienced another contraction that began in 1937 and lasted for another 13 months. A true economic recovery did not begin until 1941.
Causes of the Depression: It is a common misconception that the stock market crash of October 1929 was the cause of the Great Depression. The two events were closely related, but both were the results of deep problems in the modern economy that were building up through the “prosperity decade” of the 1920s.
As is typical of post-war periods, Americans in the Roaring Twenties turned inward, away from international issues and social concerns and toward greater individualism. The emphasis was on getting rich and enjoying new fads, new inventions, and new ideas. The traditional values of rural America were being challenged by the city-oriented Jazz Age, symbolized by what many considered the shocking behavior of young women who wore short skirts and makeup, smoked, and drank.
The self-centered attitudes of the 1920s seemed to fit nicely with the needs of the economy. Modern industry had the capacity to produce vast quantities of consumer goods, but this created a fundamental problem: Prosperity could continue only if demand was made to grow as rapidly as supply. Accordingly, people had to be persuaded to abandon such traditional values as saving, postponing pleasures and purchases, and buying only what they needed. “The key to economic prosperity,” a General Motors executive declared in 1929, “is the organized creation of dissatisfaction.” Advertising methods that had been developed to build support for World War I were used to persuade people to buy such relatively new products as automobiles and such completely new ones as radios and household appliances. The resulting mass consumption kept the economy going through most of the 1920s.
But there was an underlying economic problem. Income was distributed very unevenly, and the portion going to the wealthiest Americans grew larger as the decade proceeded. This was due largely to two factors: While businesses showed remarkable gains in productivity during the 1920s, workers got a relatively small share of the wealth this produced. At the same time, huge cuts were made in the top income-tax rates. Between 1923 and 1929, manufacturing output per person-hour increased by 32 percent, but workers’ wages grew by only 8 percent. Corporate profits shot up by 65 percent in the same period, and the government let the wealthy keep more of those profits. The Revenue Act of 1926 cut the taxes of those making $1 million or more by more than two-thirds.
As a result of these trends, in 1929 the top 0.1 percent of American families had a total income equal to that of the bottom 42 percent. This meant that many people who were willing to listen to the advertisers and purchase new products did not have enough money to do so. To get around this difficulty, the 1920s produced another innovation—”credit,” an attractive name for consumer debt. People were allowed to “buy now, pay later.” But this only put off the day when consumers accumulated so much debt that they could not keep buying up all the products coming off assembly lines. That day came in 1929.
American farmers—who represented one-quarter of the economy—were already in an economic depression during the 1920s, which made it difficult for them to take part in the consumer-buying spree. Farmers had expanded their output during World War I, when demand for farm goods was high and production in Europe was cut sharply. But after the war, farmers found themselves competing in an over-supplied international market. Prices fell, and farmers were often unable to sell their products for a profit.
International problems also weakened the economy. After World War I the United States became the world’s chief creditor as European countries struggled to pay war debts and reparations. Many American bankers were not ready for this new role. They lent heavily and unwisely to borrowers in Europe, especially Germany, who would have difficulty repaying the loans, particularly if there was a serious economic downturn. These huge debts made the international banking structure extremely unstable by the late 1920s.
In addition, the United States maintained high tariffs on goods imported from other countries, at the same time that it was making foreign loans and trying to export products. This combination could not be sustained: If other nations could not sell their goods in the United States, they could not make enough money to buy American products or repay American loans. All major industrial countries pursued similar policies of trying to advance their own interests without regard to the international economic consequences.
The rising incomes of the wealthiest Americans fueled rapid growth in the stock market, especially between 1927 and 1929. Soon the prices of stocks were rising far beyond the worth of the shares of the companies they represented. People were willing to pay inflated prices because they believed the stock prices would continue to rise and they could soon sell their stocks at a profit.
The widespread belief that anyone could get rich led many less affluent Americans into the market as well. Investors bought millions of shares of stock “on margin,” a risky practice similar to buying products on credit. They paid only a small part of the price and borrowed the rest, gambling that they could sell the stock at a high enough price to repay the loan and make a profit.
For a time this was true: In 1928 the price of stock in the Radio Corporation of America (RCA) multiplied by nearly five times. The Dow Jones industrial average—an index that tracks the stock prices of key industrial companies—doubled in value in less than two years. But the stock boom could not last. The great bull market of the late 1920s was a classic example of a speculative “bubble” scheme, so called because it expands until it bursts. In the fall of 1929 confidence that prices would keep rising faltered, then failed. Starting in late October the market plummeted as investors began selling stocks. On October 29, in the worst day of the panic, stocks lost $10 billion to $15 billion in value. By mid-November almost all of the gains of the previous two years had been wiped out, with losses estimated at $30 billion.
The stock market crash announced the beginning of the Great Depression, but the deep economic problems of the 1920s had already converged a few months earlier to start the downward spiral. The credit of a large portion of the nation’s consumers had been exhausted, and they were spending much of their current income to pay for past, rather than new, purchases. Unsold inventories had begun to pile up in warehouses during the summer of 1929.
The crash affected the economy the way exposure to cold affects the human body, lowering the body’s resistance to infectious agents that are already present. The crash reduced the ability of the economy to fight off the underlying sicknesses of unevenly distributed wealth, agricultural depression, and banking problems.
The Economy Collapse: The stock market crash was just the first dramatic phase of a prolonged economic collapse. Conditions continued to worsen for the next three years, as the confident, optimistic attitudes of the 1920s gave way to a sense of defeat and despair. Stock prices continued to decline. By late 1932 they were only about 20 percent of what they had been before the crash. With little consumer demand for products, hundreds of factories and mills closed, and the output of American manufacturing plants was cut almost in half from 1929 to 1932.
Unemployment in those three years soared from 3.2 percent to 24.9 percent, leaving more than 15 million Americans out of work. Some remained unemployed for years; those who had jobs faced major wage cuts, and many people could find only part-time work. Jobless men sold apples and shined shoes to earn a little money.
Many banks had made loans to businesses and people who now could not repay them, and some banks had also lost money by investing in the stock market. When depositors hit by the depression needed to withdraw their savings, the banks often did not have the money to give them. This caused other depositors to panic and demand their cash, ruining the banks. By the winter of 1932 to 1933, the banking system reached the point of nearly complete collapse; more than 5,000 banks failed by March 1933, wiping out the savings of millions of people.
As people lost their jobs and savings, mortgages on many homes and farms were foreclosed. Homeless people built shacks out of old crates and formed shantytowns, which were called “Hoovervilles” out of bitterness toward President Herbert Hoover, who refused to provide government aid to the unemployed.
The plight of farmers, who had been in a depression since 1920, worsened. Already low prices for their goods fell by 50 percent between 1929 and 1932. While many people went hungry, surplus crops couldn’t be sold for a profit.
Natural forces inflicted another blow on farmers. Beginning in Arkansas in 1930, a severe drought spread across the Great Plains through the middle of the decade. Once-productive topsoil turned to dust that was carried away by strong winds, piling up in drifts against houses and barns. Parts of Kansas, Oklahoma, Texas, New Mexico, and Colorado became known as the Dust Bowl, as the drought destroyed the livelihood of hundreds of thousands of small farmers. Packing up their families and meager possessions, many of these farmers migrated to California in search of work. Author John Steinbeck created an unforgettable fictional portrait of their fate in the novel The Grapes of Wrath (1939).
The Initial Response to the Depression: The initial government response to the Great Depression was ineffective, as President Hoover insisted that the economy was sound and that prosperity would soon return. Hoover believed the basic need was to restore public confidence so businesses would begin to invest and expand production, providing jobs and income to restore the economy to health. But business owners saw no reason to increase production while unsold goods clogged their shelves. By 1932 investment had dropped to less than 5 percent of its 1929 level.
Convinced that a balanced federal budget was essential to restoring business confidence, Hoover sought to cut government spending and raise taxes. But in the face of a collapsing economy, this served only to reduce demand further. As conditions worsened, Hoover’s administration eventually provided emergency loans to banks and industry, expanded public works, and helped states offer relief. But it was too little, too late.
The epitome of a “self-made man,” Hoover believed in individualism and self-reliance. As more and more Americans lost jobs and faced hunger, Hoover asserted that “mutual self-help through voluntary giving” was the way to meet people’s needs. Private giving increased greatly, reaching a record high in 1932, but the enormous number of people overwhelmed charitable organizations in need. To many, government assistance seemed the only answer, but Hoover was convinced that giving federal relief payments would undermine recipients’ self-reliance, and he resisted this step throughout his term.
The tension between citizens seeking government action and Hoover’s administration came to a head in June 1932. More than 20,000 World War I veterans marched on Washington, D.C., to ask for early payment of government bonuses they had been promised. But the government refused, and when some members of the so-called Bonus Army didn’t leave the capital, federal troops used tear gas and bayonets to evict the men and their families.
Hoover and most of his Republican Party firmly supported protective tariffs to block imports and stimulate the American economy by increasing sales of American-made products. In 1930 they enacted the Hawley-Smoot Tariff, which established the highest average tariff in American history. This was a crushing blow to European economies, which were already sinking into depression. Other nations retaliated by raising their own tariffs. This action helped to worsen and spread the depression by choking off international trade. Between 1929 and 1932 the total value of world trade had declined by more than half.
Consequences of the Depression
The Grapes of Wrath: When The Grapes of Wrath was published on March 14, 1939, it created a national sensation for its depiction of the devastating effects of the Great Depression in the 1930s. By the end of April, it was selling 2,500 copies a day-a remarkable number considering the hard economic times. In May, the novel was a number-one best seller, selling at a rate of 10,000 copies a week. By the end of 1939, close to a half million copies had been sold. John Ernst Steinbeck was shocked by the tremendous response to his novel. Almost overnight, he was transformed from a respected, struggling writer into a public sensation.
Yet The Grapes of Wrath was bound to cause controversy in a country experiencing a decade of major social upheaval in the middle of the Depression. With the novel's publication, Steinbeck found himself immersed in a great national debate over the migrant labor problem. Many people were shocked by the poverty and hopelessness of the story, and others denied that such circumstances could happen in America. Amidst the controversy, people who had never read a book before were purchasing a copy of The Grapes of Wrath. At $2.75 per copy, it was affordable and quickly sold out. Libraries had waiting lists for the novel that were months long.
Great Migration: Widespread as the black exodus from the South was, black movement within the South was greater. The same forces of farm depression, industrialization, and wartime labor shortage that prompted many blacks to leave the South altogether, prompted more blacks (as well as whites) to move from the Southern farm to the Southern city. Whereas blacks comprised at most 10 percent of some Northern cities in the 1920s, in the South they were routinely 25 to 50 percent of a city's population.
Banking During the Great Depression : The Great Depression of the 1930s dealt a severe blow to the commercial banking industry. Many banks failed (went out of business) when their loans could not be repaid. The number of commercial banks declined from 26,000 in 1928 to about 14,000 in 1933. Total deposits in these banks declined by about 35 percent. Depositors rushed to retrieve their money, a process known as a run on the banks, and the federal government was forced to close all the banks for four days in 1933 to stem the panic.
It became apparent to observers that the Federal Reserve System had not solved all the problems of bank stability. Consequently, during the Great Depression, Congress recognized the importance of a sound banking system and created a number of agencies to restore public confidence in the banking system. Among the first of these was the Federal Housing Administration, which was created in 1934 to insure payment on home loans made by private lending institutions. The guarantee helped preserve the value of bank loans and enabled banks to continue to lend money to homebuyers.
Federal Deposit Insurance Corporation: Federal Deposit Insurance Corporation (FDIC), independent agency of the United States government, was created in 1933 under a section of the Federal Reserve Act to insure deposits in banks in the event of bank failure. In 1950 the section of the act concerning the corporation was amended and made a separate law, the Federal Deposit Insurance Act. The act provides up to $100,000 in insurance for each depositor in an insured bank. All banks that meet the standards for membership in the Federal Reserve System automatically become insured by the corporation; included are national banks chartered by the comptroller of the currency under federal law and state-chartered banks that obtain membership in the system. State-chartered banks, including mutual savings institutions that are not members, may become insured if they meet the prescribed qualifications for insurance.
In 1989 the Financial Institutions Reform, Recovery, and Enforcement Act abolished the Federal Savings and Loan Insurance Corporation (FSLIC); its functions were transferred to FDIC. That agency now administers two separate deposit insurance funds: the Bank Insurance Fund for commercial banks and the Savings Association Insurance Fund for thrift institutions formerly insured by FSLIC.
The major functions of the corporation are to pay the depositors if an insured bank closes without adequate resources to pay claims of its depositors; to act as receiver for all suspended national banks and for suspended state banks if state authorities so request; and to prevent the development or continuance of unsound banking practices. The corporation may also make loans to or purchase assets from insured banks to facilitate a merger or consolidation if such action will prevent or reduce loss to the corporation or if the continued operation of a distressed bank is deemed essential to provide adequate banking services in a community. The corporation also regularly examines insured banks that are not members of the Federal Reserve System and prescribes rules governing the payment and advertising of interest on deposits.
FDIC is managed by a three-member board of directors. Two members are appointed by the president for 6-year terms; the third is the comptroller of the currency, who serves ex officio.
Jazz Prospered: Jazz prospered during the Great Depression of the 1930s. The American public, white and black, wanted to escape the nation's depressed economy. Swing-era jazz, like 1930s Hollywood films, satisfied a national hunger for reassurance and uplift. During the Great Depression jazz enjoyed a truly national audience. No longer a music of brothels and speakeasies, it was almost respectable. Small-group jazz was still performed mainly in bars and nightclubs, but big bands appeared at such formal venues as theaters, ballrooms, and prestigious concert halls. Many big bands played for dancers at swank hotels, often making live broadcasts for one of the several radio networks.
Popular and Social Dance
The dances of the teens and 1920s, such as the Charleston, with its kicks, swinging arms, mobile torsos, and blaring rhythms, reflected a euphoric sense of prosperity and freedom. The Jazz Age of the 1920s was brought to an end with the stock-market crash in 1929. In the 1930s swing emerged as the new musical sound, played by big bands led by musicians such as Benny Goodman. Wanting respite from the Great Depression, Americans eagerly watched motion-picture extravaganzas by the dance director Busby Berkeley as well as the movies of dancers Fred Astaire and Ginger Rogers.
To swing music, teenagers danced the jitterbug, an outgrowth of the 1927 lindy hop. The fox-trot, a fast, trotting dance from about 1913, returned in the 1930s in a slower, smoother version. In 1939 at the World’s Fair a samba orchestra played at the Brazilian pavilion. Soon, popular culture was swept with a rage for South American dances such as the rumba, mambo, chachachá, and conga line. The Latin forms and sensual hip movements became popular at a time when women were gaining increased freedom, working in factories and managing homes and businesses while men were away at war during the 1940s.
Investment Trusts: Investment trusts originated in England and Scotland in the second half of the 19th century. They were first established in the United States during the early 1920s, and they became popular during the rise of the stock market during that decade. The stock market crash of 1929 and the Great Depression of the 1930s consolidated and closed many investment trusts.
Keynesian Economics: British economist John Maynard Keynes addressed the problem of “boom and bust” cycles that plagued capitalism. His The General Theory of Employment, Interest, and Money, published in 1936, proposed increased or decreased government spending in response to economic fluctuations. Liaison Agency/Houlton Getty, John Maynard Keynes was a student of Alfred Marshall and an exponent of neoclassical economics until the 1930s.
The Great Depression bewildered economists and politicians alike. The economists continued to hold, against mounting evidence to the contrary, that time and nature would restore prosperity if government refrained from manipulating the economy. Unfortunately, approved remedies simply did not work. In the U.S., Franklin D. Roosevelt's 1932 landslide presidential victory over Herbert Hoover attested to the political bankruptcy of laissez-faire policies.
SIDEBAR Past Masters: Distressed by the failure of national governments to cope with the Great Depression, Keynes rejected many assumptions of classical economics and argued that state intervention, and in particular regulation of interest rates, could control inflation and minimize unemployment. Author Robert Skidelsky examines several of the most important concepts in Keynesian thought. Open sidebar added new explanations and fresh policies were urgently required; this was precisely what Keynes supplied.
In his enduring work The General Theory of Employment, Interest, and Money, the central message translates into two powerful propositions: (1) Existing explanations of unemployment he declared to be nonsense: Neither high prices nor high wages could explain persistent depression and mass unemployment. (2) Instead, he proposed an alternative explanation of these phenomena focused on what he termed aggregate demand—that is, the total spending of consumers, business investors, and governmental bodies. When aggregate demand is low, he theorized, sales and jobs suffer; when it is high, all is well and prosperous. From these generalities flowed a powerful and comprehensive view of economic behavior—the basis of contemporary macroeconomics.
Because consumers were limited in the amounts that they could spend by the size of their incomes, they could not be the source of the ups and downs of the business cycle. It followed that the dynamic forces were business investors and governments. In a recession or depression, the proper thing to do was either to enlarge private investment or create public substitutes for the shortfalls in private investment. In mild economic contractions, easy credit and low interest rates (monetary policy) might stimulate business investments and restore aggregate demand to a figure consistent with full employment. More severe contractions required the sterner remedy of deliberate budget deficits either in the form of spending on public works or subsidies to afflicted groups.
Harlem Renaissance: The Great Depression of the 1930s increased the economic pressure on all sectors of life. Organizations such as the NAACP and Urban League, which had actively promoted the Renaissance in the 1920s, shifted their interests to economic and social issues in the 1930s. Many influential black writers and literary promoters, including Hughes, James Weldon Johnson, Charles S. Johnson, and Du Bois, left New York City in the early 1930s. Finally, a riot in Harlem in 1935—set off in part by the growing economic hardship of the Depression and mounting tension between the black community and the white shop-owners in Harlem who profited from that community—shattered the notion of Harlem as the “Mecca” of the New Negro. In spite of these problems the Renaissance did not disappear overnight. Almost one-third of the books published during the Renaissance appeared after 1929. In the last analysis, the Harlem Renaissance ended when most of those associated with it left Harlem or stopped writing, while new young artists who appeared in the 1930s and 1940s never associated with the movement.
Nation of Islam: Wallace D. Fard (pronounced Farood), a door-to-door silk salesman, established the Nation of Islam (NOI) in Detroit, at the beginning of the Great Depression. In addition to selling his wares, he spread his message of salvation and self-determination throughout Detroit's black neighborhoods. He held the first meetings in people's homes, but the movement soon grew big and Fard rented halls for his gatherings. Far from adhering to strict Islamic law, the Nation under Fard was an eclectic mix of philosophy that borrowed from earlier Black Muslim movements, Christian scripture (largely to debunk Christianity), and Ford’s Afro centric interpretation of the story of Origin. The organization attracted many followers because of its angry rejection of white society.
America Quits Gold: On April 20, 1933, President Franklin D. Roosevelt's decision to go off the gold standard was an effort to combat the effects of the Great Depression, following the lead of other nations such as Great Britain. This move, detailed in this 1933 Los Angeles Times article, provided the government with greater flexibility to allow for a certain level of inflation and put more money into circulation. Washington, April 19. (Exclusive)—The United States definitely went off the gold standard today with the government embarked on a policy of controlled inflation.
The Roosevelt administration is studying further moves to restore pre-depression price levels and revive business. There is to be no resort to “printing press money,” the President gave assurance today in announcing that the bars have been put up against further export of gold and that the dollar is to be allowed to depreciate naturally in foreign exchange. “We are off the gold standard,” said Secretary of the Treasury Wooding on returning to his office from one of his frequent conferences with the President.
Consequences of the Depression on the States: The following is a summary of the economic and social consequences of the depression on the following states:
Congress as a remedy to combat the depression passed the following programs:
The Tennessee Valley Authority (TVA) provided agricultural research (especially in improvement of fertilizers), reforestation, flood control, dam building, and hydroelectric power. This program provided flood control to Tennessee, Alabama, and Mississippi.
A significant export of reindeer antlers from Alaska to Asia has developed.
In 1927, the flooding waters of the Mississippi River burst the levees and spread over the Delta flatlands. Arkansas was hard hit by falling farm prices and unemployment. The Agricultural Adjustment Act, a federal program was instituted to raise crop prices. The Southern States, California, benefited from this program.
In Colorado, despite the general economic stagnation during the 1930s, the state’s mineral production increased. Silver and gold mining grew after 1934, when the U.S. Congress passed the Silver Purchase Act and the Gold Reserve Act. The price of gold increased, and unemployed people panned for gold in streams miners had originally worked in 1859.
In Connecticut, despite the general economic stagnation during the 1930s, the state’s mineral production increased. Silver and gold mining grew after 1934, when the U.S. Congress passed the Silver Purchase Act and the Gold Reserve Act. The price of gold increased, and unemployed people panned for gold in streams miners had originally worked in 1859. Important industries were machine tools, consumer goods, and financial services—especially insurance, which was centered in Hartford. The diplomatic and economic struggle between the United States and the Union of Soviet Socialist Republics (USSR) followed World War II. Connecticut became the first producer of nuclear-powered submarines and a major supplier of Sikorsky military helicopters. By 1960 Connecticut was one of the nation’s richest states, based on income per person.
In Delaware, the industrial boom of World War I (1914-1918) spurred the growth of the Wilmington area. By 1920 the state’s urban population exceeded its rural population for the first time. However, no large banks failed in Delaware, and the diversification of industry within the state encouraged a fairly rapid economic recovery.
In 1896, the Florida East Coast Railroad ran southward from West Palm Beach creating the first modern overland route to Miami. Mr. Flagler built a hotel next to his station, and the city immediately began to function as a resort. The city also began to mature as a transportation hub. Two major hurricanes curtailed progress in Miami during the late 1920s. Despite the Great Depression, progress resumed in the 1930s as resorts were developed, and the city grew during this period. During World War II (1939-1945), Miami served as a major military training area, and thousands of soldiers settled in the area after the war ended in 1945.
In Georgia, during the Great Depression of the 1930s, it was particularly devastated as the boll weevil decimated the cotton economy. Migration to other states seemed to be one of the few ways of overcoming poverty. The state remained primarily agricultural in nature until the early 1950s, when the development of industry began to accelerate. By the early 1960s, industrial production far outranked agriculture as the chief source of income. In the late 1990s Georgia had an economy based on manufacturing and service industries. Atlanta, the largest city and capital of the state, serves as an important economic center of the South and the nation.
Idaho, along with the rest of the United States, experienced an economic depression. Agricultural prices fell dramatically and forced a large number of farmers into bankruptcy. Many left the state to seek better opportunities elsewhere. Prices recovered slowly during the 1920s. During the economic hard times of the 1930s known as the Great Depression, Idaho’s economy once again suffered. Farmers were particularly hard hit, both by drought and dropping prices for their produce.
In Illinois, the Great Depression of the 1930s forced the Civic Opera to disband, but grand opera returned to the city in 1954 when the Lyric Opera of Chicago made its debut. The Illinois Symphony Orchestra, for instance, was formed in the mid-1980s to produce classical music in central Illinois. The city is most notably a Mecca for the blues, producing some of its most well known musicians as well as influencing its sound. The blues originated in the early 1800s with Southern plantation slave workers. By the early 1920s Mississippi Delta blues musicians were migrating north to Chicago, which was burgeoning with music clubs and recording studios. Chicago became a testing ground for the blues sound.
In Iowa, the Great Depression dealt Iowa farmers a heavy blow in the 1930s. In 1920, however, the federal government withdrew price supports on farm products, and in the summer of that year farm prices suddenly began to decline. Those who had borrowed heavily often found that farm income could no longer pay mortgage payments, and bankruptcies increased across the state. Iowa farm productivity, developed in response to wartime demand, contributed to postwar food surpluses, decreasing prices for farm products and adding to farmers’ economic difficulties.
Kentucky also struggled with economic depression in agriculture and mining and with restrictions on the liquor industry as a result of the 18th Amendment to the U.S. Constitution, which introduced national Prohibition (1920-1933). The state’s economy was already in trouble before the stock market crash of 1929 that ushered in the Great Depression, the hard times of the 1930s. Kentucky was not affected as seriously as some parts of the nation because of its agricultural base and because liquor production was reopened in the 1930s when the 18th Amendment was repealed.
However, Kentucky still suffered during the Depression and wholeheartedly supported the election of Franklin D. Roosevelt in 1932 and his program for recovery, the New Deal. New Deal programs funded conservation efforts, new construction projects, and support to the needy and elderly. Passage of these programs was aided by Kentuckian Alben W. Barkley, who was the majority leader in the U.S. Senate (and later the vice president of the United States under President Harry S. Truman).
In Louisiana, During Long’s political ascendancy, a vast program of public works was instituted, some with state funds, but most with federal assistance. These programs helped to alleviate the economic effects of the disastrous worldwide Great Depression of the 1930s. After his death, considerable federal funds were spent to relieve the effects of the depression in Louisiana. Long’s political machine—an organization to control public offices and patronage—continued under the leadership of his brother, Earl K. Long, and his son, Russell Long.
In Maine, the Democratic Party made slight inroads during the Great Depression, the economic crisis of the 1930s. But Maine was among only six states to vote against Democrat Franklin Delano Roosevelt when he was elected president in 1932. The state remained fundamentally conservative and Republican into the 1950s. Margaret Chase Smith of Maine became the first woman to serve in both houses of Congress when she was elected to the U.S. Senate in 1948.
In Maryland, the economy largely continued strong during the 1920s. Its diversity helped somewhat to cushion the blows resulting from the stock market crash of October 1929 and the ensuing Great Depression, the economic hard times of the 1930s. A Peoples Unemployment League formed in Baltimore in 1933; three years later a labor strike in Cumberland led to riots. After the United States joined the Allies, war mobilization moved the state’s economy into high gear. From April 1940 to November 1943 the labor force in Baltimore gained 215,000 jobs while losing 55,000 people to military service.
In Massachusetts, Boston’s economy was strong and expanding, peaking in 1920 with nearly 90,000 industrial workers. By 1930, however, Boston lost nearly 15,000 manufacturing jobs, many to the U.S. South. The city lost another 17,000 jobs during the Great Depression, the worldwide economic slump of the 1930s. As the remaining jobs moved to the suburbs, the population of Boston and the corresponding tax base declined after 1935. During World War II (1939-1945), the city had an upturn in manufacturing as a result of increased wartime production. Despite this surge, Boston manufacturing declined steadily over the last half of the 20th century.
In Michigan, the automobile industry grew rapidly until the 1930s, when it suffered severely during the economic hard times of the Great Depression. Because Michigan's economy was so dependent on the industry, the state was hit hard, experiencing unemployment rates far above the national average. Hundreds of thousands of workers lost their jobs. The hardships of the Great Depression helped to end the Republican Party's long domination of Michigan politics. In 1932 Michigan residents gave the state's electoral votes to Democratic presidential candidate Franklin D. Roosevelt and elected Democrats to most state offices. Roosevelt's programs to combat the depression, known as the New Deal, provided work for more than 500,000 Michigan residents.
Minnesota: During its first seven years of statehood, Minnesota experienced three great crises: a depression, the American Civil War (1861-1865), and a war with the Dakota. A depression, which started in 1857, devastated the Minnesota economy, which only recovered because of the agricultural and timber goods needed during the Civil War.
Mississippi: The onset of the Great Depression and the hard times of the 1930s, wreaked new havoc on the Mississippi economy. However, by its very severity the depression spurred some long-needed economic developments in the state. Federal farm programs initiated during that decade encouraged better soil conservation practices and greater crop diversification. For its part, the state government undertook its most concerted effort to encourage industrial growth.
Missouri: During the 1930s federally sponsored construction projects, intended to provide jobs for those unemployed by the Great Depression, changed the brick and mortar landscape of downtown Kansas City. In this same era several downtown skyscrapers were built, along with the monumental Union Station and the Liberty Memorial.
During the 1930s federally sponsored construction projects intended to provide jobs for those unemployed by the Great Depression, changed the brick and mortar landscape of downtown Kansas City. In this same era several downtown skyscrapers were built, along with the monumental Union Station and the Liberty Memorial. A modern period of development began in Kansas City in the 1980s with the completion of Crown Center south of downtown. Crown Center is one of the nation’s largest privately funded urban renewal projects. It includes the corporate headquarters of Hallmark Cards, and a large shopping, entertainment, and residential complex.
Montana: During the Great Depression and the international economic decline of the 1930s, the copper industry suffered extensive losses. Inexpensive copper from Africa and South America flooded the market; Montana mines cut back production significantly and thousands of miners lost their jobs. Agriculture also suffered; prices dropped, and drought hit Montana again. After Franklin Delano Roosevelt was elected president of the United States in 1932, he initiated a number of domestic programs, called the New Deal, to help the nation recover from the depression. Farmers from Montana benefited from programs that subsidized crops, offered low interest loans, and brought electricity to many rural areas. The Silver Purchase Act of 1934 helped raise the price of silver and stimulated the mining industry. The federal and state governments constructed many water-control and irrigation systems. The most significant was the Fort Peck Dam on the Missouri River, a New Deal project completed in 1939.
In Nebraska, since its early settlement in the mid-19th century, Nebraska has had an economy based on agriculture, specifically the raising of livestock and the growing of corn (for feed) and wheat. During the 1930s the economy suffered from the effects of the Great Depression and an extended drought. Widespread use of irrigation wells in the second half of the 20th century has been responsible for the increased area of farmland under irrigation.
Although farming is still extremely important, services and manufacturing have expanded rapidly in recent decades. As in other farm depressions, many farmers had taken large loans to purchase land and modernize operations and were driven into bankruptcy when crop prices dropped and land values fell. Many farmers lost their land, and some banks with extensive farm loans followed them into insolvency.
Nevada: After World War I ended in 1918, attempts to suppress what others called immorality gave way to the values of a commercially oriented, wide-open frontier society that permitted such behavior. Illegal gambling, legalized prostitution, easy divorces, and the sale of alcoholic beverages in violation of the 18th Amendment to the Constitution of the United States became features of life in Reno and the small railroad town of Las Vegas.
The death of New lands in 1917 dealt a severe blow to progressive reform in the state. These businesses grew after 1931 when construction work began on Hoover Dam. In 1931, early in the Great Depression, gambling was again made legal and state residency required to obtain a divorce was reduced to six weeks. Social reform did not much interest Nevadans in the post World War I period. Leaders who had begun their careers in mining towns dominated the state for the next 40 years, when Nevada approved businesses (gambling and prostitution) that other states called immoral.
New Hampshire: During the second half of the 20th century, New Hampshire faced competition from Western states in leather and paper production. The textile industry, which throughout the l9th century was the state's leading source of industrial income, has declined rapidly ever since the Great Depression of the 1930s. The Amoskeag Mills at Manchester, chartered in 1831 and once the largest cotton textile plant in the world, had to stop operations in the 1930s. Many other mills also closed down or moved to the South, where labor costs were lower.
New Jersey: Like all other industrial areas in the country, the Great Depression hit New Jersey hard with the economic troubles of the 1930s. By 1931 municipalities could no longer collect property taxes; unemployed homeowners forced tax delinquencies to 28 percent in Newark and Camden and 30 percent in Paterson. The Red Cross distributed food in Elizabeth and New Brunswick, and barter systems developed in Paterson and in Newark’s Clinton Hill, allowing the unemployed to exchange service for food.
By the summer of 1933, federal relief programs, part of President Franklin Roosevelt’s economic strategy known as the New Deal, were sustaining 142,000 big-city residents—one of every ten. The New Deal’s Public Works Authority built the Margaret Hague Medical Center in Jersey City and Camden’s 515-unit Westfield Acres public housing project, and provided loans to construct the Lincoln Tunnel and to electrify the Pennsylvania Railroad’s Jersey Division. The federal Works Progress Administration (WPA) provided money for county roads, forest preserves, and writing programs. As late as 1936, 700,000 people were on the state’s relief rolls or working on New Deal projects.
New York: The Harlem Riot of 1935, a New York City uprising caused by a combination of the disastrous economic effects of the Great Depression, caused job discrimination and police brutality.
On March 19, 1935, a white Harlem storeowner accused a dark-skinned Latino boy, Lino Rivera, of shoplifting a knife. After a scuffle, in which Rivera, aged ten, struck a store clerk, the police arrested him. Rumors about the arrest and the police's treatment of the boy in custody spread throughout Harlem. Some people believed that the police had beaten or killed Rivera. Incited by street corner speakers, people began to riot, first attacking the store where Rivera had been arrested. They caused an estimated $2 million worth of damage, mostly to white-owned property. By the riot's end, three black people were dead and over 200 wounded.
The riot may have been set off by Rivera's arrest, but Harlem's African American residents were already tense with frustration about their dire social and economic conditions and their treatment at the hands of whites. The Great Depression was unusually hard on Harlem, particularly because white storeowners, a majority of whose businesses were frequented by African Americans, refused to hire African Americans as clerks. In 1933, African Americans had picketed and boycotted such stores, but in 1935 the storeowners obtained an injunction against the picketing. Many Harlemites insisted that the police enforced the injunction with brutality.
After the riot, New York Mayor Fiorello La Guardia appointed the Mayor's Commission on Conditions in Harlem, a biracial commission headed by the African American sociologist E. Franklin Frazier, to investigate and propose solutions. The commission's report, "The Negro in Harlem: A Report on Social and Economic Conditions Responsible for the Outbreak of March 19, 1935," recommended anti-discrimination measures to be taken in city housing, relief agencies, the police department, and the hiring practices for municipal jobs. La Guardia appointed Alain Locke to implement the program and attempted to expand government services to Harlem, including public housing and facilities at Harlem hospital, and special training for police. Conditions, however, remained tense throughout the decade and well into the 1940s.
North Carolina: By the 1920s North Carolina was a national leader in the manufacture of textiles, tobacco products, and furniture. The state suffered economic hardship during the Great Depression, the hard times of the 1930s, but after 1933 public works projects funded by the federal government provided jobs for thousands of people, and federal programs aided cotton and tobacco farmers. In World War II (1939-1945) the unemployment problem was significantly reduced as 362,000 North Carolinians went into the armed services and the federal government spent almost $2 billion in the state for war materials.
Defense agencies were supplied by 83 industrial plants in the state; among these were the North Carolina Ship Corporation at Wilmington, which turned out 358 ships; and the Ethyl-Dow Plant at Kure Beach, which manufactured all the tetraethyl lead used by the United States in the war. After World War II many Northern businesses, attracted by North Carolina’s restrictions on labor unions, relocated in the state. Many people seeking jobs moved from the farms to the cities, and industry expanded.
In North Dakota, William Langer was elected governor in 1932. Within a few months a federal court convicted Langer of conspiracy to obstruct an act of Congress after he tried to solicit political contributions from federal employees. After a series of appeals, the conviction was reversed, and in 1936 Langer was reelected without NPL support, the first governor in the United States to be elected as an independent.
Langer was the most influential figure of the 1930s; he provided strong leadership during the difficult drought years of the Great Depression, the economic hard times of the 1930s. He gained considerable support for an embargo on grain shipments from the state that helped raise grain prices, and in 1937 he authorized the creation of a state water conservation commission to develop and conserve water resources. In 1939 the Democrat John Moses, who investigated financial irregularities in state-owned enterprises and cut government spending, succeeded Langer.
Ohio: The 1920s were marked by economic prosperity and continued industrial growth in Ohio, but the stock market crash of 1929 precipitated the period of nationwide economic hardship known as the Great Depression. More than a million Ohio residents lost their jobs. The Depression was particularly severe in the centers of heavy industry, such as Youngstown, Akron, Toledo, and Cleveland. In those areas, where there was little diversification, it was claimed that one-third of the wage earners were unemployed. The state government struggled with declining revenues, enacting the first cigarette and sales taxes. Federal funds and construction projects, under the New Deal economic programs of President Franklin D. Roosevelt, provided some relief. By the late 1930s, the state's economy had begun to recover, helped by development of new businesses to manufacture air conditioning and refrigeration equipment and diesel engines. But full recovery came only with the onset of World War II (1939-1945).
Oklahoma: Republican power evaporated with the Great Depression that followed the stock-market crash of 1929. Oklahoma became almost a one-party state. Many Oklahoma Democrats opposed the federal government’s accumulation of power in general and the active social experimentation of the administration of Franklin Delano Roosevelt.
In Oregon, after the stock market crashed on October 29, 1929 and the United States entered a period of economic decline called the Great Depression, Oregon’s economy experienced an important transition. President Franklin Delano Roosevelt, elected in 1932, proposed an economic plan called the New Deal to counteract the effects of the Depression. Numerous conservation projects of long-range value were begun by such New Deal agencies as the Work Projects Administration (WPA) and the Civilian Conservation Corps (CCC).
In cooperation with the U.S. Forest Service and other permanent government agencies, projects were undertaken for reforestation, soil conservation, irrigation, and flood and forest fire control. Highways and recreational areas were also built or developed during this period. The most important New Deal project for Oregon was the Bonneville Dam, completed in 1938, which harnessed the power of the Columbia River for electricity, navigation, and flood control.
Pennsylvania: The basis of Philadelphia’s economy has changed substantially through time. In the 17th and 18th centuries Philadelphia grew as a major Atlantic seaport, receiving, processing, and shipping flour, meat, and forest products. A dozen shipbuilders operated in 1754, along with other maritime businesses including sail manufacturers, chandleries for selling boating equipment and ropewalks for the production of rope. In the 17th and 18th centuries Philadelphia grew as a major Atlantic seaport.
In the 19th century, the value of manufacturing increasingly surpassed commercial shipping. Grain milling was important, along with cotton and wool processing. By the latter part of the century, textile and carpet factories, iron foundries, steel mills, shipbuilders, and saw manufacturing plants dominated a highly diverse economy. Although much textile production moved to the South beginning in the early 20th century, new industries such as chemicals and food processing sustained the economy until the hard times brought by the Great Depression of the 1930s caused a general decline.
In Rhode Island, economic conditions worsened in the 1930s, as the nation entered the period of hard times known as the Great Depression. Rhode Islanders supported the Democratic presidential candidate Franklin D. Roosevelt in 1932, as they had narrowly supported the unsuccessful Democratic candidate, Alfred E. Smith, in 1928. When the Democratic-controlled General Assembly convened in 1935, it repealed the Bray ton Law, ousted the existing Supreme Court justices, and reorganized and streamlined the executive branch of the state government in a coup called the Bloodless Revolution.
The state’s economy recovered slowly during the 1930s. By 1939, employment in non-textile industries returned to the level of 1929, but employment in the textile industry was still about 15 percent below its 1929 level. World War II (1939-1945) gave a temporary lift to the state’s economy. During the war, no textile employment surpassed textile employment, partly because of a substantial increase in shipbuilding in the state. But the state’s economy still depended mainly on the declining textile industry, and Rhode Island’s unemployment rate remained consistently higher than the national average after the war.
South Carolina: Like other Americans, the Great Depression hit hard South Carolinians. Farmers, hurt by sharp declines in the price of cotton, depended heavily on the federal government for assistance. As part of President Franklin D. Roosevelt’s vast New Deal program to recover from the depression, laws were passed placing federal restrictions on cotton production. The restrictions were meant to reduce the supply of cotton and thereby raise the price that growers could get for it. They were also meant to encourage greater diversification in farming by diverting cotton acreage to other crops. However, the result for many cotton-growing tenants was that jobs in Northern cities held out better economic prospects than farming, and they left the state.
South Dakota: The prices for farm products fell even lower in the Great Depression of the 1930s. In addition, production fell off drastically, as farmers suffered a succession of droughts accompanied by grasshopper plagues. In 1933 and later years high winds whipped loose, dry topsoil into devastating dust storms known as black blizzards. It became obvious that extensive lands had been over cultivated. Thousands of farmers were forced to abandon their land and leave the state, and the population of South Dakota declined from 629,849 to 589,702 by 1945. The farmers received aid from the domestic relief programs of President Franklin Roosevelt (1933-1945). South Dakota farmers came to depend on public support and, as a result, lost some degree of economic self-sufficiency. Even with federal assistance, recovery was slow. In 1939 agricultural income was less than half what it had been in 1929.
Texas: At the onset of the Great Depression, many Texans assumed that the downturn was an eastern financial collapse and would not affect Texas. By the winter of 1930-1931, however, the price of cotton had dropped to less than a nickel a pound. More than 350,000 Texans were out of work by mid-1932, and at least 25 percent of them had no resources to survive unemployment. Dwindling tax revenues and the lack of industries limited public funds, and private charities had no funds.
Consequently Texans, like other Americans, were anxious for federal aid, and they voted overwhelmingly for Democrat Franklin Delano Roosevelt in the 1932 presidential election over the incumbent Republican Herbert Hoover. Roosevelt promised a New Deal for Americans in his inaugural address, and his domestic programs profoundly affected the Texas economy in the 1930s. Under Roosevelt's New Deal legislation, the federal government provided direct relief payments to states and individuals for the first time in history. Programs such as the Works Progress Administration and others hired the unemployed to work on public projects.
Utah: During World War II (1939-1945) there was a significant impact on Utah. The war helped the state economy recover completely as farm prices rose and manufacturing and mining were expanded in response to wartime demands. Many Utahans left to serve in the armed forces or to work in defense industries, primarily in California. The state also saw a large influx of people from other states. Many were assigned to military installations like Hill Air Force Base and Fort Douglas, worked at supply depots in Ogden, Clearfield, and Tooele, or were treated at Bushnell Military Hospital in Brigham City. Executive Orders 9066 and 9102, signed by President Franklin D. Roosevelt (1933-1945) and upheld by the Supreme Court of the United States, instructed the military to transport 70,000 United States citizens of Japanese descent and 42,000 Japanese citizens residing on the West Coast to relocation centers in the interior. Many were interned in Utah at the Topaz War Relocation Camp. In addition, a dozen prisoner-of-war camps held Italian and German prisoners during the war. The federal government also built a large steel plant at Geneva, near Provo. After the war the plant was sold to private industry and its operations were expanded. By 1950 manufacturing had passed agriculture as a source of income in Utah.
Virginia: The Barter Theatre, at Abingdon, is unique in the United States. During the Great Depression of the 1930s, actors gave performances there in exchange for food, and the bartering arrangement gave the theater its name. Later, state funds were appropriated to support the Barter, and it became the official state theater. Today it presents three distinct programs of live theater-traditional, explorative, and for young audiences. Theatre Virginia is a professional repertory theater in Richmond. George Mason University's 2,000-seat Center for the Arts offers dance, theater, and symphonies for its northern Virginia audiences.
Washington State: The economic policies of Republican Herbert Hoover, president at the beginning of the Depression, did not satisfy Washington state voters, who helped elect Democrat Franklin Delano Roosevelt as president in 1932. Roosevelt’s Public Works Administration (PWA), a government agency designed to create jobs by funding public works projects, benefited Washington. A group of local activists had been attempting to establish an irrigation project for the Columbia River basin since 1919. Harnessing the Columbia would provide inexpensive hydroelectric power for Washington. In 1933 the PWA began construction of the Grand Coulee Dam across the Columbia. Completed in 1942, it was the largest dam ever built to that time. Another PWA project on the Columbia River, the Bonneville Dam, was providing hydroelectric power by 1937. Washington citizens took advantage of this developing source of power. In 1930 an initiative had made it legal for a community, with the approval of its voters, to set up a public utility district (PUD) to buy or sell waterpower. During the next decade, PUDs were voted into existence all over the state.
Wisconsin: The state's farmers began to suffer from falling farm prices in the 1920s. Their distress became acute during the Great Depression, the national economic disaster of the 1930s. It became clear that most of the cleared northern land was better suited to trees than crops, and reforestation and rural zoning programs were adopted. Constitutional amendments passed in the 1920s permitted the state and county governments to buy land to convert to forests and parks. Nicollet and Chequamegon National Forests also were established. Industry as well as agriculture suffered severely during the Great Depression. The state's important machine tool and machinery industries were badly hurt, and only the paper industry continued to prosper.
West Virginia: West Virginia's state parks system, regarded as one of the finest in the nation, had its beginnings in 1929 with the establishment of Droop Mountain State Park, which includes the site of one of the major Civil War battles fought in the state. With the help of the Civilian Conservation Corps and the National Park Services during the Great Depression in the 1930s, West Virginia began to capitalize upon its abundance of scenic locations and historic sites through the development of a system of state parks and vacation areas.
Wyoming: Like other states, Wyoming underwent considerable hardship during the Great Depression of the 1930s. Agricultural prices dropped, a number of mines closed down, and oil production declined. Difficulties were increased by a severe and prolonged drought that began in 1926 and continued well into the 1930s. Large areas of land, especially in southeastern Wyoming where dry farming had been prevalent, were completely dried up. In 1933 Wyoming became the last state to request financial aid during the Great Depression. In 1934 Congress adopted the Taylor Grazing Act, which was designed to help avoid overgrazing. With the aid of the U.S. Soil Conservation Service some parched regions were reclaimed and returned to use as irrigated pastureland.
International Effects of the Depression: Like Hoover, leaders of other nations around the world were determined to balance their budgets by raising taxes and slashing government spending. Germany, struggling to pay reparations imposed by the peace settlements after World War I, suffered to a larger extent than any other major industrial nation. Nearly 40 percent of the German workforce was unemployed by 1932. In these desperate economic circumstances, large numbers of Germans began to listen to the tirades of Hitler, who blamed the depression on Jews and Communists and promised to restore Germany to economic and military strength. After his Nazi (National Socialist) Party became the strongest political force in Germany, Hitler was named chancellor in January 1933. He soon seized absolute control of the German government.
In Britain the effects of the depression were not as dramatic because the nation had been suffering from high unemployment through much of the 1920s. Unlike the United States, Britain already had unemployment insurance and government welfare payments to ease the burden on the jobless. The depression took longer to hit hard in France because it was less industrialized than the United States, Germany, and Britain. Also, because so many French men had died in World War I, the workforce was very small, and it took a severe economic decline before the demand for workers fell below the small supply.
Roosevelt New Deal: By the election year of 1932, the depression had made Hoover so unpopular that the election of the Democratic presidential candidate Franklin Delano Roosevelt was all but assured. Confidence—Hoover’s elusive goal—was Roosevelt’s most abundant quality. Declaring in his inaugural speech that “the only thing we have to fear is fear itself,” Roosevelt quickly lifted the nation’s spirits with the rapid and unprecedented actions of the New Deal.
Within days of his inauguration Roosevelt called Congress into a special session, during which many pieces of emergency legislation were passed. Following the example of many states, Roosevelt proclaimed a nationwide bank holiday, closing all banks to stop panicky depositors from withdrawing their money. A few days later he broadcast the first of many fireside chats on the radio, reassuring Americans that all banks that were allowed to reopen would be safe.
The New Deal produced a wide variety of programs to reduce unemployment, assist businesses and agriculture, regulate banking and the stock market, and provide security for the needy, elderly, and disabled. The basic idea of early New Deal programs was to lower the supply of goods to the current, depressed level of consumption. Under the Agricultural Adjustment Act of 1933, the government sought to raise farm prices by paying farmers not to grow surplus crops. Parts of the National Industrial Recovery Act created codes for many industries that regulated competition while guaranteeing minimum wages and maximum hours for workers.
The New Deal also tried to increase demand, pumping large amounts of money into the economy through public works programs and relief measures. Public works projects not only provided jobs but built schools, dams, and roads; the innovative Tennessee Valley Authority provided electric power and improved living conditions in an area of the southeast United States.
The New Deal produced a wide variety of programs to reduce unemployment, assist businesses and agriculture, regulate banking and the stock market, and provide security for the needy, elderly, and disabled. The U.S. gross public debt increased from $22.5 billion in 1933 to $40.44 billion in 1939, but Roosevelt was reluctant to accept any more deficit spending than seemed absolutely necessary to prevent mass suffering. He did not create an unbalanced budget on the scale Keynes advocated until World War II forced it upon him. Once the government started spending at the levels Keynes had suggested, the depression ended.
The New Deal helped people to survive the depression, but acted as a painkiller rather than a cure for the nation’s economic ills. Unemployment was reduced, but remained high through the 1930s. Farm income rose from a low of $1.9 billion in 1932 to $4.2 billion in 1940. The demands of the depression led the United States to institute social-security programs and accept labor unions, measures that had been taken decades earlier in many European nations.
Life during the Depression: The Great Depression had a substantial and varied impact on the lives of Americans. Physically and psychologically, it was devastating to many people, who not only lacked adequate food, shelter, and clothing but felt they were to blame for their desperate state.
Although few people died from starvation, many did not have enough to eat. Some people searched garbage dumps for food or ate weeds. Malnutrition took a toll: A study conducted in eight American cities found that families that had a member working full time experienced 66 percent less illness than those in which everyone was unemployed.
The psychological impact was equally damaging. During the prosperity of the 1920s, many Americans believed success went to those who deserved it. Given that attitude, the unemployment brought by the depression was a crushing blow. If the economic system really distributed rewards on the basis of merit, those who lost their jobs had to conclude that it was their own fault. Self-blame and self-doubt became epidemic. These attitudes declined after the New Deal began, however. The establishment of government programs to counteract the depression indicated to many of the unemployed that the crisis was a large social problem, not a matter of personal failing. Still, having to ask for assistance was humiliating for many men who had thought of themselves as self-sufficient and breadwinners for their families.
Because society expected a man to provide for his family, the psychological trauma of the Great Depression was often more severe for men than women. Many men argued that women, especially married women, should not be hired while men were unemployed. Yet the percentage of women in the workforce actually increased slightly during the depression, as women took jobs to replace their husbands’ lost paychecks or to supplement spouses’ reduced wages. Women had been excluded from most of the manufacturing jobs that were hardest hit by the depression, which meant they were less likely than men to be thrown out of work. Some fields that had been defined as women’s work, such as clerical, teaching, and social service jobs, actually grew during the New Deal.
The effects of the depression on children were often radically different from the impact on their parents. During the depression many children took on greater responsibilities at an earlier age than later generations would. Some teenagers found jobs when their parents could not, reversing the normal roles of provider and dependent. Sometimes children had to comfort their despairing parents. A 12-year-old boy in Chicago, for example, wrote to President and Mrs. Roosevelt in 1936 to seek help for his father, who was always “crying because he can’t find work [and] I feel sorry for him.” The depression that weakened the self-reliance of many adult men strengthened that quality in many children.
The depression’s impact was less dramatic, but ultimately more damaging, for minorities in America than for whites. Since they were “born in depression,” many blacks scarcely noticed a change at the beginning of the 1930s. Over time, however, blacks suffered to an even greater extent than whites, since they were usually the last hired and first fired. By 1932 about 50 percent of the nation’s black workers were unemployed. Blacks were frequently forced out of jobs in order to give them to unemployed whites.
Yet the depression decade was one of important positive change for blacks. First lady Eleanor Roosevelt and several leading New Deal figures were active champions of black rights, and most New Deal programs prohibited racial discrimination. These rules were often ignored in the South, but the fact that they were included at all was a major step forward. Blacks were sufficiently impressed with the New Deal to cause a large majority of black voters to switch their allegiance from the Republican to the Democratic Party during the depression years.
Other minority populations had experiences similar to those of blacks during the depression. Native Americans were even less likely than blacks to notice a downturn when the depression began; they already fared poorly by virtually every social or economic indicator. But Native Americans, like blacks, were brought into New Deal relief programs that in theory did not discriminate, and an attempt was made, through the Indian Reorganization Act, to enable tribes to reestablish their identities and cultural practices.
In industrial cities such as Detroit, Gary, and Los Angeles and in agricultural regions such as California’s San Joaquin Valley, Mexican Americans were seen as holding jobs that should go to whites. Repatriation (meaning deportation) programs were instituted to persuade Chicanos to return to Mexico, often through intimidation.
Groups of white Americans also faced discrimination during this era. Poor farmers evicted from their land or fleeing the Dust Bowl were often despised and abused when they arrived in California and other western states. They were commonly labeled “Okies,” whether they came from Oklahoma or other states.
End of the Depression: Although economic conditions improved by the late 1930s, unemployment in 1939 was still about 15 percent. However, with the outbreak of World War II in Europe in September 1939, the U.S. government began expanding the national defense system, spending large amounts of money to produce ships, aircraft, weapons, and other war material. This stimulated industrial growth, and unemployment declined rapidly. After the United States entered the war in December 1941, all sectors of the economy were mobilized to support the war effort. Industry greatly expanded, and unemployment was replaced by a shortage of workers.
Legacy of the Depression: The impact of the Great Depression and the programs of the New Deal dramatically altered the relationship between the American people and their government. The federal government expanded its role in many social and economic areas, becoming larger and more powerful. Americans came to accept government involvement and responsibility in caring for society’s most needy members and regulating many aspects of the economy.
The New Deal’s social programs reflected a shift in American values created by the shared hardships of the depression era. The depression experience discredited the extreme individualism and pursuit of self-interest that characterized the 1920s, and revived an emphasis on community, cooperation, and compassion. These values were reflected in the popular culture of the day and in political and labor movements that developed and expanded during the 1930s.
One of the most far-reaching New Deal measures, the Social Security Act of 1935, guaranteed government help to citizens who were unemployed or disabled, to older Americans, and to mothers and children. The National Labor Relations Act (1935) provided protection for union activity, which contributed to the rise of labor unions in mass-production industries such as steel and automobile manufacturing. Unions and racial minorities, who had benefited from the New Deal, were among the groups who became staunch supporters of the Democratic Party, changing American politics for decades to come.
Films Expressing the Needs of the Depression: The literature, films, and art of the depression era demonstrated the desire for a more cooperative, less fiercely competitive way of life. Many celebrated the common people, who were contrasted with greedy, powerful interests. Examples included films such as Mr. Smith Goes to Washington (1939), directed by Frank Capra, and Stagecoach (1939), by John Ford; paintings by Norman Rockwell; songs by folk singer Woody Guthrie; and novels by such writers as John Steinbeck.
Conservatives vs. Socialism: While many conservatives believed the New Deal was turning the United States toward socialism, other Americans felt it did not go far enough and sought more revolutionary change. Political movements to the left of the New Deal enjoyed considerable support during the 1930s. Among them was the Minnesota Farmer-Labor Party, which offered radical proposals challenging the capitalist system, and the unsuccessful campaign by novelist Upton Sinclair to be governor of California in 1934, proposing essentially socialist programs to “End Poverty in California.” By alleviating some of the worst effects of the depression, the New Deal helped defuse tensions and preserve a democratic, capitalist system at a time when other nations turned to fascism or socialism.
The return of prosperity during and after World War II revived some of the forces that divided society and promoted self-interest in the 1920s. But the experience of the Great Depression left a lasting mark on the United States in the forms of a much greater role for the federal government, a new political alignment in which Democrats would retain the support of a majority for most of the next half century, and a general feeling that the free market must be regulated in order to avoid another such economic catastrophe.
FDR’s New Deal: New Deal was the name given to the peacetime domestic program of United States president Franklin D. Roosevelt, and especially to the innovative measures taken between 1933 and 1938 to counteract the effects of the Great Depression.
Both Roosevelt and the Congress of the United States, in trying to reduce unemployment and restore prosperity, endorsed a wide spectrum of new federal programs and agencies, most popularly identified by acronym titles. Roosevelt, a skillful political leader, helped win support for an unprecedented array of new services, regulations, and subsidies. Yet no single political philosophy or set of coherent goals ever unified these disparate programs, most of which he developed with the aid of an informal group of advisers known as the Brain Trust. These individuals from outside government included professors, lawyers, and others who came to Washington to advise Roosevelt, in particular on economic affairs. The central legacy of the New Deal was increased government involvement in the lives of the people.
First Legislation: Roosevelt's overwhelming victory in the 1932 election, coupled with the urgency of the worst economic collapse in U.S. history, opened the way for a flood of legislation in 1933. Almost immediately after taking office, Roosevelt called on Congress to convene and began what would be known as the Hundred Days, which lasted until June 16, 1933.
Emergency Banking Act: On March 6 Roosevelt called a nationwide bank holiday, and on March 9 Congress passed the Emergency Banking Act, which provided for federal bank inspections.
Glass-Steagall Act: In the summer of 1933, the Glass-Steagall Act set much more stringent rules for banks and provided insurance for depositors through the newly formed Federal Deposit Insurance Corporation (FDIC). These acts helped to restore popular confidence in the wake of widespread bank failures.
Security and Exchange Commission: Two acts, one in 1933 and one in 1934, mandated detailed regulations for the securities market, enforced by the new Securities and Exchange Commission (SEC).
Federal Housing Administration, or FHA: Several bills provided mortgage relief for farmers and homeowners and offered loan guarantees for home purchasers through the Federal Housing Administration, or FHA .
The Federal Emergency Relief Administration: The Federal Emergency Relief Administration, which was headed by Harry Hopkins, a social worker appointed by Roosevelt, expanded existing relief grants to the states and resulted in assistance for more than 20 million people.
The Civilian Conservation Corps (CCC): The Civilian Conservation Corps (CCC) provided work relief for thousands of young men under a type of military discipline. The CCC emphasized reforestation, among other projects.
Tennessee Valley Authority (TVA): Congress established the Tennessee Valley Authority (TVA) to develop the Tennessee River in the interest of navigation and flood control and to provide electric power to a wide area of the southeastern United States.
Agricultural Adjustment Act: The most important legislation of 1933 involved the major economic sectors. As a climax to a decade of wrangling, Congress in 1933 enacted a complex new farm bill, the Agricultural Adjustment Act. It provided several mechanisms to help raise agricultural prices, but the one most extensively used provided for government payments to farmers who destroyed or did not grow surplus crops. At a time when economic hardship was leaving people in other areas in need of food, the act invited criticism. The Supreme Court of the United States declared the Agricultural Adjustment Act unconstitutional in 1936.
The National Industrial Recovery Act (NIRA): The National Industrial Recovery Act (NIRA) was the most innovative early New Deal measure. It provided for two major recovery programs—a vastly expanded public works effort, carried out by the Public Works Administration, and a complex program to regulate American business and ensure fair competition. The National Recovery Administration (NRA) approved and enforced a set of competitive codes for each industry to help ensure fair competition in each.
Second New Deal: The hopes of 1933 for early recovery proved illusory. The Supreme Court declared many of the hastily drafted early bills unconstitutional. Roosevelt now exploited developing class divisions, formed closer alliances with organized labor, and increasingly castigated the big-business groups that opposed his New Deal programs.
These reverses, plus increasingly political opposition to Roosevelt, triggered a second flood of legislation, beginning in 1935, which some observers called the Second New Deal. Among the new measures were higher taxes for the rich, strict regulations for private utilities, subsidies for rural electrification, and what amounted to a bill of rights for organized labor.
National Labor Relations Act of 1935: Under the guidance of Secretary of Labor Frances Perkins, the National Labor Relations Act of 1935 gave federal protection to the bargaining process for workers and established a set of fair employment standards. The National Labor Relations Act, also known as the Wagner Act for its sponsor, Robert Wagner, guaranteed workers the right to organize and bargain through unions.
Fair Labor Standards Act of 1938: The Federal Fair Labor Standards Act of 1938, the last major domestic program launched by the Roosevelt administration, mandated maximum hours and minimum wages for most categories of workers.
By 1935, several Roosevelt advisers welcomed massive new federal expenditures to induce more private demand, even at the price of budget deficits. A huge relief appropriation of almost $5 billion reinvigorated several programs and funded a new federalized work relief program administered by the Works Progress Administration (WPA; see Work Projects Administration).
Social Security Act-1935: Perhaps of greatest enduring significance, Congress in 1935 enacted the Social Security Act (see Social Security), which contained three major programs—a retirement fund, unemployment insurance, and welfare grants for local distribution (including aid for dependent children). These programs, coupled with a new subsidized public housing program, began what some now refer to as a welfare state. Social security was developed in the United States later than in many European countries, which had developed social security programs before World War I (1914-1918).
Packing of the Supreme Court: In 1937, after a resounding victory in the 1936 election, Roosevelt sought to increase support for his ideas on the Supreme Court. He proposed legislation that would add more judges to the Supreme Court, but Congress rejected this “court-packing” attempt. The pressures for new legislation abated after 1937, and opposition to extending the New Deal mounted rapidly, especially in the South. By 1939 public attention focused increasingly on foreign policy and national defense. The New Deal was over, but it had permanently expanded the role of the federal government, particularly in economic regulation, resource development, and income maintenance.
Although in itself the New Deal failed to stimulate full economic recovery, it provided the federal government not only with increased controls over money supply and Federal Reserve policies but also with increased understanding of the economic consequences of its own taxing, borrowing, and spending—thus helping the government to limit the impact of later recessions. In addition, the New Deal coalition dominated the electorate and the nation for years thereafter. The New Deal changed the relationship between the government and the people of the United States. In addition to increasing the involvement of the government in people's lives, the New Deal created a number of agencies that still exist, and it stimulated the growth of the Democratic Party.
Four Freedoms: The Four Freedoms were human rights principals formulated by United States president Franklin D. Roosevelt on January 6, 1941 in his annual message to the Congress of the United States. President Roosevelt made his “Four Freedoms” speech almost a year before the United States entered World War II (1939-1945). In his address Roosevelt envisioned a postwar world in which four freedoms would be guaranteed: freedom of speech and expression, freedom of worship, freedom from want, and freedom from fear. In a world society based on these principles, he said, no nation would be able to commit aggressions. War and tyranny would be replaced by the friendly cooperation of free countries. Roosevelt also stated that the United States should help democratic governments fighting in the war, and he asked Congress to send ships, planes, tanks, and arms to those nations. Much of the spirit of the “Four Freedoms” was later expressed in the Atlantic Charter, a joint declaration of principles signed on August 14, 1941, by Roosevelt and British Prime Minister Winston Churchill.
Blackfoot Letter to Roosevelt: In this letter dating from the beginning of President Franklin Roosevelt's first term in office, members of the Blackfoot tribe describe sources of ongoing conflict with the United States government and ask Roosevelt for their own “New Deal.” The following year, in 1934, on recommendation from the Roosevelt administration, Congress passed the Indian Reorganization Act, often called the “Indian New Deal.” The letter has been reproduced here much as it was written, including spelling variances.
Blackfoot Tribe Letter to Roosevelt
Family, Montana August 9, 1933
Franklin D. Roosevelt, President Washington, D. C.
Secretary of Interior and Commissioner of Indian Affairs Washington, D. C.
B. K. Wheeler, U. S. Senator Belton, Montana
J. E. Erickson, Senator Glacier Park, Montana
Roy E. Ayers, Congressman Lewistown, Montana
As a member of the Black feet tribe, a democrat and a Citizen, I desire to give voice to matters that need attention in behalf of the Indian; we too need a new deal and are not getting it. In fact, it looks as though we might lose our valuable water right and irrigation project, due to the fact of a heavy debt accumulated during the past years of Republican rule and wasteful mismanagement; we are trying to educate our children, only to see them pushed aside by outsiders from most every state in the Union.
We earnestly ask that you give us a fair and impartial looking over; the members of the Democratic Central Committee of the County can do this and we welcome outside help.
Our lands are being leased out at 10 cents. per acre—instead of 15 cents. as we had agreed upon a few years ago. Good grazing at 15 cents. per acre is cheaper than owning land—cheaper than the taxes usually paid—and our officers are encouraging us to give it for 10 cents. now. Why?
I particularly call your attention to our Treaty rights under the Treaty of 1855, 1865 and 1887 in regard to all matters pertaining to the protection and aid of our Indian people.
1. We desire to retain our irrigation rights and the present irrigation system; the little tract near Cut Bank under our ditch is about the only green spot in Glacier County; it is needed by our people and the stockman to raise hay and feed. We ask that it be reorganized and maintained under a system that will pay out; it can easily be done.
2. We desire to use or lease our lands at a fair rental and ask that our officers be required to work for our benefit rather look to the aid of the stockman from the outside who uses our land and pays little, and sometimes nothing (trespassers) for it.
3. Our local officers have indulged much in political logrolling—and have neglected the duties they were appointed to and now they sit in fear and trembling wondering if this Administration is going to turn them out and give us the new deal we were promised. You, in past years, have been investigating, but very much of the investigating has been a whitewash—we old timers know a great deal and it won't take long to get the information; we can give it to you or direct you where to get it.
4. We now have 3 producing oil wells on the reservation and no way of knowing how we are protected locally; we need an expert, perhaps a reliable lawyer, to look after this, and we want a man we know to be alright—some little right of self rule and self determination.
5. We have elaborate schools and competent Indian people—and we import political help from the outside to do the work we are able to do much better than it is being done. A new deal here is imperative.
6. We want the water rights on the Reservation preserved to the Indians and we want a reorganization of the present system for the mutual good of all people in Northern Montana. Just instituting efficiency and dispensing with partisan politics can do it—.
7. Our Indian people want their old and established and confirmed rights of hunting and fishing on Indian territory—last fall or winter some of our people were arrested for hunting east of summit in Park, our Treaty gives us that right and we do not want it infringed; we are not able to compete with the Whiteman in all respects; some things we know better than does he.
8. We want the right to take wood, pick berries and all the rights the Treaties have given us.
9. We are not just talking to find fault. We know the true facts to be worse than represented here. But we want to be and to appear within reason. An investigator that goes to the Indian office is kept in the dark, of course; let us give you a list of people to see and talk to—then go to the records.
While we are about it, let us have the benefit of the new democracy; Roosevelt carried the county by over a 1000 votes—1717 to about 700—and the rest of you not so well but good. There is some talk of not disturbing the Civil Service employees that principle is correct but in practice the disturbances have been many and all to the detriment of our tribe and the Democratic Party. Extend to us the helping hand and deal with us intelligently and we will reciprocate.
We congratulate you on the great success the Administration has so far made and ask that we be let into the good things to be dealt out.
[Signed, individual tribe members]
Summary: In 1929, Hoover’s first year as president, the prosperity of the 1920s capsized. Stock prices climbed to unprecedented heights, as investors speculated in the stock market. The 23-year-old Hoover introduced California methods to the company's gold mines in western Australia. Hoover became a world-renowned consulting engineer, accepting commissions to revive unproductive mines. By 1914 he was managing director or chief consulting engineer in a score of mining companies, and he was becoming a wealthy man. Hoover also wrote numerous articles for engineering journals and published several books. During WWI, the U.S. ambassador asked Hoover to organize the return of Americans stranded in Europe.
The Revenue Act of 1926 cut the taxes of those making $1 million or more by more than two-thirds. As a result of these trends, in 1929 the top 0.1 percent of American families had a total income equal to that of the bottom 42 percent.
In 1928 the price of stock in the Radio Corporation of America (RCA) multiplied by nearly five times. The Dow Jones industrial average-an index that tracks the stock prices of key industrial companies-doubled in value in less than two years. The stock market crash of 1929 and the Great Depression of the 1930s consolidated and closed many investment trusts.
Hoover was inaugurated on March 4, 1929, and during the first six months of his administration, the economic prosperity that had characterized the country during the 1920s continued. In response to the plight of farmers, Hoover called Congress into special session in April 1929 to enact farm relief legislation and to revise the tariff. Within six months, however, the Great Depression sent farm prices to new lows. Congress also passed the Hawley-Smoot Tariff Act, which raised agricultural duties and tariffs, or import taxes, on manufactured goods.
Following a short recession after World War I (1914-1918), the United States had enjoyed an economic boom in which both production and consumption increased. Stock prices reached their height in the so-called “Hoover bull market” during the first six months of the Hoover administration. In September 1929 some investors began selling stocks, and stock prices began to fall. On October 29 the New York Stock Exchange, the largest in the world, had its worst day of panic selling. By the end of the day stock values had declined by $10 billion to $15 billion. Hoover had been in office less than eight months when the Wall Street crash occurred. In March 1930 he assured the nation that the crisis would be over in 60 days. He repeated similar opinions to restore public confidence in the face of business failures and mounting unemployment. Public confidence was not restored.
The stock market crash highlighted important weaknesses in the economic structure of the country. In the agricultural sector prices for farm goods dropped, and farmers were less able to purchase manufactured goods. The top 5 percent of the population received 30 percent of the income of the entire country. By the time Congress met in December 1931, Hoover had abandoned his reliance of private measures and began proposing direct action by the government to defeat the depression.
The Reconstruction Finance Corporation was created in 1932 to provide emergency financing for troubled banks, insurance companies, and other associations, and by the end of 1932, it had loaned out $1.5 billion. The Glass-Steagall Act extended more credit and released some of the government's gold reserves to aid industry
In 1924 World War I veterans had been given certificates that the government promised to redeem with money in 1945. When the depression hit, however, many veterans demanded immediate payment, and in June 1932 at least 10,000 veterans marched on Washington to press their case. The Senate refused to pay off the certificates, and most servicemen went home. About 2000, however, refused to leave the capital, and Hoover sent federal troops under General Douglas Macarthur, who evicted those remaining by using tear gas and bayonets.
For Governor Franklin D. Roosevelt of New York in 1932, the outcome was a foregone conclusion. In 1933, at the worst point in the depression, more than 15 million Americans-one-quarter of the nation’s workforce-were unemployed. The lingering effects of World War I (1914-1918) caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression: the disastrous U.S. stock market crash of 1929, which ruined thousands of investors and destroyed confidence in the economy. Continuing throughout the 1930s, the depression ended in the United States only when massive spending for World War II began. The programs of the New Deal also brought together a new, liberal political alliance in the United States. Roosevelt’s policies won the support of labor unions, blacks, people who received government relief, ethnic and religious minorities, intellectuals, and some farmers, forming a coalition that would be the backbone of the Democratic Party for decades to come.
The depression also played a major role in world events. In Germany, the economic collapse opened the way for dictator Adolph Hitler to come to power, which in turn led to World War II. During this downturn the unemployment rate rose from about 3 percent to 25 percent while the production of goods and services fell by 30 percent. Federal Deposit Insurance Corporation (FDIC), independent agency of the United States government created in 1933 under a section of the Federal Reserve Act to insure deposits in banks in the event of bank failure. A very modest recovery began in March 1933, but the economy experienced another contraction that began in 1937 and lasted for another 13 months. A true economic recovery did not begin until 1941.
In 1936, British economist John Maynard Keynes published The General Theory of Employment, Interest, and Money. Keynes rejected many assumptions of classical economics and argued that state intervention, and in particular regulation of interest rates, could control inflation and minimize unemployment. In a recession or depression, the proper thing to do was either to enlarge private investment or create public substitutes for the shortfalls in private investment. In mild economic contractions, easy credit and low interest rates (monetary policy) might stimulate business investments and restore aggregate demand to a figure consistent with full employment. Roosevelt was reluctant to accept any more deficit spending than seemed absolutely necessary to prevent mass suffering. He did not create an unbalanced budget on the scale Keynes advocated until World War II forced it upon him. Once the government started spending at the levels Keynes had suggested, the depression ended.
The Harlem Renaissance was born. A riot in Harlem in 1935-set off in part by the growing economic hardship of the Depression and mounting tension between the black community and the white shop-owners in Harlem who profited from that community-shattered the notion of Harlem as the “Mecca” of the New Negro. Wallace D. Fard (pronounced Farood), a door-to-door silk salesman, established the Nation of Islam (NOI) in Detroit, at the beginning of the Great Depression. On April 20, 1933, President Franklin D. Roosevelt's decision to go off the gold standard was an effort to combat the effects of the Great Depression.
The depression had a severe impact on most of the state economies. The flood control dam projects benefited several states. The Grand Coulee Dam across the Columbia River in the Washington sate and the Hoover dam in Colorado were the biggest projects.
The New Deal produced a wide variety of programs to reduce unemployment, assist businesses and agriculture, regulate banking and the stock market, and provide security for the needy, elderly, and disabled.
The psychological impact was equally damaging. During the prosperity of the 1920s, many Americans believed success went to those who deserved it. Given that attitude, the unemployment brought by the depression was a crushing blow. The effects of the depression on children were often radically different from the impact on their parents. During the depression many children took on greater responsibilities at an earlier age than later generations would.
By 1932 about 50 percent of the nation’s black workers were unemployed. Blacks were frequently forced out of jobs in order to give them to unemployed whites.
Although economic conditions improved by the late 1930s, unemployment in 1939 was still about 15 percent. After the United States entered the war in December 1941, all sectors of the economy were mobilized to support the war effort.
The New Deal’s social programs reflected a shift in American values created by the shared hardships of the depression era. The Social Security Act of 1935, guaranteed government help to citizens who were unemployed or disabled, to older Americans, and to mothers and children. The National Labor Relations Act (1935) provided protection for union activity, which contributed to the rise of labor unions in mass-production industries such as steel and automobile manufacturing.
In short, the legislation enacted by Congress provided the necessary measures to "jump start" the economy until the beginning of WWII.
The New Deal, Contributed By: Paul K. Conkin, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Courtesy of Gordon Skene Sound Collection. All rights reserved. /Art Resource, NY/National Portrait Gallery, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
The Great Depression of the United States, contributed by Robert S McElvaine, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Farming during the Great Depression, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Herbert Hoover Presidency, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Herbert Hoover Biography, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
President Hoover's response to the Depression, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
President Roosevelt New Deal, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Business Cycle, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Banking during the Great Depression, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
United States Economy, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Films Expressing the Needs of the Depression, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Emergency Banking Act, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Glass-Steagall Act, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Security and Exchange Commission, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Federal Housing Administration, or FHA, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
The Federal Emergency Relief Administration, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
The Civilian Conservation Corps (CCC), Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Tennessee Valley Authority (TVA), Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Agricultural Adjustment Act, Microsoft Encarta Encyclopedia
The National Industrial Recovery Act (NIRA), Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
National Labor Relations Act of 1935, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Social Security Act-1935, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Fair Labor Standards Act of 1938, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Federal Deposit Insurance Corporation, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
FDR, Fireside Chats, Courtesy Gordon Skene Sound Collection. All rights reserved./Globe Photos, Inc.
Biography of Franklin Delano Roosevelt, Web Site: http://www.whitehouse.gov/history/presidents/fr32.html
New Deal of Roosevelt, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.
Evaluation of Roosevelt Presidency, Microsoft ® Encarta ® Reference Library 2004. © 1993-2003 Microsoft Corporation. All rights reserved.