Aside from a few brief excursions in the early days of the nation, Americans fought in Europe for the first time in 1918. The “Great War” was, in the words of President Wilson, “the most terrible and disastrous of all wars.” Starting in August 1914, men died at the appalling rate of about 6,000 per day. By the time the U.S. Marines first fought at Belleau Wood, almost 10 million men had fallen. The worst casualties were suffered by the French and German armies, and the area of France north and west of Paris was devastated almost beyind recognition.

The background of the Great War is complex, and most Americans, and even many Europeans, were unaware of the intricate system of arrangements among the nations, most of them based on secret treaties, promises and understandings that existed among the crowned heads of Europe. The period from the end of the Napoleonic Wars in 1815 to the outbreak of World War I is sometimes called the “Hundred Years’ Peace,” although at times the Continent of Europe was anything but peaceful. Yet the largest war during that hundred year span was the American Civil War, the bloodiest war for Americans in all of American history. Even so, American losses 1861-1865 pale in comprison with the total carnage of 1914-1918. When the end of that long period of peace arrived, it brought to the battlefield the products of the industrial era, and killing on a mass scale was appallingly easy.

Woodrow Wilson saw the Great War as a threat to everything in which he believed. For three years, while European blood was being shed at its terrible rate, the president struggled to keep Americans out of the war, despite strong feelings in some quarters that America ought to engage. Wilson was reelected in 1916 on the claim that “he kept us out of war,” a claim which he himself knew to be tenuous at best.

When Wilson came to believe that American interests demanded at response to the threat of the Kaiser’s Germany, he went before Congress and asked for a declaration of war, which he called “a distressing and oppressive duty.” He continued:

“It is a fearful thing to lead this great peaceful people into war, into the most terrible and disastrous of all wars, civilization itself seeming to be in the balance. But the right is more precious than peace, and we shall fight for the things which we have always carried nearest our hearts, —for democracy, for the right of those who submit to authority to have a voice in their own Governments, for the rights and liberties of small nations, for a universal dominion of right by such a concert of free peoples as shall bring peace and safety to all nations and make the world itself at last free.”

President Wilson had his war, and the Marines and soldiers who went to France—2 million in all—turned the tide and brought the Allies victory.

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Around 1970 a book was published by Alvin Toffler titled Future Shock. The book was about what happens when people can no longer cope with the pace of change. It is interesting that in the 50 years since the book was published, the pace of change has accelerated: merely keeping up with the latest electronic devices is but one small measure of how rapidly the world is evolving. Equally interesting is to go back 50 years from the time of the publication of Future Shock to 1920. The world had changed a great deal since the end of the Civil War, but the 1920s brought even more revolutionary changes.

The Roaring Twenties moved America out of the Victorian Age and well into the Twentieth Century. Old values and outmoded ideas were replaced by a new cultural awareness, triggered by new inventions—radio, movies, automobiles, telephones and household appliances. Advances in transportation were dramatically illustrated by Charles Lindbergh’s solo flight across the Atlantic in 1927. In that same year the first talking moving picture, The Jazz Singer, was produced.

Although change was steady and dramatic, some things seemed to remain the same. Only two Democratic presidents had been elected since the Civil War, and the trend of Republican holders of the White House seemed destined to continue. Immigration, which had reached a flood by 1900, slowed. But no one could claim that things were standing still. The world was moving forward.

In 1929, however, the crash of the stock market brought things to a screeching halt: the decade ended with a thud and was followed by a time of painful awakenings and hard labor—when labor of any kind was often very hard to find. The economic boom was over and the Great Depression crept over the landscape. The government faced unprecedented challenges and responded with unheard of solutions, as the relationships between the American people and their elected leaders were transformed. Wealthy people suddenly found themselves penniless, and the poor had to discover new means of survival.

In 1933 New York Governor Franklin Roosevelt became president, and another kind of change got into high gear almost immediately: the government began to intrude more deeply into the lives of American citizens and the businesses that they operated. The Progressive Movement of Theodore Roosevelt and Woodrow Wilson lost steam during the 1920s, but during the New Deal years it accelerated once more. Nevertheless, the best efforts of FDR and his New Deal were limited: many did not survive.

In the international arena, the great powers had sought in the 1920s to find ways of avoiding another devastating war. But the 1920s and 1930s kinds of government leaders arose, charismatic fanatics whose intention was nothing less than to change the world in their favor. Lenin and Trotsky were followed by Mussolini and Hitler, and a militarist faction took over the government of Japan. Although the United States could observe those developments, for most of the 1930s Franklin Roosevelt and his administration were preoccupied with dealing with America’s economic woes. But change was affecting even the way the next war would be fought; weapons were becoming more powerful, bigger faster aircraft were being added to the military arsenals of the nations, and naval warfare was being transformed with a shift from the battleship to the aircraft carrier as the most powerful naval weapon.

By 1940 the world had become a very different place from the world of 1920. Nevertheless, one could repeat the French phrase, “plus ça change, plus c’est la même chose”–the more things change, the more they stay the same. The old international rivalries and power struggles were to continue. Age-old social problems of poverty and hardship continued. The fundamental structure of many societies moved ahead without much change, but the world around the people was evolving rapidly. People look to the skies and saw airplanes; they turned on their radios and heard voices from thousands of miles away; they could get in an automobile and drive dozens of miles in a matter of hours and cross the country in a matter of days. Then, between 1940 and 1945, the world would change in more unimaginable ways; in this chapter we take a deeper look at how we got there.

The twenties stand apart from other periods in American history, as they belonged to neither the past nor the future of the country. Many Americans lived high, and those at the lower end of the economic spectrum were able to see possibilities for the future. Marvelous new inventions and means of communication opened new vistas even for people in remote corners of the United States. For a time everything seemed to be pointing skyward.

The Roaring Twenties moved America out of the Victorian Age and well into the Twentieth Century. Old values and outmoded ideas were replaced by a new cultural awareness, triggered by new inventions—radio, movies, automobiles, telephones and household appliances. Advances in transportation were dramatically illustrated by Charles Lindbergh’s solo flight across the Atlantic in 1927. In that same year the first talking moving picture, The Jazz Singer, was produced.

Although change was steady and dramatic, some things seemed to remain the same. Only two Democratic presidents had been elected since the Civil War, and the trend of Republican holders of the White House seemed destined to continue. Immigration, which had reached a flood by 1900, slowed. But no one could claim that things were standing still. The world was moving forward.

In 1929, however, the crash of the stock market brought things to a screeching halt: the decade ended with a thud and was followed by a time of painful awakenings and hard labor—when labor of any kind was often very hard to find. The economic boom was over and the Great Depression crept over the landscape. The government faced unprecedented challenges and responded with unheard of solutions, as the relationships between the American people and their elected leaders were transformed. Wealthy people suddenly found themselves penniless, and the poor had to discover new means of survival.

It was the age of great sports figures: Babe Ruth, Ty Cobb, Lou Gehrig, Red Grange, Knute Rockne, Helen Wills, Bill Tilden, Bobby Jones, Walter Hagen, Jack Dempsey, among others. Charles Lindbergh flew solo across the Atlantic from New York to Paris, and in the process became a hero–almost overnight he went from obscurity to being practically the most famous man in the world.Then, at the end of that raucous decade, the crash of the stock market helped trigger the worst depression in America’s history.

This chapter deals with the period that continues America’s transition to a leading position in the world power structure. In the international arena, the great powers had sought in the 1920s to find ways of avoiding another devastating war. But the 1920s and 1930s kinds of government leaders arose, charismatic fanatics whose intention was nothing less than to change the world in their favor. Lenin and Trotsky were followed by Mussolini and Hitler, and a militarist faction took over the government of Japan. Although the United States could observe those developments, for most of the 1930s Franklin Roosevelt and his administration were preoccupied with dealing with America’s economic woes. But change was affecting even the way the next war would be fought; weapons were becoming more powerful, bigger faster aircraft were being added to the military arsenals of the nations, and naval warfare was being transformed with a shift from the battleship to the aircraft carrier as the most powerful naval weapon.

By 1940 the world had become a very different place from the world of 1920. Nevertheless, one could repeat the French phrase, “plus ça change, plus c’est la même chose”–the more things change, the more they stay the same. The old international rivalries and power struggles were to continue. Age-old social problems of poverty and hardship continued. The fundamental structure of many societies moved ahead without much change, but the world around the people was evolving rapidly. People look to the skies and saw airplanes; they turned on their radios and heard voices from thousands of miles away; they could get in an automobile and drive dozens of miles in a matter of hours and cross the country in a matter of days.

This era begins with the Roaring Twenties, a decade that stands apart as a dividing line between the 19th and 20th centuries. Likewise, the First World War was in ways a combination of the imperialist drive that was part of the 19th century and a bridge to a new. Dominated by spectacular advances in the machinery of war. Thus it is not too far amiss to say that in a sense the 19th century ended at Versailles, and the 20th century began in 1920.

Just as the 1890s were a reckless decade and a precursor of things to come, the 1920s were also a wild and woolly period, when old values seem to be cast aside and new ideas bubbled up in many areas of American life. The decade of the 1930s is also in a sense a separate time, in that the Depression of that decade was the worst in American history and certainly stands alone in that regard. On the other hand, the isolationism of the 1930s harkens back to some extent to American isolationism of much of the 19th century.

The industrial force the power America’s rise in the late 19th and early 20th centuries lay behind America’s growing dominance in international affairs. America’s acquisition of an Empire at the end of the Spanish-American war placed the nation in a new relationship with other nations, especially Japan. Our participation in the Great War was another step in the transition. America, however, had always been a reluctant participant in world affairs; separated from the other major nations of the world by two oceans, the feeling of being separate, even if unequal, prevailed.

The point here is not to draw lines or declare beginning and end times. The point is that our history has twists and turns, beginnings and endings, and often history does repeat itself in fascinating and sometimes troublesome ways. In any case this last section of the book covers an era that changed the world in ways that would hardly have been imaginable at the dawn of the 20th century, or even as the decade of the 20s began.

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The Roaring Twenties—the jazz age—were a decade of enormous social change in America, although myths about the era sometimes exaggerate the reality of that strange and often troubling time. While consumerism expanded and many new inventions—radios and telephones, for example—the economic progress did not touch everyone. New gadgets and inventions became everyday items for average Americans, but it was also a time of much bitterness, conflict and disappointment. The morale crusade to end the evils of alcohol resulted in some benefits, but it also opened new areas of crime. The 1920s were also known as a time of revolution in manners and morals, when young men, and especially young women, threw off many of the social restrictions of the Victorian era and began conducting themselves in ways that scandalized the older generations. Young women liberated themselves in everything from hairstyles and clothing to deportment and public, smoking cigarettes and drinking from flasks of illegal bootleg whiskey and bathtub gin. The 20s were known as the jazz age and saw a the rebirth of the Ku Klux Klan, divisions between town and country that went beyond mere style, the Harlem Renaissance, an enormous growth in production of items once seen as luxuries such as automobiles, and a general feeling of near euphoria, as if for the middle and wealthy classes, at least, things would just keep going up.

Undercurrents in the Twenties were ominous. The economic boom of the twenties left many Americans in the dust, America’s traditional openness to immigration was severely cut back, and racial tensions rose, accompanied by a resurgence of the Ku Klux Klan. Prohibition, the “noble experiment,” caused ordinary citizens—not to mention countless underworld figures such as Al Capone—to resort to criminal behavior, even as government often winked and looked the other way. Yet it was fun while it lasted—for many. The twenties saw Charles Lindbergh fly solo across the Atlantic and Babe Ruth hit 60 home runs. But it also saw the Scopes trial and the execution of Sacco and Vanzetti following their famous murder trial. The stock market crash of 1929 ended the dreams of great wealth for many and ushered in the Great Depression of the 1930s. Although the crash was not the cause of the Depression, it had a triggering effect, and the underlying economic weaknesses in the American economy brought on a period that devastated millions of Americans, including the affluent. It was a time of upheaval and revolution, and as Dickens said of an earlier revolution, in many ways it was the best of times and the worst of times. Welcome to the Roaring Twenties.

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The Crash of 1929 and the Depression

The Great Bull Market and the Crash of 1929.  As more Americans began to invest in the stock market, often at very liberal credit terms, the markets went up.  Artificially fueled by increased credit purchases, consumer businesses produced and sold more and more, and the stock market kept pace.  But the market was overbuilt, credit was stretched thin, and when the crash came it came with a huge thud.  When capital dried up, buying slowed down, businesses laid off workers, further hurting consumer spending, and the economy spiraled downward to unimaginable depths.  People who had never wanted for anything found themselves not only unemployed but unemployable.  The situation was unprecedented, collectively and individually, and as the Depression worsened, the country floundered and people surrendered to despair.

From March 1928 through September 1929, prices on the stock market rose spectacularly.  Shares in companies such as General Electric, Radio (RCA), Montgomery Ward, and others seemed to have unlimited growth potential. Prosperity and the possibility of new wealth for millions of investor beckoned.  People mortgaged their homes to get cash with which to buy stocks, and brokers encouraged clients to purchase stock on margin.  A family with $1,000 in cash—a tidy sum in 1929—might be able to purchase $5,000 worth of stock with that down payment.  The brokerage offering the margin purchase would doubtless have borrowed funds from a bank to finance the deal.  As prices continued to rise, the structure became ever more shaky, and words of warning went unheeded.

The chart below and discussion following give an idea of how things suddenly went terribly wrong.

The Stock Market: Before and After the Crash
STOCK	3/3/1928	9/3/1929	11/3/1929
American Can	77	182	86
General Electric	129	396	168
Montgomery Ward	133	466	49
Radio Corporation	94	505	28
Westinghouse	92	313	103
General Motors	139	181	90
Anaconda Copper	54	131	70
NOTE: Adjustments made for stock splits, etc.

People and the Crash

Looking at the chart above, imagine yourself in a family in March 1928. You and your spouse are comfortable, you own a home, and you have a small amount of savings. But you keep hearing from neighbors, friends, business associates, or maybe you have even overheard gossip in a barbershop or on a train, about how much money people are making in the stock market—it has been been booming throughout the 20s. You decide, why not us? So you go down to the local bank and take out a mortgage on your home for about $4000 and add your savings to it. You find a stock broker and tell him you want to invest your money. Since everything is booming, he may suggest that with your $4000 in cash you may be able to buy two or three times that much stock by purchasing shares on margin. You end up buying $16,000 worth of stock with your $4000 cash—the broker loans you the $12,000 difference.

Eighteen months later, if your stock behaves like the ones above, it has tripled in value. If you are smart, you sell a portion of your stock, pay off the loan to your broker, pay off your mortgage, and you are still way ahead of the game. Many people were not that lucky.

Now let’s suppose that you are the same couple, but you walk into the broker’s office in September 1929 rather than in March 1928. You go through the same process and wind up buying $16,000 worth of stock on your $4000 mortgage and your $12,000 loan from the broker. (We are ignoring transaction fees and so on for simplicity.) Then the crash hits and it happens so suddenly that before you can gather your wits, the $16,000 worth of stock that you purchased is now worth a fraction of that. Your broker calls in his margin loan, as he must to cover his losses, but of course you can’t pay him, and you lose your investment and maybe even your house. It is little comfort that the broker also loses everything, and even less comfort to you that the bank that loaned the broker the money that he loaned to you is also in serious trouble.

The scenario above is oversimplified, but it does demonstrate in a simple way what happened to thousands of people. What is more complicated is the snowball effect that followed from the crash; the Depression started in 1929-1930, but also had roots in other causes.

Causes of the Crash and Depression

The Great Depression was not caused by the stock market crash of 1929—that was only the trigger. The actual depression was caused by a combination of factors of international scope and great complexity. In the United States, for example, the consumerism of the 1920s and the increase in credit buying artificially accelerated the demand for consumer goods beyond what the real market factors would have told. With the stockmarket crash, as purchasing power shrunk and sales of consumer goods slowed, manufacturers were forced to pull back, and more people lost their jobs. As more became unemployed, the demand for consumer goods shrunk even further and the gap widened.

Then banks that held mortgages were unable to collect them, and even if they foreclosed, finding buyers for the repossessed properties was difficult. Many banks ultimately failed, wiping out people’s savings, thus making the picture worse. One problem led to another until the entire country was in the throes of a paralyzing economic slowdown. Although some parts of the country were relatively untouched, in others it seemed as though entire towns and villages were without any substantial income. The depression documents that accompany this section will give you some vivid insights into the human problems created by the Depression. Those who lived through it never forgot those times.

Summary of some of the causes of the Depression:

• Overproduction in farming and manufactures, commodity prices, raw materials too high;
• Too much in profits, not enough in wages, or purchasing power.
• Over-expansion of credit—Margin, installment buying.
• Economic difficulties in Europe from WWI, reparations, debts, loans.
• Silver market depressed, Far East strapped, international trade down everywhere.
• Hawley-Smoot Tariff hurts Europe.
• Trigger effect–failures in one area spill into others.
• Psychological shock.

President Hoover and the Depression

Hoover’s administration actually he did a great deal to fight the Depression, but it was not enough. Hoover was basically conservative and could not grasp the depths of the crisis. He believed firmly in the American system, and felt that it could recover on its own with a little indirect help from government. By some standards Hoover’s action were bold, perhaps even radical, but far too little, as even the New Deal programs would be. Hoover opposed direct relief (the dole) and favored more or less voluntary approaches to recovery. Hoover was blamed for much that was not his fault, but he failed to meet the needs of the time and paid a steep price, politically and in terms of his legacy. Hoover’s programs included:

• The Reconstruction Finance Corporation provided $500 million for indirect relief by extending credit in order to bolster finances. Government loans were made to financial institutions.
• The Glass-Steagall Act expanded credit and attempted to shore up the currency.
• The Relief and Construction Act extended the scope of the RFC, provided loans for construction projects.
• The Federal Home Loan Bank Act helped bank help for home owners in order to reduce foreclosures and increase construction (and therefore employment.)
• The Norris-LaGuardia Act assisted labor by making yellow-dog contracts illegal and preventing courts from issuing anti-strike injunctions, etc.

 

Frederick Lewis Allen : CRASH!

 

[From Frederick Lewis Allen, Only Yesterday, New York: Harper & Row, 1931, pp. 332-335. Allen’s book, written in 1931, is a vivid look backward at the Roaring Twenties. His description of the Crash is famous.]

Things looked somewhat better on Friday and Saturday. Trading was still on an enormous scale, but prices for the most part held. At the very moment when the bankers’ pool was cautiously disposing of as much as possible of the stock which it had accumulated on Thursday and was thus preparing for future emergencies, traders who had sold out higher up were coming back into the market again with new purchases, in the hope that the bottom had been reached. (Hadn’t they often been told that “the time to buy is when things look blackest”?) The newspapers carried a very pretty series of reassuring statements from the occupants of the seats of the mighty; Herbert Hoover himself, in a White House statement, pointed out that “the fundamental business of the country, that is, production and distribution of commodities, is on a sound and prosperous basis.” But toward the close of Saturday’s session prices began to slip again. And on Monday the rout was under way once more.

The losses registered on Monday were terrific—17½ points for Steel, 47½ for General Electric, 36 for Allied Chemical, 34½ for Westinghouse, and so on down a long and dismal list. All Saturday afternoon and Saturday night and Sunday the brokers had been struggling to post their records and go over their customers’ accounts and sent out calls for further margin, and another avalanche of forced selling resulted. The prices at which Mr.  Whitney’s purchases had steadied the leading stocks on Thursday were so readily broken through that it was immediately clear that the bankers’ pool had made a strategic retreat. As a matter of fact, the brokers who represented the pool were having their hands full plugging up the “air-holes” in the list—in other words, buying stocks which were offered for sale without any bids at all in sight. Nothing more than this could have been accomplished, even if it could have been wisely attempted. Even six great banks could hardly stem the flow of liquidation from the entire United States. They could only guide it a little, check it momentarily here and there.

Once more the ticker dropped ridiculously far behind, the lights in the brokers’ offices and the banks burned till dawn, and the telegraph companies distributed thousands of margin calls and requests for more collateral to back up loans at the banks. Bankers, brokers, clerks, messengers were almost at the end of their strength; for days and nights they had been driving themselves to keep pace with the most terrific volume of business that had ever descended upon them. It did not seem as if they could stand it much longer.

But the worst was still ahead. It came the next day, Tuesday, October 29th.

The big gong had hardly sounded in the great hall of the Exchange at ten o’clock Tuesday morning before the storm broke in full force. Huge blocks of stock were thrown upon the market for what they would bring. Five thousand shares, ten thousand shares appeared at a time on the laboring ticker at fearful recessions in price. Not only were innumerable small traders being sold out, but big ones, too, protagonists of the new economic era who a few weeks before had counted themselves millionaires. Again and again the specialist in a stock would find himself surrounded by brokers fighting to sell-and nobody at all even thinking of buying. To give one single example: during the bull market the common stock of the White Sewing Machine Company had gone as high as 48; on Monday, October 28th, it had closed at 11-1/8 . On that black Tuesday, somebody—a clever messenger boy for the Exchange, it was rumored—had the bright idea of putting in an order to buy at 1—and in the temporarily complete absence of other bids he actually got his stock for a dollar a share!  The scene on the floor was chaotic.  Despite the jamming of the communication system, orders to buy and sell-mostly to sell-came in faster than human beings could possibly handle them; it was on that day that an exhausted broker, at the close of the session, found a large waste-basket which he had stuffed with orders to be executed and had carefully set aside for safe-keeping and then had completely forgotten. Within half an hour of the opening the volume of trading had passed three million shares, by twelve o’clock it had passed eight million, by half-past one it had passed twelve million, and when the closing gong brought the day’s madness to an end the gigantic record of 16,410,030 shares had been set. Toward the close there was a rally, but by that time the average prices of fifty leading stocks, as compiled by the New York Times, had fallen nearly forty points. Meanwhile there was a near-panic in other markets-the foreign stock exchanges, the lesser American exchanges, the grain market.

So complete was the demoralization of the stock market and so exhausted were the brokers and their staffs and the Stock Exchange employees, that at noon that day, when the panic was at its worst, the Governing Committee met quietly to decide whether or not to close the Exchange. To quote from an address made some months later by Richard Whitney: “In order not to give occasion for alarming rumors, this meeting was not held in the Governing Committee Room, but in the office of the president of the Stock Clearing Corporation directly beneath the Stock Exchange floor. . . . The forty governors came to the meeting in groups of two and three as unobtrusively as possible. The office they met in was never designed for large meetings of this sort, with the result that most of the governors were compelled to stand, or to sit on tables. As the meeting progressed, panic was raging overhead on the floor. . . . The feeling of those present was revealed by their habit of continually lighting cigarettes, taking a puff or two, putting them out and lighting new ones-a practice which soon made the narrow room blue with smoke. . . .” Two of the Morgan partners were invited to the meeting and, attempting to slip into the building unnoticed so as not to start a new flock of rumors, were refused admittance by one of the guards and had to remain outside until rescued by a member of the Governing Committee. After some deliberation, the governors finally decided not to close the Exchange.

It was a critical day for the banks, that Tuesday the 29th. Many of the corporations which had so cheerfully loaned money to brokers through the banks in order to obtain interest at 8 or 9 per cent were now clamoring to have these loans called-and the banks were faced with a choice between taking over the loans themselves and running the risk of precipitating further ruin. It was no laughing matter to assume the responsibility of millions of dollars’ worth of loans secured by collateral which by the end of the day might prove to have dropped to a fraction of its former value. That the call money rate never rose above 6 per cent that day, that a money panic was not added to the stock panic, and that several Wall Street institutions did not go down into immediate bankruptcy, was due largely to the nerve shown by a few bankers in stepping into the breach. The story is told of one banker who went grimly on authorizing the taking over of loan after loan until one of his subordinate officers came in with a white face and told him that the bank was insolvent. “I dare say,” said the banker, and went ahead unmoved. He knew that if he did not, more than one concern would face insolvency.

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Imagine these scenes: In a school classroom, perhaps fourth or fifth grade, a teacher looks down at a slender little girl in clean but ragged clothes. The teacher says, “You look pale, dear. You should go home and get something to eat.” The little girl answers, “I can’t, Miss Jones. It’s my sister’s turn to eat today.” In a rundown village in Appalachia, Eleanor Roosevelt, the wife of President Franklin Roosevelt, watches a sad looking little boy who is holding and stroking a pet rabbit. A little girl, the boy’s sister, looks up at Mrs. Roosevelt and says, “He thinks we’re not going to eat it, but we are.” A police officer in Chicago is walking his beat on a cold morning when he spies a ragged, skinny old man sleeping in a doorway. He prods the man gently with his nightstick and says, “Come on, buddy, time to move along.” Nothing. He pokes the man again, not quite so gently, and then looks closer. The man is dead. It’s the fifth one he has found this week.
Scenes like the ones above, as described in Caroline Bird’s Invisible Scar: The Great Depression, were common during the Great Depression, a time that is difficult for those of us living in the 21st century to imagine existing in America. Suicide became so common that people made bad jokes about it. Thousands of people lived in cardboard shacks, drainpipes, and tent camps on thefringes of America’s most affluent cities. Once prosperous men in three-piece suits stood in line for a piece of bread or a cup of soup. People stopped looking for jobs when it was apparent that there were no jobs to be had. How did it come about? In the 1920s nobody thought an economic disaster of such proportions could ever touch the United States. In the aftermath of the Great War, while Europe was still cleaning up the mess, caring for the wounded, and mourning the dead, Americans felt a sense of disdain for the rest of the world. They saw a European-centered world that could not manage its affairs any better than it had done in the past. America had problems of its own to be sure: racism, religious differences, adjustments to the post-industrial age. But the mood of the 1920s was upbeat and positive, and as President Coolidge said, the business of America was business.

The Depression was caused by many factors, but it was triggered by the stock market crash. The huge increases in production through the application of new methods and technologies during the 1920s had an unintended consequence—excessive supply pushed down demand, and therefore prices. At the same time, an increase in credit buying had caused the demand for consumer goods to rise artificially. As people stopped buying at an inflated rate, however, merchants found they could not sell their products. Orders to factories dried up, and people were laid off. Thus income continued to fall, and the cycle repeated over and over in a downward spiral. The country produced 8 million cars in 1928 and 2 million in 1932. Unemployment percentages varied from 15 percent to 25 percent and even higher in some areas. In hard-hit regions such as Appalachia, entire towns seemed to be hopelessly trapped in poverty.

The depth of the Great Depression is difficult for us to fathom in these times of prosperity in the early 21st century. Recent recessions, upheavals in various sectors of the economy, layoffs, home foreclosures, bankruptcies and other casualties, as trying as they may be for those who suffer them, cannot compare with the massive losses of the 1930s. The loss of human dignity, the hopelessness and despair, the humiliation that many men felt at not being able to provide for their families is almost beyond out comprehension. There was hardly a sense of promise, a feeling that “this too shall pass.” Those feelings did not pass for a long time, and for some there seemed no way out but suicide. So frequent were the suicides that newspapers actually ran cartoons or comments on the phenomenon, perhaps in an attempt to cheer people up. It did not work—the Depression went on, and on, and on. Many Americans never got over the shock.

President Herbert Hoover was elected by a landslide in 1928. He was a brilliant engineer and an experienced manager well-versed in economics. Aside from war, however, the United States government had never faced a crisis of such magnitude, although the economic recessions that began in 1837, 1873 and 1893 may have come close. Because government’s traditional relationship with business had always been one of laissez-faire, tempered by the Progressive Era’s relatively mild regulation, many people could not envision the government providing solutions for problems that government had not apparently caused.

President Hoover had been responsible for the food production program during the Great War, and his efforts in saving the Belgians from starvation had been recognized far and wide. Now, however, Hoover found himself in a position that seemed hopeless, and in which the government itself seemed helpless. President Hoover did not do nothing, however. The actions he took were unprecedented, far more than government had ever taken before in interfering with the affairs of private business. But he still believed in the principle of laissez-fair, and was confident that America could work itself out of its economic doldrums.

President Hoover’s conservative nature led him to oppose direct financial relief to the unemployed. His program of relief called for the federal government to coordinate local and regional efforts of voluntary agencies in order to “preserve the principles of individual and local responsibility.” He requested federal spending on public works projects and created relief organizations at the national level headed by federal officials. In 1932 he encouraged Congress to create the Reconstruction Finance Corporation to extend loans to banks and railroads, which he hoped would reverse the tide of deflation. He also signed the Relief and Reconstruction Act to provide loans for construction and a Federal Home Loan Bank Act that provided home mortgages for individuals. President Hoover’s actions, however, amounted to far too little to stem the tide of depression that was sweeping across the country.

President Hoover sincerely believed that the American capitalist economic system was strong enough to work its way out from under the crisis. Like many conservatives, he believed that too much government interference would lead the country toward socialism. Furthermore, Communism had engulfed Russia. Socialist parties were strong all across Europe, but America had been through a Red Scare; labor agitation and hints of “socialistic solutions” were seen by many as un-American, unnecessary, even dangerous. The income tax was relatively new, and government revenues were ample for most needs. But the burden of caring for the unemployed and unemployable soon became so large that local, state, and national government, let alone charitable organizations, lacked funds to deal effectively with the problem. As wages and incomes fell, raising taxes hardly seemed the solution.

In some parts of the country people were less affected than in others. People still went to the movies, listened to the radio, played golf and tennis, took vacations, and went about their lives as though nothing was wrong. They tried to ignore the desperate looks of people they often passed on the streets, sitting on benches, too proud to beg, but still hoping for a handout of a dime or a quarter that might buy a sandwich and a cup of coffee.

To make things worse, the middle of the United States went through an era known as the dust bowl; as farmlands dried up, primitive irrigation projects were unable to keep the crops growing. Farmers discovered that with the falling prices they could not earn enough from the sale of their produce to cover the costs of getting it to market. They burned their corn to keep warm, slaughtered their livestock for their own food, and dumped milk in the streets to protest falling prices.

Hoovervilles. Herbert Hoover was not responsible for the depression, although the policies of his Republican predecessors could be cited as contributory factors. While his actions as president went beyond any previous attempts to stimulate economic recovery, he still bore the brunt of the blame for the conditions that deepened during his administration. All over the country people who had been evicted from their homes or who could no longer afford to pay rent, gathered on the outskirts of towns and cities where they constructed shacks out of scrap wood, metal, or cardboard. They lived in tents, abandoned buildings or cars and empty drainpipes. Most of these “Hoovervilles,” as they were called, lacked sanitary facilities or running water. Charitable workers often set up soup kitchens nearby, and residents who were skilled in the building trades did what they could to improve conditions.

Hoovervilles were to be found in all parts of the country; one of the largest was in New York City’s Central Park. Thousands of people were camped along the Hudson River in the area beneath the George Washington Bridge. Although attempts were made to remove Hoovervilles where people were camped on private property, they were generally seen as necessary or unavoidable, and the residents were left to make do as best they could.

The Bonus Army. Many of those who suffered were veterans of the World War I, who had been promised bonuses for their service and had been issued certificates in 1924. Those certificates did not mature, however, for 20 years. In June, 1932 the veterans were organized by a former Army sergeant, and thousands marched on Washington to protest and demand immediate payment. They lived in a Hooverville constructed along the Anacostia River. The veterans constructed facilities, laid out streets, held parades and protested in front of the Capitol. In July and Attorney General William Mitchell ordered police to clear out the Bonus Army encampment. President Hoover then ordered the army to complete the evacuation and troops under General Douglas MacArthur and Major George S. Patton moved against the protesters with fixed bayonets. General MacArthur continued the assault against the Anacostia camping site. Hundreds of veterans were injured and a number were killed. During President Roosevelt’s first administration, the veterans were offered jobs in various new deal programs, and eventually the bonuses were paid.

The Smoot-Hawley Tariff Act of 1930. One additional event during the Hoover administration was passage of the Smoot–Hawley Tariff. Although economists have reached differing opinions on the effects of the act, it is generally felt that the tariff contributed to the worldwide depression. During the 1928 campaign, Republicans had promised to assist farmers by raising tariffs on agricultural products. Although Hoover objected to some provisions of the bill and feared that it would lead to retaliation, he signed it because of strong backing by Congressional Republicans. Although the short-term effects seemed to aid the U.S. economy, the effects of the act were felt in many countries, and retaliatory tariffs and shifts in trading practices followed, as President Hoover had feared. The failure of a large Austrian bank has been blamed in part on the Smoot-Hawley Tariff. Although Senators Smoot and Hawley were both defeated in the 1932 elections, the damage was done.

A Personal Story about the Depression

The Rise of Franklin Delano Roosevelt

Into that troubled world of the Great Depression came Franklin Delano Roosevelt. To this day he is one of the most controversial presidents in our history, yet by almost any definition, one of our greatest. Like his progressive predecessors in the White House—his cousin Theodore and Woodrow Wilson, whom he served as assistant secretary of the navy for eight years—FDR saw government as an instrument for helping people. He presided over two of the most challenging periods in American history—the Great Depression and World War II. Although one might argue that Abraham Lincoln faced a greater challenge—a nation divided against itself—Franklin Roosevelt’s contributions were nevertheless extraordinary. His unprecedented use of the power of government to attempt to aid the economy was meant to counter the economic decline, and while many Americans were no doubt aided by his New Deal programs, the precedents he set have come in for considerable criticism.

Franklin Delano was the only child of James and Sara Delano Roosevelt, a fifth cousin of Theodore Roosevelt. He was raised with an abundance of material things and the unstinting love of a doting mother. He grew up in the Hudson Valley, was educated by private tutors, and then attended the Groton School in Massachusetts, where he was taught Christian responsibility by headmaster-preacher Endicott Peabody. From Groton he went on to Harvard, where he lived an active athletic and social life. Though he never stood out as a scholar, he did become manager of the Harvard Crimson, probably the most famous college newspaper anywhere. Interested in politics from the beginning, he enthusiastically worked for his cousin Theodore’s presidential campaign in 1904 as a Young Republican at Harvard.

At Harvard Franklin met and fell in love with his cousin Eleanor, daughter of Elliot Roosevelt and niece of President Theodore Roosevelt. What seemed to some a strange romance blossomed, however, and the two were wed, over his mother’s objections. (As a doting mother, she believed that no one could ever be good enough for her boy, and Eleanor was known as the ugly duckling of the family.)

Those close to Eleanor and Franklin Roosevelt felt they were attracted to each other more intellectually than physically; despite later troubles in their marriage, they invariably saw eye to eye on many subjects. The bride was given away by her uncle, President Theodore Roosevelt himself, with the result that Eleanor played second fiddle in terms of attention, even at her own wedding. Franklin was attending Columbia Law School at the time of their marriage, and his mother bought the young couple a spacious home in New York City. She then bought and moved into the home next door, where she could keep an eye on things. Franklin and Eleanor eventually had five children, and the marriage seemed stable, despite Sara Roosevelt’s incessant meddling in the lives of her son and daughter-in-law.

Following graduation from Columbia, Franklin dabbled in the legal profession, but his real interest was always politics. In 1910 the young Roosevelt made his first foray into the political arena, as a Democrat, with cousin Theodore’s blessing. (Theodore Roosevelt was always able to work with members of the opposite party as long as he felt they were honorable men.) In a heavily Republican district, he was elected to the New York State Senate, which brought him to the attention of national Democratic leaders, including newly elected Governor Woodrow Wilson of New Jersey. When Wilson won the presidential election in 1912, he invited Franklin, who had pursued a progressive agenda in the New York legislature, to become assistant secretary the navy, a post that had been previously held by his cousin Theodore under President McKinley. Roosevelt accepted, and became an excellent assistant secretary, involving himself deeply in the affairs of the navy, in which he had great interest, and for which he had a great affection. He even vacationed on warships, often fishing off the stern of a destroyer or cruiser.

When the United States became involved in the First World War in 1917, Roosevelt was eager to serve. However, but Navy Secretary Josephus Daniels and President Wilson insisted that he remain in his post, where he would be far more valuable. As assistant secretary he traveled to Europe and visited the front lines, where he was appalled by what he saw of the horrific slaughter of the trench warfare. When he returned from the Europe, he was stricken with a serious case of flu, and while Eleanor was unpacking his bags, she discovered letters providing unmistakable evidence of Franklin’s affair with her personal secretary, Lucy Mercer. Eleanor offered to divorce Franklin, but as that would have ruined his political career, they stayed together., Although their marriage was never a romantic one thereafter, they eventually formed a unique and powerful political partnership.

In 1920 Franklin was named vice presidential candidate for the Democratic Party, and ran alongside Governor Cox of Ohio. Warren Harding easily won the election, but Franklin used the opportunity to broaden his political horizons, meet new people, and build support for his promising political career. Then, in 1921, he was struck with poliomyelitis, commonly called infantile paralysis, and for a time it seemed as though his public life might be over. In an extraordinary show of courage, however, he fought the disease, underwent the rigors of physical therapy, and although he was never again able to walk unaided, he grew strong enough that with the help of braces on his legs and someone to guide him, he could maneuver himself in an upright position. He was thus able to keep his political hopes alive. Although his infirmity was obviously known to many—he spent most of his time in a wheelchair—the public had no knowledge of the fact that he could not walk unaided. Despite his crippled legs, he projected a robust physical appearance and unmistakable vigor.

In 1928, after he had nominated New York Governor Al Smith at the Democratic National Convention as candidate for president, Smith persuaded him to run for governor of New York, hoping that it would help him with his electoral contest. Although Smith was defeated, Roosevelt won a resounding victory and became governor of the nation’s most powerful state. During his first year in office, the stock market crash of 1929 occurred, and the nation was soon plunged into the worst depression in its history. The Depression provided Governor Roosevelt with an opportunity to address the needs of his state, and he soon began experimenting with various programs of the kind that would become part of his New Deal program. Reelected by a wide margin in 1930, Roosevelt attracted national attention and became a clear contender for the Democratic nomination for president in 1932.

As a progressive, FDR worked hard for reform legislation, and instituted programs designed to help those suffering under the economic cloud. He also sought the advice of experts in the fields of labor, economics, law, and social reform. Those advisers, many of whom were professors and writers, were soon dubbed Roosevelt’s “Brain Trust.” He also built an effective team of leaders at the state level, including Frances Perkins, Henry Morgenthau, and Harry Hopkins, who, along with other members of FDR’s “brain trust,” would continue to serve him in Washington.

Franklin was charming, handsome, intelligent, athletic, and likable, but not all who met him were impressed with his depth. One of the most famous quotations about his character came from Supreme Court Justice Oliver Wendell Holmes Jr.: “A second-class intellect, but a first class temperament.” By 1932 it was clear that Herbert Hoover had not been successful in addressing the issues of the Depression. The Democrats, eager to break the Republican hold on the White House, nominated New York Governor Franklin Roosevelt as their candidate. Defying precedent, Roosevelt flew from New York to the Democratic convention in Chicago to personally accept the nomination, the first time a nominee had so addressed a party convention. A powerful, vigorous speaker despite his infirmity, FDR told the assembled delegates:

This is no time for fear, for reaction or for timidity. . . . What do the people of America want more than anything else? To my mind, they want two things: work, with all the moral and spiritual values that go with it; and with work, a reasonable measure of security—security for themselves and for their wives and children. Work and security . . . the true goal toward which our efforts of reconstruction should lead. These are the values that this program is intended to gain; these are the values we have failed to achieve by the leadership we now have. . . .

 . . . I pledge you, I pledge myself, to a new deal for the American people. Let us all here assembled constitute ourselves prophets of a new order of competence and of courage. This is more than a political campaign; it is a call to arms. Give me your help, not to win votes alone, but to win in this crusade to restore America to its own people.

With those words Roosevelt set off on a campaign that swept him into the White House by a huge margin.

The campaign of 1932 was a single-issue campaign: what to do about the Great Depression. President Hoover had struggled sincerely but ineffectively to set the wheels of industry in motion again. Roosevelt, calling on his progressive roots, claimed that the Depression was rooted in underlying flaws in the American economy. He argued that Republican policies of the 1920s had aggravated the situation. In his Commonwealth Club address of September 1932 he argued that “the function of government must be to favor no small group at the expense of its duty to protect the rights of personal freedom and of private property of all its citizens.” Observing that the country was “steering a steady course toward economic oligarchy,” he proposed that “the task of government in its relation to business is to assist the development of an economic declaration of rights, an economic constitutional order. … It is the minimum requirement of a more permanently safe order of things.”

The result of the election was a foregone conclusion: Roosevelt reversed the Republican landslide of 1928 and won 22.8 million votes to Hoover’s 15.7 million. Roosevelt garnered 472 electoral votes to 59 for President Hoover. The United States was about to enter the “New Deal” era, the era of Franklin D. Roosevelt.

Franklin Roosevelt was not capable of ending the Depression by himself, but he was willing to try almost anything, and try he did. He brought a sense of hope to Washington and conveyed it to the American people. FDR was by no means without critics, however; those on the left accused him of being a closet capitalist, and those on the right accused him of betraying his patrician class with socialist ideas. Roosevelt took it all in stride, commenting that because he was being attacked from both sides of the political spectrum, then he must be doing something right. FDR’s New Deal did not end the Depression, but it changed the relationship between the government and the American people forever, and its legacy is still with us. Memories of the Great Depression have all but disappeared except among the very old, but the effects of the Depression have never completely gone away.

The New Deal Spirit

Most Americans know the phrase from FDR’s first inaugural address, “The only thing we have to fear is fear itself.” But in addition to those encouraging words, his address contained much more, much of it couched in words that evoked military action:

I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption.

But in the event that the Congress shall fail to take one of these two courses, and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis—broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.

That last sentence earned the loudest applause from the inauguration crowd. Serving under President Woodrow Wilson during the Great War, Roosevelt had watched President Wilson organize the economy to meet the emergency of World War I. In 1933 Franklin Roosevelt came to Washington determined to use government to organize the economy again. This time he would deploy government power against the enemies caused by the Great Depression: unemployment, poverty, and hopelessness. His goal of easing suffering is understandable for all; his methods remain the source of controversy. Whatever one decides, it is clear that the legacy of the New Deal is still with us in a powerful way.

Those who knew Roosevelt well found him unfailingly pleasant, optimistic, and good-natured. What came out of Franklin Roosevelt’s White House via his fireside chats, his regular meetings with the press (Roosevelt held more press conferences than any other president before or since), and reports of those who worked with him was a sense that something good was happening. Roosevelt always began his fireside chats with the greeting, “My friends,” and many people had a sense that he was indeed their friend.

As the New Deal progressed, however, Roosevelt’s manner disconcerted some, for in any conversation he always gave the listener the sense that he agreed with or was it least sympathetic to everything his interlocutor had to say. Thus a number of visitors learned the hard way that although Franklin Roosevelt seemed agreeable to their proposals, that did not mean he was necessarily going to follow their suggestions. Yet even as his political enemies found much to criticize—and Roosevelt developed many political opponents on both the right and left—millions of Americans felt that the government was finally hearing their cries for assistance.

Roosevelt was willing to try anything, and some of the New Deal programs fell far short of expectations; indeed, the New Deal did not end the Depression. The huge outpouring of major legislation in the first hundred days of Roosevelt’s administration was unprecedented; but Roosevelt himself knew well that whatever talents he might possess, and whatever programs his administration might devise, not everyone would agree with his approach to government: the problems were too vast and deep. But he gave people hope.

The Hundred Days: FDR in Action

The first one hundred days of Franklin Roosevelt’s administration constitute one of the most remarkable explosions of legislation in the history of the Congress. The long lame-duck session meant that Roosevelt was not inaugurated until March 4. It was the last time that occurred, as the 20th Amendment soon moved inauguration day up to January 20. (The 20th Amendment was known as the “lame duck” amendment. President elect Abraham Lincoln also had to wait four months before he was able to deal with the Civil War in 1861.) Between Roosevelt’s election and inauguration thousands of banks closed their doors; many people had withdrawn their money and stuffed it under their mattresses for safe keeping, which only made matters worse.

President Roosevelt immediately called a special session of Congress to deal with the banking crisis. On March 9 he sent an Emergency Banking Act to Congress, where it was passed and signed by the president on the same day, an extraordinary accomplishment. The act gave the president broad discretionary power to regulate financial transactions, and he immediately called a national bank holiday. The Treasury Department granted licenses for banks to reopen, and the act also prohibited the hoarding of gold, requiring that anyone holding gold or gold certificates turn them in to the U.S. Treasury in exchange for other currency. Then Roosevelt went on the air with his first fireside chat, explaining his actions to the people “in terms even a banker could understand.” His precipitous action checked the money panic.

On March 20 the president signed the Economy Act, which sought to balance the budget by reducing government salaries 15 percent. It also cut private pensions and reorganized government agencies for greater economy; in the end it saved about $243 million. The Democrats had promised an end of Prohibition, and with passage of the 21st Amendment, Congress passed the Beer and Wine Revenue Act of March 22, which taxed alcoholic beverages to raise federal revenue.

On March 31 Congress passed the Civilian Conservation Corps Reforestation Act, which established the Civilian Conservation Corps and provided 250,000 jobs for males ages 18–25. Wages were $30 per month, part of which was to go to dependents. (A family could eat on a dollar a day in those hard times.) Under the act, camps were built and run by different federal departments in order to facilitate conservation projects such as planting trees to combat soil erosion and to improve national forests, as well as creating fish, game, and bird sanctuaries. By 1941 two million young men had served in the CCC, and many of their works still stand in America’s forests.

A $5 Silver Certificate, redeemable in silver coin at anybank.

Within less than a month of FDR’s inauguration four major bills were passed, and more were to come. On April 19 the United States officially abandoned the gold standard, which some have called the “most revolutionary act of the New Deal.” This meant that paper money would no longer be redeemable in gold. The value of the dollar soon declined abroad, which stopped the drain of American gold to Europe. The government fixed the value of gold at $35 per ounce, and it became illegal for citizens to own gold, except in jewelry and other artifacts. At the same time the government purchased large quantities of silver, and silver certificates continued to be redeemable in silver, generally coins. (The “Washington Quarter” was mostly silver in content until 1964.)

Additional measures of the Hundred Days included:

• The May 12 Federal Emergency Relief Act created the Federal Emergency Relief Administration, funded at $500 million, one half of which was to go to the states for direct relief. The remainder was to match state funds for unemployment relief at a rate of $1 for $3. Harry Hopkins was appointed relief administrator.

• Under the leadership of Agriculture Secretary Henry Wallace, Congress pulled out all the stops to help farmers, passing the Agricultural Adjustment Act, the Emergency Farm Mortgage Act, and the Farm Credit Act. The acts provided for the elimination of surplus crops, establishment of parity prices, and the reduction of crop production by paying farmers to allow land to lie fallow. In the process, animals were slaughtered and crops plowed under, which Secretary Wallace himself called a “shocking commentary on our civilization.” Many were outraged that pigs were slaughtered while people were starving, although usable meat was distributed through the FERA. Portions of the Act were declared unconstitutional by the Supreme Court, but amendments and later acts made adjustments to meet the court’s objections.

• On May 18 the Tennessee Valley Authority was created as an “experiment” in social planning. The TVA was given authority to build dams and power plants and to develop the entire region economically by selling power for private and industrial uses. The TVA, a pet project of FDR’s, which he visited several times, became a yardstick for evaluating the operation of power companies, establishing fair rates, and so on. Nine dams were built, and existing dams were acquired by the TVA. During World War II power from TVA dams was used to produce munitions and support operations at Oak Ridge, Tennessee, which were part of the Manhattan (atomic bomb) Project.

• On June 16 the Banking Act of 1933 (the Glass-Steagall Act) created the Federal Deposit Insurance Corporation (FDIC), which protected all bank deposits up to $5,000 and widened the power of the Federal Reserve Board over member banks. The act separated commercial and investment banking, and forced banks to get out of the investment business, restricting the use of bank deposits for speculative ventures. Today all bank deposits are insured by the FDIC up to $250,000 through December 31, 2013.

• The National Industrial Recovery Act of June 16 created the National Recovery Administration (NRA), probably the most controversial of the New Deal measures. The act established fair trade codes and provided for industrial self-regulation with government supervision. The act included restrictions of plant operations, the establishment of a minimum wage, prohibition against child labor, and limited the work week to forty hours. The NRA symbol was the Blue Eagle—which businesses could display after “Signing the pledge.” The NRA also created the Public Works Administration (PWA), budgeted with $3.3 billion to be spent on public works construction. The primary goals were to provide useful employment, raise purchasing power, promote welfare, and contribute to the revival of American industry.

• Additional acts included new laws to control information on new securities being offered to the public; make paper legal tender; establish a federal employment service to help people find jobs; make loans for people to pay taxes, make repairs on homes, and refinance mortgages; and improve efficiency of railroads by reorganization and creating a federal coordinator of transportation.

That huge outpouring of legislation brought the hundred days to an end, but the New Deal continued to expand government activity throughout 1933 and into 1934 and ’35. Although the New Deal measures were considered radical by many at the time, the social and economic reforms introduced by Roosevelt had been common in Europe for some time. In addition, beginning with the Interstate Commerce Act of 1887, the government had increasingly adopted policies that tended to soften the effects of laissez-faire capitalism. Progressives led by Theodore Roosevelt and Woodrow Wilson had continued the process, and the New Deal sustained that trend.

The most remarkable aspect of the New Deal, especially in its early days, was the speed with which it was put into practice. The legislation produced in the first hundred days of Franklin Roosevelt’s first term was comparable to the entire amount of major business legislation passed during the Gilded Age. Just as remarkable, the New Deal suddenly brought millions of average Americans an awareness of government that they had never had before. The vast programs, along with FDR’s fireside chats, made government a part of people’s daily lives.

Many of Roosevelt’s critics have charged him with creating a welfare state, but Roosevelt continually supported programs designed to put people back to work. The Civil Works Administration, created in November 1933, provided jobs as diverse as ditch digging, making highway repairs and teaching.

The troubles of the American farmer were exacerbated by the great drought that began in 1931, creating what was known as the “dust bowl.” Severe storms blew clouds of dust raised from plowed fields and dried out prairies across the southern Great Plains. The storms destroyed crops and equipment, and people and animals suffered. Close to a million people, sometimes called “Okies,” left Oklahoma and other areas of the Midwest during the 1930s and 1940s and headed for California. (Their trials are chronicled in John Steinbeck’s classic work, Grapes of Wrath.) When the Agricultural Adjustment Act was declared unconstitutional, four additional programs were instituted, and by 1940 millions of farmers were receiving subsidies under federal programs.

Still the Depression lingered on, and the social dislocations resulting from extended periods of unemployment that kept thousands in abject poverty took a grave toll on substantial portions of the population, especially in areas such as Appalachia and in manufacturing regions where heavy industries had been brought almost to a standstill. Marriages were delayed, birthrates plummeted, and a federal bureau determined that approximately 20 percent of all American children were underfed. Armies of men, women, and even children rode the rails and lived in shanty towns in search of employment or any opportunity to improve their poverty-stricken lives.

he Second New Deal

Responding to the fact that people were still suffering, as well as to his critics, Roosevelt launched what became his Second New Deal. In 1935 Congress passed theNational Labor Relations Act, which created the National Labor Relations Board. The act defined unfair labor practices and granted workers the right to bargain collectively through unions. It also prevented business owners from interfering with union matters. The NLRB supervised collective bargaining, administered elections, and ensured workers the right to choose their own union.

The most long-lasting and, according to Roosevelt, most important product of the New Deal was the Social Security Act of 1935. The act was a government insurance program for aged, unemployed, and disabled persons based on contributions by employers and workers. Critics complained that the Social Security system violated American traditions and might cause a loss of jobs. Although payments are made by the federal Social Security Administration, they are funded by payroll taxes on wages, which are paid by workers and their employers. Initial benefits were quite modest, ranging from $10 to $40 per month. Today, however, Social Security is one of the largest and most far-reaching programs administered by the federal government.

Although Social Security was never designed to be a full retirement system, many people have come to see it as just that, and attempts to modify or reform Social Security are generally met with strong opposition. As the baby-boom (post-World War II) generation approaches retirement, fears exist that payments made into the system will be insufficient to keep pace with the expanding aging population, although the age for collecting benefits has been raised in recent years. Thus a measure of the persistence of the New Deal’s legacy is the fact that Social Security is still central to the ongoing political debate in the country. Lobbying groups such as the AARP have kept the issue in the public eye.

Another important component of the Second New Deal was the Works Progress Administration (WPA), which over the course of its lifetime built hundreds of buildings, bridges, roads, airports, schools, and other public buildings such as post offices. By the time it ended during the Second World War, more than 9 million people had been employed by the WPA. Cornerstones of many buildings still in use bear the WPA imprint. In order to raise more revenue, Congress also passed theRevenue Act of 1935, which became known as the “Soak the Rich Act.” It raised tax rates on higher incomes, but did little to increase federal tax revenue, and it did not significantly redistribute income, which was a goal of the Second New Deal.

FDR Critics Left and Right. The massive injection of government funds into the economy did not end the Depression, though many of the programs brought temporary relief to thousands of people, and Roosevelt’s confident demeanor did give people hope. For a time it seemed as if every step forward would bring a reaction from businessmen and other conservatives, and critics on both the right and the left attacked FDR with increasing frequency. Roosevelt critics included men such as Father Charles Coughlin, a conservative Roman Catholic priest whose weekly radio show was heard by millions of listeners. Father Coughlin had initially supported the New Deal, but then became increasingly critical of the administration’s failure to institute reforms.

Another vigorous anti-Roosevelt activist was Dr. Frances Townsend, who created a plan calling for all persons over sixty years of age to get $200 per month if they promised not to work; they would have to spend it within thirty days. Financing would come from a 2 percent national sales tax. Townsend Clubs eventually reached a membership of 2 million Americans, and in 1936 his followers aligned themselves with the Union Party.

The most formidable opponent of Roosevelt, however, was Senator Huey P. Long, the former populist governor of Louisiana. Rising from an impoverished background, Long was a self-made politician who quickly became a legend in his own time. Struggling against conservative Louisiana Democrats, Long was willing to invest heavily in programs for the state. He oversaw construction of thousands of miles of roads and provided free books for schoolchildren. He also helped convert Louisiana State University into a fine institution of learning and added a medical school to its programs. In addition he strengthened the economic foundations of the city of New Orleans by providing for additional infrastructure.

Long’s motto was “Every Man a King”; his nickname was “The Kingfish.” Although he had supported Governor Roosevelt’s bid for the presidency in 1932, he became disenchanted when he felt that Roosevelt was not moving far enough to the left. He began to see FDR as a front man for capitalists and started attacking him. (FDR reportedly declared that Huey Long was “one of the most dangerous men in America.”) Long came up with a plan called “Share Our Wealth”; in essence the idea was to tax estates and incomes in excess of one million dollars up to a rate of 100 percent and to guarantee to every American a home, an automobile, and an education through college. Long might have given Roosevelt serious trouble in the election of 1936, though it’s unlikely he could ever have won, but he was assassinated in 1935 by a disgruntled physician.

Huey Long was portrayed as the character Willie Stark in Robert Penn Warren’s classic novel All the King’s Men. A film based on the novel won the Academy award for best picture in 1949, and a recent version (2006) stars Sean Penn as Huey Long.

A New Deal for the Indians

In 1924 all American Indians were granted American citizenship. For over a century the development of Indian and white relations had centered around one basic dilemma: Should the Indians be “Americanized” and separated from their cultural surroundings to become everyday American citizens? Or should the Indians be encouraged to remain on reservations or in other protected areas so that they could continue to live according to their cultural traditions? The answer, of course, is that for much of American history, Indians have followed both paths. Some have become assimilated, and some have resisted assimilation. The topic remains controversial within Indian cultures, and it must be kept in mind that existing American Indian cultures are still quite diverse today. (As of 2006 there were 562 federally recognized American Indian Tribes in the United States.)

An example of a cultural issue that reflects Indian diversity is the ongoing debate over Indian “mascot” names. Many tribes object to the use of Indian names or symbols by athletic teams. On the other hand, the Seminole Tribe in Florida has no objection to the use of their name by Florida State University. As is true with most cultural issues, there are various sides to the story.

Many people assumed that the granting of citizenship to Indians would complete the process of assimilation. But many Indians continued to live on reservations and were more dependent than ever upon the government for much of their welfare. Forced assimilation had proved destructive to Indian cultures and did not provide a suitable economic basis upon which Indians could live their lives.
Franklin Roosevelt appointed Indian reformer John Collier as Commissioner of the Bureau of Indian affairs. Roosevelt’s Secretary of the Interior Harold Ickes said, “Collier was the best equipped man who ever occupied the office,” as Collier had worked as an Indian reformer for some time and was familiar with many of the problems of Native American culture. Collier hoped to be able to preserve Indian culture and heritage and resolve the complicated issues of Indian lands and Indian government.

In 1934 Congress passed the Indian Reorganization Act (IRA), which reversed the Dawes Act of 1887 that had divided Indian land among private owners and restored tribal ownership. Along with the IRA, Collier used various other New Deal programs to assist the Indians, including the Public Works Administration and the Civil Works Administration. He established an Indian Civilian Conservation Corps, and oversaw the construction of schools and hospitals as well as various training programs. Collier continued to work for the acquisition of new land for Indians and to establishment self-government for those tribes who lived on reservations. He continued his services throughout World War II, finally resigning in 1945. Accepting Collier’s resignation with regret, FDR praised his services and commended him for having reoriented government policies toward the Indians.

Text of the Act. 

Most observers feel that John Collier’s motives were of the highest and that he sincerely wanted to help the Native American populations, but more recently a number of historians have criticized the IRA and Collier’s administration of it on various grounds. Tribal leaders, for example, have charged that federal programs are just heavy-handed ways of trying to control Indians. At present the federally recognized tribes have a formal relationship with the U.S. government, referred to as a government-to-government relationship, based on the fact that the organized Indian tribes living on reservations now possess a sovereignty that is higher than that of the states. In addition to relationships with the federal government, many tribes have special relationships with the states in which they are located.

Generally, the governing authority on Indian reservations is the tribal government. That means, for example, that if one is on the Navajo reservation in Arizona, one is subject to Navajo law. Indian governments on reservation areas include the full spectrum of generally recognized government agencies, from presidents or chief executives to legislative bodies, courts, administrative and police agencies.

The Election of 1936

Although the focus of the opposition to Roosevelt’s programs came from Republicans, who were heavily outnumbered in Congress, there were plenty of conservative southern senators and congressmen who were unhappy with various aspects of the New Deal. Critics on both sides argued that Roosevelt, if not actually a Communist, was dragging the country in the direction of socialism, or even worse, that he was flirting with Communism. Although such charges could be written off as political attacks, FDR was nevertheless obliged to defend himself against them by declaring in his 1936 reelection campaign that Communism was not an issue between the two major parties, and that people should “put that red herring to rest.”

Some of the opposition to Roosevelt’s reelection from the left came from within his own party. Some of his Democratic critics believed that Roosevelt’s reforms had not gone far enough, that he was just “fronting” for Wall Street, as Huey Long had charged. Several of Roosevelt’s critics organized a Union party, presenting a populist alternative to the mainstream Democrats. Also on the left was the Communist Party led by Earl Browder, whose convention at Madison Square Garden in New York City in 1936 attracted a large crowd. Browder claimed charges that Roosevelt’s programs were communistic were ridiculous and merely a cover-up for capitalism. (The appeal of Communism was blunted by the fact that communist sympathizers—“fellow travelers”—were disturbed by the belief that international Communism was controlled mostly from Moscow.)

Despite the critics on the right, left, and even in the center of the political spectrum, Roosevelt won a second term by a huge landslide. His opponent, Governor Alf Landon of Kansas, won only two states and eight electoral votes; FDR had 523. As mentioned above, Huey Long, who might have caused problems for Roosevelt in that election year, was assassinated in the state Capitol in Baton Rouge in 1935.

1936 Presidential Election Results
Party	Candidate	Popular Vote	Electoral Vote
Democrat	Franklin D. Roosevelt	22,752,648	523
Republican	Alf Landon	16,681,862	8
Union	William Lemke	892,378	0
Socialist	Norman Thomas	187,910	0
Communist	Earl Browder	79,315	0
In the Congress elected in 1936, Democrats held 77 of 96 seats in the Senate and had a majority of 328 out of 435 in the House. During FDR’s first administration, American voting patterns had shifted dramatically. Blacks began to feel the hand of government lifting them up rather than pushing them down, and they shifted from voting about 80 percent Republican to 80 percent Democratic. As they gained greater access to government services, they came to see expanding government as economically advantageous, just as they had viewed Republican-backed programs as beneficial during the Reconstruction years and after.

Roosevelt’s Second Term: Roosevelt and His Critics

“I see one-third of a nation ill-housed, ill-clad, ill-nourished.”—FDR 2nd Inaugural Address

American presidents who get elected by large majorities—or even modest ones—for a second term in office often get into trouble. That has happened to almost every president in the 20th century, excepting, in modern times, President Eisenhower, and even he had difficulties with the U-2 affair, Little Rock, and other issues that we will address later in the course. Franklin Roosevelt was unique in that despite problems during his second term, he recovered and was elected two more times. By 1940 when he was reelected for an unprecedented third term, however, world conditions had changed dramatically, and therefore so had the issues facing the nation.

Some who believed that Franklin Roosevelt was doing more harm than good seemed to bear a particular animus toward him because, as his old headmaster from the Groton School, Endicott Peabody, put it, Roosevelt had “betrayed his class.” Some critics feared that FDR was trying to create a dictatorship, and his immense popularity tended to underscore that fear. Others argued that increasing government controls over the economy would eventually threaten the liberties of the people. A cartoon in The New Yorker magazine early in the New Deal years showed a group of obviously prosperous, upper-class people emerging from a posh restaurant. Out for an evening of entertainment, one of them offered the suggestion, “Let’s all go down to the movies and hiss Roosevelt.” In those pre-television days, people got their visual news in movie theaters from newsreels, and Roosevelt quickly came to dominate them.

In my family there lived a genteel old lady whose father had been named for Henry Clay, the famous Whig (a party that feared too much power in the hands of the executive.) My grandmother rarely uttered a bad word, but she was quickly provoked by FDR’s patrician Hudson Valley voice. “Damned jackass!” she would mutter over and over whenever FDR was on the radio. As his landslide victory in 1936 showed, however, millions of Americans approved of what he was trying to do.

Roosevelt critics on the right formed an organization known as the Liberty League, of which former New York Governor Al Smith, who had once been a loyal Roosevelt supporter, became an outspoken leader. The Liberty League claimed that Roosevelt was leading the country toward Communism. In January 1936 Smith made a radio address to the American people which he called the “Betrayal of the Democratic Party.” Claiming to have been a lifelong Democrat and vowing to remain one, he attacked the New Deal as antithetical to the American system of government. He claimed the American businessmen were being shackled by government. He concluded his speech with these words:

There can be only one Capital, Washington or Moscow! There can be only one atmosphere of government, the clear, pure, fresh air of free America, or the foul breath of Communistic Russia. There can be only one flag, the Stars and Stripes, or the Red Flag of the Godless Union of the Soviet. There can be only one National Anthem—the Star Spangled Banner or the Internationale.

President Roosevelt responded to his critics by arguing that fostering the economic well-being of the country would strengthen liberty and democracy.

Roosevelt and the “Nine Old Men”

The most serious challenge to FDR’s programs had come from the United States Supreme Court, which ruled that several of Roosevelt’s New Deal programs were unconstitutional. The decisions angered the president and led him into his greatest political blunder, which followed the election of 1936.

When Franklin Roosevelt resumed office for his second term in 1937, the Depression, as he acknowledged in his second inaugural address, had been alleviated but was still serious. Although Roosevelt was by any measure an extremely popular president, he still had critics on both the right and left. Feeling that he still had a mission of relief, recovery, and reform to accomplish, he saw his critics as carping nit-pickers who were out to thwart his attempts not only to restore the United States economy, but to cure many of its systemic ills. Feeling he was on the right track, he did not take well to criticism. Roosevelt was especially piqued over the Supreme Court’s decisions that many of his programs were unconstitutional, and he decided to take on the court directly.

During FDR’s first administration, the U.S. Supreme Court had undermined some core programs of FDR’s New Deal. In 1935 in the case of Schecter Poultry Corp. v. United States, known as the “sick chicken case,” the court ruled that portions of the National Industrial Recovery Act were unconstitutional and that by enacting it, Congress had given too much authority to the executive; the president had overstepped his powers under the commerce clause of the Constitution. Then in 1936 the court ruled portions of the Agricultural Adjustment Act unconstitutional, on the grounds that using the taxing powers of the government to control and support agricultural prices was a “matter beyond the powers delegated to the federal government.”By the end of its 1936 term, the Court had ruled New Deal laws unconstitutional in seven cases.

Shortly after his inauguration in 1937 Roosevelt gave a speech in which he excoriated the justices as “nine old men” who were out to keep him from helping the American people. With help from Attorney General Homer S. Cummings, FDR came up with a plan to expand the size of the court from nine to fifteen justices. He argued that the “nine old men” who sat on the bench at that time were overworked and incapable of handling the load and thus were making erroneous decisions.

There was nothing unprecedented about changing the number of justices on the Supreme Court, but there was no precedent for doing so in a manner that was so blatantly political. The chief justice responded to the president’s charge by stating that these nine old men were doing just fine, thank you, and needed no assistance from the president. FDR had submitted his court plan to Congress without any prior consultation; he was used to having Congress agree with his programs without question. He failed to grasp that Congress was already growing jealous of the president’s extraordinary powers and was not about to give him control of the court on a silver platter. In other words, his court-packing plan backfired; it was his biggest political mistake.

In the end, however, Franklin Roosevelt never tangled with the court again. Perhaps realizing that the president did have appointment powers he was bound to be able to employ—and which he did in fact use during his next two administrations—they never ruled against another New Deal program. Roosevelt had other problems in his second term, including what became known as the “Roosevelt recession” of 1937, brought about when even Roosevelt himself grew concerned over the growing government spending deficits. But by 1937 Germany was beginning to threaten the security of Europe, and the Japanese were attacking China. As the American economy continued slowly to recover, New Deal issues began to take a backseat to the new menace in the world, the growth of German and Italian fascism and Japanese militarism.

The New Deal Winds Down: The Legacy of FDR’s Programs

In a 1938 radio address, President Roosevelt told the people:

Democracy has disappeared in several other great nations, not because the people of those nations disliked democracy, but because they had grown tired of unemployment and insecurity, of seeing their children hungry while they sat helpless in the face of government confusion and government weakness through lack of leadership . . . The people of America are in agreement in defending their liberties at any cost, and the first line of the defense lies in the protection of economic security.

In his State of the Union address of that year, he said:

[I]n a world of high tension and disorder, in a world where stable civilization is actually threatened, it becomes the responsibility of each nation which strives for peace at home and peace with and among others to be strong enough to assure the observance of those fundamentals of peaceful solution of conflicts which are the only ultimate basis for orderly existence.

It is clear that as the situation in much of the world was rapidly deteriorating, Franklin Roosevelt had one eye on the American economy and the other on the possible need for the United States to have to defend itself. The setbacks that Franklin Roosevelt underwent during his second term had tended to water down his plans for continuing the New Deal. Responding to the “Roosevelt recession” of 1937, FDR persuaded Congress to authorize spending of an additional $33 billion, mostly for the WPA and PWA. With that infusion of dollars the economy began to recover once again, but Roosevelt never applied the massive spending that would have been necessary to completely put the economy back on its feet. It was only the huge government spending brought about by World War II that finally brought the American economy back to the robust condition it had enjoyed in 1929. A few additional acts were passed during Roosevelt’s second term, but nothing to compare with the huge outpouring of legislation between 1933 and 1936.

In the midterm elections of 1938, the Democrats lost a large number of seats in both the House and Senate, and Roosevelt abandoned any further plans for new reform measures. Despite the fact that the New Deal did not fulfill the hopes of Roosevelt and the American people that the government could wipe out the effects of the Depression, Franklin Roosevelt’s administration forever changed the relationship between the government and the people, and between the president and Congress.

The Tennessee Valley Authority remains a model of a successful government-sponsored massive utility program. The Social Security Act has provided a safety net for millions of Americans. Even as its future seems uncertain in the early part of the 21st century, the American people have come to expect that the government will assist them in their old age. Yet critics argue that Social Security has undermined America’s tradition of self-reliance and forces working people to support those who were unwilling or unwilling to provide for their own retirement. Other reforms in the area of labor, public works, and finance have also continued into recent decades. When the stock market experienced a huge drop in 1987 (in some respects a worse fall than in the crash of 1929), the damage to the economy and to the American psyche was negligible, mostly because of safeguards that had been put in place since the disaster of 1929.

Whether or not one agrees with the utility of the New Deal programs conceived by Franklin Roosevelt and the members of his administration, it is undeniable that Franklin Roosevelt was one of the most powerful presidents in American history, and that he probably had as much impact on the United States government as any president since George Washington.

By 1940, as has been said elsewhere, the world was a very different place, and President Roosevelt now entered the second challenge of his presidency. As storm clouds arose over Europe and Asia, Roosevelt had another series of battles to fight. First he had to confront the isolationists who believed in the principle of “America first,” and who rejected the notion that the U.S. ought to become involved in the world conflict. Second, when Japan attacked Pearl Harbor, and when Germany declared war on the United States a few days later, Roosevelt faced the challenge of mobilizing the nation to fight the Axis powers.

 

Based on a work at www.sageamericanhistory.net.
Sage American History by Henry J Sage is licensed under a
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