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Chapter 26 |
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After a great rise in the stock market, the 1929 crash brought about an economic depression, which had to be dealt with first by Hoover, and then, more successfully, by Franklin Delano Roosevelt.
The Great Depression
The economy of the United States collapsed after 1929, creating the single worst panic and era of unemployment in the nation's history.
The Great Crash
The consumer revolution of the 1920s relied on increased productivity and prosperity, but after 1924, productivity began to outpace consumption, causing a slight recession in 1927. Corporate and government leaders failed to heed this warning sign, however, and from 1927 to 1929, the stock market experienced a sharp increase known as the great bull market. Based on easy credit, inflated currency, and margin loans, the strength of the stock market obscured the economic problems looming on the horizon. The bubble burst in the fall of 1929 in the great stock market crash. The crash soon spilled over into the larger economy—banks and businesses failed, workers lost their jobs, and consumers came up short.
Effect of the Depression
This was the start of a decade of terrible economic conditions, and few escaped its material or psychological impact. Ironically, the poor survived because they had experience with existing in poverty while the middle class took what was perhaps the hardest hit. Eventually, the Great Depression became the worst economic downturn in the nation's history.
Fighting the Depression
Ending the depression became the most important political issue of the 1930s, as first a Republican president and then a Democrat tried to achieve economic recovery. Though they failed solve the nation’s economic problems, the Democrats did succeed in renewing Americans’ hope for the future and alleviating some individual suffering.
Hoover and Voluntarism
Hoover at first emphasized voluntary solutions to the economic ills of the nation, using government only minimally. As the depression deepened, he began getting the government more and more involved in the economy, but his efforts failed to stop the deterioration.
The Emergence of Roosevelt
In 1932 the voters elected Democrat Franklin D. Roosevelt, the former governor of the New York who promised a “new deal” for the country, to the presidency in a landslide.
The Hundred Days
With a clear understanding of the responsibilities of political leadership, Roosevelt called Congress into special session in order to solve the banking crisis. After this success, he proceeded to pass several significant reforms in the first three months of his initial term. Though some of his programs were somewhat radical, the tone of Roosevelt’s New Deal was reform and restore, not drastic change.
Roosevelt and Recovery
Roosevelt pushed several acts through Congress, attempting to instigate industrial and agricultural recovery. The National Recovery Administration was meant to foster cooperation between government, business, and labor as a means of achieving economic progress while the Agricultural Adjustment Administration was an effort to subsidize farmers back into prosperity.
Roosevelt and Relief
Roosevelt also took steps to provide immediate relief for the millions of Americans that were unemployed and poverty-stricken. Both the Civilian Conservation Corps and the Works Progress Administration implemented new work relief programs intended to spur the economy while also keeping people from starving and restoring their self-respect. These projects also provided needed labor for new schools, parks, and other public projects.
Roosevelt and Reform
After pressure developed for more fundamental reform, Roosevelt responded by suggesting permanent changes in the economic arrangements and institutions of the United States.
Challenges to FDR
Several liberal critics, including most notably Father Charles Coughlin, Francis Townsend and Huey Long, complained that the New Deal was not solving the problems of the still-ailing economy. They suggested that more radical reforms were in order.
Social Security
In response to this criticism from the left, Roosevelt secured passage of the Social Security Act, which provided modest pensions, unemployment insurance, and financial assistance to the handicapped, needy elderly, and dependent children. The Social Security Act was a landmark piece of legislation for FDR, creating a system to provide for the welfare of individuals in the new industrial society.
Labor Legislation
The president also supported legislation, the Wagner Act, guaranteeing the rights of workers to organize and bargain collectively with employers. He also endorsed the Fair Labor Standards Act, a law that provided for maximum hours and a minimum wage. This act was aimed at unorganized workers who did not benefit from the efforts of the unions.
Impact of the New Deal
Roosevelt’s New Deal program, succeeded in improving some, if not all, elements of American society, but did not initiate radical change. In short, the New Deal was a modest success but not an overwhelming victory. The most important advances came for organized labor while women and minorities in nonunionized industries were largely neglected.
The Rise of Organized Labor
The New Deal resulted in a dramatic increase in union membership, especially among the unskilled laborers who worked in the nation’s steel and automobile industries. Miners and workers in other mass production factories also became more unionized as a result of the New Deal. Workers in the service industries still remained largely unorganized.
The New Deal Record on Help to Minorities
With only a few exceptions, the New Deal did not address the problems of the nation’s minorities. While some New Deal programs helped African Americans and other minorities survive the depression, they did little to address racial injustice and discrimination. Indeed, some New Deal programs actively discriminated against non-White Americans. Native Americans, long neglected by the federal government, fared better than they had in many years with the passage of the Indian Reorganization Act that emphasized tribal unity and authority.
Women at Work
For most women the Depression caused a worsening of their position in the economy. Their wages were lower if they did work, and more than 20 percent were unemployed throughout the decade. The one arena in which women did make advances was the government as women were employed in any number of New Deal agencies.
End of the New Deal
After five years of significant success, Roosevelt could no longer secure the passage of new reforms and his New Deal came to an end. Despite the end of the New Deal, Roosevelt was extremely popular and had revived American optimism despite the continuation of the Depression.
The Election of 1936
Roosevelt and his party won a landslide victory in the elections of 1936 against forces from both the right and the left. The Democratic victory also marked the solidification of a new political coalition that included the poor, the urban, the laborers, and religious and ethnic minorities that would dominate American politics for decades to come.
The Supreme Court Fight
Roosevelt’s effort to reorganize the Supreme Court so that it would act more favorably on his New Deal programs failed in Congress and weakened the president’s position with Congress. Senators and Representatives that had reluctantly supported FDR’s programs before now felt free to oppose them.
The New Deal in Decline
A recession in 1937 that dissolved the slow but steady improvement in the economy under Roosevelt’s New Deal along with the unsuccessful “Purge of ’38” revived the Republican party and strengthened opposition to Roosevelt’s programs in Congress.
Conclusion: The New Deal and American Life
The New Deal did not cure the problems of the Depression, nor did it radicalize the nation’s economy. And while its benefits were not distributed evenly among the American populace, the New Deal did ease many Americans’ suffering while at the same time relieving the psychological impact of the depression on the public. The New Deal also made some permanent reforms in the American system and left the Democratic party as the majority party for decades to come.
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