The Depression Decade
In the United States the greatest legacy of the years 1930-1939 was the creation of the modern bureaucratic welfare state, which arose in response to the worst economic collapse in national history. Unlike other economic crises, the Great Depression was not short-lived. It persisted throughout the 1930s, affecting all aspects of society. The critical political controversy of the decade focused on how government ought to be used to bring the Depressionto an end. Every political quarter proposed solutions. In the desperate times of severe economic crisis patience often grew thin, and debates became strident. The major political contest took place between Republicans and Democrats. Together these parties consistently drew about 97 percent of ballots cast, and the debate over how to end the Depression was generally carried out on ideological terrain defined by individuals and groups within them. Yet other groups—with a broad spectrum of alternative political visions—also influenced the debate and sometimes policy. On the political Left were small numbers of socialists, communists, and anarcho-syndicalists; and on what is sometimes called the "far Right" there were tiny groups of American fascists and Nazi sympathizers. The severity of the Depression and the immediacy of the need to bring the nation back to prosperity galvanized politics in the 1930s. Still, the problems of the United States in the Great Depression must bekept in perspective. For all of the hardships, most Americans continued to work; and in contrast to other countries suffering from the international economic depression, the United States remained among the wealthiest nations in the world.
President Hoover's Problem
RepublicanHerbert Hoover was president when the stock market crashedon 29 October 1929. This crash on Wall Street in New York was part of a series of events—a sort of chain reaction—in which unemployment, credit contraction, deflation, depressed agricultural prices, and international problems all played parts. With the economy spiraling downward, the pressing question became what, if anything, government should do. President Hoover's first response to the onset of the Depression was to allow traditional market forces to make correctiveswith a minimum of government intervention. In this view the overheated economy would self-adjust if given time. As Andrew Mellon, Hoover's secretary of the treasury, declared, it was necessary to "purge the rottenness out of the system" by allowing the downturn to run its expected course. Hoover himself asserted that "Economic depression cannot be cured by legislative action or executive pronouncements. Economic wounds must be healed by the action of the cells of the economic body—the producers and consumers themselves." While seeking to convey a spirit of optimism, Hoover also met with business leaders and asked them to keep their workers' wages at current levels, even if working hours had to be cut back. This measure, it was hoped, would keep prices up and give workers purchasing power, but it did not work. Unemployment rose precipitously, and the economy staggered. By early 1932, with the November elections less than a year away, Hoover changed course away from his initial "laissez-faire" approach and initiated the greatest peacetime government expenditure program in the nation's history to that time. The Reconstruction Finance Corporation (RFC) made more than one billion dollars of federal money available in "loans for income producing .... enterprises which will increase employment." When the hoped-for recovery did not materialize, Hoover was routed by DemocratFranklin D. Roosevelt in the 1932 presidential election.
The New Deal
Using the democratic measuring stick of popular votes, there can be no doubt that Franklin D. Roosevelt, the Democrats, and the New Deal dominated the 1930s. Roosevelt's take-charge, action-oriented, pragmatic brand of politics was welcomed by most Americans who had watched as the number of shanty towns—called "Hoovervilles"by many—grew larger. Alongside poverty, strikes by industrial workers increased and were sometimes violent and bloody. Voices from the political Left and Right captured people's attention in ways that they had not done in pre-Depression years. In response Roosevelt's political program promised a reshuffling of the cards of American government, economy, and society in a "New Deal" for the American people. The New Deal set out to bring relief, recovery, and reform, and in the process the federal government was vastly expanded. Roosevelt accomplished his sweeping legislative reforms (and his election to four terms as president) by building the New Deal coalition, which was to endure for more than two decades after his death. Drawingtogether elements from urban ethnic groups, labor, women, African Americans, and middle-class liberals, Roosevelt used, for the first time in American history, the power of government to sustain a series of bureaucratic institutions to administer such new programs as unemployment insurance, public housing, and social security. The New Deal created the modern welfare state.
The First New Deal
When Franklin D. Roosevelt took office on 4 March 1933, unemployment was at 25 percent nationwide. In Toledo, Ohio, three-quarters of those looking for work could find none. There was no federal welfare system, no federal unemployment insurance, no public housing. When people did not find work, they turned of necessity to charitable organizations that were usually run by churches and synagogues. The enormity of the Depression overwhelmed these traditional means of aid to the needy, and it became clear to the president that government-run relief efforts were required. Within exactly one hundred days of taking office, Roosevelt introduced fifteen major legislative bills to Congress. All were passed. In the next two years Roosevelt embarked on a vast array of relief and reform programs in an effort to place the U. S. economy on its feet. To bring the economy back from the brink, the initial stages of the New Deal allowed limited collusion among businessmen in setting prices and standards within an industry. To increase employment, and with it consumer spending, the New Deal used deficit spending, pouring billions of dollars into relief and jobs programs. It dealt with the banking and securities-market crises through reform legislation and bolstered farmers' beleaguered economic position with price supports.
The Second New Deal
In 935 Roosevelt made a decided move to the political Left in what historians have labeled "the Second New Deal." Less than two years into his first term, the economy began to falter. Though the federal government had pumped billions into works projects and relief, the much-vaunted recovery had not taken shape. Roosevelt was pilloried from both the Right and Left by popular figures such as Sen. Huey Long of Louisiana, Father Charles Coughlin, the "radio priest" of Detroit, and Dr. Francis Townsend of California. In response Roosevelt orchestrated the beginning of the modern welfare state. A significant part of this "new Roosevelt" was his anticorporate tone. His "Soak the Rich" progressive tax (which proposed taxes as heavy as 75 percent on the wealthiest Americans) and his efforts to rein in the power of utility trusts marked a break with the relief policies of the previous two years. The keystone of this Second New Deal phase of Roosevelt'sreform efforts, however, was the Social Security Act of 1935.
The United States did not enter World War II in September 1939, when England and France declared war on a belligerent Germany. During most of the 1930s Americans were deeply isolationist. One poll revealed that 64 percent of Americans supported isolationist policies as late as 1937. Nevertheless, after the Hitler-Stalin Pact of August 1939 and the German invasion of less than a month later, the isolationist mood in the United States waned. By the end of the decade, with war raging across Europe and relations between the United States and Japan becoming increasingly tense, the United States had begun to prepare for war.
The Depression Ends in War
Though the economy had somewhat recovered by the end of the 1930s, many problems remained. Unemployment, an important economic indicator, remained extremely high. In 1939, 9.5 million Americans (17 percent of the labor force) were out of work. Not until the United States entered World War II in 1941 did the Great Depression finally come to an end. It ended not so much because of the actions of presidents or political parties but because of the military expenditures of World War II.