The Not-So-Roaring Twenties, the Great Depression,
and a "New Deal" for Americans
To understand that the 1920s was a decade of sharp contrasts.
To examine the economic realities of the 1920s and the consequences of ignoring economic warning signs.
To understand President Hoover's response to the Great Depression
To trace the rising power of the federal government through the goals and accomplishments of Franklin Delano's Roosevelt's New Deal
To undertake a more indepth analysis of three of the most important acts of the Federal government during the New Deal: the Social Security Act, the Glass-Stegall Act, and the 1937 U.S. Supreme Court decision about contract of liberty.
Discussion Goal #1:
To understand that the 1920s was a decade of sharp contrasts.
It was an age, on the one hand, of expanding freedom while on the other hand, it was an age when freedom was dramatically restricted:
Expanding freedom: women got out of their corsets, Americans danced in new ways to exciting new music, people created thousands of inventions , Harlem experienced a cultural renaissance, gays and lesbians tentatively moved out of the closet, and the automobile caught Americans by storm.
Restricting freedom: the KKK terrorized African Americans and those not believed to be 100% American, alcohol consumption and purchase was prohibited, immigration was dramatically restricted.
2. It was also an age of consumer consumption of new products versus an age of excess.
- More and more new products became available to the average consumer for their consumption: cigarette lighters, refrigerators, electric stoves, vacuum cleaners, wristwatches, dry ice, pyrex glass for cookware, automobiles.
- As more products became available, the corporations began to rely heavily on advertising. Indeed, the widespread use of radio made advertising slogans as popular as nursery rhymes - and even created a new vocabulary - "tune in," "network," and "airwaves."
- While most urban families traditionally paid cash for what they bought, the 1920s introduced the installment plan - "buy now, pay later." By the late 1920s, credit purchases accounted for 15% of all retail purchases.
By 1927, two-thirds of all American automobiles were sold on credit.
An age of excess arose
during which Americans became enamored with the dangerous materialism of conspicuous consumption. Many American writers began writing about a growing generation of young people who lived shallow, greedy, and empty lives brought about by such conspicuous consumption. This is especially seen through popular books of the era - The Great Gatsby
by F. Scott Fitzgerald and Main Street
by Sinclair Lewis.
3. It was a period of increasing corporate profit and prosperiety for skilled worker versus decreasing prosperity for farmers and unskilled workers.
- A huge increase in corporate profits and prosperity of skilled workers.
- Much of this boast came from the automobile industry. In 1919, 1in 16 people owned an auto; by 1929, 1 in 5 (in Los Angeles, by 1925, 1 in 3.)
- In 1925, Ford turned out 9,000 cars a day with a daily profit of some $25,000; average weekly wage for workers was $24.
- Ford had made the Model T affordable - in 1909, it cost $950 (compared with average factory wage of $518 per month); by 1927, the cost was $295.
- By 1927, Ford had produced more than 15 million Model T's.
- Not only was the automobile influencing the growth of corporate profit, it also has several important impacts on American society.
- In addition to the automobile, several other new technologies dramatically changed society.
- Electricity - In 1920, about one-third of all residences had electricity; by 1925, electrical power had reached 60% of American urban residences; by 1929, electrical power had reached most urban homes, but fewer than 10% of all rural homes.
- Radio - The basic components of radio transmitters and receivers were perfected before WWI, but it was not until 1921 that the first commercial radio broadcasting station was established; in 6 years, 681 were operating.
By the early 1930s, 40% of all households had radios.
Radio made advertising slogans as popular as nursery rhymes and created a new vocabulary - "tune in," "network," and "airwaves."
- Motion Pictures - Although movies had been around for over a decade, it was not until the 1920s that they reached huge audiences. In 1922, weekly average attendance was 40 million people. By 1929, there were 23,000 movie theaters in the U.S. with a combined weekly average attendance of about 100 million - the equivalent of about two-thirds of the total population went to the movies each week
- A few skilled and unskilled workers also benefited from improved working conditions:
U.S. Steel introduced the 8-hour workday in 1923, Ford introduced the 5-day work week in 1926, and International Harvester introduced the annual 2-week paid vacation
A substantial decrease in prosperity for farmers and unskilled workers
- At the bottom of the unskilled wage scale were blacks, Mexican-Americans, recent immigrants, and women. Nothing was done during this time of rising prosperity to help their situation.
- Prosperity also evaded farmers. Many farmers had expanded their operations during the war in response to government demands for more food.
- Between 1914 and 1920, exports of farm products nearly quadrupled. After the war when European farmers resumed production, the glut of agricultural goods on world markets brought falling prices.
- Throughout the 1920s, American farmers produced more than the domestic market could consume.
Crop prices fell to half of what they brought during the war.
The average farm's net income between 1917-20 ranged between $1,196 and $1,395 annually - but in 1921, it fell to $517. Farmland was less valuable in 1928 than it had been in 1912.
The proportion of farmers' total population fell from 30% to 25%.
And this age of contrasts - and all it brought with it - changed American society. The effects of the automobile on American lives demonstrates such changes. The popularity of the automobile in the 1920s:
- Encouraged the growth of new institutions: gas stations, traffic lights,
hot-dog stands, garages, tourist shops, billboards, roads.
- Changed the location of where people living with the booming increase of suburbs and subsequent boom
in residential and commercial construction.
- Ensured that more money was spent in road and building construction
that in any other single private industry.
- Shortened traveling time from cities to rural areas, thereby decreasing
the isolation of farm life. One farm women, when asked why her family
had an automobile but no indoor plumbing responded, "Why you can't go to
town in a bathtub."
- Created traffic congestion. By 1926, cars in the evening rush hour
in Manhattan crawled at 3 mph, slower than a person could walk.
- Changed the way Americans banked. Most banks previously were located
only in one spot - city center - where services were limited to businesses
and wealthy citizens with large accounts. The car encouraged the
growth of suburban branches.
- Gave American youth more freedom than ever before. By 1927, 82.8% of all
automobiles were closed, allowing young people to escape adult supervision.
Discussion Goal #2:
To examine the economic realities of the 1920s and the consequences of ignoring economic warning signs
For the first time, Americans in the 1920s became enamored with the stock market as a possible road to riches. Speculation ran rampant.
- What is speculation? Buying stock with the expectation of selling it at a higher price.
- By 1929, 10% of the American population - 4 million people - owned stock.
- Many bought on the margin - they would purchase a $100 share of stock with as little as $10 down and the remaining $90 would be owed to the stock broker - on the margin. If the stock advanced to $150, then the investor could pay the broker, plus have a profit.
But if the stock fell to $50, the investor still owed $90 to the broker.
- Many Americans also speculated in real estate. By 1923, Florida had become the playground of the nation's elite. By 1924, land in Florida was increasingly accessible to middle class Americans. Many began to buy acres of overpriced land hoping to resell at large profits.
Little government regulation of the economy due to the belief that voluntary cooperation among competing groups and interests could foster economic and social progress, as well as international peace.
This was especially true for President Hoover who believed that once government stepped into the lives of ordinary Americans to directly solve society's problems, the people gave up their freedom and the government then became the problem - the government should help but not solve problems.
Slowing American economy. Both the American public and policy-makers failed to recognize the signs of economic weakness.
Prosperity was dependent upon the rise of a few major industries - automobile, construction, and consumer goods.
These boomed throughout most of 1920s, but began to show signs of weakness due to overproduction toward end of the decade.
Unequal distribution of income.
The gap between the wealthy and the poor substantially widened. There were 513 families with annual incomes exceeding $1 million, but over 70% of all families lived on less than $2,500 a year.
- Upper and middle classes experienced prosperity
- The poor, minorities, and those living in rural areas enjoyed no increases in wages or savings - but they did experience increases in prices. For these people who spent every penny of what they earned, any change in credit policy or wages could spell disaster.
The consequences of ignoring these economic realities
- October 1929 Wall Street Crash - http://www.youtube.com/watch?v=RJpLMvgUXe8&feature=related
- October 1929-1933 - Beginning of the Great Depression
- 90,000 businesses failed.
- 9,000 banks closed and depositors lost $2.5 billion.
- Expenditures for goods decreased by 45%.
- Unemployment rose from 3% to 25% - with 13 million out of work.
- Workers incomes dropped 40% - average annual incomes dropped 35%, from
$2,300 to $1,500
- In their desire to endure, men and women were willing to work for almost
- People not only lost their jobs, they also lost their houses and apartments.
- Family structures were strained and sometimes shattered.
- Thousands of youths became homeless - Riding the Rails at http://www.pbs.org/wgbh/amex/rails/filmmore/index.html
- People were hungry, many suffered from malnutrition, and some starved to
- Some people who began to search for explanations for their miser turned to racism and racial stereotyping especially against African Americans, immigrants, and Mexican
Discussion Goal #3: To understand President Hoover's response to the Great Depression
Hoover's reaction came in three stages:
- He reminded the nation that voluntary action would heal the economy
and that any dramatic changes in government action would be in keeping
with American political tradition. Asked employers not to cut wages
or production or to lay off workers; asked unions not to demand higher
wages. Only a few employers and union members listened - not enough
to stimulate the economy.
- He allowed the federal government to assume some direct involvement
in economic recovery. Asked federal, state, and local governments
to increase spending to construct public works projects, especially highways,
dams, and government facilities. All governments doubled their spending
on public works, but it was not enough to make an impact on the economy.
- He promoted more direct federal involvement in the economy by asking
Congress for banking reforms, financial support for home mortgages, creation
of the Reconstruction Finance Corporation, and higher taxes to pay for
In short, Hoover's policies were based upon the "trickle down" theory - the belief that benefits to workers and the unemployed would trickle down in the form of voluntary actions that would result in higher wages and new jobs.
- Hoover's critics called his measures "welfare for the rich," insisting that the effects of such programs would not trickle down.
- They claimed Hoover had not gone far enough to relieve the suffering of the Great Depression, especially for the poor and unemployed. They favored direct relief - direct payment to the poor and unemployed and the creation of massive public works programs. Hoover opposed these efforts, believing that
- Public works programs would be too expensive for the federal budget.
- Direct relief should be voluntarily distributed by private organizations and local governments.
- Direct relief would erode the traditional American work ethic and bring about a class of idle Americans who would rather live on relief than work.
- Direct relief would erode the traditional American work ethic and bring about a class of idle Americans who would rather live on relief than work.
But Hoover's big mistake - and the mistake that lost him the election - was his response to the Bonus Marchers.
In the summer of 1932, about 22,000 impoverished WWI veterans marched to Washington DC to ask the federal government for early payment of their veterans' bonus scheduled for payment in 1945.
Hoover allowed the Bonus Marchers to enter DC and ensured that tents, clothing, medicine, and food were available. The marchers set up a Hooverville in Anacostia Flats across from Congress.
On June 15, the House of Representatives passed a bill to grant the bonus, but it was defeated in the Senate 62 to 18.
So, Hoover signed a $100,000 transportation bill to assist the bonus army demonstrators in getting home and set a July 24 deadline for the men to abandon their encampments. Over half left, but almost 10,000 stayed at Anacostia Flats and in several abandoned buildings around the capital.
Hoover then ordered the army to evict them - which resulted in a clash between about 800 soldiers and 5,000 vets. Under command of Army Chief of Staff General Douglas McArthur, assisted by Patton and Eisenhower, ther force consisted of four cavalry troops, four infantry companies, six tanks, and several mounted machine guns. This army drove veterans from abandoned buildings
and in the process, killed 2 bonus marchers and an 11-week-old baby, as well as injured over 1000 people.
Consequently, during the Election of 1932 the American people turned to a new presidential model - Franklin Delano Roosevelt - for two primary reasons:
- Americans were looking for new leadership and change - Roosevelt projected the image that he was more caring and energetic than Hoover. He campaigned as the champion of the "forgotten man."
- At the Democratic nominating convention, Roosevelt promised "a new deal for the American people." While he had placed no emphasis on the phrase "new deal" in his speech, the press quickly focused on it, handing Roosevelt a clever slogan for his campaign - the New Deal. Americans seized the optimism they found in his promise.
Discussion Goal #4: To trace the rising power of the federal government through the goals and accomplishments of Franklin Delano's Roosevelt's New Deal
1. When FDR came to office, the nation's economy was on the brink of collapse, almost 1/4 of the entire labor force were unemployed, and banks were closed in 38 states. On inauguration day, FDR declared that he would call Congress into a special session and request "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." And what kind of power does he ask for - Federal intervention in the economy.
2. FDR then took two unprecedented steps within the first 4 months of his presidency, steps that greatly expanded the role of the federal govenrment into the lives of Americans: First, he used the federal government to provide economic relief for Americans . Second, he used the powers of the federal government to try to stimulate an economic recovery. Both the relief and recovery efforts will represent an unprecedent rise in the power of the federal government.
- Civilian Conservation Corps (CCC) provided a relief
and employment program for young men between the ages of 17 and 27, who
volunteered to work in national forests, parks, and on federal land for
$30 per month. The first 250,000 young men were housed in 1,468 camps around
the country. At its peak in 1935, the CCC included 500,000 young men. This photo shows CCC workers building a road in 1933.
- Civil Works Administration (CWA) created a wide scale work relief program that employed up to 4 million people to build bridges,
schools, hospitals, airports, parks and playgrounds. Additionally, C.W.A.
funds went toward the repair and construction of highways and roads.
Disbanded after 1934.
- National Recovery Administration (NRA) used national
economic planning to establish and administer a system of industrial codes
to control production, prices, labor relations, and trade practices among
leading business interests. Declared unconstitutional by the Supreme
Court in 1935.
- Tennessee Valley Authority (TVA) utilized regional
planning by supporting controversial public power projects like building
dams, producing and selling fertilizer, reforesting the Tennessee Valley
area. Continues to meet Tennessee Valley's energy and flood-control
- The Wagner Act established the National Labor Relations
Board (NLRB) to preside over labor-management relations and enable unions
to engage in collective bargaining with federal support. The Act introduced an unprecedented
federal government policy by determining that whenever the majority of a company's
workers voted for a union to represent them, management must negotiate with the union on all matters of wages, hours, and working
- The National Youth Administration (NYA) created a student work and an
out-of-school program. The student work program provided 2 million students
with odd jobs that paid them enough to stay in school. The out-of-school
program set 2.5 million young people up with various jobs ranging from
house painting to cleaning local parks, and eventually came to include
- Fair Labor Standards Act established a federal minimum
wage of 40 cents an hour and a maximum workweek of 40 hours for businesses engaged in interstate commerce.
3. While FDR's relief and recovery measures made the Great Depression bearable for some, they did not end the Great Depression.
Discussion Goal #5: To undertake a more indepth analysis of three of the most important acts of the Federal government during the New Deal: the Glass-Stegall Act of 1933, the Social Security Act of 1935, and the 1937 U.S. Supreme Court decision about liberty of contract.
The Glass-Steagall Act of 1933 prohibited commercial banks from engaging in the investment business in order to protect depositors from the hazards of risky investment and speculation., gave the Federal Reserve System tighter regulation over national banks, and created the Federal Deposit Insurance Corporation (FDIC) which insures bank deposits. So, why was this needed and why did it represent a huge increase in government power?
- Beginning in the 1900s, commercial banks established security affiliates that floated bond issues and underwrote corporate stock issues. The expansion of commercial banks into securities underwriting was substantial until the 1929 stock market crash and the subsequent Depression. In 1930, the Bank of the United States failed, reportedly because of activities of its security affiliates that created artificial conditions in the market. When FDR came to office in1933, he closed all of the nation's banks for a four-day period soon thereafter, 4,000 banks closed permanently.
- Consequently, public confidence in the U.S. financial structure plummeted. The Glass-Steagall Act was passed by Congress in order to restore the banking public's confidence that banks would follow reasonable banking practices. The act forced a separation of commercial and investment banks by
- preventing commercial banks from underwriting securities and
- preventing investment banks from the business of receiving deposits.
- From the time of its passage until 1999, critics have sought to repeal the Act, arguing that it allows too much federal intervention into the economy.
- In 1999, Congress responded to these criticisms in passing the Gramm-Leach-Bilely Act which repealed the Glass-Steagall Act's restrictions on bank and securities-firm affiliations; that is, the new act allowed banks to merge with insurance companies and investment houses - the very actions that had occurred in the 1920s and contributed to the 1929 Stock Market Crash.
- The Senate vote was overwhelmingly positive and President Clinton also supported the Act. Only 8 senators voted against the measure (Senators Barbara Boxer, Russ Feingold, Barbara Mikulski, Richard Shelby, Tom Harkin, Richard Bryan, Paul Wellstone, and Byron Dorgan
- Some of those senators, especially Byron Dorgan, have been speaking out for the last three years claiming that the repeal of Glass-Steagall led to today's current economic crisis.
The Social Security Act of 1935. Prior to the Depression, several States had been forced to deal with the problems of economic security in a wage-based, industrial economy. Some states established Workers Compensation programs welfare programs for the elderly. But the main strategy for providing economic security to the elderly was some kind of old-age "pension" welfare program based on proof of financial need. But these plans were always inadequate: some had restrictive eligibility requirements which disqualified many of the elderly and even the most generous plans paid a maximum of $1 per day.
With the coming of the New Deal a "new" idea of social insurance which was already widespread in Europe.
Social insurance, as conceived by President Roosevelt, would address the permanent problem of economic security for the elderly by creating a work-related, contributory system in which workers provided for their own future economic security through taxes paid while employed. This would be an alternative to reliance on welfare and it would be a radical change in our capitalist system. In the context of its time, it can be seen as a moderately conservative, yet activist, response to the challenges of the Depression.
By the time America adopted social insurance in 1935, there were 34 nations already operating some form of social insurance program that used government-sponsored efforts to provide for the economic security of its citizens.
- The underlying principle of social insurance is that an identified group of persons are "insured" in some way against a defined risk such as disability, death, old-age, and unemployment - in other words risks that involved loss of income.
On June 8, 1934, President Roosevelt, delivered a message to the Congress in which he introduced the need for social security:
"Security was attained in the earlier days through the interdependence of members of families upon each other and of the families within a small community upon each other. The complexities of great communities and of organized industry make less real these simple means of security. Therefore, we are compelled to employ the active interest of the Nation as a whole through government in order to encourage a greater security for each individual who composes it . . . This seeking for a greater measure of welfare and happiness does not indicate a change in values. It is rather a return to values lost in the course of our economic development and expansion . . ."
He then announced his intention to provide a program for Social Security based upon studies of his newly-created Committee on Economic Security (CES) which was instructed to study the entire problem of economic insecurity and to make recommendations for Congressional legislation.
Within six months, the CES developed a report and drafted a detailed legislative proposal, both of which were presented to Roosevelt and Congress in early 1935. The Social Security Act was finally passed and sent to President Roosevelt who signed it into law on August 14, 1935. In addition to several provisions for general welfare, the new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement. Following are the basic elements of Social Security:
- Social Security is funded by a payroll tax. When we make wages, 6.2% is taken out of our paychecks to go to Social Security. An additional 6.2% is matched by our employers. This match ends after the first $90,000 of income for each person; thereafter, only the payroll tax is added.
- Social Security provided a monthly benefit to individuals age 65 and older and no longer working. The monthly benefit was paid to the primary worker when he retired; the amount received was based on the individual's payroll tax contributions.
1937 West Coast Hotel v. Parrish U.S. Supreme Court on Liberty of Contract. Elsie Parrish, an employee of the West Coast Hotel Company in Washington, argued that she received sub-minimum wage compensation for her work and that she should recover the difference between the wages paid to her and the minimum wage fixed by state law.
The question before the court was -
Did the minimum wage law violate the liberty of contract as construed under the Fifth Amendment as applied by the Fourteenth Amendment?
In a 5-to-4 vote, the Court held that the establishment of minimum wages for women was constitutional.
The tradition of liberty of contract holds that individuals and corporations have the freedom to form contracts without government restrictions. The belief is that any one can choose to voluntarily enter into a contractual agreement about rights and protections as defined by the parties to the contract. It is based upon the idea of laissez faire economics – the belief that government should stay out of the economic affairs of its citizens and businesses. Thus, when people have liberty of contract, they are free from government restrictions such as minimum wage or price fixing.
- In 1902, liberty of contract gained attention when a New York baker, Joseph Lochner was fined for violating a state law limiting the number of hours his employees could work. Lochner sued the state arguing that the NY law denied his right to "due process” and that he had the right to freely contract with his employees without state interference.
- In 1905, the U.S. Supreme Court invoked the 14th Amendment due process class when it declared the NY state law unconstitutional because it imposed a limit on hours of work. In Lochner v. New York, Justice Peckham wrote "Under that provision no state shall deprive any person of life, liberty, or property without due process of law. The right to purchase or to sell labor is part of the liberty protected by this amendment..."Justice Oliver Wendell Holmes famously dissented, and in so doing, accused the majority of making law based on economics rather than interpreting the constitution and stated that "Liberty of Contract" did not exist in nor was it intended in the constitution.
- For the next 35 years, the
Supreme Court generally struck down laws that interfered with the freedom of people to bargain over the terms of their own contracts: minimum-wage and maximum-hours laws, housing segregation laws, licensing laws and laws interfering with the freedom of parents to determine what kind of schooling their children receive.
- In 1937, during the New Deal, the Supreme Court changed course. In West Coast Hotel v. Parrish, the Court upheld a Washington state minimum wage law. Chief Justice Charles Evans Hughes in delivering the majority opinion, announced a new standard of review: liberty or property rights were no longer protected under the Due Process Clause that previously had limited government regulation of business. This ushered in what modern scholars call the rational basis test – if a legislature passes a law in the public interest, courts will uphold government regulation of business at the state or federal level.
- This decision contributed to the tremendous growth in the nation's regulatory and welfare state over the past several decades.
Public policy scholars have argued for years about if those laws are detrimental to those they are supposed to help, if it's perverse paternalism because government is harming the very people—younger unskilled workers—that presumably they're intended to help.
- So, without the change in 1937, today we would have
- few, if any federal labor laws (especially minimum wage);
- regulations that dictate what kind of products Americans can use (such as energy legislation intended to ban incandescent light bulbs, legislation to conserve water which means toilets no longer properly flush, washing machines that no longer properly wash clothes); and
- no national health care law – not because it exceeds the scope of power under the Commerce Clause – but because it interferes with a fundamental right for citizens to decide how best to purchase health care services.
- Returning the U.S. to liberty of contract is a goal of libertarians who argue that the current status is legal paternalism – it allows the government to interfer with individual freedom to decide what products to buy and to make contracts for labor.
1. The decade that began in 1920 and ended in 1929 could more appropriately
be called the "Not-So Roaring Twenties." While much progress was made
in terms of modern industry and consumerism - the reality is that the Twenties
was a decade of sharp contrasts.
2. Such sharp contrasts produced ambiguous results. For instance:
Prohibition became reality - but it only temporarily banished the saloon,
did nothing to halt the use of alcohol, promoted the glamorous image of
alcohol use that attracted younger upper and middle class use, and prompted
the violent excesses of bootlegging.
- Many so-called "freedoms" for minorities - women, blacks, Latinos, gays
and lesbians - were minimal. While their behavior was somewhat liberalized,
they gained very little in terms of economic, social, and political power.
3. The great technological innovations of the period helped reshape American
society - especially the automobile, electricity, radio, and motion pictures.
4. At least four economic realities of the decade were ignored by the
vast majority of Americans: easily-available credit, little government
regulation of the economy,a slowing economy, and the unequal
distribution of income.
5. The consequences of ignoring the economic warning signs led to the
stock market crash of 1929 and the Great Depression.
6. The Great Depression exacted a heavy human toll on the lives of ordinary
Americans who often worked for almost nothing; often lost not only their
jobs, but their homes as well; suffered severe family strain; were hungry
and sometimes starving; and often blamed immigrants, blacks, and Mexicans
for their plight.
7. Many historians have come to believe that the New Deal controls were really "concessions" - concessions that didn't
solve the problems created by the Depression, but nonetheless, did create
an atmosphere of progress and improvement that restored the faith of many
Americans in the system. In short, only enough help had been given
to make Roosevelt a hero to millions - but the same system that brought
depression and crisis remained functional.
9. New Deal legislation was not responsible for recovery from the Depression. That only occurred with the outbreak of WWII which
propelled the American economy into another era of prosperity.
10. The New Deal did little to help Americans without effective voices
or political clout - African Americans, Mexican Americans, women, sharecroppers,
small farmers. For African Americans especially, the New Deal "was
psychologically encouraging" despite the facts that its programs did little
to help African Americans. Jim Crow was still the rule in the south
and much of the rest of the nation, as well as in the armed forcers.
Because they were largely tenant farmers, farm laborers, migrants, and
domestic workers - they did not qualify for
unemployment insurance, minimum wages, social security or farm subsidies.
11. Despite such limitations, the New Deal did change the nation and
its people. Indeed, the New Deal:
Ended the fear generated by the Depression and encouraged a return to the
stable and orderly society that fit in well with traditional American values.
- Greatly increased the power of the federal government:
- The New Deal altered the historic relationship between government and society - for the first time in U.S. history, many Americans believed that government - especially the federal government - had a responsibility to provide for the welfare of those
unable to care for themselves (Social Security Act).
- Thereafter, a substantial number of Americans did not challenge the belief
that government was responsible for the needy until the 1990s.
- Greatly increased presidential power and prestige, especially through the use of Executive Orders** and Presidential Proclamations. Under FDR, the president was given unprecedented power, largely through his use of over 3,700 executive orders and presidential proclamations during his administrations.
Some of his most controversial include:
- August 1940 decision to bypass Congress by giving Britain 50 destroyers in return for the rights to 9 strategic bases. Because the deal increased U.S. national security, he and his AG believed he could make the exchange without Congressional approval.
- May 1941 decision to declare an "unlimited national emergency" and later giving him increased wartime powers (in peacetime) prior to the declaration of war.
- Giving him power to increase the size of the army and navy
- Giving him power to place compulsory defense orders with industry
- Incarceration of Japanese Americans via EO 9066
- June 1941 EO 8802 requiring "full and equitable participation of all workers in defense industries, without discrimination..."
Solidified a shift from the Republican to the Democratic Party dominance.
- Marked the establishment of a new political coalition that would dominate
American politics for the next three decades.
- The coalition
consisted of urbanities; Southern and Western Democrats; diverse
religious and ethnic groups from the northern cities - Catholics, Jews,
Italians, Poles, Irish, Slavs; labor unions; and African Americans.
- Thereafter, the poor and the oppressed, as well as many middle class Americans
flocked to the Democratic Party - leaving the GOP in a minority position
supported by the wealthy and small-town and rule white Americans.
12. Historians remain divided about the New Deal's legacy.
Conservatives argue that the New Deal left a negative legacy - government
intervention undermined individualism and free enterprise and created an
expensive and overbearing government.
Liberals argue that New Deal promoted stable economic growth and contributed
to the overall health of American society.
- Leftists Revisionist historians like Howard Zinn argue that the New Deal legislation is an example of how "the
system responded to workers' rebellions by finding new forms of control
- internal control by their own organizations as well as outside control
by law and force." (Zinn, 393). He further argues that the New Deal did nothing to redistribute wealth and power in the
nation; it left capitalism intact with the rich still controlling
the nation's wealth, its laws, courts, police, newspapers, churches, and
colleges; and the New Deal missed important opportunities by failing
to combat racism or address economic inequalities. Roosevelt faced few political or
social constraints during the early years and could have made more significant
changes, but chose not too.
**US presidents have issued executive orders since 1789. Although there is no Constitutional provision or statute that explicitly permits executive orders, there is a vague grant of "executive power" given in Article II, Section 1, Clause 1 of the Constitution, and furthered by the declaration "take Care that the Laws be faithfully executed" made in Article II, Section 3, Clause 4. Most Executive Orders use these Constitutional reasonings as the authorization allowing for their issuance to be justified as part of the President's sworn duties. To implement or execute the laws of the land, Presidents give direction and guidance to Executive Branch agencies and departments, often in the form of Executive Orders.
Executive Orders have been used by every chief executive since the time of George Washington. Most of these directives were unpublished and were only seen by the agencies involved. In the early 1900s, the State Department began numbering them; there are now over 13,000 numbered orders. Orders were retroactively numbered going back to 1862 when President Lincoln suspended the writ of habeas corpus and issued the Emancipation Proclamation by Executive Order. There are also many other Executive Orders that have not been numbered because they have been lost due to bad record-keeping. Such is not the problem today. All Executive Orders passed from President Herbert Hoover to today are easily accessible.