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New Deal
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The New Deal was the name coined by President Franklin D. Roosevelt, a Democrat, for the socialistic programs he conducted throughout the Great Depression. This program had three aspects: relief, recovery and reform. It sought to provide immediate relief for the millions of unemployed. Roosevelt believed the New Deal would aid in recovery and reform in hopes of ending the Great Depression.
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Economic planning
As the Depression set in, terms like “planned economy” and “national planning” became the watchwords of the day. [1] They had been used by theoriticians for years and popularized by best-selling writers like George Soule and Stuart Chase, who lauded the Soviet Gosplan (central planning), asking plaintively, “Why should the Russians have all the fun of remaking a world?” The most prominent of the Brain Trusters and the man often considered the chief ideologist of the “first New Deal” (roughly, 1933–34), was Rexford Guy Tugwell. Tugwell was a follower of the school of thought known as Institutional Economics, founded by the eccentric writer on economics, Thorstein Veblen. His official position was assistant secretary of agriculture, that is, second in command to Henry A. Wallace, but his influence extended far beyond that. In 1927, Tugwell traveled to the Soviet Union and observed through scientific economic planning the Soviets were able to “carry out their industrial operations with a completely thought-out program.” “The future,” he announced, “is becoming visible in Russia.” Tugwell scorned the free market as anarchical, an uncoordinated muddle of hopelessly conflicting aims and purposes. It would have to be replaced by national planning, or technocracy, another shibboleth of the day, implying rule by the technical experts and managers, [2] like himself.
The National Recovery Act (NRA) and the Agricultural Adjustment Administration (AAA) were plans to take the whole industrial and agricultural life of the country under the wing of the government, organize it into vast farm and industrial cartels, as they were called in Germany, corporatives as they were called in Italy, and operate business and the farms under plans made and carried out under the supervision of government. This is the complete negation of liberalism. It is, in fact, the essence of fascism. Fascism goes one step further and insists this cannot be done by a democratic government; that it can be done successfully only under a totalitarian regime. At the time fascism was not defined as anti-Semitism. It was a word used to describe the political system of Italian Premier Benito Mussolini. Roosevelt adopted the Italian model merely because at the moment it seemed politically expedient.
100 Days
Roosevelt gathered around himself a Brain Trust, supposedly made up of the "best and the brightest" minds.
Shortly after his election FDR forced the Congress to scrap minimum wage and maximum hour legislation which the Senate had already passed. [3]
In May 1933, the Thomas Amendment to the Agricultural Adjustment Act (AAA) was passed, giving the president the authority to increase the money supply by $3 billion in unbacked bills and to reduce the value of the gold dollar by up to half. In June, a supine Congress delivered to FDR the joint resolution he had requested, forbidding private debtors to fulfill their obligations in gold and relieving the government of its own sworn obligations. [4]
National Recovery Act
The NRA Act provided an appropriation of $3,300,000,000 which the President was given to be spent at his own discretion. He had a sum of money equal to what the government spent in the prvious ten years outside of discretionary spending. Roosevelt decided how it should be spent and where. If a congressman or senator needed an appropriation for his district, instead of introducing a bill in Congress, he went to Roosevelt to ask for it. All over the country, states, cities, counties, business organizations, institutions of all sorts wanted projects of all kinds. Instead of going to Congress they went to the President.
Roosevelt asked Clarence Darrow to head up a national recovery review board. The Darrow Committee's report stated, "We have here a body not only perfectly equipped to exercise monopolistic control, but endowed with extraordinary powers incompatible with the ideals heretofore entertained in a free country. . . In proportion as the authority of government sanctions regulation by industrial combinations, the inevitable tendency is toward monopoly with the elimination of the small business ." [5]
In the twenty-three months that NRA was on the Statute books, the average number of workers involved in strikes and lockouts and the number of days of idleness and lost productivity per month resulting were approximately four times as large as during the six months before NRA. After NRA was declared unconstitutional, both the number of workers involved in industrial disputes and the number of days lost declined.[6]
Donald Richberg, former Counsel and later Administrator of NRA admitted candidly, "Yet step by step through the diabolical logic of events the NRA became the apparent exponent and protector of 'price fixing' - that hateful objective of that most hated ogre, a big business monopoly."[7]
This blank check legislation led to the subservience of Congress and the rise of bureaucracy. Under the Constitution, Congress alone can write laws. The executive branch only enforces the law. But Congress now began to pass laws that created large bureaus empowered to make regulations or directives with a wide range of authority. Under these laws the executive bureau became a quasi-legislative body authorized by Congress to make regulations which had the effect of law. This practice grew until Washington was filled with a vast array of bureaus that were making laws, enforcing them and actually interpreting them through administrative law courts set up within the bureaus, abolishing on a large scale the separation of powers between executive, legislative and judicial processes.
Civilian Conservation Corps
The inner affinities of the New Deal with the continental dictatorships is well illustrated by one of the first measures passed during FDR’s first Hundred Days and was a program that was one of FDR’s favorites, the Civilian Conservation Corps (CCC).
Young men were enrolled as amateur forest rangers, marsh-drainers, and the like, on projects designed to improve the countryside. The recruits were given room and board, clothing, and a dollar a day. More than two and half million of them passed through the camps of the Civilian Conservation Corps, until the program was abolished in 1942, when the men were needed for the draft.
Declining exports
From 1932 to 1935 the volume of imports of crude foodstuffs increased 41% and of manufactured foodstuffs 49%. The volume of Agricultural exports from the United States declined. [8]
The following table gives the volume of imports in 1932 and 1935 for important agricultural products.
| Agricultural Imports | Before Roosevelt | 3 years into 'relief' efforts |
| Commodity | 1932 | 1935 |
|---|---|---|
| Wheat | 3,000 bu. | 27,439,000 bu. |
| Corn | 344,000 bu. | 43,242,000 bu. |
| Oats | 59,000 bu. | 10,107,000 bu. |
| Barley | None | 4,840,000 bu. |
| Rye | None | 9,643,000 bu. |
| Rice | 19,074,000 lb. | 53,457,000 lb. |
| Barley malt | 52,533,000 lb. | 320,6 23,000 lb. |
| Hay | 13,858 tons | 67,171 tons |
The quantities of individual commodities exported declined as follows:
| Agricultural Exports | Declines 3 years into |
| Commodity | New Dealism |
|---|---|
| Cotton | 33% |
| Unmanufactured tobacco | 4% |
| Wheat | 99% |
| Flour | 491% |
| Meat products | 19% |
| Lard | 82% |
In the summer of 1933 New Dealers paid farmers under the Agricultural Adjustment Act (AAA) to plow up 10,500,000 acres of growing cotton, or 25% of the total acreage. The Bankhead cotton Act of 1934 set a limit OF 10,000,000 bales of cotton to be marketed by farmers from the 1934 - 1935 crop.
In the fall of 1933, the AAA destroyed 6,200,000 pigs and 220,000 mother sows were slaughtered in the AAA's effort to raise prices at a cost of over $30,000,000. The total live weight of the pigs and sows slaughtered was 443,69.7,348 pounds. Of this only 97,064,159 pounds of food products were obtained-the rest was converted into inedible grease or fertilizer.
Unemployment
Unemployment increased 163% over the average of what it had been in 1930 by the third year of the New Deal. By contrast, recovery was well underway in Great Britain, with an increase of only 1.1%.
| United States | Great Britain | |
|---|---|---|
| Unemployment (1930 average) | 4,770,000 | 1,993,951 |
| Unemployment February 1936 | 12,550,000 | 2,016,578 |
| Percent increase | 163 % [9] | 1.1% [10] |
Crash of 1937
By 1937, the Government's own statistics were showing that 23.8% of the Workforce was either unemployed, or underemployed. The term for the human suffering at the hands of government planners was "wastage." According to the Brain Trusters own statistics, of "100 Per Cent Manpower," 23.8 were "Per Cent Wastage." [11] After four years of "government solutions," contemporaneous reports were stating "much of the unemployment in 1937 was due to a decrease in the number of jobs available." [12]
The 1937 - 1943 Depression was longer in duration than the 1929 - 1932 crash, the result of massive government intrusion into the private economy which stunted growth. Manufacturing demand stimulated by WWII led to the 1943-1949 recovery, where finally, in 1949, the New York Stock Exchange recovered to the level it had been at 1929.
Many New Deal reforms were unpopular and criticized. In 1948 President Harry Truman ran on a reformed New Deal platform called the Fair Deal, which was regarded largely as an admission the New Deal had not been fair.
References
- ↑ FDR: The Man, the Leader, the Legacy, Ralph Raico, Future of Freedom Foundation, April 1, 2001. Retreived from The Independent Institute.org 06/17/07.
- ↑ The Managerial Revolution, James Burnham, Indiana University Press, Bloomingham 1966.
- ↑ The Roosevelt Myth], John T. Flynn, Fox and Wilkes, 1948, Book 2, Ch. 3., The Forgotten Deprssion.
- ↑ The New Ordeal, Freeman Tilden, The North American Review, v. 239, February 1935, p. 131-7.
- ↑ Special and Supplementary Reports of Darrow Committee, appointed by the President, released May 20, 1934. [1]
- ↑ Bureau of Labor Statistics, United States Department of Labor.
- ↑ Donald R. Richberg, The Rainbow, Garden City : Doubleday, Doran and Company, 1936, pg. 31.
- ↑ Publications of United States Department of Commerce.
- ↑ American Federation of Labor.
- ↑ League of Natione, Bulletin of Statistics.
- ↑ Population and the Pattern of Unemployment, 1930-1937, Rupert B. Vance and Nadia Danilevski, The Milbank Memorial Fund Quarterly, Vol. 18, No. 1. (Jan., 1940), pp. 27-43.
- ↑ Population and the Pattern of Unemployment, 1930-1937, Vance and Danilevski.
