1930s: 'New Deal' Starts to Fail, Just as Threats Grow Overseas
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THE MAKING OF A NATION – a program in Special English by the Voice of America.
By the middle 1930s, America seemed to be moving out of the worst economic depression in its history. Most people supported the "New Deal" policies of President Franklin Roosevelt.
The dark view that many Americans held during the final days of President Herbert Hoover's administration seemed to be changing. People began to believe that the United States was facing its problems with energy and hope.
The change could be seen in the way that Americans were moving away from extreme political movements of both the right and the left. Many decided that the best solution was to work through the existing political system.
Most importantly, Roosevelt's continued experiments with different programs showed Americans that they did not have to blindly follow political or economic traditions.
For years, most Americans had accepted the basic ideas of traditional free market capitalism. But as the depression began, a small number of Americans became interested in the economic ideas of Karl Marx.
Roosevelt believed it was best to travel a path between these two opposite ideas. He basically supported the free market system. But he believed government also had a right and responsibility to act when needed. And he supported new government controls in such important areas as banking, transportation, agriculture, and oil production.
Some Americans did not think it was wise, or even possible, to mix traditional free market capitalism with government intervention or socialism. Former Republican Treasury Secretary Ogden Mills put it this way:
"We can have a free country or a socialist one. We cannot have both. Our economic system cannot be half free and half socialistic. There is no middle ground between governing and being governed, between absolute rule and freedom.”
Many leftists and socialists agreed with conservatives that it was impossible to mix capitalism and socialism. One leftist publication wrote:
"Either the nation must live with the sadness of capitalism or it must prepare to replace capitalism with socialism. There is no longer a practical middle path."
However, Roosevelt and his New Dealers happily rejected these arguments. They aimed the country between rightist and leftist extremes and created a whole new set of rules for government, the economy, and democracy.
Most Americans supported Roosevelt and the Democrats as they experimented with new solutions to the problems of the depression. They elected Democrats to a large majority in Congress in 1934. Two years later, they re-elected Franklin Roosevelt to a second term in the White House by one of the largest victories in American history.
Roosevelt's big victory made him stronger than ever. So he decided to fight the part of the government that had been blocking many of his programs -- the Supreme Court.
Most of the nine judges on the Supreme Court in 1936 were conservative. They had ruled that many of Roosevelt's most important New Deal programs were illegal. Now the judges were preparing to decide the future of programs to help old people, labor unions, and others. And there was nothing the president could do under the American system of government.
So Roosevelt called for changes in the system. He asked Congress to reorganize the federal judicial system. And he asked for the power to add several new members to the Supreme Court. In this way, Roosevelt hoped to gain a new majority on the court that would support his views.
Most Americans liked Roosevelt. But people of all opinions feared that the president was trying to destroy the careful system of checks and balances in the federal government. They agreed with him in opposing the court's decisions. But they accepted the right of Supreme Court judges to rule as they thought correct. For this reason, the nation rejected Roosevelt's plan to add new members to the court.
Roosevelt's unsuccessful effort to change the Supreme Court came at the same time as the economy began to get worse.
Many Americans thought they had defeated the depression in 1935 and thirty-six. There was steady economic improvement. Some bankers had even begun to fear that the economy was growing too fast.
These bankers called on the nation's central bank -- the Federal Reserve Board -- to control the expanding money supply. And the Federal Reserve acted to limit the amount of money in use.
At the same time, the federal government began reducing the amount of money that it was spending. And it launched the new Social Security tax on workers' incomes.
The effect of all these government actions was to limit the amount of money being spent by the government, companies, and private citizens. As a result, the economy began to fall once again into depression.
In August 1937, stock market prices began to fall sharply.
In seven months, the price of stock for the General Motors Corporation fell from sixty dollars to twenty-five. The United States Steel Company stock fell all the way from one hundred twenty-one dollars to thirty-eight. In fact, the stock markets lost in nine months about two-thirds of all the gains that they had made so slowly and painfully since Roosevelt took office.
Americans had supported Roosevelt's New Deal program because it offered a solution to the depression. Now that program seemed to be failing.
Historian Frederick Lewis Allen remembered those dark days of 1937.
"Goods sold slowly," Allen wrote. ”Businessmen became frightened and reduced production. Two million men were thrown out of work in the space of a few months. They became less able to buy what was for sale. The terrible circle of the falling value of the dollar moved all the more rapidly.
The new economic crisis hurt Roosevelt's popularity. And it came at a time when he faced growing opposition within his own Democratic Party.
For several years, conservative Democrats from the southeastern part of the country had supported Roosevelt. They liked his leadership and the power that he brought to all Democrats. But they opposed many of his more liberal or experimental social policies.
As the economy and Roosevelt's popularity fell, many of these southern Democrats began to openly oppose his leadership. They voted with Republicans on important bills before Congress.
Roosevelt became very angry about the new opposition from within his own party. He began to intervene personally in Democratic Party primary elections in 1938. He told party members in several states that they should only vote for candidates who would support his New Deal policies.
Roosevelt's opponents accused him of interfering in local politics. And democratic voters agreed with these criticisms. In almost all cases, they rejected the candidates supported by the president. A few months later, voters in the general election gave the Republicans major gains in both the House of Representatives and Senate.
In most situations, such a change in support would have signaled the end of a president's power. If people will not follow, a president cannot lead or be elected.
But such was not the case for Roosevelt and the United States in the late 1930s. It was true that economic and political troubles were not solved. But another crisis was growing larger every day, making these other problems seem less and less important.
The crisis was in foreign policy. Adolf Hitler and his Nazi party in Germany seemed ready to make war on Europe. And Japanese forces appeared to be planning new aggression in the Pacific. Americans could no longer just worry about their problems at home. A dark cloud was forming outside their door.
That will be the subject of our next several programs.
You have been listening to THE MAKING OF A NATION, a program in Special English by the Voice of America. Your narrators have been Harry Monroe and Jack Weitzel. Our program was written by David Jarmul.