The New Deal
Wolran Kim (Nov 2010)
The Great Depression was an unprecedented economic disaster. After the Treaty of Versailles in 1919, the swelled industry from World War I, adjusted to domestic demand and Roaring 20s was inaugurated. America has experienced a boom in the 1920s, but a financial crisis came from plunged stocks due to excessive credit and excessive speculation. The quarter of workers unemployed; the business was declared bankrupt; people lost their homes and farms; a million banks went bankrupt in 5 years; the New York stock plunged 75 percent in 4 years; 60 percent of farm income has fallen. The Great Depression had a major impact on many countries who cooperated economically with U.S. as well as America. This country agreed to catastrophe, but they did not agreed how to overcome the impasse. Herbert Hoover and Franklin Roosevelt had two sharply contrasting views in the depression of the crisis.
Hoover was the most concerned that the change in the New Deal of the Democratic Party would destroy America's own systems politically, economically, and socially. The problem was not confrontation between two individuals or political parties but two philosophies of government. He was stressed that a unique system over 150 years might be destroyed because of the solution to overcome the dangerous situation of the past 3 years. A legislative sanction was needed to block an innovative proposal from the Democratic Party. American society had achieved a remarkable growth of industry which could not be found in any other country, and inheritance of those fruits to our children is also our responsibility. Democratic defections came from the individualism of Europe and Unions, and those did not fit into the American tradition and will. The aftermath of World War Ⅰ caused the economic crisis, and the inability of the government for bankruptcy, no credit, and unemployment would not be healed, just worsened by that. Only the American free enterprise system only could overcome this crisis.
The New Deal could not be executed without infringing on individual liberties and the principles of the American system. Increasing 87% of the government spending meant sixteen days' additional work for every citizen for the government. In addition, the monetary policy was not realistic, and a law to extend the government into personal banking business would destroy the whole American system. It was not liberalism; it was degeneration. It was tyranny over state and local governments, and undermined state and local responsibilities and initiative if the government goes into the power business. Job creation through public projects is impossible by examining the cost. The Democrats said that this is the time to manage our achievements more than the development of industry. But this is speech of abandonment which means degeneracy not development of the America's future.
In fact, Hoover did not show any clear solution. The market system has self control adjustment, so just be patient. The Democratic Party's unprecedented proposal meant a great expansion of the federal government and the growth of bureaucracy. This innovative defection would shake the base of U.S. economy, society, politics, and also would infringe upon civil liberties. Wrong policies would destroy the law and the rights of society, and the person is wrong who performs the wrong policy, not institutions. Thus, the concept of Hoover is the prosperity and stability of the ordinary people and their families, not a wealthy minority. It is achievement of the society which guarantees the equality of opportunity, a fair society, society which takes its own way. And all of these systems must be made from the experience of United State’s history, and also it has to be based on a growth facto of this country.
Roosevelt sent a message of hope of prosperity and alternatives for facing the problems regarding depression in his inaugural address on March 4. 1933. Prior to the crisis, the most realistic thing to be feared is 'fear' itself which paralyzed will, not the object of fear. There was a lot lost, but there was still a lot more to be thankful for. Happiness is pleasure that comes from creative endeavors and the joy of achievement rather than the mere accumulation of wealth. The noble values of American society could be restored when we again found the ancient truth of fighting against illegal trading and speculation.
In reality, we were faced with unemployment as the biggest problem, and this would be solved with wise decisions and courage. Urgent response was required at that time and direct intervention of government was inevitable. We needed remediation of size and distribution of industry, adjustment of agricultural value, readjustment of productivity and purchasing, curtailment of the government expenses, and reduction of uneconomic and inequitable public business.
For business recovery, we must emerge from the wrong way and a bad system, and strict government intervention was inevitably the process of banks, credit, investment, and all transactions. A special session would be requested to new parliament for execute all of these proposals, and some states would be asked for help. A department would be established which could respond sensitively to the international economy to meet the trade balance, and it was not simple because they were in a close relationship with various elements in the United States. All the policies would run on their own tradition of pioneering spirit, and the government would have pursuant power as emergency. But the constitutional law which is the greatest of modern political organization would not be destroyed, and the constitutional fundamentals would maintain a balance between the executive and legislative authority. Temporary legislation which violated the normal balance of public policy may be required but it was inevitable to deal with the economic crisis. In conclusion, Roosevelt promised to do his best to overcome this adversity, and emphasized necessity of the government's intervention and control.
According to Powell, Senior Fellow at a libertarian think tank, and the Cato Institute in Washington, DC, the New Deal was a failure. He argues that FDR was the culprit who made the economic crisis worse because his deal did not work based on many economists' research findings. The New Deal far overvalued and negative studies were ignored until 1999. The famous achievement of FDR's first 100 days was assessed in erroneous view, and it was proved as a foolish policy which prolonged the Great Depression based on various economic indices. There was no effect and it was not an economic recovery program. The unemployment rate was 17.2% for the New Deal era (14% in 1930), peak for per capita output of 1937 was lower than 1929. The changes in monetary policy were a mistake of the government not the failure of the market economy. The NLRA (1935) increased the unemployment rate 8 points compared to 1940, and an antitrust crusade against big employers had a total lack of tangible results. Enterprise Monopoly was revealed as merely an illusion, and the filling antitrust lawsuits was not just against single companies, but entire industries which collapse as a result.
He drove employers to become economic dictators who were hungry for power, and reduced the United States to a harsh country which did not guarantee investment. Federal taxes as a percentage of the GNP jumped from 3.5% (1933) to 6.9% (1940), and the tax burden on the populace was increased as a Social Security payroll tax and liquor taxes. Economic growth was slowed down from tightening of employers. Anti business tax laws negatively impacted employment, and unstable and uncertain tax policy made the market economy worse. Securities Act and financial, legal trials created enormous time and cost. An inefficient capital was worse than the previously established SEC (Securities and Exchange), gold prices rose, and the social welfare ignored the poor. The NLRA (1935) only contributed to layoffs and unemployment, and 26.3% of the American banks went bankrupt in 1930~33, while a single bank was not bankrupt with permission of nationwide branch banking during the Great Depression in Canada. Centralized power at the Fed exerted an evil influence throughout the United States, and GNP fell by 18%, and the industrial production fell by 28%. African Americans were the biggest victims of the New Deal, and National Recovery administration's minimum wage codes took away jobs from 500,000 inexperienced Black workers. FDR spent 60% of the funds for the West to acquire politic rights instead the South which had votes already. According to Powell, the New Deal just prolonged the Great Depression.
According to Professor Brinkley, FDR who took office as president in these difficult economic times has recovered with the New Deal from unemployment of quarter of the workforce. In his inaugural address, he breathed out hope and the spirit of overcoming to starving people saying we should be afraid of nothing except fear itself. WPA, CCC, TVA, NRA, FSA, AAA, etc. were commendable government tools which realized a society of justice as treatment for the Great Depression. He showed his strong will that could overcome the economic crisis regardless of becoming the focus of criticism such as 'boondoggles'. His wife, Eleanor Roosevelt, also participated in various social welfare programs as one of the best his new dealers. He revived the dying U.S. labor movement, and 20 million (one-sixth of citizens) received benefits of public projects in 1934. The WPA (the Works Progress Administration) had to bail out unemployed, and establishment of the AAA (the Agricultural Adjustment Administration) adjusted supply and demand of agricultural products. The CCC (Civilian Conservation Corps) provided jobs for 2.9 million young people in 9 years and also educated them about protection of nature and resources. CIO (Congress of Industrial Organizations) created new labor-management relations, and the SSA (Social Security Act) which is rated the highest of New Deal, to ensure the first welfare programs such as unemployment benefits, health insurance, and public assistance. The New Deal could not completely draw out the United States from the Great Depression, but FDR's aggressive policies sure lifted the tune from the economic downturn.
Jim Powell showed all the blunders and mistakes of the New Deal and focused on a negative light, and professor Brinkley gave attention to the positive perspective on the successful results. According to Powell, the AAAs reduced farm acreage and gave millions of dollars to big farmers, but the 600,000 black sharecroppers got nothing. Income inequality was exacerbated as the landowners’ incomes increased and the incomes of the much larger group of tenants, croppers and workers declined according to 2001 National Bureau of Economic Research study. The 1935 National Labor Relations Act contributed to layoffs by giving imprimatur to labor union monopolies, violent strikes, and surging wage rates in mass production industries. Over the course of three months in 1937-38, General Motors dismissed a quarter of its employees, and overall U.S. car production dropped almost 50 percent. The economists estimated that by 1940 unemployment was eight points higher than it would have been in the absence of higher payroll costs imposed by New Deal policies. According to Brinkley, AAAs rescued even more farms by paying farmers not to produce crops over certain quotas, and these quotas made angry response from the public. But three years after its creation, America's farmers were better off than before by half. It worked. About NLRA, FDR managed to turn even this labor unrest to the good of his troubled nation, and created new labor-relation boards to mediate between industries and workers.
When taking a picture, some people take the side of the sun reflected and some take the shade in the background. The results from history could not simply decide in black and white; advantages and disadvantages co-exist everywhere. It should be objective and neutral rather than focus on divisive trade-offs. Was New Deal successful policy? This question is still controversial even after 70 years. The New Deal was a revolution which changed the paradigm of society in economic crisis of the Great Depression. According to U.S. survey, FDR has an excellent record; he got 1st place in leadership and political ability, 2nd in accomplishments, crisis management, and personnel policy, and 15th in morality, among 31 presidents until his term. He is the most recognized president, four times elected in history as President, and must be a truly remarkable man who had been in the position of president 15 years while paraplegic at the age of 39. I realized again that United States is indeed a country with great potential while watching professor Brinkley's video. The Social Security card which I have now is exactly the same without a bit of difference from 1935. It was amazing that a historical product never changed with compromising through changing of regime and era. It would have changed the color or shape of that little card of the Social Security Act.
I do not consider FDR as the ringleader who prolonged the Great Depression. He worsened the economic crisis in a negative light by Powell, and he has left the great historic value in a positive view of Brinkley. Even if it is ignorant to assess political and economic history with an emotional yardstick, I would think where is the President who wants to ruin the country? I think the New Deal left big thick traces in history with economic measures.
Wolran Kim (Nov 2010)
The Great Depression was an unprecedented economic disaster. After the Treaty of Versailles in 1919, the swelled industry from World War I, adjusted to domestic demand and Roaring 20s was inaugurated. America has experienced a boom in the 1920s, but a financial crisis came from plunged stocks due to excessive credit and excessive speculation. The quarter of workers unemployed; the business was declared bankrupt; people lost their homes and farms; a million banks went bankrupt in 5 years; the New York stock plunged 75 percent in 4 years; 60 percent of farm income has fallen. The Great Depression had a major impact on many countries who cooperated economically with U.S. as well as America. This country agreed to catastrophe, but they did not agreed how to overcome the impasse. Herbert Hoover and Franklin Roosevelt had two sharply contrasting views in the depression of the crisis.
Hoover was the most concerned that the change in the New Deal of the Democratic Party would destroy America's own systems politically, economically, and socially. The problem was not confrontation between two individuals or political parties but two philosophies of government. He was stressed that a unique system over 150 years might be destroyed because of the solution to overcome the dangerous situation of the past 3 years. A legislative sanction was needed to block an innovative proposal from the Democratic Party. American society had achieved a remarkable growth of industry which could not be found in any other country, and inheritance of those fruits to our children is also our responsibility. Democratic defections came from the individualism of Europe and Unions, and those did not fit into the American tradition and will. The aftermath of World War Ⅰ caused the economic crisis, and the inability of the government for bankruptcy, no credit, and unemployment would not be healed, just worsened by that. Only the American free enterprise system only could overcome this crisis.
The New Deal could not be executed without infringing on individual liberties and the principles of the American system. Increasing 87% of the government spending meant sixteen days' additional work for every citizen for the government. In addition, the monetary policy was not realistic, and a law to extend the government into personal banking business would destroy the whole American system. It was not liberalism; it was degeneration. It was tyranny over state and local governments, and undermined state and local responsibilities and initiative if the government goes into the power business. Job creation through public projects is impossible by examining the cost. The Democrats said that this is the time to manage our achievements more than the development of industry. But this is speech of abandonment which means degeneracy not development of the America's future.
In fact, Hoover did not show any clear solution. The market system has self control adjustment, so just be patient. The Democratic Party's unprecedented proposal meant a great expansion of the federal government and the growth of bureaucracy. This innovative defection would shake the base of U.S. economy, society, politics, and also would infringe upon civil liberties. Wrong policies would destroy the law and the rights of society, and the person is wrong who performs the wrong policy, not institutions. Thus, the concept of Hoover is the prosperity and stability of the ordinary people and their families, not a wealthy minority. It is achievement of the society which guarantees the equality of opportunity, a fair society, society which takes its own way. And all of these systems must be made from the experience of United State’s history, and also it has to be based on a growth facto of this country.
Roosevelt sent a message of hope of prosperity and alternatives for facing the problems regarding depression in his inaugural address on March 4. 1933. Prior to the crisis, the most realistic thing to be feared is 'fear' itself which paralyzed will, not the object of fear. There was a lot lost, but there was still a lot more to be thankful for. Happiness is pleasure that comes from creative endeavors and the joy of achievement rather than the mere accumulation of wealth. The noble values of American society could be restored when we again found the ancient truth of fighting against illegal trading and speculation.
In reality, we were faced with unemployment as the biggest problem, and this would be solved with wise decisions and courage. Urgent response was required at that time and direct intervention of government was inevitable. We needed remediation of size and distribution of industry, adjustment of agricultural value, readjustment of productivity and purchasing, curtailment of the government expenses, and reduction of uneconomic and inequitable public business.
For business recovery, we must emerge from the wrong way and a bad system, and strict government intervention was inevitably the process of banks, credit, investment, and all transactions. A special session would be requested to new parliament for execute all of these proposals, and some states would be asked for help. A department would be established which could respond sensitively to the international economy to meet the trade balance, and it was not simple because they were in a close relationship with various elements in the United States. All the policies would run on their own tradition of pioneering spirit, and the government would have pursuant power as emergency. But the constitutional law which is the greatest of modern political organization would not be destroyed, and the constitutional fundamentals would maintain a balance between the executive and legislative authority. Temporary legislation which violated the normal balance of public policy may be required but it was inevitable to deal with the economic crisis. In conclusion, Roosevelt promised to do his best to overcome this adversity, and emphasized necessity of the government's intervention and control.
According to Powell, Senior Fellow at a libertarian think tank, and the Cato Institute in Washington, DC, the New Deal was a failure. He argues that FDR was the culprit who made the economic crisis worse because his deal did not work based on many economists' research findings. The New Deal far overvalued and negative studies were ignored until 1999. The famous achievement of FDR's first 100 days was assessed in erroneous view, and it was proved as a foolish policy which prolonged the Great Depression based on various economic indices. There was no effect and it was not an economic recovery program. The unemployment rate was 17.2% for the New Deal era (14% in 1930), peak for per capita output of 1937 was lower than 1929. The changes in monetary policy were a mistake of the government not the failure of the market economy. The NLRA (1935) increased the unemployment rate 8 points compared to 1940, and an antitrust crusade against big employers had a total lack of tangible results. Enterprise Monopoly was revealed as merely an illusion, and the filling antitrust lawsuits was not just against single companies, but entire industries which collapse as a result.
He drove employers to become economic dictators who were hungry for power, and reduced the United States to a harsh country which did not guarantee investment. Federal taxes as a percentage of the GNP jumped from 3.5% (1933) to 6.9% (1940), and the tax burden on the populace was increased as a Social Security payroll tax and liquor taxes. Economic growth was slowed down from tightening of employers. Anti business tax laws negatively impacted employment, and unstable and uncertain tax policy made the market economy worse. Securities Act and financial, legal trials created enormous time and cost. An inefficient capital was worse than the previously established SEC (Securities and Exchange), gold prices rose, and the social welfare ignored the poor. The NLRA (1935) only contributed to layoffs and unemployment, and 26.3% of the American banks went bankrupt in 1930~33, while a single bank was not bankrupt with permission of nationwide branch banking during the Great Depression in Canada. Centralized power at the Fed exerted an evil influence throughout the United States, and GNP fell by 18%, and the industrial production fell by 28%. African Americans were the biggest victims of the New Deal, and National Recovery administration's minimum wage codes took away jobs from 500,000 inexperienced Black workers. FDR spent 60% of the funds for the West to acquire politic rights instead the South which had votes already. According to Powell, the New Deal just prolonged the Great Depression.
According to Professor Brinkley, FDR who took office as president in these difficult economic times has recovered with the New Deal from unemployment of quarter of the workforce. In his inaugural address, he breathed out hope and the spirit of overcoming to starving people saying we should be afraid of nothing except fear itself. WPA, CCC, TVA, NRA, FSA, AAA, etc. were commendable government tools which realized a society of justice as treatment for the Great Depression. He showed his strong will that could overcome the economic crisis regardless of becoming the focus of criticism such as 'boondoggles'. His wife, Eleanor Roosevelt, also participated in various social welfare programs as one of the best his new dealers. He revived the dying U.S. labor movement, and 20 million (one-sixth of citizens) received benefits of public projects in 1934. The WPA (the Works Progress Administration) had to bail out unemployed, and establishment of the AAA (the Agricultural Adjustment Administration) adjusted supply and demand of agricultural products. The CCC (Civilian Conservation Corps) provided jobs for 2.9 million young people in 9 years and also educated them about protection of nature and resources. CIO (Congress of Industrial Organizations) created new labor-management relations, and the SSA (Social Security Act) which is rated the highest of New Deal, to ensure the first welfare programs such as unemployment benefits, health insurance, and public assistance. The New Deal could not completely draw out the United States from the Great Depression, but FDR's aggressive policies sure lifted the tune from the economic downturn.
Jim Powell showed all the blunders and mistakes of the New Deal and focused on a negative light, and professor Brinkley gave attention to the positive perspective on the successful results. According to Powell, the AAAs reduced farm acreage and gave millions of dollars to big farmers, but the 600,000 black sharecroppers got nothing. Income inequality was exacerbated as the landowners’ incomes increased and the incomes of the much larger group of tenants, croppers and workers declined according to 2001 National Bureau of Economic Research study. The 1935 National Labor Relations Act contributed to layoffs by giving imprimatur to labor union monopolies, violent strikes, and surging wage rates in mass production industries. Over the course of three months in 1937-38, General Motors dismissed a quarter of its employees, and overall U.S. car production dropped almost 50 percent. The economists estimated that by 1940 unemployment was eight points higher than it would have been in the absence of higher payroll costs imposed by New Deal policies. According to Brinkley, AAAs rescued even more farms by paying farmers not to produce crops over certain quotas, and these quotas made angry response from the public. But three years after its creation, America's farmers were better off than before by half. It worked. About NLRA, FDR managed to turn even this labor unrest to the good of his troubled nation, and created new labor-relation boards to mediate between industries and workers.
When taking a picture, some people take the side of the sun reflected and some take the shade in the background. The results from history could not simply decide in black and white; advantages and disadvantages co-exist everywhere. It should be objective and neutral rather than focus on divisive trade-offs. Was New Deal successful policy? This question is still controversial even after 70 years. The New Deal was a revolution which changed the paradigm of society in economic crisis of the Great Depression. According to U.S. survey, FDR has an excellent record; he got 1st place in leadership and political ability, 2nd in accomplishments, crisis management, and personnel policy, and 15th in morality, among 31 presidents until his term. He is the most recognized president, four times elected in history as President, and must be a truly remarkable man who had been in the position of president 15 years while paraplegic at the age of 39. I realized again that United States is indeed a country with great potential while watching professor Brinkley's video. The Social Security card which I have now is exactly the same without a bit of difference from 1935. It was amazing that a historical product never changed with compromising through changing of regime and era. It would have changed the color or shape of that little card of the Social Security Act.
I do not consider FDR as the ringleader who prolonged the Great Depression. He worsened the economic crisis in a negative light by Powell, and he has left the great historic value in a positive view of Brinkley. Even if it is ignorant to assess political and economic history with an emotional yardstick, I would think where is the President who wants to ruin the country? I think the New Deal left big thick traces in history with economic measures.