Almost daily there are headlines, numbers and analysis being thrown at FDR’s New Deal. Obama Gives Us the Same Old New Deal. And, How Government Prolonged the Depression. Or, Stimulus: Can it work like Roosevelt’s New Deal? And Roosevelt’s ‘New Deal’ Resurfaces in US Economic Stimulus Debate. But all of these discussions seem to overlook the actual living and breathing people who were impacted by FDR’s New Deal and the very real ways these programs impacted and changed their lives. Ways that are not easily translated into numbers for others to analyzed.
Eighty years ago, the daily life of the average citizen was very different then our lives are today. And yet many of the financial and economic challenges they faced then seem eerily familiar. Does that mean we are headed for a Great Depression? Or that we need another New Deal? I don’t know. I am not an economist and I don’t want to play one on this blog. But I would like to present some additional numbers and words for everyone to consider in the discussion of what worked and didn’t work.
Most historians mark the start of The Great Depression as, Black Tuesday, October 29,1929. Franklin D. Roosevelt was inaugurated March 4,1933. From 1929 to 1933, the unemployment rate went from 4% to 25%. In addition, in 1933, the underemployment (lower wages and hours) rate was 25%. Which meant, nearly 50% of U.S. households in 1933 were directly experiencing unemployment or underemployment.
The Depression’s Impact in Dollar Terms
The Depression’s Impact on the Economy 1929 — 1933 Banks in operation 25,568 – 14,771
Prime interest rate 5.03% – 0.63%
Privately earned income $45.5 B – $23.9 B
Personal and corporate savings $15.3 B – $2.3 B
Volume of stocks sold (NYSE) 1.1 B – 0.65 B
Value of Shares (NYSE) $89.0 B – $19.0 B
Historical Statistics of the United States, pp. 235, 263, 1001, and 1007.(h/t K. Wilkisons)
The Depression’s Impact on people:
Consumer Spending 1929 — 1933 Food $19.5 B — $11.5 B
Housing $11.5 B — $7.5 B
Clothing $11.2 B — $5.4 B
Automobiles $2.6 B — $0.8 B
Medical Care $2.9 B — $1.9 B
Philanthropy $1.2 — $0.8 B
Historical Statistics of the United States, pp. 319 .(h/t K. Wilkisons)
So what did it all mean to the American people who lived with those numbers everyday? What did average Americans think about the New Deal, The Great Depression, and FDR back when it really mattered whether the New Deal worked or not?
The Depression’s Impact on Lives
Well, thanks to a Work Projects Administration (WPA) New Deal program – called the Federal Writers’ Project I was able to find the actual words and stories of American citizens during that time. So I’ll let these Americans speak for themselves. (Interviews are condensed, full length versions can be found at American Life Histories: Manuscripts from the Federal Writers’ Project, 1936-1940.)
Letter to President Roosevelt
Mr. Emanuel Verschleiser – December 20, 1938
WPA Workers, MA, 1937
To Our Illustrious President: Our Holy Books say: A poor man is like a dead man. You came and resurrected the poor man from the dead. You came and said: ‘Wake up, forgotten man. I will give you new life. I will give you a new deal.’ Like the prophet, Nathan, who said to King David: You have so many sheep and yet you want to take the last sheep of the poor man; so you said to the rich, to the Wall St. bankers: Leave the poor man his last sheep. Let him also live. All the rich men hate you for that. They know that you brought new hope to the poor plain man. They know that never again will the old times come back. May I end respectfully that your name, our illustrious President, will live forever.
(Mr. Verschleiser of New York, NY was “over 70” years of age, a retired Jewish farmer and former candy shop owner.)
July 25, 1939
One reason people here don’t like WPA is because they don’t understand it’s not all bums and drunks and aliens! Nobody ever explains to them that they’d never have had the new High School they’re so goddam proud of … that new brick sidewalks … the shade trees … all around town, if it weren’t for WPA projects… They don’t stop to consider that on WPA are men and women who have traveled places and seen things, been educated and found their jobs folded up and nothing to replace them with. How you going to call Doc Crowley, for instance, a bum? Practiced a dentist, – and now his eyes are going bad, – think he’s not damn grateful for WPA? How about these college fellows, – some of ‘em on here with me,- M.I.T. graduates, – U. of Alabama – Dartmouth – Yale plenty of them can’t get work, and why?…
I used to figure everything was right with the world, – you don’t think so much about injustices and inequalities, all the things that oughtn’t to be, when everything’s going rosy with you, know it? It’s only when you get like this, – plugging on WPA never knowin when the axe will fall, – finding but how little people think of your abilities because you’re stuck on WPA – then you begin to read about things, and find that all over everywhere, – there’s two kinds of people, the kind on top, – and the rest, some of whom are trying to get on top, most of whom are just riding along, trying not to think about things any more than they can help…
…you can’t even register in Boston anymore for work, they’ll just look at you as if you were nuts or something! “Why,” they’ll say, “we can fill jobs for ten years just from the people living right here. Go back where you came from. If you can’t find work there, there’s certainly nothing here for you!” So it goes! You know, for a long time I didn’t dare tell mother I was even on the WPA! Then, of course, when the checks came to the house in the mail, the jig was up! She felt terribly about it all, but what could we do? …
One thing I will say, – to you! When the city hasn’t got funds to finance Public Welfare, – and they start in squawking to the state, – and then when the state finds the burden’s more than they can swing, – you’ll see how long it takes the old birds in Washington to realize it’s government help, or else – it’s only that it’s too bad to make all the guys go through what they’ve got to, first, in order to convince Congress we’re not just throwing a lot of heffer-dust about ourselves, right?
(Mr. Buxton of Newburyport, MA was single, 36 year old man with the care of his mother. He was employed as a WPA Draftsman and Asst. Engineer.)
The More Modest Among Us
Mr. Alex Samuels – December 15, 1939
I bought a home in Decatur. That was in 1920 and houses were at their highest price then. The place cost about $8,500 counting the improvements I put in. My wife was rather anxious to own a place. Personally, I never could see that it was cheeper to buy than to rent. . . I also bought a five-acre lot . . .
I returned to Atlanta in 1931 to try to sell my house. I had already sold the lot … what cost $2,500 for $500. No one was greatly interested in building even in 1928. In 1931 it was practically impossible to sell houses for money … I finally traded it for an abandoned farm. I had a $6,000 equity in the place but should have been glad to have sold it for $1,000. I moved to the farm with my collie dog in the fall of 1931…
I had over four hundred hens part of the time but that many hens can easily eat fifty or sixty dollars’ worth of feed in a month, and frequently make a return of fifteen or twenty dollars worth of eggs….there was no money to be made on worn-out farm … The farm was profitable only in one respect – it was a pleasant place to live. I sold it in 1937 and netted $500 on it. I may say that I received $500 on my house which had cost at least $6,000 above rent … came back to Atlanta to try for a job, but didn’t have the luck of finding one.
I don’t believe that any one thoroughly understands all of the causes of depressions . . . Certainly Presidents Coolidge and Hoover did not understand the subject, . . . they smilingly assured the American people that all was well with the world and the best of our coming prosperity was just around the corner. . .I sold the small amount of stock which I owned jointly with my mother before the 1929 break …
The depression was very possibly made during the years [1913?] to 1927 when most of us were spending more than we had really made. The sum of debts, if the estimates are at all correct, represented much too large a proportion of our total wealth, and they could only be carried by a continual advance in values…
… A concentration of wealth in the hands of a small proportion of our citizens cannot possibly be made consistent with general prosperity. Regardless of whether one believes that enormous fortunes are acquired by moral individuals or not… In the United States I believe that our past prosperity has been due to our more fair distribution of wealth among those who produced it rather than to the efforts of a few who have managed to control large enterprises.
The New Deal policies seem to me to be generally correct … However, I do not think we are going to see the 1929 levels reached rapidly. Too many people are now accustomed to live on a lower consuming level than they did in the 1920’s. Very few of these I know who are earning well during that period are now spending as freely as they did then. To reach that glorious but rather silly level of spending, we must probably wait until a new generation of spenders, arrives.
… The W. P. A. or some such arrangement is almost a necessity as long as our industrial organizations unable to properly employ people who are able to work. I believe that in time we will again adjust things, however, so that it will not be necessary. It scarcely would be beneficial to business employment or production to have the millions now depending on W. P. A. unable to buy at all…
The prospects of getting employment do not seem especially good, but there should be a pretty fair chance of starting a small business…
(Mr. Samuels of Atlanta, Georgia, 55 years of age, degrees in mathematics and physics. He taught physics at Georgia Tech and Cornell. From 1914-20, taught in the Philippines and traveled to Japan, China, and India. He became a WPA worker just 3 months prior to his December 1939 interview.)
So what is my take on FDR’s New Deal? Do I think it worked? Yes, because I think the it did what it needed to do for the American people. The New Deal gave us what we needed:
HOPE – for their future
FOCUS – beyond their daily existence
DIVERSION – from their anger and resentment
LIFELINE – in the face of total desperation
FAIRNESS – that the government was looking out for them
And here’s my hope – as everyone continues to debate our current economic situation, the whys and hows of the New Deal, and what any of this could mean for us now, that we not forget that there are very real and complex American lives at the center of all of this, and they are not easily reduced to numbers and simple formulas.
[This was also posted in March '09 at No Quarter]