Donald Elder: Events in American History – Recovery from the Depression

Apr 25, 2016 by

An Interview with Professor Donald Elder: Events in American History – Recovery from the Depression

Michael F. Shaughnessy –

  1. Professor Elder, the Great Depression of 1929 was surely one of the worst events in American history. Further, there were a number of “events” that assisted in our recovery from the crash. Today, we shall examine some of these. First of all, can we start with FDR’s speech where he said “The only thing to fear is fear itself.” What was the context to that? And where did the line come from?

When Franklin D. Roosevelt won the presidential election in November of 1932, the nation faced an economic peril hitherto unseen in our history. Every sector of the economy had seen a catastrophic reversal: the vast majority of banks, for example, had ceased operations.

Unfortunately, the crisis only worsened at that time, because the constitutional provision regarding inaugurations meant that Roosevelt would not take office for nearly four months. During that waiting period, Roosevelt refused to go on record regarding what steps he would take to address the Great Depression, a silence that only added to a mounting sense of unease.

No one therefore knew what to expect when Roosevelt gave his inaugural address on March 4, 1933. Within moments of beginning his speech, however, Roosevelt began to give the American public a sense of optimism that had been noticeably lacking for the previous four years.

Indeed, almost immediately Roosevelt stated that “the only thing we have to fear is fear itself.” This phrase proved uplifting for the nation, and although the Great Depression would drag on for years, public confidence would never sink to the depths it had reached in the days leading up to Roosevelt’s inauguration. Interestingly, the most famous passage in Roosevelt’s speech did not appear in its initial iteration. Raymond Moley, one of Roosevelt’s most important advisors, wrote that first draft, and nowhere does a phrase about “fear” appear. Clearly, at some point Roosevelt added those words, but there is no agreement about how that came about. The most commonly accepted version regarding the addition involves Louis Howe, another of Roosevelt’s advisors. Shown a copy of the speech that Moley had written, Howe suggested inserting the famous phrase. Roosevelt made a slight modification, and then added the new sentence. However the phrase came into existence, it will remain one of Roosevelt’s most enduring legacies.

2. Now, there were a series of singular events, or laws, which facilitated the recovery. Let’s start with the CCC (Civilian Conservation Corps). Whose idea was this, and what was the essential thrust behind it?

Immediately on becoming president, Roosevelt began to call on Congress to enact laws and create programs that would help stimulate an economic recovery. As part of this agenda, on March 21, 1933, Roosevelt asked Congress to create a Civilian Conservation Corps. This program would hire young men to do work on federal lands, primarily those containing forests. Roosevelt had employed a similar strategy while serving as the governor of New York, and had found it an effective program for a number of reasons. First, it allowed him to do something directly about unemployment.

Virtually everyone hired by the CCC did not have a job, so this program helped individuals that had failed to find gainful employment through normal economic channels. During its nine-year run, the CCC employed over 3,000,000 young men, including African-Americans and Native-Americans.

Second, the CCC helped Roosevelt achieve the vision that he had for helping the American people witness the majestic scenery that existed in our national parks. Building and improving roads that lead to and wound their way through these parks gave tourists access to those locations in a manner hitherto unimaginable. Finally, it proved to be a remarkably prescient program. Starting in 1934, soil erosion and drought led to massive dust storms affecting large portions of the Great Plains region. A similar phenomenon struck the same area in 1936.

In response, Roosevelt ordered the CCC to plant trees to act as wind breaks. Before ending this program, the CCC planted well over 200,000,000 million trees throughout the West. For those reasons, most historians regard the CCC as having been an unqualified success.

3. Moving right along, the TVA (Tennessee Valley Authority) was another effort to help the U.S. recover. Was it specifically focused on the Tennessee Valley or that region of the country? And who was the mastermind behind it?

Two factors influenced the creation of the Tennessee Valley Authority. First, the areas that the Tennessee River ran through had seen devastating floods throughout American history. Individuals familiar with the situation suggested that a series of dams built on that river could help alleviate that threat.

Second, other individuals recognized that because the Tennessee River dropped precipitously along its route, it offered a number of locations where dams could generate hydroelectric power. When Roosevelt won the presidential election in 1932, one such federally-owned dam already existed at Muscle Shoals, Alabama. Although finished years before, however, this dam had never generated electricity. This stemmed from widespread conservative opposition to the federal government competing with private power companies.

George Norris, a senator from Nebraska, had long sought to utilize the dam’s hydroelectric potential, and in January of 1933 he invited Roosevelt to visit Muscle Shoals. When he arrived, Roosevelt noticed that virtually none of the buildings along banks of the Tennessee River had electric lighting. This seems to have motivated Roosevelt to develop a plan to build a series of dams along the river to provide inexpensive electricity to the inhabitants of the region. This resulted in him asking Congress to pass the Tennessee Valley Authority Act, which that legislative body did in May of 1933. This act helped transform one of the poorest areas in the country into an economically vibrant one.

4. The W.P.A. (Works Progress Administration) was yet another in a series of “alphabet” legislations. Who was the brains behind this, and what were they trying to accomplish with this program?

Although Roosevelt’s initial efforts to combat the effects of the Great Depression had eliminated some of the suffering felt by the American people, millions of Americans still could not find work two years later. In addition, Roosevelt had come to believe that direct assistance to the unemployed degraded those individuals.

Accordingly, Roosevelt created a new program in 1935 to put millions more Americans to work. Congress allocated 1.3 billion dollars annually to the program, which became known as the Works Progress Administration. By 1935 a social worker from Iowa named Harry Hopkins had become Roosevelt’s most trusted aide, and for that reason the president asked him to run the WPA.

Hopkins accepted, and immediately began creating projects to employ out of work Americans. These projects ranged from building bridges to painting murals. By 1938, the WPA employed 3,300,000 Americans.

While Hopkins spent a great deal of money on the WPA, he did so in an extremely efficient manner. Estimates vary, but most experts believe that only 3% of the funds allocated went for overhead. In addition, the quality of the work done was usually first rate. Indeed, many of the roads and buildings constructed by the WPA are still in use today.

5. Are there other “alphabet” legislations or programs that contributed to recovery?

Although the nation had gone a long way towards becoming industrialized by 1929, a significant portion of the population still earned a living from agriculture. The Great Depression hit these people especially hard, since many of their fellow citizens had lost the ability to buy their goods. Farmers complained that industrialization and urbanization had helped create a cycle of “boom and bust” for agriculture, and for years they had asked for a guaranteed price for commodities.

Until 1932, chief executives had usually their plight. When he became president, however, Roosevelt wanted to help farmers. For that reason, he chose Henry Wallace, a well-known agriculturalist from Iowa, to serve as his Secretary of Agriculture. Wallace embraced the idea of a guaranteed price for commodities (known as parity), and recommended that Congress embody that principle in a federal act. These price supports would be paid for by a tax that would be levied on companies that processed food products. At that point, Wallace chose to add another provision to his proposed law. Believing that overproduction had led to the low prices for commodities that existed at that time, Wallace mandated that farmers should plow under a significant portion of the crops that they had grown.

This made his law, which became known as the Agricultural Adjustment Act, perhaps the most controversial feature of Roosevelt’s New Deal. While opinions about the law differ, it is clear that the AAA immeasurably improved the livelihood of the agricultural sector.

6. Obviously, when World War II came along, the focus of the country shifted. But indirectly, how did World War II contribute to recovery?

By 1939, Roosevelt had spent billions of dollars in an effort to resurrect the American economy, and had created numerous programs to help alleviate the suffering of the people. In some respects, he had little to show for his efforts. On the one hand, the nation still had an unemployment rate of 17.2%, which was only about 8% lower than it was in 1933 when Roosevelt took office. On the other hand, the economy had grown at an annual rate of 7.7% during those years, suggesting that a substantial recovery had taken place. Because of this seeming contradiction, historians disagree on whether Roosevelt’s New Deal had worked or not. This all became a moot point in September of 1939 when World War II started. Orders for war materiel soon energized the American economy, and unemployment decreased by almost 8% during the next two years. When the United States itself went to war in 1941, unemployment virtually disappeared. We will thus never know for sure whether the New Deal would have eventually fully restored the American economy or not.

7. What have I neglected to ask about the series of events that fostered the recovery of the U.S.?

During his presidency, Roosevelt drew criticism for his unprecedented intervention into the economic and social fabric of the nation. To this day, critics still excoriate him for his activist presidency. But to the vast majority of the people who lived through the Depression, he was a hero. Inheriting a nation teetering on the brink of a total collapse, Roosevelt restored the faith of the American people in the viability of our way of life. While some found the phrase from his inaugural address about fear to be a large understatement in 1933, it seems in retrospect to have been exactly what the American people needed to hear to give them hope for a better future.

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.