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FDR and an Active Federal Government

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					                    FDR and an Active Federal Government

Discussion Point 1:
   Beginning with the “First 100 Days” following his inauguration, President Franklin
   Roosevelt began a course of action that has impacted public policy and political
   action to the present day. Before the emergence of the Great Depression, most
   American leaders since the founding of the United States maintained serious
   reservations about an active government, which did not change substantively until the
   ascension of Roosevelt.

        Adam Smith: The Invisible Hand (from Wealth of Nations) – 1776
     Web version: http://www.bibliomania.com/2/1/65/112/7058/2/frameset.html

Adam Smith, the economist who influenced many of the Founding generation, railed
against the prevailing restrictive, regulated, 'mercantilist' system, and focused on
individual interests operating within his ideal government—one that ruled with an
“invisible hand.”

        But the annual revenue of every society is always precisely equal to the
exchangeable value of the whole annual produce of its industry, or rather is precisely the
same thing with that exchangeable value. As every individual, therefore, endeavours as
much as he can both to employ his capital in the support of domestic industry, and so to
direct that industry that its produce may be of the greatest value; every individual
necessarily labours to render the annual revenue of the society as great as he can. He
generally, indeed, neither intends to promote the public interest, nor knows how much he
is promoting it. By preferring the support of domestic to that of foreign industry, he
intends only his own security; and by directing that industry in such a manner as its
produce may be of the greatest value, he intends only his own gain, and he is in this, as in
many other cases, led by an invisible hand to promote an end which was no part of his
intention. Nor is it always the worse for the society that it was no part of it. By pursuing
his own interest he frequently promotes that of the society more effectually than when he
really intends to promote it. I have never known much good done by those who affected
to trade for the public good. It is an affectation, indeed, not very common among
merchants, and very few words need be employed in dissuading them from it.



                    Robert Yates: An Excerpt from Brutus I (1787)
  Web version: http://press-pubs.uchicago.edu/founders/documents/v1ch8s13.html

       In this selection Yates, a prominent Anti-Federalist writer, offers a view of the
Constitution’s division of powers very different from that of the Federalists of the era..
Yates contends that the Constitution does not adequately secure limited government
because it tends to consolidate all power in the Federal Government and leaves nothing
of importance to the states.
          The first question that presents itself on the subject is, whether a confederated
government be the best for the United States or not? Or in other words, whether the
thirteen United States should be reduced to one great republic, governed by one
legislature, and under the direction of one executive and judicial; or whether they should
continue thirteen confederated republics, under the direction and control of a supreme
federal head for certain defined national purposes only?
          This enquiry is important, because, although the government reported by the
convention does not go to a perfect and entire consolidation, yet it approaches so near to
it, that it must, if executed, certainly and infallibly terminate in it.
          This government is to possess absolute and uncontrollable power, legislative,
executive and judicial, with respect to every object to which it extends, for by the last
clause of section 8th, article 1st, it is declared “that the Congress shall have power to
make all laws which shall be necessary and proper for carrying into execution the
foregoing powers, and all other powers vested by this constitution, in the government of
the United States; or in any department or office thereof.” And by the 6th article, it is
declared “that this constitution, and the laws of the United States, which shall be made in
pursuance thereof, and the treaties made, or which shall be made, under the authority of
the United States, shall be the supreme law of the land; and the judges in every state shall
be bound thereby, any thing in the constitution, or law of any state to the contrary
notwithstanding.” It appears from these articles that there is no need of any intervention
of the state governments, between the Congress and the people, to execute any one power
vested in the general government, and that the constitution and laws of every state are
nullified and declared void, so far as they are or shall be inconsistent with this
constitution, or the laws made in pursuance of it, or with treaties made under the
authority of the United States. The government then, so far as it extends, is a complete
one, and not a confederation.
          It is true this government is limited to certain objects, or to speak more properly,
some small degree of power is still left to the states, but a little attention to the powers
vested in the general government, will convince every candid man, that if it is capable of
being executed, all that is reserved for the individual states must very soon be annihilated,
except so far as they are barely necessary to the organization of the general government.
The powers of the general legislature extend to every case that is of the least importance
– there is nothing valuable to human nature, nothing dear to freemen, but what is within
its power. It has authority to make laws which will affect the lives, the liberty, and
property of every man in the United States; nor can the constitution or laws of any state,
in any way prevent or impede the full and complete execution of every power given.


           Thomas Jefferson: First Annual Message to Congress – 1801
    Web version: http://www.yale.edu/lawweb/avalon/presiden/sou/jeffmes1.htm

Within this address to Congress, Jefferson questions the complexity of the government.

. . . .When we consider that this government is charged with the external and mutual
relations only of these states; that the states themselves have principal care of our



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persons, our property, and our reputation, constituting the great field of human concerns,
we may well doubt whether our organization is not too complicated, too expensive;
whether offices or officers have not been multiplied unnecessarily, and sometimes
injuriously to the service they were meant to promote. . . .


Discussion Point 2:
       FDR’s insistence that the federal government take an active role in alleviating the
       economic conditions in America was a monumental divergence from previous
       practices. However, because of the severity of the Depression that was in full
       force by the time Roosevelt took office, the president felt compelled to be
       proactive in attempting to reverse the economic stagnation then gripping the
       nation. Within three months, FDR was able to push through initiatives such as the
       AAA, the NIRA, the Securities Act and the creation of the FDIC.

             Herbert Hoover: Rugged Individualism Speech – 1928
 Web version: http://coursesa.matrix.msu.edu/~hst203/documents/HOOVER.html

This speech was delivered in New York City by Republican presidential candidate
Herbert Hoover on October 22, 1928, toward the close of the election campaign. In this
classic example of American conservative philosophy, Hoover condemned the
Democratic platform as a misguided attempt to solve the problems of prohibition, farm
relief, and electrical power through state socialism; he extolled free, private enterprise
and initiative, a system of "rugged individualism," as the foundations of America's
"unparalleled greatness." Government entry into commercial business, he argued, would
destroy political equality, increase corruption, stifle initiative, undermine the
development of leadership, extinguish opportunity, and "dry up the spirit of liberty and
progress."

         …But in addition to this great record of contributions of the Republican Party to
progress, there has been a further fundamental contribution -- a contribution perhaps
more important than all the others -- and that is the resistance of the Republican Party to
every attempt to inject the Government into business in competition with its citizens.
After the war, when the Republican Party assumed administration of the country, we
were faced with the problem of determination of the very nature of our national life. Over
150 years we have builded up a form of self-government and we had builded up a social
system which is peculiarly our own. It differs fundamentally from all others in the world.
It is the American system. It is just as definite and positive a political and social system
as has ever been developed on earth. It is founded upon the conception that self-
government can be preserved only by decentralization of Government in the State and by
fixing local responsibility; but further than this, it is founded upon the social conception
that only through ordered liberty, freedom and equal opportunity to the individual will his
initiative and enterprise drive the march of progress.
         During the war we necessarily turned to the Government to solve every difficult
economic problem -- the Government having absorbed every energy of our people to war
there was no other solution. For the preservation of the State the Government became a



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centralized despotism which undertook responsibilities, assumed powers, exercised
rights, and took over the business of citizens. To large degree we regimented our whole
people temporarily into a socialistic state. However justified it was in time of war if
continued in peace time it would destroy not only our system but progress and freedom in
our own country and throughout the world. When the war closed the most vital of all
issues was whether Governments should continue war ownership and operation of many
instrumentalities of production and distribution. We were challenged with the choice of
the American system rugged individualism or the choice of a European system of
diametrically opposed doctrines -- doctrines of paternalism and state socialism. The
acceptance of these ideas meant the destruction of self-government through centralization
of government; it meant the undermining of initiative and enterprise upon which our
people have grown to unparalleled greatness.



                 Business Cycle of the Great Depression (Chart)
   Web version: http://bss.sfsu.edu/tygiel/Hist427/1929photos/BusinessCycle.htm




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              Dow Jones Industrial Average – 1910 – 1955 (Chart)
              Web version: http://www.amatecon.com/gd/djia.jpg




                       Unemployment – 1929 – 1942 (Chart)
                                  Web version:
http://occawlonline.pearsoned.com/bookbind/pubbooks/martin_awl/medialib/downl
                              oad/MARTFIG241.gif




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Franklin D. Roosevelt: First Inaugural Address of Franklin D. Roosevelt – March 4,
                                       1933
   Web version: http://www.yale.edu/lawweb/avalon/presiden/inaug/froos1.htm

This is a transcription of FDR’s first Inaugural Address.

         I am certain that my fellow Americans expect that on my induction into the
Presidency I will address them with a candor and a decision which the present situation
of our Nation impels. This is preeminently the time to speak the truth, the whole truth,
frankly and boldly. Nor need we shrink from honestly facing conditions in our country
today. This great Nation will endure as it has endured, will revive and will prosper. So,
first of all, let me assert my firm belief that the only thing we have to fear is fear itself--
nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert
retreat into advance. In every dark hour of our national life a leadership of frankness and
vigor has met with that understanding and support of the people themselves which is
essential to victory. I am convinced that you will again give that support to leadership in
these critical days.
         In such a spirit on my part and on yours we face our common difficulties. They
concern, thank God, only material things. Values have shrunken to fantastic levels; taxes
have risen; our ability to pay has fallen; government of all kinds is faced by serious
curtailment of income; the means of exchange are frozen in the currents of trade; the
withered leaves of industrial enterprise lie on every side; farmers find no markets for their
produce; the savings of many years in thousands of families are gone.
         More important, a host of unemployed citizens face the grim problem of
existence, and an equally great number toil with little return. Only a foolish optimist can
deny the dark realities of the moment.
         …Restoration calls, however, not for changes in ethics alone. This Nation asks for
action, and action now.
         Our greatest primary task is to put people to work. This is no unsolvable problem
if we face it wisely and courageously. It can be accomplished in part by direct recruiting
by the Government itself, treating the task as we would treat the emergency of a war, but
at the same time, through this employment, accomplishing greatly needed projects to
stimulate and reorganize the use of our natural resources.
         Hand in hand with this we must frankly recognize the overbalance of population
in our industrial centers and, by engaging on a national scale in a redistribution, endeavor
to provide a better use of the land for those best fitted for the land. The task can be helped
by definite efforts to raise the values of agricultural products and with this the power to
purchase the output of our cities. It can be helped by preventing realistically the tragedy
of the growing loss through foreclosure of our small homes and our farms. It can be
helped by insistence that the Federal, State, and local governments act forthwith on the
demand that their cost be drastically reduced. It can be helped by the unifying of relief
activities which today are often scattered, uneconomical, and unequal. It can be helped by
national planning for and supervision of all forms of transportation and of
communications and other utilities which have a definitely public character. There are




                                                                                             6
many ways in which it can be helped, but it can never be helped merely by talking about
it. We must act and act quickly.
        Finally, in our progress toward a resumption of work we require two safeguards
against a return of the evils of the old order; there must be a strict supervision of all
banking and credits and investments; there must be an end to speculation with other
people's money, and there must be provision for an adequate but sound currency.
        There are the lines of attack. I shall presently urge upon a new Congress in special
session detailed measures for their fulfillment, and I shall seek the immediate assistance
of the several States.
        Through this program of action we address ourselves to putting our own national
house in order and making income balance outgo. Our international trade relations,
though vastly important, are in point of time and necessity secondary to the establishment
of a sound national economy. I favor as a practical policy the putting of first things first. I
shall spare no effort to restore world trade by international economic readjustment, but
the emergency at home cannot wait on that accomplishment.
        …I am prepared under my constitutional duty to recommend the measures that a
stricken nation in the midst of a stricken world may require. These measures, or such
other measures as the Congress may build out of its experience and wisdom, I shall seek,
within my constitutional authority, to bring to speedy adoption.
        …We face the arduous days that lie before us in the warm courage of the national
unity; with the clear consciousness of seeking old and precious moral values; with the
clean satisfaction that comes from the stem performance of duty by old and young alike.
We aim at the assurance of a rounded and permanent national life.
        We do not distrust the future of essential democracy. The people of the United
States have not failed. In their need they have registered a mandate that they want direct,
vigorous action. They have asked for discipline and direction under leadership. They
have made me the present instrument of their wishes. In the spirit of the gift I take it.
        In this dedication of a Nation we humbly ask the blessing of God. May He protect
each and every one of us. May He guide me in the days to come.


                     National Industrial Recovery Act – 1933
   Web version: http://www.law.du.edu/sterling/Content/ALH/Indust_Recov.pdf

The NIRA, eventually ruled unconstitutional, outlined many components of the American
economy to be controlled by the federal government.


AN ACT
       To encourage national industrial recovery, to foster fair competition, and to
provide for the construction of certain useful public works, and for other purposes.
       Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled,
TITLE I – INDUSTRIAL RECOVERY
       DECLARATION OF POLICY




                                                                                             7
                 SECTION 1. A national emergency productive of widespread
unemployment and disorganization of industry, which burdens interstate and foreign
commerce, affects the public welfare, and undermines the standards of living of the
American people, is hereby declared to exist. It is hereby declared to be the policy of
Congress to remove obstructions to the free flow of interstate and foreign commerce
which tend to diminish the amount thereof; and to provide for the general welfare by
promoting the organization of industry for the purpose of cooperative action among trade
groups, to induce and maintain united action of labor and management under adequate
governmental sanctions and supervision, to eliminate unfair competitive practices, to
promote the fullest possible utilization of the present productive capacity of industries, to
avoid undue restriction of production (except as may be temporarily required), to increase
the consumption of industrial and agricultural products by increasing purchasing power,
to reduce and relieve unemployment, to improve standards of labor, and otherwise to
rehabilitate industry and to conserve natural resources.
…
         CODES OF FAIR COMPETITION
                 SEC. 3. (a) Upon the application to the President by one or more trade or
industrial associations or groups, the President may approve a code or codes of fair
competition for the trade or industry or subdivision thereof, represented by the applicant
or applicants, if the President finds (1) that such associations or groups impose no
inequitable restrictions on admission to membership therein and are truly representative
of such trades or industries or subdivisions thereof, and (2) that such code or codes are
not designed to promote monopolies or to eliminate or oppress small enterprises and will
not operate to discriminate against them, and will tend to effectuate the policy of this
title: Provided, That such code or codes shall not permit monopolies or monopolistic
practices: Provided further, That where such code or codes affect the services and welfare
of persons engaged in other steps of the economic process, nothing in this section shall
deprive such persons of the right to be heard prior to approval by the President of such
code or codes.
…
         AGREEMENTS AND LICENSES
                 SEC. 4. (a) The President is authorized to enter into agreements with, and
to approve voluntary agreements between and among, persons engaged in a trade or
industry, labor organizations, and trade or industrial organizations, associations, or
groups relating to any trade or industry, if in his judgment such agreements will aid in
effectuating the policy of this title with respect to transactions in or affecting interstate or
foreign commerce, and will be consistent with the requirements of clause (2) of
subsection (a) of section 3 for a code of fair competition.
         (b) Whenever the President shall find that a destructive wage or price cutting or
other activities contrary to the policy of this title are being practiced in any trade or
industry or any subdivision thereof, and, after such public notice and hearing as he shall
specify, shall find it essential to license business enterprises in order to make effective a
code of fair competition or an agreement under this title or otherwise to effectuate the
policy of this title, and shall publicly so announce, no person shall, after a date fixed in
such announcement, engage or carry on in any business, in or affecting interstate or




                                                                                              8
foreign commerce, specified in such announcement, unless he shall have first obtained a
license issued pursuant to such regulations as the President shall prescribe.
        …Nothing in this Act, and no regulation thereunder, shall prevent an individual
from pursuing the vocation of manual labor and selling or trading the products thereof;
nor shall anything in this Act, or regulation thereunder, prevent anyone from marketing
or trading the produce of his farm. ...
                 SEC. 7. (a) Every code of fair competition , agreement, and license
approved, prescribed, or issued under this title shall contain the following conditions: (1)
that employees shall have the right to organize and bargain collectively through
representatives of their own choosing, and shall be free from the interference, restraint or
coercion of employees of labor, or their agents, in the designation of such representatives
or in self-organization or in other concerted activities for the purpose of collective
bargaining or other mutual aid or protection; (2) that no employee and no one seeking
employment shall be required as a condition of employment to join any company union
or to refrain from joining, organizing or assisting a labor organization of his own
choosing; and (3) that employers shall comply with the maximum hours of labor,
minimum rates of pay, and other conditions of employment approved or prescribed by the
President.

TITLE II – PUBLIC WORKS AND CONSTRUCTION PROJECTS
        FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS
                SECTION 201. (a) To effectuate the purposes of this title, the President is
hereby authorized to create a Federal Emergency Administration of Public Works, all the
powers of which shall be exercised by a Federal Emergency Administrator of Public
Works (hereafter referred to as the “Administrator”), and to establish such agencies, to
accept and utilized such voluntary and uncompensated services, to appoint, without
regard to the civil service laws, such officers and employees, and to utilize such Federal
officers and employees, and, with the consent of the State, such State and local officers
and employees as he may find necessary, to prescribe their authorities, duties,
responsibilities, and tenure, and without regard to the Classification Act of 1923, as
amended, to fix the compensation of any officers and employees so appointed.
…
                SEC. 202. The Administrator, under the direction of the President, shall
prepare a comprehensive program of public works, which shall include among other
things the following: (a) Construction, repair and improvement of public highways and
park ways, public buildings, and any publicly owned instrumentalities and facilities; (b)
conservation and development of natural resources, including control, utilization, and
purification of waters, prevention of soil or coastal erosion, development of water power,
transmission of electrical energy, and construction of river and harbor improvements and
flood control and also the construction of any river or drainage improvement required to
perform or satisfy any obligation incurred by the United States through a treaty with a
foreign Government… (c) any projects of the character heretofore constructed or carried
on either directly by public authority or with public aid to serve the interests of the
general public; (d) construction, reconstruction, alteration, or repair under public
regulation or control of low-cost housing and slum- clearance projects. ...




                                                                                          9
               SEC. 204. (a) For the purpose of providing for emergency construction of
public highways and related projects, the President is authorized to make grants to the
highway departments of the several States in an amount not less than $100,000,000, to be
expended by such departments in accordance with the provisions of the Federal Highway
Act, approved November 9, 1921, as amended and supplemented. ...
        SUBSISTENCE H OMESTEADS
               SEC. 208. To provide for aiding the redistribution of the overbalance of
population in industrial centers $25,000,000 is hereby made available to the President, to
be used by him through such agencies as he may establish and under such regulations as
he may make, for making loans for and otherwise aiding in the purchase of subsistence
homesteads. The moneys collected as repayment of said loans shall constitute a revolving
fund to be administered as directed by the President for the purposes of this section.


             FDR: First Fireside Chat (Banking Crisis) – March 12, 1933
                Web version: http://historymatters.gmu.edu/d/5199/

President Franklin Roosevelt took office in March 1933 amid a national banking crisis.
In his first “fireside chat,” Roosevelt discusses this crisis in simple language, knowing
that the complexity of the issue might confuse ordinary citizens. As the text shows,
Roosevelt is careful to express to the nation his sense of concern and responsibility.

        I want to talk for a few minutes with the people of the United States about
banking -- with the comparatively few who understand the mechanics of banking but
more particularly with the overwhelming majority who use banks for the making of
deposits and the drawing of checks. I want to tell you what has been done in the last few
days, why it was done, and what the next steps are going to be. I recognize that the many
proclamations from State Capitols and from Washington, the legislation, the Treasury
regulations, etc., couched for the most part in banking and legal terms should be
explained for the benefit of the average citizen. I owe this in particular because of the
fortitude and good temper with which everybody has accepted the inconvenience and
hardships of the banking holiday. I know that when you understand what we in
Washington have been about I shall continue to have your cooperation as fully as I have
had your sympathy and help during the past week.
        First of all let me state the simple fact that when you deposit money in a bank the
bank does not put the money into a safe deposit vault. It invests your money in many
different forms of credit-bonds, commercial paper, mortgages and many other kinds of
loans. In other words, the bank puts your money to work to keep the wheels of industry
and of agriculture turning around. A comparatively small part of the money you put
into the bank is kept in currency -- an amount which in normal times is wholly sufficient
to cover the cash needs of the average citizen. In other words the total amount of all the
currency in the country is only a small fraction of the total deposits in all of the banks.
        What, then, happened during the last few days of February and the first few days
of March? Because of undermined confidence on the part of the public, there was a
general rush by a large portion of our population to turn bank deposits into currency or
gold. -- A rush so great that the soundest banks could not get enough currency to meet the



                                                                                        10
demand. The reason for this was that on the spur of the moment it was, of course,
impossible to sell perfectly sound assets of a bank and convert them into cash except at
panic prices far below their real value.
         By the afternoon of March 3 scarcely a bank in the country was open to do
business. Proclamations temporarily closing them in whose or in part had been issued by
the Governors in almost all the states.
         It was then that I issued the proclamation providing for the nation-wide bank
holiday, and this was the first step in the Government's reconstruction of our financial
and economic fabric.
         The second step was the legislation promptly and patriotically passed by the
Congress confirming my proclamation and broadening my powers so that it became
possible in view of the requirement of time to entend (sic) the holiday and lift the ban of
that holiday gradually. This law also gave authority to develop a program of
rehabilitation of our banking facilities. . . .
         The third stage has been the series of regulations permitting the banks to continue
their functions to take care of the distribution of food and household necessities and the
payment of payrolls.
         This bank holiday while resulting in many cases in great inconvenience is
affording us the opportunity to supply the currency necessary to meet the situation. No
sound bank is a dollar worse off than it was when it closed its doors last Monday. Neither
is any bank which may turn out not to be in a position for immediate opening. The new
law allows the twelve Federal Reserve banks to issue additional currency on good assets
and thus the banks which reopen will be able to meet every legitimate call. The new
currency is being sent out by the Bureau of Engraving and Printing in large volume to
every part of the country. It is sound currency because it is backed by actual, good assets.
         …We had a bad banking situation. Some of our bankers had shown themselves
either incompetent or dishonest in their handling of the people's funds. They had used the
money entrusted to them in speculations and unwise loans. This was of course not true in
the vast majority of our banks but it was true in enough of them to shock the people for a
time into a sense of insecurity and to put them into a frame of mind where they did not
differentiate, but seemed to assume that the acts of a comparative few had tainted them
all. It was the Government's job to straighten out this situation and do it as quickly as
possible -- and the job is being performed .
         I do not promise you that every bank will be reopened or that individual losses
will not be suffered, but there will be no losses that possibly could be avoided; and there
would have been more and greater losses had we continued to drift. I can even promise
you salvation for some at least of the sorely pressed banks. We shall be engaged not
merely in reopening sound banks but in the creation of sound banks through
reorganization.
         …Confidence and courage are the essentials of success in carrying out our plan.
You people must have faith; you must not be stampeded by rumors or guesses. Let us
unite in banishing fear. We have provided the machinery to restore our financial system;
it is up to you to support and make it work.
         It is your problem no less than it is mine. Together we cannot fail.




                                                                                         11
                 FDR: Second Fireside Chat (New Deal) – May 7, 1933
                  Web version: http://www.gutenberg.org/etext/5767

This is a transcription of Roosevelt’s second Fireside Chat, which outlined the New Deal
Program.

         On a Sunday night a week after my Inauguration I used the radio to tell you about
the banking crisis and the measures we were taking to meet it. I think that in that way I
made clear to the country various facts that might otherwise have been misunderstood
and in general provided a means of understanding which did much to restore confidence.
         Tonight, eight weeks later, I come for the second time to give you my report -- in
the same spirit and by the same means to tell you about what we have been doing and
what we are planning to do.
         Two months ago we were facing serious problems. The country was dying by
inches. It was dying because trade and commerce had declined to dangerously low levels;
prices for basic commodities were such as to destroy the value of the assets of national
institutions such as banks, savings banks, insurance companies, and others. These
institutions, because of their great needs, were foreclosing mortgages, calling loans,
refusing credit. Thus there was actually in process of destruction the property of millions
of people who had borrowed money on that property in terms of dollars which had had an
entirely different value from the level of March, 1933. That situation in that crisis did not
call for any complicated consideration of economic panaceas or fancy plans. We were
faced by a condition and not a theory.
         There were just two alternatives: The first was to allow the foreclosures to
continue, credit to be withheld and money to go into hiding, and thus forcing liquidation
and bankruptcy of banks, railroads and insurance companies and a recapitalizing of all
business and all property on a lower level. This alternative meant a continuation of what
is loosely called "deflation", the net result of which would have been extraordinary
hardship on all property owners and, incidentally, extraordinary hardships on all persons
working for wages through an increase in unemployment and a further reduction of the
wage scale.
         It is easy to see that the result of this course would have not only economic effects
of a very serious nature but social results that might bring incalculable harm. Even before
I was inaugurated I came to the conclusion that such a policy was too much to ask the
American people to bear.
         …The legislation which has been passed or in the process of enactment can
properly be considered as part of a well-grounded plan.
         First, we are giving opportunity of employment to one-quarter of a million of the
unemployed, especially the young men who have dependents, to go into the forestry and
flood prevention work… In creating this civilian conservation corps we are killing two
birds with one stone. We are clearly enhancing the value of our natural resources and
second, we are relieving an appreciable amount of actual distress… Second, I have
requested the Congress and have secured action upon a proposal to put the great
properties owned by our Government at Muscle Shoals to work after long years of
wasteful inaction, and with this a broad plan for the improvement of a vast area in the
Tennessee Valley.



                                                                                           12
         .…Next, the Congress is about to pass legislation that will greatly ease the
mortgage distress among the farmers and the home owners of the nation, by providing for
the easing of the burden of debt now bearing so heavily upon millions of our people.
         .…Our next step in seeking immediate relief is a grant of half a billion dollars to
help the states, counties and municipalities in their duty to care for those who need direct
and Immediate relief.
         The Congress also passed legislation authorizing the sale of beer in such states as
desired. This has already resulted in considerable reemployment and, incidentally, has
provided much needed tax revenue.
         We are planning to ask the Congress for legislation to enable the Government to
undertake public works, thus stimulating directly and indirectly the employment of many
others in well-considered projects.
         Further legislation has been taken up which goes much more fundamentally into
our economic problems. The Farm Relief Bill seeks by the use of several methods, alone
or together, to bring about an increased return to farmers for their major farm products,
seeking at the same time to prevent in the days to come disastrous over-production which
so often in the past has kept farm commodity prices far below a reasonable return.
         …Well-considered and conservative measures will likewise be proposed which
will attempt to give to the industrial workers of the country a more fair wage return,
prevent cut-throat competition and unduly long hours for labor, and at the same time to
encourage each industry to prevent over-production.
         …Our Railroad Bill falls into the same class because it seeks to provide and make
certain definite planning by the railroads themselves, with the assistance of the
Government, to eliminate the duplication and waste that is now resulting in railroad
receiverships and continuing operating deficits.
         …Today we have reason to believe that things are a little better than they were
two months ago. Industry has picked up, railroads are carrying more freight, farm prices
are better, but I am not going to indulge in issuing proclamations of overenthusiastic
assurance. We cannot bally-ho ourselves back to prosperity. I am going to be honest at all
times with the people of the country. I do not want the people of this country to take the
foolish course of letting this improvement come back on another speculative wave. I do
not want the people to believe that because of unjustified optimism we can resume the
ruinous practice of increasing our crop output and our factory output in the hope that a
kind providence will find buyers at high prices. Such a course may bring us immediate
and false prosperity but it will be the kind of prosperity that will lead us into another
tailspin. It is wholly wrong to call the measure that we have taken Government control of
farming, control of industry, and control of transportation. It is rather a partnership
between Government and farming and industry and transportation, not partnership in
profits, for the profits would still go to the citizens, but rather a partnership in planning
and partnership to see that the plans are carried out.
         …To you, the people of this country, all of us, the Members of the Congress and
the members of this Administration owe a profound debt of gratitude. Throughout the
depression you have been patient. You have granted us wide powers, you have
encouraged us with a wide-spread approval of our purposes. Every ounce of strength and
every resource at our command we have devoted to the end of justifying your confidence.




                                                                                          13
We are encouraged to believe that a wise and sensible beginning has been made. In the
present spirit of mutual confidence and mutual encouragement we go forward.

Discussion Point 3:
       Although many Americans were content with the president’s decision to increase
       the involvement of the federal government in the nation’s economy, in reality,
       FDR’s initial efforts had little lasting impact on the economy. Furthermore,
       opponents capitalized on the question of the constitutionality of many of the
       president’s initiatives and sought to dismantle much of what had been
       accomplished during the “First 100 Days. “ Ultimately, Roosevelt’s reaction to
       his critics paved the way for more lasting reform in areas such as Social Security
       and economic regulation.

                          Loveless C.C.C. – Song Lyrics
Web version(Lyrics): http://www.pbs.org/wgbh/amex/rails/sfeature/lovelessccc.html
                         Web version (Audio Recording):
       http://www.pbs.org/wgbh/amex/rails/sfeature/ram/lovelessccc.ram

This page contains the song lyrics for Loveless C.C.C. describing the horrendous
working conditions of the Civilian Conservation Corps. With this plan, FDR brought
together two wasted resources, the young men and the land, in an effort to save both.

Why did I ever Join the C.C.C.?
Oh, why did I join the C.C.C.
Why did I join the C.C.C.?
This old hard labor's killing me.
They treat me like a dirty dog
I have to slave down in a log
And they feed me like a hog
Oh, why did I join the C.C.C.?

I haft to work most ever day
Five bucks a mounth is my pay
I'm just a wasting my life away
Oh, why did I join the C.C.C.?

The Lieut. sure is hard-boiled
His hands and clothes are never soiled
When I come in all day I've toiled
Oh, why did I join the C.C.C.?

These O. D. clothes sure is hot
They'll make you scratch a whole lot
They'll make you wish you'd never got
Into this old C.C.C.




                                                                                        14
Note: the same boy wrote another parody, this time to the familiar cowboy song, of
which Beeman remembered only the following verses (which he thinks were all that were
composed, but isn't sure).

There's an empty cot in the barrack tonight
There's a C.C.'s head hanging low
The axe and saw hang on the wall
Now he's gone where the C.C. boys go.

There's a place for every C.C.
Where the leader takes care of his own
How happy I'll be when I leave the C.C.
And there'll be no K.P. at home.


New York Times: Hoover Charges Roosevelt 'New Deal' Would Destroy Foundation
       of Nation; 22,000 Jam the Garden, 30,000 Outside – November 1, 1932
                                  Web version:
http://www.nytimes.com/learning/general/specials/elections/1932/featured_article1.h
                                       tml

Hoover responds to FDR’s New Deal saying it would "destroy the very foundations of
our government and crack the timbers of the Constitution." This is a New York Times
article covering Hoover’s speech at Madison Square Garden.

   President Hoover declared last night that the "inchoate new deal," proposed by Governor
Roosevelt and his supporters would "destroy the very foundations of our government and crack
the timbers of the Constitution." He made this charge when he addressed the nation by radio
from a rostrum in Madison Square Garden.

He was cheered wildly and enthusiastically by the crowd of 22,000 packed in the flag-draped
arena where he appeared as a defender of American traditions and institutions, which he said
were threatened with destruction by the false liberalism of his opponents.

Nearly 30,000 others who fought for admittance to the hall and a glimpse of the Chief
Executive heard his voice in the street outside the Garden -- heard him warn solemnly that if
the Democratic tariff were put into effect, "the grass will grow in the streets of 100 cities" and
that "weeds will overrun the fields of millions of farms."

Charges 'Philosophy of Despair.'

The President said Governor Roosevelt himself had voiced tenets which indicated a philosophy
of despair for the future of America, and had proposed measures which would put the
"government into the power business." Further, said the President, Mr. Roosevelt had made
"frivolous" promises to put 10,000,000 unemployed men at work on self-liquidating
government projects -- a promise which could be fulfilled only at a cost of $9,000,000,000



                                                                                           15
annually to the taxpayers.

He warned that such proposals, if carried out, would "enslave" the taxpayers of the nation and
create a "bureaucracy" with one-third of the electorate in Federal jobs, Mr. Hoover referred
briefly to Governor Roosevelt's recent remark about Republican control of the Supreme Court.
He declared that if it was Mr. Roosevelt's idea to inject politics into the judicial branch, which
he called the "keystone" of the American system, he was "proposing the most revolutionary
new deal, the most destructive safeguard of our form of government," ever proposed by a
candidate for the Presidency.

The President's address contained a defense of the system under which this country has lived
and prospered for 150 years. He declared that it had been thrown out of gear by "abnormal"
dislocations abroad. It should not be scrapped in a moment of despair, he said, but repaired.

Tells How to Repair System.

He listed some of the mechanisms by which the battered system could be preserved and
restored after the depression has been driven out, exactly as it was given to the people of the
United States by the founders. These were the Federal Reserve System, the Farm Board, the
Home Loan Banks, the Federal Land Banks, private and local relief for the destitute and the
mobilization of private industry and business for recovery.

These measures, he said, were not "socialism" but "the essence of protection to the
development of free men." The system under which intellectual horizons had broadened,
leisure increased, wages and working conditions improved, could and would be preserved, he
asserted, if the Republican party received a new mandate from the people to carry on. Under it,
in the last thirty years, he told his auditors, science and invention had "lifted infinite drudgery
from women and men" and "taken sweat from the backs of men."

If Mr. Roosevelt undertook to make good his promise to a constituent to support measures for
inaugurating self-liquidating projects to provide work for all, Mr. Hoover declared, it would
mean "the total abandonment of every principle upon which this government and the American
system is founded." Continuing, he said:

"The stages of this destruction would be first the destruction of government credit, the value of
government securities, the destruction of every fiduciary trust in our country, insurance policies
and all. It would pull down the employment of those who are still at work by the high taxes and
the demoralization of credit upon which their employment is dependent. It would mean the
pulling and hauling of politics for projects and hauling of politics for projects and measures, the
favoring of localities, sections and groups. It would mean the growth of a fearful bureaucracy
which, once established, could never be dislodged. If it were possible, it would mean one-third
of the electorate with government jobs earnest to maintain this bureaucracy and to control the
political destinies of the country."

Declaring that true liberalism was represented by the Republican party, Mr. Hoover said the
"spirit of liberalism is to create free men; it is not the regimentation of men, nor the expansion


                                                                                           16
of bureaucracy." He warned that a government in business would be driven to "greater and
greater control of the nation's press and platform."


John Maynard Keynes: An Open Letter to President Roosevelt - December 31, 1933
                                  Web version:
   http://www.eco.utexas.edu/facstaff/Cleaver/368KeynesOpenLetFDRtable.pdf

“In response to the New York Times' request for his views on the American outlook,
Keynes has written "An Open Letter to President Roosevelt," which is scheduled to
appear in the Sunday issue of December 31st and is to be syndicated in other parts of the
United States.”

         . . . .You may be feeling by now, Mr. President, that my criticism is more obvious
than my sympathy. Yet truly that is not so. You remain for me the ruler whose general
outlook and attitude to the tasks of government are the most sympathetic in the world.
You are the only one who sees the necessity of a profound change of methods and is
attempting it without intolerance, tyranny or destruction. You are feeling your way by
trial and error, and are felt to be, as you should be, entirely uncommitted in your own
person to the details of a particular technique. In my country, as in your own, your
position remains singularly untouched by criticism of this or the other detail. Our hope
and our faith are based on broader considerations.
If you were to ask me what I would suggest in concrete terms for the immediate future, I
would reply thus.
         In the field of gold-devaluation and exchange policy the time has come when
uncertainty should be ended. This game of blind man's buff with exchange speculators
serves no useful purpose and is extremely undignified. It upsets confidence, hinders
business decisions, occupies the public attention in a measure far exceeding its real
importance, and is responsible both for the irritation and for a certain lack of respect
which exists abroad. You have three alternatives. You can devalue the dollar in terms of
gold, returning to the gold standard at a new fixed ratio. This would be inconsistent with
your declarations in favour of a long-range policy of stable prices, and I hope you will
reject it. You can seek some common policy of exchange stabilization with Great Britain
aimed at stable price-levels. This would be the best ultimate solution; but it is not
practical politics at the moment unless you are prepared to talk in terms of an initial value
of sterling well below $5 pending the realization of a marked rise in your domestic price-
level. Lastly you can announce that you will definitely control the dollar exchange by
buying and selling gold and foreign currencies so as to avoid wide or meaningless
fluctuations, with a right to shift the parities at any time but with a declared intention only
so to do either to correct a serious want of balance in America's international receipts and
payments or to meet a shift in your domestic price level relatively to price-levels abroad.
This appears to me to be your best policy during the transitional period. In other respects
you would regain your liberty to make your exchange policy subservient to the needs of
your domestic policy--free to let out your belt in proportion as you put on flesh.
         In the field of domestic policy, I put in the forefront, for the reasons given above,
a large volume of Loan-expenditures under Government auspices. It is beyond my



                                                                                            17
province to choose particular objects of expenditure. But preference should be given to
those which can be made to mature quickly on a large scale, as for example the
rehabilitation of the physical condition of the railroads. The object is to start the ball
rolling. The United States is ready to roll towards prosperity, if a good hard shove can be
given in the next six months. Could not the energy and enthusiasm, which launched the
N.I.R.A. in its early days, be put behind a campaign for accelerating capital expenditures,
as wisely chosen as the pressure of circumstances permits? You can at least feel sure that
the country will be better enriched by such projects than by the involuntary idleness of
millions.
        I put in the second place the maintenance of cheap and abundant credit and in
particular the reduction of the long-term rates of interest. The turn of the tide in great
Britain is largely attributable to the reduction in the long-term rate of interest which
ensued on the success of the conversion of the War Loan. This was deliberately
engineered by means of the open-market policy of the Bank of England. I see no reason
why you should not reduce the rate of interest on your long-term Government Bonds to
2½ per cent or less with favourable repercussions on the whole bond market, if only the
Federal Reserve System would replace its present holdings of short-dated Treasury issues
by purchasing long-dated issues in exchange. Such a policy might become effective in the
course of a few months, and I attach great importance to it.
With these adaptations or enlargements of your existing policies, I should expect a
successful outcome with great confidence. How much that would mean, not only to the
material prosperity of the United States and the whole World, but in comfort to men's
minds through a restoration of their faith in the wisdom and the power of Government!

      Huey Long: "Share the Wealth" Speech in the Senate - February 5, 1934
              Web version: http://www.ssa.gov/history/longsen.html

During his three brief years in the U.S. Senate, Huey Long became one of the most
flamboyant and provocative Senators in the nation's history. He earned the enmity of his
fellow Senators due to his frequent use of the filibuster to make some "point of principle"
about which he was especially passionate, and due to his not infrequent habit of casting
aspersions on the character of his fellow Senators. But the floor of the Senate gave Huey
Long what he prized most, a bully pulpit from which to expound his views. He used this
opportunity to the fullest--taking the Senate floor to place in the official record his
arguments for his Share The Wealth program, and to proselytize for his general world-
view. These speeches delivered during 1934 and 1935 make his case that the nation is in
a mess and that his Share The Wealth program is the solution.

People of America: In every community get together at once and organize a share-our-
wealth society--Motto: Every man a king

Principles and platform:
        1. To limit poverty by providing that every deserving family shall share in the
wealth of America for not less than one third of the average wealth, thereby to possess
not less than $5,000 free of debt.




                                                                                          18
         2. To limit fortunes to such a few million dollars as will allow the balance of the
American people to share in the wealth and profits of the land.
         3. Old-age pensions of $30 per month to persons over 60 years of age who do not
earn as much as $1,000 per year or who possess less than $10,000 in cash or property,
thereby to remove from the field of labor in times of unemployment those who have
contributed their share to the public service.
         4. To limit the hours of work to such an extent as to prevent overproduction and
to give the workers of America some share in the recreations, conveniences, and luxuries
of life.
         5. To balance agricultural production with what can be sold and consumed
according to the laws of God, which have never failed.
         6. To care for the veterans of our wars.
         7. Taxation to run the Government to be supported, first, by reducing big fortunes
from the top, thereby to improve the country and provide employment in public works
whenever agricultural surplus is such as to render unnecessary, in whole or in part, any
particular crop.

Simple and Concrete--Not an Experiment
        To share our wealth by providing for every deserving family to have one third of
the average wealth would mean that, at the worst, such a family could have a fairly
comfortable home, an automobile, and a radio, with other reasonable home conveniences,
and a place to educate their children. Through sharing the work, that is, by limiting the
hours of toil so that all would share in what is made and produced in the land, every
family would have enough coming in every year to feed, clothe, and provide a fair share
of the luxuries of life to its members. Such is the result to a family, at the worst.
        From the worst to the best there would be no limit to opportunity. One might
become a millionaire or more. There would be a chance for talent to make a man big,
because enough would be floating in the land to give brains its chance to be used. As it is,
no matter how smart a man may be, everything is tied up in so few hands that no amount
of energy or talent has a chance to gain any of it.
        …Now to cover the principles of the share-our-wealth society, I give them in
order:
                1. To limit poverty:
                         We propose that a deserving family shall share in our wealth of
America at least for one third the average. An average family is slightly less than five
persons. The number has become less during depression. The United States total wealth
in normal times is about $400 billion or about $15,000 to a family. If there were fair
distribution of our things in America, our national wealth would be three or four or five
times the $400 billion, because a free, circulating wealth is worth many times more than
wealth congested and frozen into a few hands as is America's wealth. But, figuring only
on the basis of wealth as valued when frozen into a few hands, there is the average of
$15,000 to the family. We say that we will limit poverty of the deserving people. One
third of the average wealth to the family, or $5,000, is a fair limit to the depths we will
allow any one man's family to fall. None too poor, none too rich.
                2. To limit fortunes:




                                                                                          19
                        The wealth of this land is tied up in a few hands… Now we do not
propose to hurt these very rich persons. We simply say that when they reach the place of
millionaires they have everything they can use and they ought to let somebody else have
something…                               3. Old-age pensions:
                        Everyone has begun to realize something must be done for our old
people who work out their lives, feed and clothe children and are left penniless in their
declining years. They should be made to look forward to their mature years for comfort
rather than fear. We propose that, at the age of 60, every person should begin to draw a
pension from our Government… Such a pension would retire from labor those persons
who keep the rising generations from finding employment…
                4. To limit the hours of work:
                        This applies to all industry. The longer hours the human family can
rest from work, the more it can consume. It makes no difference how many labor-saving
devices we may invent, just as long as we keep cutting down the hours and sharing what
those machines produce, the better we become…
                5. To balance agricultural production with consumption:
                        About the easiest of all things to do when financial masters and
market manipulators step aside and let work the law of the Lord. When we have a supply
of anything that is more than we can use for a year or two, just stop planting that
particular crop for a year either in all the country or in a part of it. Let the Government
take over and store the surplus for the next year…
                6. To care for the veterans of our wars:
                        A restoration of all rights taken from them by recent laws and
further, a complete care of any disabled veteran for any ailment, who has no means of
support.
                7. Taxation:
                        Taxation is to be levied first at the top for the Governments support
and expenses. Swollen fortunes should be reduced principally through taxation. The
Government should be run through revenues it derives after allowing persons to become
well above millionaires and no more. In this manner the fortunes will be kept down to
reasonable size and at the same time all the works of the Government kept on a sound
basis, without debts.




                                                                                          20
Comparative Perspective:
           http://www.english.uiuc.edu/maps/depression/about.htm




          http://econ161.berkeley.edu/TCEH/Slouch_Crash14.html




                                                                   21
22
http://woodrow.mpls.frb.fed.us/research/sr/sr295.pdf




                                                       23
http://elsa.berkeley.edu/users/cromer/great_depression.pdf




                                                         24

				
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