The transition to a new president during an economic downturn has many looking back to the Great Depression, Franklin Roosevelt and the New Deal. The current crisis has been described as the worst since then, and Barack Obama’s challenges have been compared to Roosevelt’s in 1933. Mark Leff is a professor of history who has studied the period, including research on the rhetoric and reality of some New Deal policies. Leff was interviewed by News Bureau social sciences editor Craig Chamberlain.
What do you think are the most common misconceptions about the Great Depression and the New Deal government programs put in place to counter it?
The standard rap on the New Deal is that it didn’t solve the Depression. In the New Deal years of 1933-1939, before the spending infusion of World War II, the unemployment rate never dropped below 14 percent, and stock market prices only made up half the ground lost in the crash. But that 14 percent plunges to 10 percent if you count as employed the formerly jobless on New Deal work projects. And it would have fallen further if Roosevelt hadn’t liberated his inner fiscal conservative, curtailing federal spending and temporarily balancing the federal budget in 1937-38. Before that, the economy had rocketed upward at a yearly clip of about 10 percent.
A second misconception is that FDR faced a pliant rubber-stamp Congress. Congress did enact over a dozen landmark New Deal initiatives in his legendary first hundred days. FDR’s emergency banking bill sailed through, almost sight unseen, on the same day it was delivered. But some of these measures wouldn’t have seen the light of day if the “wild men of Congress” hadn’t forced Roosevelt’s hand. Those measures include some of the New Deal era’s proudest reforms: support for union rights, suspension of farm and home foreclosures, even government insurance of bank deposits.
Finally, it’s been easy to cast FDR’s predecessor, Herbert Hoover, as a “do-nothing” incompetent. He instead deserves credit as a transitional president who initiated programs that moved into the New Deal: federal support for farm prices and home mortgages, loans for state and local job-creating construction projects and unemployment assistance, and a Reconstruction Finance Corporation to bail out failing banks.
How bad are things today compared to 1933?
We’re being bombarded with depressing reminders that today’s economy is tanking: foreclosures, bankruptcies and layoffs hanging over millions; life savings, retirement accounts and employer-backed health insurance fading fast; banks receiving billions in bailout money but still not lending; state and local governments unable to cover growing obligations.
But when FDR entered office, one in four American workers had no job at all, and many of the rest could find only part-time work or were farmers fighting losing battles against foreclosure and plummeting crop prices. Americans hunched in bread lines and scavenged in garbage dumps in sight of silent factories. The 40 percent decline in stock prices over the last year or so has staggered us, but the Great Depression crash had gone twice as deep. Runs on the banks had already wiped out one of five banks and millions of depositors, and most states had simply closed their banks indefinitely. A collapsed financial system left the economy on life support. Respected authorities talked casually about the need for dictatorship. At no other time in U.S. history – and certainly not today – have economic conditions been so dire.
Also, the New Deal’s response to the Depression makes a recurrence even less likely. Granted that New Deal regulation, put in place to protect against capitalism’s excesses, has been allowed to atrophy. Still, so much of what we today take for granted was brought to us by the New Deal. If our bank goes under, our money is safe. The loss of our job can be cushioned by food stamps or unemployment compensation. When our retirement savings erode, we still have Social Security.
We’ve seen articles comparing Roosevelt and Obama, even including pictures of Obama with FDR’s trademark cigarette holder and confident grin. How would you compare the two men and their situations?
It’s not just that Obama faces a grim economy now labeled Depression 2.0, or that he, like FDR, enters the White House with a decisive victory. Both also had the good fortune to succeed a disgraced and often tone-deaf president, paving the way for their empathetic styles, their charisma and eloquence, and “yes we can” confidence that could ease the critical task of winning the trust of disoriented and panic-stricken Americans. The fact that neither was encumbered by any responsibility for the social distress also left them in a position to “feel the pain” of those left behind. Obama, like FDR, also can brand as out-of-touch those with faith that the fundamentals of the economy are sound, including disgraced financial “Masters of the Universe” implicated in causing the crisis.
How would you compare the political challenges now versus then?
The New Deal was inspired and shaped by pressures from social movements, especially unions, which reached a third of American workers then versus a paltry 12 percent today. FDR’s flypaper mind allowed for remarkable improvisation, even if at the expense of programmatic consistency.
Obama, in contrast, is a careful, systematic thinker, an idealist who shares FDR’s commitment to a common good but who feels constrained by vestiges of the post-Reagan common sense that government is the problem, by mushrooming debt, and by pleas for a new post-partisan tone in Washington. That, along with a narrower Democratic majority than during the New Deal, helps explain why Obama’s recovery plan, unlike FDR’s, features tax cuts.
FDR instead pushed the top individual tax rate to 79 percent, and it rose again in World War II to more than 90 percent, dwarfing today’s 35 percent.
You can also see a difference when you look back to the New Deal’s public works revolution, which gave us thousands of new or improved bridges, schools, airports, parks, roads and power lines. Several million Americans annually were rescued from unemployment by federal emergency jobs in FDR’s first two terms.
But even though more are out of work today than in the average Depression year, some find extravagant Obama’s plans to employ a fraction of that number, mostly through the private sector, to restore our rusting infrastructure, repair crumbling schools and roads, computerize medical records, upgrade our electric grid, and build classrooms and labs.
It’s common knowledge that Obama was a community organizer. That helps account for his extensive network of volunteers, along with his mantra “it’s about you” that runs counter to FDR’s almost martial calls to enlist under his leadership. Much of what happened under FDR, however, resulted not from his initiative, but due to actions and pressures from movements, organizations and the larger society. If it’s really all about us, there are some lessons from the Great Depression we might take to heart.
