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259 THE DEPRESSION, THE NEW DEAL, AND FRANKLIN D. ROOSEVELT

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moved to the city, which was an expanding job market before the 1930s, less would have been produced and prices would have risen for the more efficient farmers who remained on the farm. But few of the 30 percent of Americans who remained as farmers wanted to leave the land. The Farm Board gave them a precedent for government intervention and the high tariff gave them a reason to complain that others were getting help from the government. Why not farm- ers as well? Since farmers were a potentially strong political group in many states, politicians emerged to argue for more intervention. Hence Roosevelt and others made the case for the AAA, paying farmers not to produce.…

Labor Relations

Employer-employee arrangements drastically changed during the New Deal. Before the Great Depression, “liberty of contract” tended to be the rule. “Whatever may be the advantages of ‘collective bargaining,’ it is not bargaining at all, in any just sense, unless it is voluntary on both sides,” wrote Justice Mahlon Pitney of the Supreme Court in 1917. “The same liberty which enables men to form unions, and through the union to enter into agreements with employers willing to agree, entitles other men to remain independent of the union and other employers to employ no man who owes any allegiance or obligation to the union.”

President Roosevelt wanted to tilt the balance of power more in favor of unions. The year he was elected president he had help from two of his friends, Senator George Norris of Nebraska and Representative Fiorello La Guardia of New York. Their Norris–La Guardia Anti-Injunction Act, passed in 1932, made it harder for employers to stop union organizing. Yellow-dog contracts, which required employees to agree not to join a union, were made unenforce- able by law, and federal courts could issue no injunctions in labor disputes except in cases of fraud or violence.

When Roosevelt became president, his NRA gave further help to union organizing. According to the NRA, in the writing of industrial codes, workers had “the right to organize and bargain collectively through representatives of their own choosing, and shall be free from interference, restraint, or coercion of employers of labor.” Workers were free to have a variety of unions, including company unions, represent them. The NRA did not require a “closed shop,” that is, a single union mandated as the bargaining representative for all workers in an industry.

Even before the NRA was struck down by the Supreme Court, Senator Robert Wagner of New York, with Roosevelt’s later tacit approval, began for- mulating a law that would strengthen the power of unions. The National Labor Relations Act, or the Wagner Act as it was sometimes called, proposed to sharply alter the industrial workforce. The key part of the bill had a list of “unfair labor practices.” Employers were not allowed to stop any union from organizing. They could not fire anyone because he or she was a union member, and they had to agree to bargain collectively with union representatives. If 30 percent of employees in an industry wanted a union, they could have a vote and whichever union they might select would represent all workers.…

 

 

Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

260 MAJOR PROBLEMS IN AMERICAN HISTORY

The Wagner Act certainly weighted the scales toward labor. The United Stated had thousands of strikes and work stoppages as unionization proceeded rapidly in the 1930s and 1940s. Wages, of course, increased for many workers in the newly unionized industries. But from a standpoint of the Great Depres- sion and overall employment, the new labor relations had problems as well. Since much higher wages were the cost of doing business for many corpora- tions, they hired fewer workers and trimmed down their labor forces when possible—especially by mechanization, which occurred rapidly in the coal industry, for example. Unions often discriminated against blacks, so they rarely benefited from new labor laws. And American exports were sometimes less competitive on world markets. That also diminished sales and new hiring, which prolonged the Great Depression.…

If the evidence suggests that the New Deal failed, that raises a legitimate question: What should Roosevelt have done about the Great Depression? Put another way, what better path might Roosevelt have taken to achieve economic recovery?

Such a question is, of course, speculative and counterfactual. No one can be sure what alternatives would have produced a stronger economy and less unem- ployment. The Great Depression was a complicated, worldwide crisis and difficult to handle. It’s easy many decades later to see errors in policy. Also, Roosevelt and other leaders were constrained politically and economically. They did not have the hindsight we have today. For example, few politicians of the 1920s and 1930s saw the damage done by the Federal Reserve, and not just in the higher interest rates, but in its demand that banks change their reserve ratios. Few saw at the time how the declining money supply, a by-product of Fed actions, damaged the economy and hindered recovery. In any case, however, because the Fed is independent, no one can really fault Hoover or Roosevelt for problems created by the new federal banking system.

Given the constraints on Roosevelt, then, and the confusion created by this unique depression, what could Roosevelt have done to achieve better recovery for the economy and more employment? Some comparisons might help. In the Panic of 1893, U.S. unemployment briefly hit what was then the all-time high of 18.4 percent, but the panic was over in a little more than five years. In the mini-recession of 1921, unemployment reached 11.7 percent, but hard times lasted less than two years. In both of these economic downturns, Presidents Cleveland and Harding cut federal expenses and, in the case of Harding, cut the income tax rate as well. Soon investments in business became attractive again, capital slowly flowed back into the American economy, and it bounced back. In recessions before 1893 and 1921, presidents followed roughly the same plan and the crises

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