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article number 293
article date 11-28-2013
copyright 2013 by Author else SaltOfAmerica
We Elect President Franklin Roosevelt & Get a “New Deal”, 1933
by James Truslow Adams

From the 1942 book, The March of Democracy, The Record of 1933-1941.

ON January 23, Missouri, the last of the necessary thirty-six States had approved the XXth Amendment to the Constitution which provided that in future, the President should be inaugurated on January 20 instead of March 4, and the newly elected Congress convene January 3, so that Roosevelt was the last President to be inaugurated on the historic date.

Meanwhile, in 1933, the now powerless President Hoover had to struggle along with the lame-duck Congress. The executive and legislature had long been at loggerheads, and although in the country’s crisis, Hoover suggested that Roosevelt, as President-elect, should co-operate with him, the latter declined for the most part to do so.

Everything in the future, for the nation as well as himself, would depend on his establishing his own prestige by his own methods. It would have been folly for the new President to court defeat at the hands of Congress before he had even entered upon his new duties.

By March 4 the country was in the midst of a banking panic and a crisis of the first magnitude. In State after State the governor had been forced to declare banking “holidays” and to close the banks under his control. The American people were bewildered and completely discouraged. The Hoover administration was on the defensive. Congress was discredited as were also the big bankers and other business leaders.

Nothing much was known about Roosevelt, except his smile. As William Allen White wrote at the time of his inauguration, “… we are putting our hands in a grab-bag. Heaven only knows what we shall pull out.” With the disingenuousness apparently required of a Presidential candidate, his campaign speeches had not disclosed his real views, and confidence in him had been gradually waning until the, for him, lucky attempt at his assassination in Florida on February 15, which resulted in the death instead of Mayor Cermak of Chicago.

Roosevelt’s superb behavior on that occasion, and the sudden realization that he was all that stood between the nation and possible choas and ruin, rallied public opinion behind him as behind no other President-elect since Washington. The people were demanding some one to lead them, some one with character, some one who, whether wise or foolish, would at least try to do something.

They had grown perhaps a little suspicious of Roosevelt’s extremely charming personality, but when in the few minutes after the bullet was fired, Roosevelt showed himself wholly careless of his own safety, thoughtful only of his doomed friend, the people realized the courage and character behind the urbanity, and their confidence suddenly went out to him.

Between a thoroughly discredited Congress with no ideas beyond the pork-barrel, and a popular hero, who was realized to be the only possible savior, if there was to be one, of society, there was no longer any question as to which would be master.

Roosevelt was inaugurated on Saturday, March 4. During the preceding days not only had banks been closing wholesale but gold had been steadily withdrawn on a large scale. The day before the inauguration the New York banks alone had lost over $116 million. On the day the new President took office all the banks of New York and Pennsylvania were added to the closed list, as were also all the principal stock and commodity exchanges.

Inauguration of Franklin Delano Roosevelt, March 4, 1933.

Stories had begun to leak out of colossal losses and scandalous mismanagement of the people’s money by such men as Charles E. Mitchell at the head of the National City Bank of New York and Albert H. Wiggin at the head of the Chase National of New York, two of the largest banks in the world.

In his Inaugural Address, Roosevelt lashed out at the “money changers,” promised “action and action now,” and stated that if no other way were feasible he would ask war-time powers from Congress.

By six o’clock in the afternoon he had secured from the Senate confirmation of all his Cabinet appointments without even the usual reference to a committee. The more notable appointees were Cordell Hull, the first Secretary of State from the South since Calhoun; Wilham H. Woodin, Secretary of the Treasury; Harold L. Ickes, Secretary of the Interior; and Miss Frances Perkins, Secretary of Labor, an extremely able woman and the first to sit in an American Cabinet.

At the Cabinet meeting next day, Sunday, the immediate problem was what to do about the banks. Attorney-General Cummings assured the President that the “Trading with the Enemy Act” of the World War had not been repealed in full and that he could use it.

Roosevelt had already considered this and immediately issued a proclamation closing all the banks in the country for four days, placing an embargo on gold and silver for either export or domestic use, and imposing a penalty of $10,000 fine or ten years’ imprisonment for violation.

FROM THE NEW YORK TIMES OF MARCH 6, 1933. The headline reads Roosevelt Orders 4-Day Bank Holiday, Puts Embargo on Gold, Calls Congress.

Monday morning the American people woke up to find themselves limited for the time being to the cash which they happened to have in their pockets on Saturday.

The spell of panic, however, was broken. The psychology of the nation was changed in an instant. A wave of good humor swept over it. Every one, rich or poor, was in the same boat, and the sudden discovery that no matter how much you owned you had nothing to spend was treated as a huge joke. After three years’ gloom and fear, the American spirit, responding to new leadership, suddenly found itself again.

The new Congress had been called in special session for March. Meanwhile the President had been at work on measures to reopen sound banks as quickly as possible—money to be advanced by the RFC; the President’s right of action under the doubtful Trading with the Enemy Act to be confirmed; war-time powers over gold to be granted to him.

On the evening of the 8th he called together the leaders of the new Congress and received their reluctant consent. In the early hours of the dawn, Secretary Of the Treasury Woodin was asked by newspapermen as he left the White House if the bill were finished. “Yes,” he answered, “both bills are finished. You know my name is Bill, and I’m finished too.”

The following day Congress met, was organized in three hours, and in less than forty minutes after the House had begun consideration of the President’s banking measure it was passed by acclamation, the Senate passing it by a vote of 73 to 7 after three hours’ debate. Roosevelt signed it that evening.

No such speed in peacetime legislation had been known before. An hour later, the same night, the President announced to a stunned meeting of the leaders that he wanted authority to cut $100 million off government salaries and $400 million off veterans’ pensions and compensations, about 2,500,000 persons being involved.

The next day he sent a special message to Congress showing that passage of the bill was necessary or the deficit would be $5 billion by June 30, 1934.

Two days later, March 12, he gave his first Presidential talk to the people over the radio on the subject of the banking situation. It explained the position in the simplest terms, as well as what he was trying to do, and made a tremendous popular hit.

It has been said that the permanent officials of the Treasury sent him a draft of a speech, which was full of involved statistics, and which no one but a banker could understand. Roosevelt at once said it would not do, and hen sitting a few minutes before a blank wall he visualized the ordinary Americans who would be listening to him—tradesmen, farmers, mechanics, clerks, professional men, and others with no technical knowledge of banking, and decided what he would say to them.

The next day he sent another special message to Congress urging the immediate modification of the Volstead Act so as to permit, within constitutional limits, the sale of beer of higher alcoholic content in order that new revenues could be collected.

The succession of short, sharp, and most incisive messages indicated to the public that the President had a well-defined policy which he was unfolding step by step, and public confidence rose rapidly, reflected in rising prices on the stock and commodity exchanges.

“Looks as If the New Leadership Was Really Going to Lead.” Political cartoon highlights “emergency legislation.”

This was only in part true, though in the next few weeks more bills were sent to the obedient Congress, which promptly passed them—bills for the protection of the investor in securities, for mortgage relief, and other purposes—and on April 19 the President definitely carried the United States off the gold standard.

He was, in fact, with the help of what he considered the best expert advice, although always making final decisions himself, trying experiments, and occasionally he frankly said so.

In these experiments he has been motivated by two objects—one the overcoming of the depression, and the other the making over of the economic organization of the nation, the latter being what he called in his campaign speeches “the New Deal.”

It is “the New Deal” which appears—it is too soon yet to speak positively—his chief objective, and it is difficult as yet to judge what his conception of the new society may be. In his first year he has shown enormous courage but has, apparently, not seldom changed his point of view, as well as his advisers.

As the latter loomed large in the administration, to a considerable extent displacing the regular Cabinet in public sight, the so-called “brain trust” requires some comment:

Of recent years college professors have been more and more frequently called into consultation as “experts.” Hoover made frequent application to them when President; Roosevelt did the same as Governor of New York; and foreign governments have done likewise.

However, they have never been so in the forefront of affairs as since Roosevelt entered the White House, and this, together with the vagueness of what the “New Deal” might signify, helped to hinder the restoration of confidence.

The lack of ability to foresee the future, to say nothing in too many cases of the absence of personal integrity, had indeed thrown the “big business men,” the bankers and captains of industry, into the discard, but on the other hand the American has never had much belief in the practical ability of a professor, and the “experts” have disagreed among themselves as notably as doctors are said to do.

JUST OILING THE CLOCK A BIT. A cartoon by Carlisle on the “Brain Trust” Trying to Fix a Broken System in “The Des Moines Register.”

Moreover, Roosevelt chose many of his advisers from the distinct radical or left-wing group, the names of most of them being utterly new to the public.

At first among the chief of these appear to have been Professor Raymond Moley, Doctor R. G. Tugwell, and A. A. Berle, Jr., all of Columbia University, New York. In the summer of 1933 there were added to these and many others, Professor G. F. Warren of Cornell, a leading advocate of the “commodity dollar,” and Professor J. H. Rogers of Yale. At least twenty to thirty others could be mentioned.

It is to the “brain trust” that we owe the carrying out of the vague “New Deal,” or as a great admirer of the President prefers to call it, “the Roosevelt Revolution.” What the final result may be, no one can yet say, but as we shall see at the end of the chapter, they have presented a staggering bill for the American citizen to pay.

In May, in spite of somewhat improving conditions, it appeared as though the forces of disorder were gathering strength. The strongest two political groups with us are the veterans and the farmers, and both of these threatened trouble.

A new Bonus Expeditionary Force marched on Washington, but Roosevelt had made preparations in advance and the disgraceful scenes of the previous year were not to be re-enacted.

He had already organized his Civilian Conservation Corps, as one of his favorite relief measures, and thanks both to his personality and the evident lack of sympathy throughout the country with the demonstration being made by the ex-soldiers at the Capital, the march ended in a peaceful settlement.

By August 1 over 30,000 veterans were working with 210,000 other young Americans, in the Corps, building 50,000 miles of roads and trails, 12,000 miles of telegraph lines between fire lookouts, and improving conditions on some 15 million acres of our forest lands.


The project for such a Corps of young men had long been a favorite one with the President, and may likely prove a lasting organization in our national life. Without general training in the army and with the practical disappearance of frontier experience, the opportunity offered by the Corps for a large number of young men to spend some time in at least a semi-disciplined life in the open appeals to many as an admirable thing.

Adding educational features and the genuinely useful work in conservation of our forest and other resources, the objections to such an organizing of young men for temporary training are slight and the advantages are many. The future of this work holds many possibilities if properly and wisely handled.

The farm problem was more serious and cannot be said to have been settled yet. The farms of the nation were burdened with a mortgage debt alone of between $8 billion and $9 billion, largely incurred when farm products had been at extremely high prices, whereas they had now fallen to equally extreme low prices.

The farmers, unable to pay their interest and other debts, had united here and there, as they had done a century earlier, in attempting to prevent foreclosure and the loss of their homes, but the country was suddenly shocked into a more acute awareness of the situation when a farmer mob at Le Mars, Iowa, carried a judge out of the court room, abused him, put a rope around his neck, and threatened to lynch him unless he would agree not to sign any more orders for foreclosures.

One of the chief features of the depression throughout the world has been the maladjustment between the prices for raw products, that is commodities of all kinds, and of finished goods, the former having fallen much lower in proportion than the latter. Moreover, the farmer in general for the past few decades had been allowing himself to become less and less self-supporting.

The old-fashioned farm with not only its chief crop but also its pigs, chickens, cows, and so on, had been, even in bad times, a fairly self-sustaining unit, but the modern farmer with his tractor instead of plow and often having to buy practically all he uses, even his eggs and milk, has become in innumerable instances almost as dependent on a constant inflow of money income as a city dweller.


Caught with heavy debts and to a great extent unable to sell his crops for even the cost of production, his plight had become pitiable, although it must be confessed that he was not altogether blameless, for during the years of prosperity, instead of reducing his mortgages and other debts he had increased them.

The war had brought him high prices and a much extended market, and he had joined in the general American delirium of believing in the permanence of the “new era.” Great industrial corporations had likewise increased their plants and debts to find themselves suddenly without the demand counted upon.

At such times of stress the farmer has always insisted upon an inflation of the currency, “cheap money,” so that he may pay his debts more readily. It is an interesting point, which should have a strong bearing on the possibility of managing a currency in America, that the demand for a changed dollar never occurs except when prices are falling.

When prices are rising, and therefore it is easier for a debtor to pay, it never occurs to him that he should offer his creditor a larger sum than called for in principal or interest to offset the creditor’s loss, but always—in the 1830’s, 1850’S, 1870’S, 1890’s—when prices fall, then comes the inevitable demand for a cheap dollar.

The lesson would seem to be that with our temperament we shall never make a dollar dearer though we may from time to time make it cheaper. But a stable dollar, which shall always have the same purchasing power, entails the altering of its content or value so as to halt rising prices as well as falling ones.

On the other hand the psychology of the American people will have to be completely altered if we are to witness them deliberately trying at any time to halt rapidly rising prices for farm produce, stocks, real estate or other things.

The old dispute as to inflation was one of the marked features of the year’s history, and the creation of a dollar with a higher purchasing power became a fixed part of the President’s policy.

The Farm Relief Bill sent to Congress by Mr. Roosevelt, and finally accepted by him with what was known as the Thomas Amendment, gave the President varied and enormous powers of inflating the currency. He was permitted to reduce the gold content of the dollar up to 50 per cent; to issue $3 billion in paper money; to provide for the unlimited coinage of silver at the Bryan ratio of 16 to 1; and in other ways to cheapen both credit and money.

Don’t Crush Them! The Farm Relief Bill would affect more than farmers.

Without going into details, the President’s own part of the bill had provided for lowering the interest rates on farm mortgages, for a government guarantee of the interest on $2 billion of mortgage debt, and the revolutionary idea of paying the farmer for reducing his planted acreage in the hope of reducing output and so raising prices.

In fact, the farmers, as in cotton for example, by an increased use of fertilizer and perhaps more intensive work, have actually raised a larger crop on the reduced acreage. The government had made the incredible error of paying out taxpayers’ money to the farmers not for a smaller crop but merely for cultivating fewer acres.

The year’s history has raised some very pretty ethical problems, of which the plan just noted and the currency question are two of the most interesting.

Necessity knows no law, but it may be asked what are the possible limits of paying a man not to work? If in a period of glutted markets and low prices a farmer is to be paid not to raise crops, why should not a copper mine owner be paid not to mine copper or an author not to write books?

It is impossible that the farm problem, which is one of the most serious in America, can be settled in that way, and unless the markets of the world are again opened, the plight of the farmer is likely to become even more difficult, especially in such crops as cotton which chemists are now threatening to produce synthetically with more ease than the manufacture of artificial silk.

Meanwhile, the farm problem remained one of the most baffling in the President’s first year.

The history of that year is essentially economic and it is impossible to describe all the measures taken by the administration or to describe all the agencies set up to carry them into effect. These became known by the initials of their names until the alphabetical jumble became bewildering, as is evident from the following list of the chief new bureaus created:


AAA —Agricultural Adjustment Administration.
CCC —Civilian Conservation Corps.
CCC —Commodity Credits Corporation.
CSB —Central Statistical Bureau.
CWA —Civil Works Administration.
ECNR —Executive Council for National Recovery.
ECPC —Executive Commercial Policy Committee.
FACA —Federal Alcohol Control Administration.
FCA —Farm Credit Administration.
FCT —Federal Coordinator of Transportation.
FDIC —Federal Deposit Insurance Corporation.
FESB —Federal Employment Stabilization Board.
FERA —Federal Emergency Relief Administration.
FHC —Federal Housing Corporation.
FHQLC —Federal Home Owners’ Loan Corporation.
FSHC —Federal Subsistence Homestead Corporation.
FSRC —Federal Surplus Relief Corporation.
NEC —National Emergency Council.
NIRA —National Industrial Recovery Act.
NLB —National Labor Board.
NRA —National Recovery Administration.
PAB —Petroleum Administrative Board.
PRA —Presidential Re-employment Agreements.
PWA —Public Works Administration.
SAB —Science Advisory Board.
TVA —Tennessee Valley Authority.

One’s mind goes back at once to the Washington of war times, and indeed the city was humming with an activity and the rapid growth of a bureaucracy such as it had not known since the days of Wilson and the European conflict. Of a few of these new activities we shall speak later, but must now consider the currency problem which was so closely allied to that of the farmer.

A POSSIBLE ADDITION TO THE LINE. A cartoon in “The New York Herald Tribune” on the costs of the many Government Relief Agendas.

When Roosevelt agreed to the Thomas Amendment to his Farm Bill on April 19 and took America off gold, the British Prime Minister, MacDonald, and the representative of France, M. Herriot, were on the ocean on their way to Washington whither they had been invited by Roosevelt to consult on means of world co-operation in re-establishing stability and trade.

They were stunned by the news which they received at sea that America had abandoned the gold standard, and were resentful at what they considered a trick merely to place a strong weapon for bargaining in the hands of the President.

Reassured as to the American domestic necessity of the action when they reached the Capital, plans were made for the assembling in London in June of representatives of sixty-five nations in a world Economic Conference.

Perhaps the most disastrous feature of the depression had been, as we have said, the enormous drop in the prices of raw materials in every country producing them, whether farm produce and metals in America, copper and nitrates in Chili, coffee in Brazil, rubber in the Far East or what not.

At going prices, the producers of commodities could no longer exchange their depreciated products for the manufactured goods they desired. Added to this was the complete demoralization of the foreign exchange markets in money and the impossibility of those who did an international business figuring costs or profits.

Moreover, the growing international deadlock was made worse by the increasing economic nationalism—the effort of each nation to save itself regardless of the international situation which was one of the root causes of the internal troubles of each.

Roosevelt had had from the beginning, as one of his chief aims, the raising of commodity prices by whatever means possible. He appears to have wavered between national and international action until after the Economic Conference had actually got started on its work in London.

It is certain that after the Washington meeting both MacDonald and Herriot expected that he would assist in the effort to stabilize the foreign exchanges and thus render the international flow of goods and services, so essential to recovery, easier.

It is also certain that when the American delegation sailed, they understood that one of their most important duties would be to stabilize, even though only partially and tentatively, the dollar with other currencies.

There was a choice of two methods. Each country might try to raise its internal level of prices by currency manipulation regardless of other countries and of international trade; or the assembled nations of the world might try to raise world prices by some common agreement which would involve some more stable relation of the currency of each to all the others.

The two methods were obviously mutually exclusive, for if each country tried to raise its internal prices by lowering the value of its currency regardless of others, the international chaos could only grow worse.

Roosevelt and his advisers had either not grasped this inherent incompatibility of methods or the President was wavering between two sets of advisers and the two methods of procedure.

In any case, he suddenly made up his mind to keep a free hand to play with the American dollar and to decline any resort to international stabilization. His cable of July 3 to the Conference stating his determination with great abruptness astounded the world and torpedoed the Conference.

With his instructions suddenly torn to bits, Secretary Hull labored manfully to save America from the not unwarranted anger of the other nations who had assembled with us for joint action, and to secure at least some results from the meeting. In this he was eminently successful, and the fact that the Conference did not at once break up with extremely bad feeling was due wholly to him.

Meanwhile, Moley, who had been the original head of the “brain trust” and very helpful to Roosevelt during his campaign and early days as President, had turned up in London. Although only Assistant Secretary of State, his actions there with reference to his chief were such as to bring to a head a situation that had long become impossible.

It was clear that Mr. Hull could no longer retain both his dignity and his office if Moley remained, and the latter was soon removed.

Franklin Delano Roosevelt, Thirty-Second President of the United States.

When the United States had gone off the gold standard in April it had been confronted by a problem which, in its immensity, was peculiar to itself. Not only was the government honor pledged to pay the interest and principal of the national debt in gold coin but, largely dating from the fear of inflation in the Bryan campaign of 1896, the greater part of all municipal, railroad, and other bonds and mortgages was also so payable.

In most foreign countries such contracts were payable merely in “sterling,” “francs,” “marks,” and so on, so that no question arose when one country or another had gone off gold, except in a few cases which called specifically for gold payments. In such cases the highest Court in England, the House of Lords, decided late in the year, that payment would have to be made either in gold or in its equivalent value in the paper money of the country, and the British Empire has honored such clauses.

The almost universal insertion of the gold clause in the United States undoubtedly constituted a grave danger, and it may have been against public policy.

The fact remained, however, that the debtors had for years been getting better terms for their loans because of it, and now when at last the creditors found themselves in the position against which they had been insuring themselves it was a distinct blow to public confidence to have Congress pass, and the President sign, June 5, an Act abrogating all these contracts and cancelling the obligation to pay in gold or its equivalent.

In view of the rising price of gold and the vast mass of debt in the country, the measure was probably necessary but the fact that it marked a breach of good business faith on a hitherto unprecedented scale could not be concealed. This, with the failure of the Economic Conference, made men realize even more fully the far-reaching possibilities of the depression and of the as yet undefined “New Deal.”

In his cable to London, the President had spoken of a “commodity dollar,” and business was getting more and more at sea as to the monetary policy of the government, and as to what all contracts and property might be worth in the future.

The first burst of optimism was over, and during the summer both the markets and the volume of many lines of business dropped somewhat alarmingly again.

Moreover, new developments had come throughout the spring with a rapidity and on a scale which had taken people’s breaths away. Since the World War the government had owned the immense power resources of Muscle Shoals, for which it had paid about $165 million.

As part of his public works programme, which was eventually to have $3.3 billion allotted to it for expenditure, the President got a bill passed not only for the development of the power of the Shoals but for a corporation which, under the name of the Tennessee Valley Authority, was to develop a whole area of 640,000 square miles and lead, as he said, to “national planning for a complete river watershed involving many States and the future lives and welfare of millions.”

If the project should prove successful, he indicated that he had it in mind to duplicate it in other parts of the country. Naturally this threatened competition of the government with private enterprise on a colossal scale alarmed many, particularly the holders of public utility securities which, next to governments and railroads, had been considered the safest in the country.

Largely held by savings banks, life insurance companies, trust funds, and private investors, the threat to one of the greatest industries in America had a depressing effect for the remainder of the period under review.

Of the various new government agencies set up, however, that which became known as the NRA evoked the most public interest. The National Industrial Recovery Act, passed in June, was made up of two distinct parts, the second granting the President control of the $3.3 billion already mentioned for public works, which he might use at his discretion interpreting the words in their very broadest meaning.


Although this was the greatest effort made by any nation to try the experiment of recovering from a depression by use of public money, it was the first part of the Act which was the most interesting.

The American has always been an individualist but as the wealth and opportunity of the individual grew on a national scale, and the great corporations arose, we have seen how the ordinary American felt it necessary, in order to preserve his own opportunity as an individual, to curb that of the trusts and great wealth. Hence tame the Sherman Anti-Trust Law and other efforts which we have already noted in preceding chapters.

It was evident, however, with 12 million unemployed, that the evils of uncontrolled competition could be as great as those of combination in restraint of trade.

Employers might try to keep on employees, to maintain wages, and in other ways to soften the effects of lack of business, but with cut-throat competition for what little business was doing, there was in every trade, at least a minority who would stop at nothing to cheapen costs and thus take business away unfairly from the better employers.

The first section of the Recovery Act aimed to correct this situation. As the Sherman Anti-Trust Law was constitutional and had to be got rid of, the President declared a “state of emergency” to exist, which he could declare terminated at any time.

According to the terms of the Act, any representative trade could draft a code of fair competition, which could be altered or amended by the President and which, when he had signed it, would become binding law on every one engaged in the trade.

The President could force the drafting of codes even if an industry preferred not to do so. The right of both employers and employees to organize was recognized and the codes had to contain agreements as to maximum hours, minimum wages, and other details.

The Act was, in most of its features, to remain in force for two years, unless the President terminated the “emergency” sooner. It became evident, however, from his statements that he considered the new framework of industry would in many of its features be a permanent change from the old.


The first code to be submitted and accepted was that of the textile industry, which incidentally abolished child labor, but it soon became evident that the drafting of codes would be slow work, and on July 20 Roosevelt issued by decree, a blanket code to shorten hours and raise wages, pending the formulation of codes for individual industries.

Gradually these were submitted and signed, those for oil, steel, and lumber on August 19, and for the automobile trade a week later.

General Johnson had at once been placed in charge of the NRA and realized the slowness of the voluntary drafting of the codes, which led to the President’s issuing his blanket code, for which there was no legal basis and which had to be accepted voluntarily.

At once Johnson swung into a campaign like that for the Liberty Loans in the war. The “Blue Eagle” was to be displayed by all joining and it was somewhat too clearly indicated that employers or shops which did not display it were to be boycotted.

Mass emotion was played upon, and such great enthusiasm was worked up that Johnson predicted the return of 6 million workers to employment by September, though, in fact, only about 2 million additional were then employed.

It is too soon yet to calculate what may be the final result of the NRA. It has worked in many cases rather hard on the small business man, and has accomplished considerably less than was hoped. On the other hand, we shall probably not go back to the old conditions, and some permanent as well as temporary gains may be anticipated from it.

If a reasonable degree of prosperity returns once more, as it probably will, the attitude of the average citizen toward all these amazing powers which have been bestowed upon the government may change to a great extent.

What people are willing to do and submit to when frightened is quite different from what they will accept when self-confident. It is too early as yet to speak of a permanent “revolution” as having been accomplished.

The “Blue Eagle” was to be displayed by all joining and it was somewhat too clearly indicated that employers or shops which did not display it were to be boycotted.

Toward the end of the year confidence was growing somewhat greater, and this was in one way evidenced by a freer discussion of the policies of the “New Deal,” and especially of the President’s attitude, so far as it was inferred or known, on the currency question.

The effort to raise prices by buying gold, which is supposed to have been the idea of Professor Warren, proved a somewhat absurd failure. Late in November, the resignation of Doctor O. M. W. Sprague as adviser to the Treasury, a post in which he had been far from happy, became the signal for more general criticism of the government’s wavering course on money.

In the next few weeks, to mention only a few incidents, the Advisory Council of the Federal Reserve Board went on record as opposed to it; the American Economic Association did the same; a group of Yale professors of economics published a manifesto against it; a group of Harvard experts published a book condemning it.

Finally, on January 31, 1934, the President issued a Proclamation devaluing the dollar by close to 40 per cent in gold, agreeing to purchase all gold offered at $35 an ounce, and also to sell gold to foreign central banks whenever it reached the export point.

Without attempting to enter upon the intricacies of the gold standard and exchange, it may be said that this action put the United States partially on a gold basis again and definitely reduced the value of the dollar, which the President reserved the right to reduce further to 50 per cent of its former worth in gold if he considered it necessary.

The government had taken possession of all the gold in the banking system, and the Treasury figured that by reducing the gold content of the dollar from 25 and 8/10ths grains to 15 and 5/2Ists, it would make a “profit” of approximately $2.7 billion.

Of course, taking over all the gold and reducing the amount in each dollar would leave the government in possession of the balance, but instead of a “profit” it must be considered, whether wise and necessary or not, as confiscation of the property of the government’s citizens rather than a “profit” in the ordinary sense.

Let us suppose that the government had seized all the land in the country—so many acres from each owner. Then suppose it decreed that henceforth an “acre” should contain not 43,560 square feet but only 26,136, and returned to each owner the same number of “acres” it had taken from him. By this process it would have come into possession of 40 per cent of all the land in the United States, but no one would claim that it had done anything but confiscate it.

What the ultimate effects of the depreciation of the dollar will be yet remains to be seen. It should benefit exporters and hurt importers, and as domestic prices gradually rise some classes will gain and others lose.

There would seem to be little doubt, however, that as one blow after another has been given to good faith and the sanctity of contracts, far-seeing investors have become less inclined to place their money in fixed or long-term investments, and that recovery has to that extent been retarded.

On the other hand, the belief that the President has considered a return to a gold basis and that the depreciation will now be held within the limits of a fifty to a sixty cent dollar, has helped the growth of confidence.

Meanwhile Roosevelt had met Congress on January 3, 1934 delivering his message in person, and the nation was stunned when told the bill it would have to meet. The deficit for the current fiscal year was given as approximately $7 billion, and the budget for the year as over $10.5 billion.

The President estimated that the government would have to borrow $10 billion in the next six months, and that by June 30, 1935, the total debt would be nearly $31 billion, when he hoped the budget might become balanced.

In his campaign speeches he had advocated “sound money” and an immediate balancing of the budget. The measure of the anxiety through which the nation had been passing for months may be taken from the fact that it felt a certain relief in January in finding itself with a fairly definite fifty to sixty cent dollar, and a budget which might be balanced in another two years after colossal taxation.

ISN’T THE BLAMED THING EVER GOING TO TAKE OFF? A cartoon by Carlisle in “The Des Moines, Register” in the summer of 1934.

As we have seen, the codes under the NRA brought about the abolition of child labor, though if the codes should lapse at the end of the “emergency” of two years, it is possible, though unlikely, that child labor might come back.

Another significant experiment at the other end of the age scale has now come into play by law in twenty-five States—the substitution of old age pensions for the former “poor house,” a movement which is likely both to spread wider and to be extended in scope.

During the year also, there was inaugurated what Miss Perkins considers one of its “real achievements,” the establishment of a national employment service under the charge of the Department of Labor and now operating over 2400 employment agencies scattered through every State in the Union.

On the other hand, there has been a notable antagonism shown to the granting of huge salaries and bonuses to corporation officials. The various investigations of the year into the private affairs of many of the members of leading banking houses added to the feeling which was already rapidly growing. The bonuses, running in some cases into the millions, which had been paid to some corporation officials, had become a disgrace, both to the Boards of Directors who granted them and to the officials who received them.

The RFC set a salutary example when it refused to advance money to certain railroads until the official salaries had been reduced to reasonable limits, and it is said that when Mr. Schwab was arguing with Mr. Roosevelt over the steel code and remarked that he must look after the interests of his stockholders, the President smiled ingratiatingly and asked “were you looking after the interests of the stockholders when you paid those million-dollar bonuses to my friend ‘Gene Grace’?”

In New York City the overthrow of the shameless government of Tammany Hall and the election of Mr. La Guardia as Mayor was a significant event, and on the whole, in spite of colossal burdens assumed and much uncertainty as to the future, the first year of the Roosevelt administration marked a considerable advance in the national life.

Not only had hope and vigor replaced the despair and lack of initiative of the preceding three years but we had come to occupy ourselves with the genuine betterment of conditions for all.


In his speech to Congress on January 3, 1934, the President admitted that much which had been done hurriedly under the spur of necessity might have to be altered but that nevertheless progress had been made toward a better organization of the life of the nation.

“We have undertaken new methods,” he said. “It is our task to perfect, to improve and to alter when necessary, but in all cases to go forward,” and on the whole the country did go forward in the first twelve months of his term.

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