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article number 303
article date 12-31-2013
copyright 2013 by Author else SaltOfAmerica
Many Government Programs are Declared Unconstitutional, 1935
by James Truslow Adams

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

ALTHOUGH it is difficult to appraise rightly the ultimate importance of exciting events while living in the midst of them, I think it safe to say that the year 1935 will eventually be considered as one of the most important in the history of the Republic. It was a year which answered no fundamental questions for the American people—in spite of the Supreme Court decisions which we shall note in the course of this chapter—but which so placed issues before us that they must soon be settled one way or another; and the entire course of our civilization may depend upon how they are settled.

The significance of the year is that it has posed such important questions for us, and that America is forced to decide. It may be, for example, that toleration of opinion and the personal liberties of freedom of speech, press and action may be compatible with the extreme form of political and economic centralization and control desired by many, though both ancient and modern history, notably that of our own day in a number of great countries, would appear to teach otherwise.

If they are not, then men and women will have to decide which of these goods (if extreme centralization is a good) they most desire, and cast their ballots or perhaps, in time, fight for those they most desire.

Fortunately our decision cannot be made hastily. In the great populations of our modern democracies false information and emotion derived from newspapers, the moving pictures and the radio, acting upon all of us simultaneously, may cause us to advocate a course of action which we may later regret.

The example of the Hitler régime in Germany shows us how even a sober, orderly, and highly cultured and intelligent nation may embark upon a course which ends in economic, spiritual and intellectual ruin, and once embarked finds it impossible to turn back.

In our own form of government, perhaps the most useful function performed by our Supreme Court is that of preventing us from suddenly changing our institutions in their fundamental form, and of at least giving us time to consider whither we are bound.

What even the friends of the present administration like to call “the Roosevelt Revolution” involves a large alteration in our relations to one another, in the relations of the citizen to his government, and possibly even in the choice of goods as noted above.


Many of the most radical, indeed almost revolutionary, measures passed by the administration in the three years it has been in power has been declared unconstitutional by the Supreme Court in 1935.

This does not mean that the Court is oblivious to the social ills of our time or heedless of a humanitarian program.

It does mean, however, that the methods of solution for our problems, proposed in haste and without due consideration, have not been in accord with the fundamentals of our form of government. These include certain defined relations of the citizen to his State and national governments.

They also include certain relations between the States and the Federal Government which latter was erected to bind the States together, to perform certain functions for all better than the individual States could do, and also to guarantee certain personal liberties to all citizens.

Decisions by the Court, although binding, are not final settlements of the problems involved. Either of two things can be done. More carefully thought-out solutions might be found or less carelessly drawn laws enacted which might better meet the constitutional test; or the Constitution itself, if a real majority of the American people and not a mere minority group wish to do so, could be amended.

This is not, as some loud voices claim, necessarily a lengthy process. When the opinion of the people was finally consolidated, the amendment repealing Prohibition was put through all its stages in about nine months. The “lame-duck” amendment took only about eleven months.

If the people do not take interest in a proposed change in our fundamental institutions or if a majority is opposed to such change, it would seem unwise that such change could be made by the Executive or a mere majority of one Congress.

A very active minority may object strenuously to a delay of a few months before they can attain their objects, and indulge in recrimination against the Court, but, as just noted, if the people really wish the object to be attained, the delay need not be more than a few months.

Such a delay is surely better than to force a change, perhaps little understood or even undesired, on the nation without giving it time to think or express its genuine opinion.


The fact that such a “breathing space” has been forced on the people in 1935 is the most significant characteristic of that year. The American people may or may not as a whole approve of the New Deal and the methods adopted to put it into practice.

If they do not, they should be thankful to the Supreme Court. If they do approve, the road is open to them to propose and pass amendments which will enable them to draft laws in accordance with an amended Constitution. At least they have been given time to think, and they have, under the present Constitution, the power to act.

So long as that Constitution lasts and the Supreme Court carries on its present function of interpreting it, they cannot be swept along in a resistless current as have all classes in Russia, Germany and Italy. To one who has watched events in those countries, to some extent at first hand, that would appear to be something to be grateful for rather than to condemn.

We may now pass on to consider some of the more specific important events of the year which bear on the generalizations of the preceding pages.

Congress, the first to be elected since the inauguration of the New Deal, met on January 3, and on the 4th, the President, in person, delivered his message on the state of the nation, his message on the budget following a few days later. In both of these he again emphasized his policy as trying to lead America toward a “new order of things” but “under the framework and in the spirit of the American Constitution.”

The keynote of the first message was “the security of the men, women and children of the nation,” toward which goal the entire program of legislation should be directed. Somewhat better business had almost wholly failed to reduce unemployment, and during the year the number of unemployed was variously estimated at from ten to thirteen million.

In January there were about five million on the Federal payrolls alone, of whom the President estimated 1.5 million as unemployable. The remaining 3.5 million he planned to take off ordinary relief and set to useful work as rapidly as possible.

Instead of a dole, which would have been financially much the less expensive method, he wished to set the unemployed to work on such projects as slum-clearance, reforestation, road building, and so on.

For this purpose he asked Congress for $4 billion, and in spite of a heated contest between those who favored the dole system and those in favor of the works system, Congress finally appropriated $4.880 billion “subject to allocation by the President.” No such sum had ever before in the history of the world been voted to be placed at the disposal of one individual.

The task of spending such a huge amount not only wisely but as rapidly as possible—as it was largely to provide for those out of work and without means of support—was obviously a most difficult, and as was to be proved, an impossible one.

Clearly the work to be provided would have to be of a sort in which labor costs would exceed the cost of materials as largely as might be. The object was not to provide the nation primarily with new roads, buildings and other things which it might or might not need but to provide penniless people out of work and out of luck at the very moment with means of subsistence.

Moreover, the work was stipulated to be of a sort which should compete as little as possible with private industry so as not to cause further unemployment by forcing private business to turn off employees, by the government undertaking work which would have otherwise been handled by private concerns.


Undoubtedly it is far better for the morals of a man or woman to be paid for doing useful work than a mere sustenance dole in idleness. It was this aspect of the case which appealed to the President. The conditions of the problem, however, as has been noted, were extremely difficult.

To a great extent the authorities in Washington consulted the local ones throughout the nation. Haste was essential, yet haste, in many cases, precluded careful consideration and detailed examination of plans suggested. Moreover, local politicians were anxious to bring as much money into their own communities as possible.

As a consequence, sums were spent in many places for work which could not be classed as necessary or useful, and the term “boon doggling” became popular to describe such enterprises. For the most part the amounts involved were comparatively small although in the aggregate they have been considerable.

Looking at the problem merely from the economic and not from the human side, it is obvious that the “works” plan is far more costly than the “dole” plan. In the latter the government, which means in the end the taxpayer (as the government can raise money only by taxation or borrowing, and borrowings have also to be paid eventually out of taxes), has to pay only the cost of feeding, clothing and sheltering those without means of their own.

On the other hand, the works plan calls for large outlays in addition, such as the cost of drawing plans, legal expenses, cost of materials, and the overhead which any ordinary business has.

Americans are a kindly and helpful people, and those with jobs or money assuredly did not wish to allow other Americans to be without food or shelter in the emergency, but as the year progressed the realization sank deeper that the eventual bill to be footed, whether taxes should be increased before the election of 1936 or postponed until after, would be a staggering one.

In his budget message, the President, who as we noted in the preceding chapter had announced in January, 1934, that he hoped to balance the budget by June, 1935, stated that the budget for the fiscal year ending June 1936, would still leave an additional deficit of $4.5 billion, and that by June 30 of that year the national debt might stand at over $34 billion.

In fact, it did reach an all-time high of over $30 billion by December, 1935, and it was then freely predicted that it would rise to $38 billion in another two years.

People began to realize that unless the government went bankrupt and merely repudiated these huge debts (which as the debt has largely been carried by the banks for the government would mean their bankruptcy also and bring our whole business system crashing about our ears), they will eventually have to be paid either by ourselves or our children.

On January 17, the President sent to Congress his message on Social Security which resulted in the passage of the Act of August 14, although Congress was much overburdened and many Congressmen favorable to the object of the Act strongly desired to hold it over for more careful and mature consideration.


When signing the bill the President expressed his belief as to its fundamental importance, and remarked that if Congress in its session had done nothing else, the passage of this bill would make it “historic for all time.”

Just as every one agrees that those injured in war, the widows of those killed (until remarried), and the minor children should be assisted by the State, so most now agree that the State should provide a greater degree of security for the old and for those injured, so to say, in the economic life of the modern world.

In theory, social insurance is correct, but in America just as the cost of war pensions exceeds the cost of the wars themselves, there is danger, as we do things, lest the cost of social security might approach perilously near the value of the social product.

It all depends on how we administer the system chosen; whether we make it honest and scientific or whether we handle it as we always have the war-pension scandals.

Even at present no one knows what it will cost. It is estimated that almost immediately 25 million people may become beneficiaries, with 50 million on the payrolls in less than twenty years more.

If our handling of war pensions forms any criterion as to what may happen, we may also expect constant demands for increasing the amount of pensions and also the number receiving them, by lowering the age limit and in other ways.

This comment is not directed against the need of increased social security for our citizens. It is an open question, however, whether the matter should be handled by the Federal Government or by the States, and we certainly have to take into account the corruption of our politics as noted above.

During the nearly three centuries of settlement and westward migration, from the founding of Jamestown in 1607 to the presidency of Theodore Roosevelt in 1901, Americans had been accustomed on the whole to doing much as they liked in exploiting the resources of the continent. The American temperament, character and outlook, as we have known them, were formed during that period which embraces nine-tenths of our entire history.

Ordinary life was bare, meager and hard, but the prizes to be won were colossal. Economic success seemed to bring with it all the other desirable goods, and men as a whole devoted themselves to achieving that, and not mere security and contentment, with a vigor and buoyancy of spirit never known elsewhere.


The striving for this single goal, however, brought many evils in its train. In most of America, scholarship, letters, the fine arts, even the art of living a happy and fully rounded life were sacrificed to the striving for “success.” To a great extent even government was sacrificed, and the man who saw, or thought he saw, the way to millions with their attendant prestige, power and luxury, did not care to become a government official or employee.

Even such giants in Congress as Daniel Webster obeyed attentively the business desires of their constituents. It is true that many of those who reached the highest pinnacles of material success were of the coarser and more ruthless sort, far from admirable as men or citizens. But it is a mistake to think that these formed a small class apart from the rest of us.

Almost all the founders of great fortunes rose from poverty and obscurity, and it must be recalled that for one who succeeded there were tens of thousands like-minded in their ambitions and methods who failed.

For these and other reasons we have developed the politician and spoils system as known among us, rather than a government machine composed of trained men in the Civil Service.

This has made it difficult under the New Deal properly to plan, carry out and co-ordinate the work of all the new bureaus. This has called for an enormous expansion in the number of Federal employees, which is said to have increased by over 200,000. Indeed, it was estimated by the end of the year that 16 per cent of all workers in the nation were on the government payrolls.

It is impossible to follow in this brief review the increase and frequent changes in the bureaus, commissions and departments, some thirty of the leading ones of which were listed in the preceding chapter.

From various public utterances, the President had evidently considered that the strongest two pillars of the New Deal were the NRA, which regulated industry, and the AAA, which regulated agriculture. Both of these had many good ideas embodied in them but both proved unwieldy in practice.

For example, the hundreds of codes under the NRA became increasingly annoying to business men, especially to the smaller ones who could not afford costly legal advice at every turn. Some features of the NRA, such as the abolition of child labor, had met with pretty general approval throughout the nation, and would be desirable to retain permanently in some form.


Nevertheless, the constant interference with the running of business of all sorts by Executive Orders from Washington which were claimed to have all the validity and force of law, aroused much opposition, and the whole system by which Congress had delegated excessive powers to the President had always been considered unconstitutional by many of our leading legal minds and others.

The AAA had also become infinitely more complicated than had been intended or planned at first. Both that and the NRA were based on a philosophy of controlling (largely raising) prices, and of reducing production so as to create an artificial scarcity.

The leading problem of our day, which had been widely discussed, had been considered to be how, in the midst of a vast potential plenty for all, that plenty could be best distributed so that all might share to a greater extent than hitherto. We had solved the problem of production, both agricultural and industrial.

The unsolved problem was how to bring about a more just distribution. After three years of the New Deal many people who believed in its humanitarian objective came to be more and more sceptical as to its method of attacking the problem of plenty by the creation of artificial scarcity.

Whatever the solution may be, the year 1935 was notable for bringing large numbers of citizens to a new realization of the difficulties and complexities involved in trying to regulate the entire economic life of a nation of 125 million citizens, each one of whom is naturally primarily concerned with making his own living if possible and as good as one may be.

In the beginning, the AAA had started to regulate only one basic crop, cotton. Growers were to be paid for reducing the amount raised, being paid for what they did not raise by money derived from a “processing tax” to he passed on to the ultimate consumer of manufactured cotton goods.

It was hoped that prices would rise, the income of the farmers would be increased, and a better balance established between them and the manufacturers whose goods they bought.

At least two unexpected results had become clearly evident by 1935.

One was that by raising the price of American cotton artificially above the world price; we heavily damaged and greatly endangered for the future our foreign markets for selling our surplus crop, cotton having been one of our most important exports, and the growers largely dependent upon such exports for their prosperity.

The other discovery had been that in a complex, closely interwoven agricultural-industrial nation such as ours, the artificial control of the price of one basic commodity leads practically inevitably to the control of others, and, in time, possibly to that of practically all.

One crop, for example, can be restricted but the repercussions from this control spread in all directions, like the circles on water when a stone is thrown into it.

PRESIDENT ROOSEVELT PRESENTS THE FIRST CHECK TO A TEXAS FARMER FOR THE DESTRUCTION OF HIS COTTON. Forty-seven acres had been plowed under in accordance with the government plan for reducing crops. Underwood and Underwood photo.

The Farmer may be paid for not raising cotton but other crops can be raised on the acres left idle. That makes a sudden increase in the new crop raised, and a glut ensues which hurts those who had been raising it before, so that the newly enlarged crop has to be taken under control in its turn.

Tobacco was thus taken over and made basic. But when cotton and tobacco were limited, peanuts could be raised, and peanuts became basic and controlled when the peanut growers of North Carolina were threatened with ruin by the sudden increase in production in other parts of the country. So it goes.

Moreover, in this day of synthetic products given to us by modern chemistry, there are many substitutes for vegetable products. An enforced scarcity of one of the latter leads to an increased manufacture of its industrial substitute, and control has to be widened to include those.

To a considerable extent, however, the policies of the government have been altered, or at least their application has been halted, by the action of the Supreme Court.

The decision by the judges that the AAA was unconstitutional belongs to the history of 1936, as it was not handed down until January of that year, but from the beginning of 1935 there were accumulating evidences that many of the policies of the New Deal were unpopular whether in accord with the Constitution or not.

By January some cases had advanced far enough for decision by the highest tribunal, and on the 7th the Court, by a vote of eight to one, decided that Section 9C of the NRA (the clause involved in the case) was unconstitutional.

In that clause, the Court stated, Congress had transferred part of its lawmaking function, set down in the Constitution as its alone, to the President. If Congress could do that, then it could go on and transfer other legislative powers, not only to the President but to other officials or individuals.

In a word, it would open the way to the abdication of Congress and the transfer of all its powers to a dictator.

In another decision, May 27, the Court declared practically the entire NRA unconstitutional and the whole fabric crumbled. The Blue Eagle was dead. However, business men and politicians had already come to the conclusion that the NRA had outlived its usefulness, such as it had been, and had rapidly been becoming both a business and a political liability.


For easily understood political reasons it would have been difficult if not impossible to legislate it out of existence. The Supreme Court had cut the knot. The President expressed much concern as to the result on the nation’s business but fortunately his fears were unjustified.

Indeed, the destruction of the NRA marked the beginning of genuine business recovery. The economic life of the nation took a fresh start. This may have been in part due to the fact that forces of recovery may already have been well in motion.

It would seem more likely, however, that there was genuine economic advantage in the abolition of the codes, and more especially that there was a considerable restoration of the feeling of confidence, without which there can be no genuine revival of business, due to the fact that the decision of the Court showed that there was still a bulwark between the people and the increasingly mistrusted ideas and experimentation of the New Deal.

The NRA was finally dissolved by the administration on January 1, 1936.

It may be noted that by that time the poll being taken by The Literary Digest showed that of the 1,370,000 answers received, 60 per cent were opposed to the New Deal, a marked change from 1934 when practically the same people addressed had voted 60 per cent in favor of it. The figures must be taken only for what they are worth but in the past the Digest polls have been remarkable for their accuracy in indicating general public opinion.

Early in the year, on February 18, decisions were handed down by the Supreme Court on a group of cases involving the repudiation by the government of its promises to pay holders of government bonds in gold coin of the former weight and fineness existing before our depreciation of our dollar to approximately fifty-nine instead of one hundred cents, and the abrogation of the gold clause in all private contracts as described in Chapter One.

This decision—rendered five to four—was hailed by the government as a victory though it was really a moral defeat. The Court generally agreed that Congress had power to regulate the currency and hence could devalue the dollar.

It was further agreed that there could not exist a sort of double system of money in the country, the dollars in private contracts being valued at 100 cents while the government dollar was 59 cents.

But a very sharp line was drawn between the power of Congress to regulate the currency and the right of the government to go back on contracts previously made with the people who in good faith had loaned their money to the government when the government had needed it and who would now have their money paid back to them shorn of about 40 per cent of its previous value in gold.

Even among the five judges who upheld the administration in the main and as to the power of Congress to regulate the currency and the value of the dollar, this point was strongly stressed.


Thus Chief Justice Hughes, one of the five, said in his Opinion that a promise solemnly made by the government to repay money borrowed by one Congress could not be altered by a later one merely because it found repayment under the agreed terms inconvenient.

“On that reasoning,” he said, “if the terms of the government’s bonds as to the standard of payment can be repudiated, it inevitably follows that the obligation as to the amount of payment may also be repudiated. The contention necessarily imports that the Congress can disregard the obligations of the government at its discretion and that, when the government borrows money, the credit of the United States is an illusory pledge.”

He pointed out that there were no remedies the citizen could invoke unless Congress provided them but that, nevertheless, if Congress failed to provide them, “the contractual obligation still exists, and, despite infirmities of procedure, remains binding upon the conscience of the sovereign.”

So far from providing remedies, the government later passed legislation preventing suits from being brought against it in this connection. The whole proceeding of the government, which brought such a sharp rebuke from the Court as to its morality, had not even benefited the government as had been hoped.

As we noted in an earlier chapter, devaluation and repudiation had not attained their object of immediately raising the level of prices when a price rise might have been helpful but had merely piled up trouble for the future when the full effects of the policy may be felt in an abnormal speculation and rise in living costs when not wanted.

Much the same must be said of the government’s policy as to silver, which by the end of the year, in spite of having caused much suffering among the peoples which have a silver currency, and demoralization in the silver markets of the world, had had no such beneficial effect among ourselves as had been anticipated by those favoring it.

On May 6, the Railway Pensions Act, which had placed a peculiarly heavy burden upon one industry arbitrarily selected, for pensions to workers, was declared unconstitutional by the Supreme Court, and during the year lower Federal courts declared other Acts unconstitutional, though many of these cases had yet to reach the Supreme Court at the end of the year.

In fact, before it was over, some 2000 suits had been started involving almost all aspects of the New Deal.

THE JUSTICES OF THE SUPREME COURT. This body is the highest Court of Appeal in legal matters and determines the constitutionality of laws passed. Photograph taken in 1935.

In spite of many of its ideals and aspirations, with which a large portion of forward-looking Americans must agree, so much of its legislation had been prepared so hastily, crudely and apparently regardless of the Constitution that few of us engaged in agriculture, commerce, industry and other pursuits could tell where we stood at the end of this momentous year.

Indeed, in July the President had pressed for the passage of the Guffey Coal Bill, requesting that the Committee of Ways and Means would allow no doubts as to its constitutionality to “block the suggested legislation.”

Earlier in the year, the President had failed to get favorable action on our joining the World Court. This, unlike the more debatable and contentious subject of joining the League of Nations, which might easily involve us in the quarrels of the Old World, would not lead us into international complications and would make for peace rather than for war.|

So far, however, though successive recent Presidents have all asked for the same action as did Roosevelt, the Senate has blocked the way. In view, nevertheless, of the alarming outlook abroad, notably in the Italo-Ethiopian dispute, Congress passed a bill, later subject of much dispute, looking toward preserving our neutrality in case of war.

An excellent recommendation by the President was that the government accounts should show clearly what subsidies are being paid to shipping companies under the guise of padded costs for carrying the mails, so that we may really know to what extent this particular industry is being subsidized.

It is one of the serious drawbacks to government operation of any business that it is far more difficult for the citizen to know actual costs than in the case of private business.

The accounts of all large-scale businesses are of necessity complicated, but the government is now the biggest business of all, and unlike private concerns, it audits its own books as each department pleases. No outside auditing firm is employed to check figures or suggest methods of cost accounting. This gave rise during the year to a considerable political controversy as to whether the Post Office had shown a large surplus or a large deficit.

Spending as we are now a half score or more of billions every year, it is hard to determine what undertakings are profitable and what may not be. This is one reason why it is hard to determine whether a government charge for any service is really a “yardstick” or not.

Any suggestion, therefore, such as noted above by the President for a clearer accounting system should be welcomed, and it is to be hoped that such suggestions may in time be made for other government enterprises and expenses.

In spite of much continued crime in the United States, one of the matters accomplished by the Roosevelt administration, on the value of which all can agree, has been the fine work done by the “G-men” under J. Edgar Hoover, at the head of the Federal crime bureau.

Only a year or two ago it seemed as though we had become helpless before the group of leading criminals and organized crime, with its keen minds and vast financial resources. The police of our great cities and forty-eight states seemed unable, as separate units, to compete with them.


It is said that the criminals themselves gave the nickname to the Federal officers of “G-men,” meaning government men, and it is certain that criminals fear them as they never did loc¬al officials.

As a result of captures and prompt sentences or the killing of leading criminals resisting capture, many of the most notorious criminals are now out of the way, and there seems a fair chance of stamping out the most infamous of crimes for which our America has unhappily been noted: Kidnapping for ransom.

Even huge ransoms look small as compared with almost certain tracking down and prompt conviction. Moreover, there seems to be a healthy change in public interest. The most notorious criminals, because of their daring and the risks they took, acquired not only public interest but a certain misplaced public sympathy.

The G-men, however, are quite as daring and take as many risks in protecting homes and society as the criminals did in bringing anxiety and sorrow to them, and now bid fair to become the public heroes in place of the gangsters.

They are beginning to occupy the place in story and public imagination that the long-noted Northwest Mounted Police have in Canada, and there could be no happier augury for a period of better law enforcement in our country in this and the next generation than this shift in interest, particularly for the young.

There will be less juvenile crime and creation of potential gangsters when boys learn to admire the G-men rather than the enemies of society they track down.

Although so many of the measures of the Roosevelt administration are controversial, and intelligent men honestly differ about their value, the establishment of the G-men, as also of the CCC, mentioned in the review of the previous year, has met with the approval of all Americans regardless of party or economic views.

On May 22 the President appeared before Congress in person to deliver his Veto Message against the latest Bonus Bill. By the end of 1934, during which year about $700 million had been paid to the veterans, they were again demanding immediate payment of the adjusted certificates due only in 1945.

In spite of much murmuring among Congressmen about “mail order legislation” and “government by telegraph,” direct pressure upon members of Congress proved successful, as usual, and the measure was passed.

In his Veto Message, the President calmly gave his reasons for refusing to sign the bill. America, he said, had been generous to the veterans. Up to June 30, 1934, it had spent in various ways more than $7.8 billion upon them, and by 1945 the figure would have reached to $13.5 billion.

The immediate payment, as called for in the bill, of the face value of the certificates not due until 1945 would entail a clear gift of $1.6 billion more. He also pointed out that the veterans would share in the benefits of the Social Security Act, and that they had already shared to a greater extent than any other group of citizens in the money spent by the PWA.

It may be noted that in addition to what they have received from the Federal Government, the veterans have also received large sums from the individual States, ten of which have given bonuses costing the taxpayers approximately $350 million. Other States have granted money in other forms, such as Kansas, which in fifteen years has expended over $6 million on her veterans; or New York, which, under certain circumstances, exempts the real estate of veterans up to $5000 from taxation.

Maine has a local pension system which in six years up to 1934 cost that far from rich State $500,000. Oregon, in addition to the bonus given, created a revolving fund for loans to veterans amounting to about $31 million. The insurance offered during the war, and the bonus and other benefits granted by the Federal Government were given in the belief that the nation might avoid such pension systems as have followed previous wars.

For 1935, the Patman Bill failed of passage over the President’s veto by only nine votes in the Senate.

THE BONUS ARMY. Many veterans of the Great War actively marched or assembled as the “Bonus Army” in request for early redemption of their service certificates.

Business improved during the year, the decisions of the Supreme Court having helped to restore confidence, so that the so-called “heavy industries,” which had seriously lagged in recovery, began to gain ground at last.

The huge sums poured out by various government agencies had been felt mostly in increased purchases of consumers’ goods, but fear of what might still be in store, from either economic or political causes, had continued to keep capital timid about investments in building new plants or otherwise developing industry.

A broad and sustained recovery cannot be based merely on arranging that by government borrowing the people, or a portion of them, shall have more to spend on clothes, cars, entertainment, food and other perishable commodities.

Relief is necessary, but pouring government funds into the business well in certain lines has apparently not worked as the alluring metaphor of “priming the pump” suggests it might.

The business of the country cannot get under permanent headway until large numbers of men, large and small, have determined to spend or borrow money for the creation of durable goods, such as dwelling houses, enlargement or modernization of plants and machinery, and so on.

This can come only from a reasonable confidence in the future—hence the value of the Court decisions—and this confidence may be shaken by either economic or political causes.

The failure of the heavy industries to get a start was particularly notable in the utility industry, which, except for lack of confidence, would have invested huge sums in new plants and modernization. Although during the year, the gross business of this industry rose to an all-time record, its securities remained far below the level of prices which mere business conditions would have caused them to attain.

Few investors were so hardy as to put new money into enterprises to which the administration had shown itself distinctly hostile.


The willingness of the government to make gifts to localities to build their own plants at about half actual cost rendered deadly destructive the competition of such fifty-cent plants with even the most honest, efficient and public-spirited private plants which had had to provide the entire cost of construction for themselves, and at interest rates governing money borrowed for private industry and not at rates ruling for governments or municipalities.

The claim of the TVA to be a “yard stick” for the price of electric current, even though it later claimed in 1936 that it sold its current merely as a by-product of other enterprise, had been pretty well shattered before the end of the year.

Nevertheless, private capital was naturally shy of investing in enterprises which might be run out of business any moment, and so one of the greatest industries of the country did not provide its share in general recovery.

Just as toll roads have gone and we now travel freely on roads provided by public authority and at public cost, and just as for the most part we cross free the bridges which used to charge for the privilege, so some day the government may decide to provide electric current at half the cost of production or free.

The public demand and the tendency of the present government seem to point in that direction, but we are apt to make such changes without reimbursing those who have formerly provided services, just as, when Prohibition came in, the values of breweries and distilleries were destroyed without compensation.

The unwillingness of private capital to pass into an industry so threatened can be well understood, but is unfortunate as greatly retarding the possible rapidity of general business recovery.

Meanwhile, the CCC, already mentioned, continued its excellent work, especially in reforestation, which adds a very important item to the genuine and permanent wealth of the nation, not merely in standing timber but in the preservation of the soil.


In a short summary, it is impossible to write of all the activities of the government, which have come to an astounding degree to overshadow the daily life of every citizen. It is also too soon to give a fair appraisal of the New Deal.

It may well prove that in the long run we may judge President Roosevelt less by the successes or failures of his individual acts as by the new social outlook which he insisted upon, as we now do Wilson and Theodore Roosevelt.

Perhaps we should not say a new outlook, for it is as old as the Christian religion, but we need at times some leader to bring us back from a rampant materialism.

In practical measures the New Deal cannot be called a success. In fact, to a large extent its measures lie around it in ruins. Nevertheless, after the twelve years of crass materialism following as a reaction the abortive idealisms of the war, we needed to return to the search for a better social order.

By the end of 1935 scarcely any one could deny that the ordinary American citizen was taking a much keener, and, let us hope, a more intelligent interest in public affairs as contrasted with his private ones.

As usual, however, a prolonged depression brought forward all sorts of quack schemes, and promises by leaders enjoying a temporary popularity of things impossible to perform. Among the more picturesque of these leaders for a time was U. S. Senator Huey Long, who succeeded in making himself practical dictator of the State of Louisiana, the only dictator of quite that sort we have yet had in the United States.

His assassination on September 7, though deplored on account of the method of combating such an assumption of power, was generally accepted by the nation as fortunate. Both his rise and fall may have represented a passing phase of our political life or, more ominously, the beginning of a new era in our politics.

The waning power and influence of Father Coughlin of Detroit would seem, however, to mark a returning sanity.

Toward the end of the year, on the other hand, the Townsend plan to give every person over sixty at least $200 a month provided the money were spent within that time became regarded as possibly a dangerous political issue.

On the whole, however, America ended the year in a distinctly sounder condition than at the beginning. Business had improved; confidence had to a considerable, though far from complete, extent been restored; and many Americans at least had learned as a result of the experience of the preceding five years that quick easy money, bull markets and good tips are not all that is requisite for the good life.

A saner and more wholesome atmosphere had replaced the feverish excitement of the pre-depression years and the extreme hopelessness of 1932.

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