Timer
Message Area
lblCurrentLayerIndex
lblCurrentImageIndex
lblFade-OutLayer
lblFade-InLayer
lblSponsorAdTimer:
lblHidCurrentSponsorAdIndex =
lblMadeItTo

  < Back to Table Of Contents  < Back to Topic: You Can Enjoy Politics

article number 336
article date 04-22-2014
copyright 2014 by Author else SaltOfAmerica
The President Takes Control of our Currency, the Air Mail and Labor, 1934
by James Truslow Adams
   

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

THE year 1934 was filled with striking events both at home and abroad. Our domestic affairs, with which we are chiefly concerned here, were set against a world background of political uncertainty and violence unexampled since the end of the World War.

In France the scandals growing out of the Stavisky murder and other cases resulted in the fall of the Cabinet on January 28, and early in February a week of rioting and bloodshed in Paris caused the gravest crisis since the establishment of the present republic.

The following week there was rioting in Vienna against the government, resulting in large loss of life.

On the 17th of the month the world was stunned by the news of the death of King Albert of Belgium, killed while mountain climbing, and the European situation became tense, though it quickly cleared.

In June occurred the shocking wholesale murders committed by the Nazi government in Germany in Hitler’s “purge,” soon after which he assumed supreme power as a dictator, following the death of General von Hindenburg.

At intervals there were bloody upheavals in Spain.

In July the chancellor of Austria was assassinated, as were the King of Yugo-Slavia and the French Foreign Minister, Barthou, in October.

The year ended with a renewal of mass murder in Russia.

In the Far East, Japan continued to exploit Manchukuo and disregard world opinion, while at our own doors, the revolution in Cuba became more Communistic and violent.

   
IS IT GOING TO EXPLODE AGAIN? A cartoon in the early part of 1934 by Fitzpatrick in “The St. Louis Post Dispatch” on the threat to World Peace.

In spite of these and other happenings in many countries, threatening the stability of individual nations and world peace, the United States, though suffering from sporadic violence in a series of strikes, which will be noted later, proceeded in an orderly fashion with stupendous plans for recovery.

We have no exact figures in our country for unemployment or for those receiving various forms of Federal, State and local relief, but at one time the estimate of those being thus helped ran as high as 20,000,000.

Although this figure, to be surpassed in 1935, may have been exaggerated, the proportion of our citizens ordinarily self-supporting who had to ask aid before the end of this fifth year of the depression was staggering, and considering the genuine sufferings of the people, the patience and good sense manifested were remarkable.

This has probably been due to several causes. In some respects the American people is a lawless one. In the past all too many, from the great business leaders down to the smallest individual, have chosen for themselves from among the innumerable wise and unwise laws of the nation and its forty-eight States which they will obey and which they will not. As a result, partly of national character and partly of the unique conditions of our national development, this fact has bred disrespect for law, and incidentally the rise of a genuine criminal class.

But the American people have at the same time never been revolutionary. They have indeed been extraordinarily conservative in their fidelity to established forms of government. So much so that we are far behind many other countries in social legislation.

Another point in the present depression as contrasted with earlier ones in which greater violence occurred has been the unprecedented scale on which individuals of all sorts have been helped by the governments, state and national, as noted above. A century ago, in the great depression of 1837 to 1841, men and women froze and starved to death in the streets of even New York. By gigantice efforts that sort of thing has not been allowed to happen this time.

Just as the dole in England, however much deplored, is acknowledged even by die-hard Tories to have saved that country from social revolution in the past decade, so the enormous sums for relief of all sorts under which we have staggered probably account for the comparative lack of trouble during these terrible five years among ourselves.

As a third point, we must accept as a great stabilizing factor socially the leadership of President Roosevelt, whether we agree or not with many of his experiments and specific policies. Personally, I disagree with many, but the belief on the part of the great majority of the people that he is doing his best for them has undoubtedly kept down a large amount of discontent which under a less popular and trusted leader might easily have smouldered into fierce flame.

   

Undoubtedly some of his policies have considerably retarded the rate of recovery, which with us has lagged rather conspicuously behind that of the British Empire and some other countries. It is also a question whether, if recovery is too slow, the policies may not lead us into worse conditions owing to a heavily depreciated currency which would overwhelm all, rich and poor alike, in common disaster.

As we noted at the close of the preceding chapter, Congress met on January 3, 1934. The President presented the figures for government expenses, stating that the deficit for the fiscal year would be around $7 billion but that he hoped to balance the budget by June 30, 1935.

The nation was stunned but the President’s control over Congress was as notable as in the preceding special session, the famous “hundred days,” and the legislature offered little or no opposition to the program of the administration. So, far from reducing any of the extraordinary powers granted to him in the emergency of the preceding year, his hands were strengthened and the legislation consisted largely in rounding out the main features of the New Deal.

One of the first of the important measures passed by request of the President was the Gold Reserve Act. This forbade the coining of gold and gave the government title to all the monetary gold in the country, including all the reserves of the Federal Reserve Banks.

Under the Thomas Amendments to the Agricultural Relief Act, noted in the preceding chapter, the President had been given power at his discretion to reduce the gold content of the dollar by 50 per cent. The Gold Reserve Act now specifically gave him the power to reduce it to between fifty and sixty cents, and it was in accordance with this new Act that he established it temporarily at 59.06, as already described.

The Act also transferred some of the powers properly belonging to the Federal Reserve system to the Treasury, that is, unfortunately, to a purely political instead of a banking agency.

   
GOLD AT 59.06 PER CENT OF DOLLAR VALUE. New York Times cartoon.

As a further inflationary measure, Congress passed, on June 19, a silver purchase act which it was estimated might entail the purchase of a billion ounces and gave Roosevelt the power to place the country on a bi-metallic basis. As has been shown over and over again in history when two metals form the basis for a nation’s money, one always shoves the other out of circulation, depending on which is the cheaper commercially. Another element of uncertainty was thus introduced into our monetary system.

On August 9 all the stocks of silver in the country were nationalized and owners were forced to sell to the government at 50.01 cents an ounce and turn their holdings over to it.

Although as yet, except as a potential source of possibly great future inflation, our new silver policy has had little effect on our domestic situation, it has had serious results for the countries which have a silver currency, such as Mexico and China. By forcing up the price of the metal we have raised the value of their currencies while all the rest of the world, except the small “gold bloc,” has been reducing the values of theirs.

This has put the silver countries at a great disadvantage as to foreign exchange and naturally reduced their purchasing power abroad. It may be noted here that the silver question, intruded constantly into our political life, has to a great extent been an offshoot of the “great compromise” in our Constitution which gave each State two senators while basing representation in the lower house on population.

Had it not been for the abnormal political influence thus given to the only seven, mostly thinly populated, states which produce silver, the silver currency question would have always had less power to disturb us. The influcence of the silver group has not been based on the number of ounces produced but on the number of senators involved, the total value of silver production being less than half the value of our peanut crop.

Before mentioning other Congressional measures we may stop to consider some of the effects, actual or potential, of the currency measures taken during 1933 and 1934. In actuality thus far they have not brought about the results for which they were designed. The measures were all aimed at bringing about a rise in prices.

Professor Warren’s gold purchase scheme proved farcical, and prices instead of rising actually declined somewhat while it was being practised. Again, after the gold value of the dollar was cut by about 41 per cent, wholesale prices rose only about 26 per cent and retail prices less than that. Moreover, a large part of both these rises can be directly attributable to the increased costs of production due to N.R.A., the A.A.A. and other parts of the New Deal. Yet if prices rise promptly in proportion to depreciation of the currency, they should have risen 70 per cent.

The fact is that unless a person feels that his money is going to depreciate constantly on his hands he will not buy goods simply because some of the purchasing power of his money has been taken from him, any more than he will borrow money simply because he can do so at the low rate of 1 per cent.

Until he feels confidence in the general business outlook and in his own personal one, he will continue to limit commitments and act with caution. As a means of raising prices to lift us out of the depression the methods taken with the currency have thus largely, if not wholly, failed.

   

On the other hand, the measures taken, besides having caused us to break the national faith, may be laying up much trouble for us in the future. Owing to the enormous amount of promises to pay in gold dollars or the equivalent at the old value, estimated as high as a hundred billion dollars, the catastrophe would be so great if the Supreme Court decided that the Act of Congress abrogating the “gold clause” were unconstitutional, that it is probable that body may have to find some way of validating our breach of faith.

The number of gold clause contracts in other countries have been so small that their problem is quite unlike ours but it is not pleasant to go back on all our contracts while the courts of such nations as Holland and England are declaring that their business men must pay in full in such cases.

On March 1, the Republic of Panama, with which we had a treaty guaranteeing that small country as rent for the Canal zone $250,000 a year in the value of our former gold dollars, returned the check sent, demanding that we pay them what we had promised and not the equivalent of only $150,000.

On the other hand, Canada, which has outstanding in the United States alone, gold obligations to the extent of about $2 billion, would find itself, in proportion to its resources, in almost as awkward a situation as the United States if the Supreme Court uphold the gold clause.

The scale on which the gold clause has been put into contracts, public and private, in America has created an entirely different problem from that existing with regard to a comparatively small number of contracts in Europe. Congress has the unquestioned constitutional power to regulate the value of money.

But if the citizens at large create such a mass of future contracts payable in money of a value of their own choosing, as to force the country into bankruptcy if Congress alters the value and the Supreme Court at the same time upholds the contracts, then Congress has practically been deprived of its constitutional power.

There is no question that the gold clause on the scale we have used it, has been against public policy. The decision of the Supreme Court belongs to the history of 1935 but we may note here that the President, Congress and the Court were placed in a most difficult, if not dangerous, position by the vast outstanding mass of gold contracts.

Apart from this question of honesty, other serious problems loom. If sooner or later we have a sustained rise in business, the effect of the depreciated dollar will then be felt on prices, not now when wanted but just when it will not be wanted. When business and speculation become active, prices will rise of themselves but they will rise far more rapidly, possibly to the full 70 per cent extra, with a sixty-cent dollar than they would have done with a hundred-cent one.

   

In addition, with the huge increase in government bond issues, with the possibilities inherent in the Thomas Amendments, the Silver Acts and others, and with the now practically complete dominance of politics in the Federal Reserve Bank System, the difficulty of preventing a huge inflation of both currency and credit would seem to have become almost insuperable. The result might well be such a boom as would be followed necessarily by a collapse which, as President Angell of Yale writes, would make “the events of 1929—1933 seem trivial.”

Thus far, therefore, it would seem as though the financial and currency policies of the government had not brought about the expected result of a rise in prices, have not “primed the pump,” and have not restored confidence but on the contrary retarded its growth. Yet they have set forces in motion which may do incalculable harm. It is impossible to predict and one can consider only what has—or has not—in fact been achieved and what the possibilities may be for the future.

Among other important bills passed was the Bankhead Bill which gave the government compulsory power to limit the production of cotton not only in the nation but on each individual farm. After a summer’s trial this was endorsed by the farmers themselves by an overwhelming majority in a referendum vote in the autumn. This is not altogether surprising as the system would seem to have given the farmers who are now raising cotton a monopoly of that branch of agriculture.

A number of bills were passed for increase of the revenue, among them a new Income Tax Bill increasing returns by about $300 million. As part of the New Deal, Congress also provided for the control and regulation of the Stock Exchange, a wise action considering the magnitude of the interests now involved however the details may work out. The fact that changes were also enacted making the Securities Act of the preceding year more workable would indicate that such controls would in time be placed on a practical footing.

Another action taken which may be considered as part of the New Deal program was the National Housing Act. By the terms of this it was hoped to reorganize the financing of private homes by those in need of assistance, and to stimulate the greatly lagging building trades. It provides that a home owner can repair or improve his house up to the amount of $2000 by discounting his note at his bank without security, the government guaranteeing the bank up to 70 per cent of the loan.

If a person wishes to build a house he may get a loan from his bank on one mortgage payable in twenty years at a low rate of interest instead of first and second mortgages for short terms at high rates. The government undertook to guarantee the mortgage up to 80 per cent or $16,000, thus hoping to release bank funds for this purpose.

For various reasons, the law expected to put about $1.5 billion into circulation has not accomplished as much as was hoped, either in relief or recovery, but has been helpful.

   

Another Act which was a hopeful sign of increasing understanding of our economic situation in relation to the outer world, but from which the results thus far have been meagre was a Tariff Bill which gave the President power to negotiate and conclude agreements with foreign nations, permitting him to raise or lower existing duties by 50 per cent.

Mr. George N. Peek, the President’s special adviser on foreign trade, calculated that from 1914 to 1933 the debt owed to us by the rest of the world had been increased by over $20 billion. Of this the “War Debts” represent about $10.3 billion, but it is evident that apart from them we cannot expect to continue to sell to other nations or get returns on our foreign investments unless we consent to buy more goods from them.

It was not unexpected when in June, Great Britain joined the other foreign nations (except Finland which continued to pay) in default on its War Debt to us. The British had been making “token” payments as an acknowledgment of their recognition of the obligation pending a possible re-settlement of the whole problem.

Great Britain decided to suspend even this as a result of the absurd Johnson Bill, passed in April, which forbade Americans to lend money to any foreign country which might be in default of all or even a part of the money due us.

In an effort to put an end to the seemingly endless and bloody war between Bolivia and Paraguay, Congress prohibited the export to them of arms or ammunition and we requested that other nations would do the same but the munitions interests were too strongly entrenched in Europe for the most part and we were left with only the moral satisfaction of ourselves not aiding the conflict without being able to stop it although England joined us in May.

Two other interesting actions were taken outside our own borders. A new treaty was made with Cuba by which we gave up our right of intervention under the Platt Amendment. This was in line with our efforts to establish better relations with all South America which Secretary Hull had worked for on his trip to the Montevideo Conference.

A new Philippine Independence Bill was also passed, in much the same terms as the one of the preceding year except that it gave the Filipinos until fall to decide whether or not to accept. Beneficial as their independence may be for the American sugar grower it may well prove disastrous for the islands as many of the best leaders there now recognize.

In the three hundred years of Spanish rule the population had increased approximately from only 3 million to 6 million, whereas in the thirty years of American rule it has risen to over 12.6 million. Nearly half of these people are dependent on the production of sugar, hemp, tobacco and cocoanuts, which in turn are dependent on a free entry into the United States. If the Filipinos accept independence—or have it thrust upon them—they will be outside our tariff wall and the economic crash will probably result in intense misery.

By the end of March, the President, who had been handling Congress with consummate skill, was showing signs of strain, and went on a fishing trip on Mr. Vincent Astor’s yacht for a fortnight. Congress had also felt the strain of being restrained, and in his absence proceeded to pass the Independent Offices Bill over his veto, a bill which called for additional payments to war veterans of $228 million and provided for replacement of two-thirds of the 15 per cent reduction in Federal salaries, including those of the Congressmen themselves.

   

Having behaved like mischievous schoolboys when the teacher has left the room, they suddenly became frightened, and marched in a body to greet him on his return at the Union Station. The humor of the situation was not lost on the President, who made a three minute speech to them from the platform of his private car, one of the most amusing and adroit of his whole political career.

The matter would have been sheer farce had it not been so serious. What appeared was the incapacity of Congress when left to itself and not any relaxing of Executive control, the only other failure of the President to get what he wanted throughout the long session being the rejection by the Senate of his St. Lawrence Seaway Treaty with Canada. He had declared, however, that the passage of the Offices Bill would destroy the savings effected under the Economy Act and upset the financial plans of the administration.

Both in his veto and later in the year Roosevelt made clear his stand on the question of the bonus and veterans’ relief. As for the veterans themselves he has no wish to deprive of their pensions those whose disabilities came from service but he does object to setting up what is practically a relief bureau on special terms for a particular group of able-bodied citizens.

As he put it at Chicago, he believes that “no person because he wore a uniform should thereafter be placed in a special class of beneficiaries over and above all other citizens.” The problem of continual pressure by so large a group is, indeed, one of the most serious dangers which we face in the future.

Almost every President has fought against the scandals of the Civil War pensions, yet although that war cost over $3 billion, the American people have already paid out over $7, billion in pensions to men who fought or did not, who were injured or not, and to their widows, children, and every one else who can claim a blood or pension relationship to them.

For the comparatively small Spanish War we have paid out in pensions over $800 million although less than 400,000 men took part. General Hines, of the Veterans’ Bureau, has estimated that by 1966 this little war will have cost the nation in pensions about $3.7billion, although the war itself cost only $584 million.

When we consider that we had over 4 million men in the World War, and its enormous cost, the prospect ahead of us is staggering. In fifteen years its veterans have already received approximately $6 billion and incessantly the clamor continues for more. If the eventual payments bear any such relation to the cost of the war as in the case of the previous two wars the cost in time to the nation for this particular group of citizens, and every one who can be worked in as related to them, becomes unthinkable.

In this connection we may note that although in many ways, such as old age pensions, the social services in England have been far more largely developed than with us, yet from March 31, 1922, to March 31, 1934, the number of pensioners of the World War fell from 2.9 million to 1 million and the cost of pensions from £95 million to only £45 million, due mostly to deaths, children attaining the age of sixteen, and the re-marriage of widows. The contrast with our own figures and their upward trend is notable.

One serious mistake the President made at the beginning of the year was in connection with the air-mail service. It was claimed that there had been graft and favoritism on the part of the Postmaster General in the previous administration, and Postmaster Farley suddenly cancelled all contracts with the private companies and turned the service over to the army to run.

   
ARMY AIRCRAFT TRY TO DELIVER THE MAIL. Many army fliers were killed during the ill advised operations.

The army proved badly equipped for the work and in the little over three months, from February 9 to June 1, that it carried the mails, twelve army fliers were killed, though in a brief review of this work in “The New York Times” the Secretary of War made no reference to these men who had fallen in line of duty and merely noted that “not a single pound of mail was lost.”

The people, however, had been shocked by what they called “legalized murder,” and a demand went up from the country, notably voiced by Colonel Lindbergh, for stopping the slaughter. The administration had to turn the business back to private companies which were equipped to handle it.

They were, in fact, extraordinarily well equipped. It is not perhaps generally realized what a great change has come over aviation and that America now leads the world. At the time of writing this chapter figures are not yet available for 1934 but in 1933 they were as below:

   
Aviation activity by country for 1933.

Of course the American continent, with its huge area and population, is peculiarly fitted to develop a great system of overland air routes, but the comparison with the rest of the world is no less striking if we consider our Pan-American service which links together thirty-four nations and colonies in the Western Hemisphere.

That service, maintained by the government-subsidized Pan-American Airways, operates more than 26,600 miles of air routes, more than twice that operated by Imperial Airways, which is the British Empire service. In 1933 it operated also a fleet of 139 air liners as against only 37 by the British.

In 1933 this American service, now the greatest in the world, maintained an efficiency rating of 99.5 per cent for schedules, and beat the British by a considerable margin in its safety record,—2.7 million miles flown to every fatal or serious accident against 2.3 million miles for the British.

   
THE “BRAZILLIAN CLIPPER”. A giant modern flying boat which carries forty-four passengers, as well as mail and cargo, and makes an average speed of 150 miles an hour and is capable of 192 miles an hour. Courtesy of Pan American Airways.

The report on the working of the N.R.A. which had been asked for from a committee headed by Clarence Darrow was given to the public on May 20. It was, for the most part, a scorching criticism, laying particular stress on the hardships which the codes entailed upon the little business man in small communities.

After the end of the Congressional session, the President left on July 1 for a month’s holiday, and on the cruiser “Houston” visited Haiti, Porto Rico, the Virgin Islands and Colombia. Having passed through the Panama Canal, he proceeded to Hawaii, and landed in the United States again at Portland, Oregon, on August 5.

Meanwhile a colossal physical disaster had overtaken the country. There had been a cycle of sub-normal rainfall in the central west lasting since 1909, and the dramatic sequel occurred on May 11, when, after scorching heat, a dust cloud 1000 miles wide suddenly carried 300 million tons of formerly fertile soil off the surface of Trans-Mississippi farms eastward across 1500 miles of land and far out into the Atlantic.

New York and other eastern cities were darkened at mid-day by the dirt from far beyond the Mississippi.

It was one of the great disasters of history. The drought and burning heat lasted until the showers of September. Cattle died by tens of thousands for lack of grass and water. In June the government hastily undertook to slaughter over 1 million head to put an end to their sufferings. Of these more than 500,000 had to be buried as unfit for food.

Streams disappeared, and even the Missouri River shrank to one-third of its normal size. Crops were the smallest since the bad year of 1893, and the A.A.A. had suddenly to reverse its policy of crop reduction.

It was a striking example of what can happen to a “planned economy.” In addition to the unemployment already existing, the government had to aid 400,000 families owing to the disaster. The loss to the country was estimated at $5 billion. Fifteen states and approximately 10 million people were affected.

The catastrophe served to call public attention to what has long been going on due to soil erosion.

All over our nation, wasteful forms of farming and the cutting down of forests have resulted in the rain carving gulleys in the soil and ruining rich lands. The director of the Soil Erosion Service, H. H. Bennett, stated last summer that at least 3 billion tons of soil are washed out of the fields and pastures of America every year, and that we have already created, in the President’s phrase, a “manmade Sahara” out of good farming lands which in the aggregate equals in extent the combined States of Connecticut, Massachusetts, and Illinois.

From our great Mississippi Valley alone over 400 million tons of soil are carried into the Gulf annually, a loss every year of the equivalent of enough good soil to make 1250 unusually rich farms of 160 acres each.

Wind erosion is now being added to that from water, and America is confronted by a problem of such magnitude as can be handled only by the wise planning of the Federal Government. One suggestion has been to plant a forest 100 miles wide and 1500 miles long stretching from the Canadian boundary of North Dakota south to Texas.

   
This barn on a farm in South Dakota was almost buried during a dust storm. Photograph by Wide World.

It was evident on his return from Hawaii that the President’s popularity had been in no way diminished, and in his addresses to crowds on his way back to Washington, notably in that of August 9 at Green Bay, Wisconsin, he gave a ringing defense of the New Deal. A month later the normally Republican State of Maine went Democratic, which was considered as a portent of the national election to be held in November.

At the same time as the Maine election, Upton Sinclair, Socialist of California, announced himself as a candidate for governor on the Democratic ticket, winning at the primaries over the other Democratic candidate by 125,000 votes. His “EPIC” (End Poverty in California) plan was so radical and unsound as to make his adherence to the party of no little annoyance to its leaders.

Other plans, even wilder than Sinclair’s, were proposed by others in California and capital began rapidly to leave the State.

At the beginning of October, the President in a broadcast to the people defended the administration, and particularly the N.R.A., although he admitted that it had gone too far in such matters as price-fixing and the limitation of production. He also frankly pointed out other defects, and suggested that he was considering a revision of its provisions with a view to “legislation which will determine its permanent form.”

Speaking of the claim made by business men that his policies were preventing the restoration of confidence, he said nothing as to the unbalanced budgets, the possible reduction of expenditure or a stabilized dollar.

Instead he laid the blame for the failure of confidence to return at the door of labor, and promised to hold conferences with labor leaders to seek some means of establishing an industrial truce.

   
LONG SHOREMAN STRIKING. President Roosevelt would try to reign in labor.

His acceptance of the resignation of General Johnson, the head of the N.R.A., indicated there were considerable changes to be expected. Donald R. Richberg took his place and the general remarked that the “N.R.A. is as dead as the dodo.” It was not, but was to be modified in the next few months, and probably in 1935, on more workable lines for business.

Another important resignation was that of Lewis W. Douglas who had performed notable service as Director of the Budget. In view of the huge unbalanced budgets in prospect, the loss of Douglas was felt by many conservative people as indicating a danger to sound finance.

On the other hand the President’s address to the members of the American Bankers’ Association, gathered in Washington on October 24 for their annual meeting, and the speeches of leading bankers there, were considered as the signing of a “truce” between business and the administration.

Although in the continued attacks on public utilities the “truce” was distinctly not in evidence, on the whole the relations between Roosevelt and business took on a more hopeful aspect for genuine co-operation, which continued from that time to the end of the year.

One of the most disputed points in the N.R.A. had been the celebrated 7A clause which, both in itself and as interpreted, gave, in the eyes of employers, too great power to the labor leaders of the large organizations.

So far from smoothing relations between employers and labor it had made them more difficult, and the year had been marked, as the President admitted, by extensive and frequent strikes.

In March had come the strike in the automobile industry which threatened to paralyze one of the key industries of the country and one on which the restoration of prosperity chiefly depended.

This had been averted by the direct and successful intervention of the President. In June another important industrial conflict, this time in the steel industry, was prevented by William Green, the head of the American Federation of Labor.

On the Pacific coast a longshoremen’s strike, combined with sympathetic action by maritime unions, had been in progress from May until the port was again opened in July, and there was much rioting and considerable loss of life. A general strike was then demanded but not called, though the teamsters joined the longshoremen, and the next week the general strike was on as the result of the votes of 115 unions.

There was panic in the city and the militia were called out. The strike had spread to Oakland, and to Portland, Oregon. After 4600 militiamen had been called into action, and it was also evident that the longshoremen were losing the sympathy of the public, they agreed to arbitrate, and the general strike was over by July 19. There had been much unjustified violence on both sides.

   
TEXTILE STRIKE OF 1934. Tensions were high in many labor markets.

In September 80,000 workers were called out in the textile industries, the biggest single walk-out attempted in our history. Among other demands was that for a five-day, thirty-hour week with no reduction in pay from that received for forty hours, but the 7A clause was also, as usual, one of the chief causes of the trouble. The Cotton garment industry had not been affected by the strike but it also threatened a walk-out for October 1.

In the South 15,000 militia were called out, and there was violence both in that section and Rhode Island. The conflict was marked by bitter feeling shown between the president of the United Textile Workers and General Johnson, then still head of the N.R.A., the latter claiming that the strike was “in absolute violation” of the agreement made by the textile workers with the Federal government when they had discussed the textile code.

The number of workers out was variously estimated in the papers as from 500,000 to 800,000, but apparently 400, 000 would be more nearly correct. Again the President intervened, and with the promise that a Textile Relations Board would be created to protect labor’s right to bargain collectively, and that certain claims with regard to wages and other matters would be investigated, the leaders called the strike off toward the end of the month.

In October the Great Atlantic and Pacific Tea Company closed its 428 stores in Cleveland owing to labor troubles and threatened to leave the city for good as it was claimed they could get no protection from violence. After ten days’ negotiations and Federal mediation, order was restored and the stores remained.

The great event of November was naturally, however, the national election. Although polls taken by “The Literary Digest”, which have proved remarkably accurate in the past, forecast a great victory for the administration, it had been so frequently the case in the mid-term elections to have the administration defeated that no one could be sure what would happen until the votes were counted.

The result was a staggering blow to the Republican Party. It was found that the Democrats had 69 seats in the Senate to only 25 for the Republicans, and one Progressive and one Farmer-Laborite. In the House the Democrats had 322 seats to the Republicans’ 103.

To find one party in possession of 72 per cent of the strength of the Senate and 74 per cent of the House one has to go back to the immediate post-Civil War period when as a result of the war, the Democratic Party had almost ceased to exist.

It is true that, as in the last English election, the number of the winning party in the legislature was out of all proportion to the comparative strength of the voters at the polls. In the popular vote the Republicans had polled about 12.1 million votes against the Democrats’ 15.3 million. As compared with 1932 the Democrats lost approximately 7.4 million votes against a Republican loss of only 3.6 million but even so the result for a mid-term election was practically unprecedented.

In fact, it was almost too much for the Democrats for a too unwieldy majority is hard to keep in order. There was, however, little question that the popularity of Roosevelt was the chief factor in the victory. It must not be lost to view, however, that the vast number of people, in one way and another getting money from the government, may also have had much to do with the result.

The temptation to Congress to continue pouring out the golden stream of billions will be very great. The result showed, nevertheless, that whatever conservatives might fear as to the possible ultimate results of the New Deal policies, these appealed to the rank and file in their immediate effects.

That confidence had made great gains during the year was shown by the fact that although a few days after election, November 12, the Treasury lifted all restrictions on the export of gold and allowed any citizen to transfer his capital abroad if he chose, few seem to have taken advantage of the opportunity.

No flight of capital occurred, and no necessity appeared of again putting into effect the restrictions which had lasted from the banking crisis of 1933.

   

During the latter half of the year, the question of war material became of interest from two different angles. On July 16 the Japanese Ambassador in London had intimated that his country would withdraw, as entitled to do after two years’ notice, from the naval treaty of 1922 which prescribed a ratio of 5—5—3 for the naval strengths of Great Britain, the United States, and Japan.

After prolonged but futile negotiations between representatives of the three powers in London, it was clear that Japan would not reconsider, and on December 29, the Japanese Ambassador in Washington formally denounced the treaty. In the Far East, Japan has no neighbor to compete with her on the sea.

Considering her group of islands remote from both the United States and the British Empire, the former having to defend two coasts, 3000 miles apart, and the latter to maintain its intercourse with all its parts which encircle the globe, it is difficult to understand why Japan should require as large a navy as either of the other two powers.

In March the Vinson Bill, passed by Congress, authorized the President to build our navy up to the full strength permitted under the treaty, but a race between ourselves and Japan to build up to unspecified limits would be a very different matter.

There is no question that we could build faster than she but our whole policy, honestly pursued, has been the limitation of armaments; and it is to be hoped that some agreement may be reached by 1936 when the field for a race will be open.

   
U. S. BATTLESHIP CALIFORNIA, IN NEW YORK HARBOR DURING THE NAVY CRUISE OF 1934. Photograph by Underwood and Underwood.

During the fall, a Congressional Committee investigated the munitions industry, and brought out many disturbing facts as to the influence of the international group of producers on the provocation of wars, so much so that a similar inquiry for England was proposed in Parliament. No action has been taken as to the matter in America, and the army is itself opposed to the nationalization of the industry.

The President has suggested, however, that in future wars, private profits from the industry should be eliminated, and late in December appointed a committee, headed by B. M. Baruch, to prepare legislation which would, as he said, “take the profit out of war.”

The arms manufacturers have also been accused of blocking helpful legislation in our internal war—that against crime—it having been said that legislation by Congress to control the traffic in revolvers and other portable weapons has been defeated by those interested in the profits derived from them.

It is asserted that since the last war the United States has imported 1 million revolvers and manufactured 500,000. The Attorney-General has said that “it is a conservative estimate that there are more people in the underworld carrying deadly weapons than there are in the army and navy of the United States.”

The year was marked by a series of spectacular kidnappings and other crimes, and it may be noted that although the homicide rate for the 31 largest American cities was 5.1 per 100,000 population in 1900, it rose to 10.7 in 1933, or more than doubled. The rate across the border in Canada for its largest 14 cities is only 1.5 per 100,000.

The situation had become such that Congress passed several laws breaking down State boundaries for the purpose of ensuring the safety of the citizens, and since the Federal Government took hold there, has been a marked advance in the process of cleaning up the criminals. The question of States’ rights has been left in abeyance in the crisis, as has the legality of declaring certain persons “Public Enemies” to be shot at sight.

We have accepted the fact that crime has become so extensive that it is now war between the decent citizen and the underworld, and that when a well-known criminal is seen there is no more need for a trial than there would be for an enemy seen in real war. It is a confession of the breakdown of the orderly process of the law but has to be acquiesced in temporarily.

The first Public Enemy Number One was the notorious murderer Dillinger who was tracked down and slain by Federal agents on July 22. Since then we have also rid ourselves of Clyde Barrow, Bonnie Parker, “Pretty Boy” Floyd, “Baby Face” Nelson, and many others.

   
The infamous Bonnie Parker.

The fact that under modern conditions with hand machine guns, fast cars and other equipment, a criminal could commit crimes and escape over the boundary into another State, has made Federal control inevitable. Moreover, Federal agents do not have the same relation to the underworld as do too often the local police forces.

The most interesting capture was that of Bruno Hauptmann, the alleged kidnapper and slayer of the Lindbergh baby, who at the end of the year was being held for trial in New Jersey, and was convicted and sentenced to death in February.

Other evidence that Americans are waking up to the moral evils which the war and the post-war orgy brought to us are not wanting. Figures for 1934 are not yet available but those for 1933 show that in that year there was an increase in church membership of more than 800,000, bringing the total to over 60 million, an increase in seven years of nearly 8,.7 million.

During 1934, war was also started against indecent films, and although ignored at first it became of such proportions as to alarm the Hollywood producers. The lead was taken by the Catholic Church, and it is said that practically all of its 22 million membership enlisted for a year in the crusade, and the Protestants have joined heartily in the movement.

It is little use to try to instil ideas of decency and clean living in children at home if you then take them to look at films on which crime and vice are made as glamorous as Hollywood can make them. This fact at last seems to be sinking into the minds of the American public.

On the whole, although recovery had not been as rapid as had been hoped and there was ample cause for anxiety as to both the present and the future, the year ended with a more hopeful spirit than it had begun. The Christmas trade was the largest since 1929, and the spirit of the people was both calmer and stronger.

   
THIS TABLE & THE TABLE BELOW COMPILED BY THE REVIEW OF REVIEWS SHOWED THAT THE MIDDLE WEST, GOEOGEAPHICALLY SPEAKING, LED THE REST OF THE COUNTRY WITH AN INCREASE OF 95.7 PER CENT IN THE CARS REGISTERED DURING THE FIRST SIX MONTHS OP 1934.
   

In this brief survey it has been impossible even to mention many of the important measures taken or to describe at length the effects of all the forces put into operation or the experiments tried. Many mistakes have been made, many heavy risks taken.

Both business leaders and the President have learned much. There is a better sense of co-operation throughout the entire nation and an appreciation of the fact that we are not merely trying to get out of the slough of depression but to build a better America. There is a sense of courageous adventure and endeavor.

Unfortunately there is as yet no prospect of balanced budgets nor a halt to spending. At the end of the year the American Federation of Labor estimated that the unemployed numbered 11.5 million, and the burden is still tragically heavy and the suffering great.

Nevertheless, the nation is considerably better off than at the end of 1933 in spite of the added blow delivered to us by nature in the great drought, a blow, however, which was much intensified by our own wastefulness and carelessness in the past. If we are to remain a great and self- sustaining nation the time has come, as we have this year been sharply warned, when we must preserve those natural resources which are still left to us.

At the end of the year there were also signs of distinct improvement in the world at large. December brought to Europe the almost sudden realization that, in spite of all that had happened to cause anxiety, nevertheless crisis after crisis had been surmounted and that instead of war the structure of peace was really stronger than when the year began or than any one had imagined.

Not only were international relations, on the whole, felt to be on a firmer basis but in the democratic countries there had been a marked loss of interest in the various forms of dictatorships as the only means of solving national economic problems. In spite of much of both anxiety and bitterness, Europe was in better psychological condition and more hopeful and confident.

Owing to wise handling of finances and to a rise in commodity prices, conditions were distinctly improved in Australia, South Africa, and several of the leading countries of South America. No nation can prosper by itself alone, and although much remains to be done to restore international trade, the improved condition of many parts of the world augurs well for our own improvement.

One of the most encouraging signs, however, was the renewed hope of Americans themselves. Whatever we may think of individual measures adopted, or methods of carrying them out, America has been engaged for two years in a colossal effort at co-operation, and the stark despair of 1932 has now at last given place to courage, and the nation is once more finding itself and looking forward to accomplishment and not back to loss.

   
< Back to Top of Page