How Labor and the New Deal in the 1930s
Were Able to Change the Face of America

The stock market crash of October 29, 1929 triggered an unending series of calamities that had the country teetering on the edge of chaos. It spilled over into a bank crisis, causing the closing of 5,000 banks in a three-year period. Millions of people lost their savings; thousands of companies couldn’t pay their bills or meet their reduced payrolls and went bankrupt. (I can still recall people in my community banging on the doors of the local Bank of America and shrieking, ”I want my money!”)

The biggest problem was unemployment. In the depth of the Great Depression, 25 percent of the nation’s workforce was jobless; another 25 percent was working part-time, and those lucky enough to have a job were working a six-day week of 50 to 60 hours, with no pay for overtime work, no pensions and no legal protection on the job.

By the spring of 1933, when President Roosevelt took the oath of office, the number of unemployed had risen from 8 million to 15 million (roughly one-third of the non-farmer workforce.) In a country of some 120 million people, probably more than 40 million were either unemployed or members of a family in which the main breadwinner was out of work.

By the fall of 1931, a survey had shown that the net income of 550 corporations had declined 68 percent. Many of them tried to stay alive by still more layoffs and repeated wage cuts. A year later, average weekly earnings had declined from $25.03 to $16.73, a total income drop of 48 percent. Workers with starving families were willing to work for a pittance. Women in Tennessee earned as little as $2.29 for a 50-hour workweek. Some desperate men worked for 5 cents an hour in sawmills.

The Depression struck a devastating blow at the nation’s farmers. With prices for corn, wheat and other farm products dropping below the cost of production, farmers could not meet their mortgages and operating expenses. Thousands lost their farms that had been in their family for generations. As an example, 40 percent of the farms in Mississippi were on the auction block by 1933.

One of the ironic features of the Great Depression was that, while people across the country were starving, granaries were bulging with grain, warehouses were stocked with clothing and other necessities. Farmers were dumping huge quantities of milk and killing off livestock in the hope that prices would rise if the supply of farm products would be less than the demand.

The Depression had created a huge reservoir of people who were both jobless and homeless. About two million of these “hoboes” were roaming the country, many of them riding in railroad box cars. on trains headed for the West, in the hope of reaching California.. In 1932, the Southern Pacific reported that it had ejected 683,000 trespassers, mostly young men from 16 to 25.

President Herbert Hoover never fully understood the depth of the Depression. He thought it was a stock market crisis that would be resolved in time by the nation’s business leaders, who had created prosperity in the past decade. He urged the states to create “prudent” public works projects, but the states, bleeding from cuts in revenue and spending, could not afford to start new public works.

His Federal Farm Board offered loans at low rates to farmers and bought huge amounts of wheat and cotton in the hope of bolstering farm prices, but farmers continued to “overproduce” and prices kept dropping.

Hoover resisted the growing demand for more vigorous action and massive spending by the government to start the nation toward economic recovery. He shared the conventional wisdom that federal spending would prolong the depression by discouraging business investment and inviting inflation.

Hoover claimed that federal funds were not needed and that charity and local government would meet the needs of the unfortunate. This was hardly a practical solution in a city like Cleveland where 50 percent of the workforce were without jobs, and where other cities were even worse off. In New York City, the average family stipend for relief was $2.39, with a waiting list of 25,000 families. By 1932, only 1.5 percent of all government funds were spent on home relief and averaged about $1.67 per citizen.

Feeling abandoned both by business and government,, many workers were attracted by the appeals of socialists, communists, fascists and utopian schemes that promised economic security. But most people appeared resigned to a hopeless future, not knowing where to turn. One economist wrote: “It is easier to believe that the earth is flat than to believe that private initiative will save us.” The suicide rate increased from 14 to 17 percent per 100,000.

It seemed incredible that the American people could rise from the depth of their despair to rebuild an economy they would become proud of?

Article 2 of this four-part series will be posted Friday, May 9, 2008

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