The Great Depression (26 page)

EDITOR’S NOTE

 

Despite the flurry of legislation and dramatic overhaul of the New Deal’s early efforts, joblessness did not immediately improve. The American Federation of Labor estimated in April 1933 that there were 13 million Americans unemployed, up from 12 million in November 1932. To remedy this, in November 1933 Roosevelt adviser Harry Hopkins hastily assembled a plan and a $400 million budget to create the Civil Works Administration to provide federal jobs for unemployed Americans to build roads, parks, playgrounds, airports, and the like. Roth would begin to see the effects in his community almost immediately, and by Christmas some 3.5 million Americans had CWA jobs.

 

 

EDITOR’S NOTE

 

While President Roosevelt initiated many dramatic new programs in his much examined, much hailed First Hundred Days, it would actually take another year or so for Roth and most white-collar Americans to experience any real, practical impact from the New Deal. Nearly twelve million Americans, for example, were still out of work by the end of 1934. It would take until the months leading up to President Roosevelt’s reelection in 1936 before West Federal Street in Youngstown, as well as other main streets in America, witnessed a “boom” unmatched in post-1929 life: shopping for home furnishings and clothing, new autos on the road, and steel mills operating at 80 percent capacity. Rather, 1934 and 1935 were years in which parts of the New Deal proved successful, parts failed, and parts were overturned by the Supreme Court.

 

One relative success story, noted by Roth, was Roosevelt’s Home Owners Loan Corporation, which saved many families from foreclosure and homelessness. The program helped rescue home owners from foreclosure and banks from bad loans. The administration offered banks the chance to trade defaulted loans for government bonds. Home owners could refinance their homes with twelve-year mortgages rather than the common five-year plan. The HOLC ended up refinancing one in five home mortgages under this plan and laid the foundation for a renewed—and more stable—mortgage-lending practice that would last for decades to come. Says Schlesinger of the HOLC, “Probably no single measure consolidated so much middle-class support for the administration.”

 

The Federal Deposit Insurance Corporation of 1933 also counts as an almost instant success, and its continued existence has doubtlessly prevented the kind of widespread bank closures that Roth observed. By federally insuring bank deposit accounts up to five hundred dollars (via a small tax on bank deposits), the run on bank withdrawals that had paralyzed the system since the Great Crash of 1929 stopped. In fact, the number of banks that had to shutter for the remainder of the 1930s was less than 8 percent of the total that closed in just 1933. By April 1934 Roth witnessed his local Dollar and City banks remove their restrictions on withdrawals of fourteen million dollars in frozen deposits.

 

Other initiatives, however, sputtered. The Agricultural Administration Act passed quickly in May 1933 with a lofty aim: to return farmers to the income level and prosperity they experienced between 1909 and 1914. It also provided the secretary of agriculture with grand powers: The AAA paid farmers who agreed to cut their production output by one-third and entered into marketing agreements with processors. Much to the bewilderment of Roth and many Americans, the AAA even destroyed some existing overproduction (including the slaughter of eight and a half million piglets to boost hog farmers’ income as people starved in many parts of the country) that would drive prices down if the surplus made it to the market. On one level the AAA was a success: It enabled gross farm income to increase by 50 percent between 1932 and 1936. But overall it failed: The program boosted farmers’ income at the cost of taxing processors, distributors, and American households, which footed the entire bill.

 

In fact, by February 1935 housewives across the country picketed local butchers with signs proclaiming, “Down with high meat prices!” In Los Angeles ten thousand women boycotted meat shops until the prices dropped by five cents a pound. In New York and Chicago, similar organized protests ensued. Eventually, the courts became involved; many lawsuits were filed in 1934 claiming that the AAA’s practices were unjust. In 1936 the U.S. Supreme Court ruled in United States v. Butler that the AAA was unconstitutional and coercive. It found, in a six-to-three decision, that the Constitution did not give the federal government the right to use its power to levy taxes on processed foods as a means to regulate the economy and subsidize farmers’ profits. As a result, more than two hundred million dollars in illegal fees were returned to food-processing companies.