The Real 100 Days: FDR's

TW: Everyone knows the "100 days" concept came from FDR's initial months in office during the Great Depression. Arthur Schlesinger wrote a look back at FDR's 100 days in April, 1983. It is one of those interesting pieces written fifty years after the fact but also over 25 years ago. It had the benefit of distance from the actual event without the distortions of recent history, no conservative ascendancy, no 9/11, no stress of being tangled amidst the to and fro of our current Great Contraction. Many passages though are very relevant to the current debates.

From NYT via Mark Thoma's blog (original by Arthur Schlesinger April 10, 1983):
" ...The Hundred Days were only the start of a process that ended by transforming American society. Who can now imagine a day when America offered no Social Security, no unemployment compensation, no food stamps, no Federal guarantee of bank deposits, no Federal supervision of the stock market, no Federal protection for collective bargaining, no Federal standards for wages and hours, no Federal support for farm prices or rural electrification, no Federal refinancing for farm and home mortgages, no Federal commitment to high employment or to equal opportunity - in short, no Federal responsibility for Americans who found themselves, through no fault of their own, in economic or social distress?

These social changes have won general approval. Even the Reagan counterrevolution, for all its 19th-century laissez-faire and Social Darwinist passions, shrinks from abolishing the framework of social protection -the ''safety nets'' - created by the New Deal.

But what of the narrowly economic results? How effective was the New Deal in reducing unemployment, promoting economic growth and altering the distribution of income? And does the experience of half a century ago offer any guidance to the nation in its economic perplexities today?

The technique of the New Deal was improvisation and experiment. ... In the intellectual circumstances of the time, there was really no alternative to experiment. The Hundred Days
found the country in a state of invincible ignorance. No one knew the causes of the Depression. No one knew the cure. Business leaders and academic economists alike were analytically baffled and impotent. ...

Economists had been so wrong in the recent past and were in such hot disagreement in the urgent present that no non-economist could take the profession seriously...

...The President-elect emerged from this varied experience with a patrician disdain for business wisdom and a curiosity about economists. ''This nation asks for action, and action now,'' he said in his inaugural address.

...But the New Deal came to public spending earlier and for its own reasons...He took his ideas from two now forgotten American economic writers, William Trufant Foster and Waddill Catchings, whose irreverent critique of Say's Law in the 1920's had demonstrated the perils of oversaving, concluding with the brisk injunction: ''When business begins to look rotten, more public spending.'' ...

The third prong in the Second New Deal was targeted attention to weak sectors in the economy - the South, the West, housing, railroads...[the New Deal] liberated the colonial South and West from the New York capital market and used government money to lay the foundation for the postwar boom in the Sun Belt...(The Sun Belt today repays Washington's initiative by opposing, in the sacred name of free enterprise, government intervention on behalf of other parts of the country, as, for example, the decaying industrial heartland of the Middle West and Northeast.)

...As has been often noted, the New Deal did not solve the problem of unemployment. By 1940 the jobless rate had been cut by nearly two thirds, to 9.3 percent of the labor force from 25.2 percent in 1933. Still five million people lacked jobs.

So much re-employment in half a dozen years was a not inconsiderable accomplishment...The reason the New Deal did not do even better was that Roosevelt, though much denounced at the time as a profligate spender, remained at heart a budget-balancer and a planner. In any event, the hysterical opposition of businessmen to public spending for anyone but themselves made it politically impossible for him to spend very much.

The largest peacetime deficit the big spender produced was a feeble $3.5 billion in 1936. The increase in public debt through the 1930's hardly offset the contraction in private debt. It was not until war legitimized really effective deficits - $18 billion in 1942, $54 billion in 1943 - that unemployment disappeared; proving incidentally how right Eccles and Keynes were.

The New Deal, aided by wartime full employment, also had some impact on the distribution of income. The top fifth of American families received only 46 percent of aggregate personal income in 1946, down from 54.4 percent in 1929, while the share of the lowest two-fifths rose to 16 percent from 12.5 percent.

This was not a great change. But it was the only reversal in the trend of income distribution in American history before or since (except for a brief moment in the 1960's, and is thereby an achievement.

Roosevelt was concerned not only with getting out of the Depression but with preventing new depressions in the future. For the Great Depression was a traumatic experience. Mass unemployment, doubt whether democratic institutions could master economic crisis, the waiting specters of Communism and fascism - all this gave democratic society such a scare in the 1930's that a primary New Deal goal was to make the American economy depression-proof.

Before the New Deal, in those glorious days of the gold standard and the unregulated marketplace, the nation had gone through a bad depression every 20 years or so - 1819, 1837, 1857, 1873, 1893, 1907, 1921, 1929. The New Deal now moved to equip the economy with built-in stabilizers designed to protect individuals against unemployment, businesses against bankruptcy and society as a whole against the roller coaster of boom-and-bust.

...But we have come to understand that, in an economy dominated by market power concentrated in large corporations and unions, fiscal and monetary policy can restrain inflation only by very crude-tuning - to put it bluntly, by inducing mass unemployment.

...Rereading the inaugural today, one is struck by a different passage - by Roosevelt's stinging indictment of the ethic of the ''money changers'' who, ''stripped of the lure of profit by which to induce our people to follow their false leadership ... have fled from their high seats in the temple of our civilization.''

The time had come, Roosevelt said, to ''restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit.

...These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and our fellow men.''

Perhaps our nation will be more united, more equitable and more prosperous, too, if we abandon the current program of cutting taxes for the rich and social programs for the poor and recall the proposition Roosevelt set forth in his second inaugural:

''The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.''

http://economistsview.typepad.com/economistsview/2009/05/the-hundred-days-of-fdr.html

Some Things Never Change

TW: Our government struggles to deal with the current economic crisis, it is not the first time.

From Winston Churchill via Politics Of Upheaval from Schlesinger:
" 'The problem of unemployment is the most torturing that can be presented to a civilized society.' In 1930 Churchill raised a question which troubled many in these dark years-- the question whether this was a problem with which representative democracy could ever deal. Democratic governments, he suggested, drifted along the line of least resistance, took short views, smoothed their path with platitudes, and paid their way with sops and doles.

Parliaments, he pessimistically concluded, could deal with political problems, but not with economic. 'One may even be pardoned for doubting whether institutions based on adult suffrage could possibly arrive at the right decisions upon the intricate propositions of modern business and finance' "

There Is Hope...I Think

TW: I always tell folks what keeps me sane in these times of distress is the study of history. I have never been an adherent of the "good old days". The good old days exhibited some very bad attributes including senior government officials with serious problems.

Herman Talmadge was the Democratic governor of Georgia in the 1930's. He gave serious consideration to running against FDR in 1936 with the support of numerous politicos. His segment of the Democratic party has migrated to the Republicans (granted with enlightment relative to some issues).

From "The Politics Of Upheaval" by Arthur Schlesinger:
"The only way to make an honest government is to keep it poor. You can't help the people by giving them something. You weaken their soul and their heart, and dry up their muscles...

What you need in New York [City] is not LaGuardia [then mayor of NYC] but Mussolini. A little castor oil would go a long ways toward starting the wheels of industry goin' again...

[FDR was] that cripple in the White House...

No niggah's as good as a white man, because the niggah's only a few shawt year-ahs from cannibalism."
Herman Talmadge Democratic governor of Georgia from 1935

Sound Familiar?

"He plainly felt that his Presidency had been a success, that he had been betrayed by events beyond his control and traduced by unscrupulous propagandists; and he gave every indication of a passionate desire for vindication...

He denounced spending, he denounced regimentation, he denounced centralization. For a positive program he offered only his old formula: retrenchment, the balanced budget, the gold standard, the tariff, the return of relief to the states."
Herbert Hoover 1935 from "The Politica Of Upheaval" by Arthur Schlesinger, Jr.

TW: btw it continues to amaze me that many Republicans are now trying to trash FDR's New Deal as ineffectual and by inference supporting the laissez-faire policies of Hoover.