Ask the Politially Correct!
What was FDR's Second New Deal?
Politically Correct Resolution:
During the depression years while the United States had a 25%
unemployment rate, the government was paying the larger farmers
not to grow crops to creat a world wide demand for agricultural
products. While many Americans were starving, the international
financial community was investing in Germany's (Nazi) rearmament.
In fact one of the investors, Henry Ford, was instrumental in
having a factory in Germany that built tanks for the Nazi's.
In the 1930's while Americans starved, the German people,
under Hitler, with Investments (seed money) from the international
financial community suffered little from the Depression years.
The "second" New Deal (1935-40s) aimed at restoring the economy
from the bottom up (History 1302)!
The "second" New Deal attempted to end the Depression by spending
at the bottom of the economy where government funds attempted to
turn non-consumers into consumers again. Many of the programs lasted
only until World War II while others became permanent fixtures in
American life. The Works Progress Administration was a huge
federal jobs program that sought to hire unemployed breadwinners for
the purpose of strengthening their family's well-being as well as boosting
consumer demand. The jobs varied but consisted of mainly of construction
of public roads, buildings and parks. Over the course of its
life (1935-43) over eight million Americans worked on WPA projects.
This was "counter-cyclical demand management" on a huge scale.
The 1935 Social Security Act set
up a modest worker-funded but federally-guaranteed pension system. Not
on the princely scale that had had advocated, nevertheless, Social
Security (at the time) did act as a safety net for a few older workers,
promoted increased some consumer demand and earned a place as a fixture on
the American political and social landscape.
Finally, another significant component of the "second" New Deal was the
National Labor Relations Act of 1935. Usually called the Wagner Act after
its sponsor, Senator Robert Wagner of New York, this law attempted to prevent
employer's use of intimidation and coercion in breaking up unions. It set
up the National Labor Relations Board to guarantee the right of collective
bargaining for American workers. The results were immediately discernable:
the formation of the Congress of Industrial Organizations whose auto worker
and coal miner units soon saw their wages increase significantly. Again,
higher wages among the masses of the working class is an example of the
"second" New Deal's attempt to restore the economy from the bottom up.
Assessing the legacy
World War II ended both the temporary New Deal programs and the Depression
they were attempting to cure. Keep in mind that many facets of the New
Deal--Social Security, the Federal Deposit Insurance Corporation and the
Securities and Exchange Commission to name only three--have remained
in American life from the 1930s until the present.
War ended the Depression simply because of increased government spending,
an intensified version of what Roosevelt was already doing with the WPA
and similar programs.. Responding to the external threats posed by the
Axis Powers (Germany, Japan and Italy) Roosevelt and the Congress threw
fiscal caution to the wind and spent what was necessary to win the war.
In so doing, they also achieved pre-Depression levels of employment and
What then is the legacy of the New Deal as a whole? Would it have ended
the Depression? The best answer to that is that it went a long way toward
alleviating the worst suffering of the Depression while still being captive
to the conventional thinking (political, fiscal, racial) of the day. One
cannot answer the question of whether it could have ended the Depression
based on historical facts. World War II interrupted the process.
What are the other long-term consequences of the Depression and New Deal?
The rise of the "Roosevelt Coalition" of farmers, union members, working
class people, Northern blacks and liberals made the Democratic Party the
nation's dominant party for almost sixty years. Further, the political
consensus that developed after World War II held that never again should
the government allow another depression to take hold. Thus, there followed
an unprecedented level of federal economic intervention. This huge
expansion in the role, size and power of government in American social
and economic life is aptly summed up in Republican President Richard Nixon's
famous 1971 remark, "We're all Keynesians now." (History 1302)
Basically the "Keynesians Theory" was spend your way to prosperity. The
same theory that is being used today! It didn't work then and it won't
work now! That is, if the special interests are allowed to get their
sticky fingers in what is left of the "American Pie"!
"How fortunate for governments that the people they administer to don't
think"! (Adolf Hitler)
"MEMORES ACTI PRUDENTES FUTURI"
(Mindful of what has been done, aware of what will be)