T6 Economic Flashcards

Question

(2) Father Charles Coughlin

Answer 1

* Charles Coughlin was a priest whose radio programme, The Golden Hour of the Little Flower, was enormously influential during the first half of the 1930s. * It regularly commanded an audience of 30–40 million, and listeners contributed more than $5 million per year to his parish in Detroit. * In 1934, Coughlin founded the National Union for Social Justice with the aim of monetary reform and redistribution of wealth. * Roosevelt was afraid of Coughlin’s influence, particularly when a possible alliance with Huey Long was mooted. * However, Long was assassinated, and Coughlin became increasingly anti-Semitic, blaming Jews for both the New Deal and control of Wall Street. This lost him significant support.

Answer 2

* Roosevelt faced significant opposition from big business and wealthy people who increasingly felt the New Deal had gone too far. * Some would not even say his name; they called him ‘that cripple in the White House’. * Roosevelt himself said that everyone was against him but the electorate. * However, the relationship with big business was always difficult. * Roosevelt knew the economy could not recover without its support and big business may have feared the alternative had the New Deal failed completely. * However, they hated the Revenue Acts which raised taxes and opposed what they perceived as ever greater government interference. * Republican opponents in Congress were to be joined by more conservative Democrats who also feared the New Deal had gone too far. * Roosevelt called for a special congressional session in November 1937 to pass various measures such as an anti-lynching bill, which had been delayed due to the debates on the Judicial Reform Bill. Not one was passed.

Answer 3

* Given Roosevelt’s flexible ideas on the workings of the Constitution, it was perhaps inevitable that he would come into conflict with its guardian, the Supreme Court. * Although he had not directly attacked the Court during the election campaign, he felt it was in need of reform. * While the Court had supported New Deal laws in the days of crisis, it had increasingly declared legislation unconstitutional as Roosevelt’s first term of office came to an end. * In the 140 years before 1935, the Supreme Court had found only about 60 federal laws unconstitutional; in eighteen months during 1935 and 1936, it found eleven to be so. * Indeed, on one day, ‘Black Monday’, 27 May 1935, the Supreme Court attacked the New Deal in several ways. * For example, it found the Farm Mortgage Act unconstitutional. It argued that the removal of a trade commissioner, which Roosevelt sought, was the responsibility not of the president but of Congress. * Most importantly, it found the NRA to be unconstitutional through the ‘sick chicken’ case. * If the Federal Government could not prosecute individual firms for breaking the NRA codes, it followed that all the codes themselves must be unconstitutional. * This was because they were developed by federal government but affected individual firms in individual states. * The argument went that the executive had acted unconstitutionally in giving itself the powers to implement the codes in the first place. * This was because it had no authority to intervene in matters that were the preserve of individual states. * Given that the codes were at the heart of NIRA, it could not survive without them. * More significantly, the ruling seemed to imply that the government had no powers to oversee nationwide economic affairs except in so far as they affected inter-state commerce.

Answer 4

* Roosevelt believed the justices on the Supreme Court were out of touch. Of the nine judges, none were his appointments. * He increasingly saw the issue of the Supreme Court as one of unelected officials stifling the work of a democratically elected government, while members of the Supreme Court saw it as them using their legal authority to halt the spread of dictatorship. The scene was set for battle. * On 3 February 1936, Roosevelt presented the Judiciary Reform Bill to Congress. * This proposed that the president could appoint a new justice whenever an existing judge, reaching the age of 70, failed to retire within six months. * He could also appoint up to six new justices, increasing the possible total to fifteen. * The measure had been drawn up in secret, although, ironically, the idea of forcibly retiring judges had first been proposed by one of the existing members of the Supreme Court in 1913. * Roosevelt had stirred up a hornet’s nest. Many Congressmen feared he might start to retire them at 70 next. * He had also greatly underestimated popular support and respect for the Court. * In proposing this measure, Roosevelt was seen as a dictator. In July, the Senate rejected the Judiciary Reform Bill by 70 votes to 20.

Answer 5

* Roosevelt spoke of the New Deal’s aims as ‘relief, recovery and reform’ and it is against these that its success should be judged. * There has been much debate about the achievements of the New Deal, in particular how it extended the economic and social role of the Federal Government.

Answer 6

* Economic recovery was sluggish during the New Deal years, in part because many of its measures were contradictory. * Roosevelt believed in a balanced budget. He was, therefore, reluctant to spend excessively on federal projects. * He failed to see that massive government expenditure might be necessary to offset the reduction in spending in the private sector. * This desire for a balanced budget led to a reduction of the budget deficit over the course of Roosevelt’s presidency. In 1938, the deficit was lower than the $2.5 billion deficit Hoover had run up in 1932 and over which Roosevelt had criticised him in the 1932 presidential election. * The actual achievements of the New Deal were rather slender. * The national total of personal income stood at $86 billion in 1929 and only $73 billion in 1939. * This was despite a population increase of 9 million during the course of the decade. * The Government seemed reconciled to a permanent unemployment figure of at least 5 million. Wages averaged $25.03 per week in 1929 and $23.86 ten years later. * In 1933, 18 million Americans were unemployed. In 1939, 9 million were still out of work. * While there was a reduction in unemployment in the early years of the New Deal, it may largely have been the result of people working in the alphabet agencies. * The Roosevelt Recession of 1937 saw a return to higher unemployment with nineteen per cent of the workforce jobless in 1938. * Most historians agree that the real reason unemployment fell was the amendment of the 1935 Neutrality Act in November 1939. This meant that belligerents could buy from the USA. Within a year there were orders for 10,800 aircraft and 13,000 aeroplane engines.

Answer 7

* The New Deal was, when viewed as a whole, a programme of reform. * The reforms were economic, political and social and transformed the national infrastructure of the USA. * Economic reforms were mainly intended to rescue the capitalist system from its worst excesses and to provide a more rational framework in which it could operate. * Roosevelt allowed labour unions to take their place in labour relations and reluctantly recognised that federal government had a role in settling industrial disputes. * Reluctantly, Roosevelt came to realise that the expansion of government he had created was to be permanent. His attempted reform of the Supreme Court failed, but the Court nevertheless became more sympathetic to New Deal legislation, recognising the political realities of the later 1930s. * The New Deal also saw an expansion in the functions of state and local government, for example in terms of welfare provision. * The system became more modern and able to address the needs of citizens in the twentieth century. * People increasingly expected that the government would take responsibility for their problems. * The Social Security Act and the relief and job creation agencies expanded the role of government considerably.

Answer 8

* The Government took over more control of people’s lives. * In 1940, the Smith Act had been passed which made it illegal to threaten to overthrow the government of the USA. * Originally aimed at supporters of fascism, it later became associated with the attack on Communists. * The Selective Service Act of the same year had introduced conscription. * As the war developed the Office of War Mobilization was created to control the supply of goods and prices; the National War Labor Board set wages. * The War Management Commission, set up in 1942, had to recruit workers where they were needed most. * Moreover, the Office of Scientific Research and Development mobilised thousands of scientists to develop new methods of death, from bazookas to the atomic bomb, as well as new methods of saving the lives of those who were wounded in battle. * The Office of Price Administration and Civilian Supply was set up in August 1941 to control inflation. * In April 1942, it issued a General Maximum Price regulation which froze prices at March 1942 levels to prevent inflation. * It had the power to control all prices (except agricultural commodities) and ration scarce items. * Eventually such items as petrol, tyres, coffee, sugar and other foodstuffs were rationed. Almost 90 per cent of food items were subject to price controls.

Answer 9

* Economically, the Second World War played a much greater role in economic recovery than the New Deal with nearly 9 million still out of work as late as 1941. * Indeed, American involvement in war production made the New Deal irrelevant. * Between 1941 and 1945, the USA produced 86,000 tanks, 296,000 aircraft and 15 million rifles. * Farm income grew by 250 per cent. Unemployment effectively ceased by 1942; in 1944 it stood at 1.2 per cent, having fallen from 14.6 per cent in 1940. * In 1944 alone, 6.5 million women entered the labour force; by the end of the war almost 60 per cent of women were employed. * The number of African Americans working for the federal government rose from 50,000 in 1939 to 200,000 by 1944. * In the years between 1940 and 1944, 5 million African Americans moved to the cities where a million found jobs in defence plants. * Gross National Product (GNP) meanwhile rose from $91.3 billion in 1939 to $166.6 billion by 1945. * However, under the Office of War Mobilization, food prices and rents were strictly controlled. * Some items such as meat, sugar and petrol were rationed, and the production of cars for ordinary motorists stopped entirely. * While many consumer items such as clothes were made from far less material and became simpler in style and others disappeared from the shops, most Americans were comparatively well paid during the war and did not suffer the deprivations of those in other belligerent countries. * Although prices rose by 28 per cent during the war years, average wages increased by 40 per cent; people may not have had much to spend these wages on but they could and did save. * It was the spending power of these consumers that helped to fuel the post-war boom period. * As a result of the costs of the war, the National Debt which stood at $41 billion in 1941 had risen to $260 billion by 1945. * The federal government spent twice as much between 1941 and 1945 as it had before in 150 years. * Roosevelt hoped to pay for much of the war production by increased taxes. * The highest earners paid 94 per cent tax. * This gave a sense of greater equality. * The poor grew more wealthy during the war years and the rich received a smaller proportion of national income. * The Second World War brought enormous economic changes to the USA. * Unemployment collapsed and the USA became an economic powerhouse. * The government had direct control, unthinkable in previous periods.