The New Deal Era & Now, End

When Franklin Roosevelt took office, the American economy was in a shambles. Between 1929 and 1933, the economy suffered some staggering blows. Business investment plummeted by more than 95% from the 1929 level, international trade declined by about 50%, Gross National Product (GNP), used to measure the sum of all goods and services produced by the economy, dropped by nearly 30%, construction spending fell by 78%, the Consumer Price Index (CPI) showed an overall drop in prices by 18%. This huge price drop is called "deflation." Now, we all LOVE when the price of goods or services fall, but trust me, we don't want this to happen. When prices fall because of better producer efficiency or because they were way over priced, that's one thing, but when prices fall because businesses are trying desperately to bring in customers who are either hoarding funds or don't have many funds to hoard, this is a serious situation. A "mentality" sets in, with buyers waiting for prices to fall further before buying, which leads to prices falling further. If your employer is making less money, because of lower prices, guess who might not have a job soon?

After taking office, Roosevelt embarked on a course to try to stabilize, and then to reinvigorate, the economy. His proposals to Congress are known collectively as "The New Deal." Did his plans work? Well, the next election would seem to indicate that a great many Americans believed they did, or at least that many wanted to give FDR's policies more time, as Roosevelt swamped his Republican opponent, Alfred Landon, by a huge margin in both the electoral vote and in the popular vote.*** Roosevelt went on to win again in 1940, but while the popularity of the New Deal certainly continued with voters, war had broken out in Europe and in Asia, Japan was at war with China. There's no question that these events also influenced the outcome of the election. In 1944, Roosevelt won again, but by that time, America was in the midst of the war, now called "World War Two," and voters certainly weren't interested in changing administrations with the country at war. But elections aren't the only way to judge Roosevelt's two terms in office; we have statistics, and they can be little "buggers" for those desperately trying to throw history into reverse. Here, from "Historical Statistics US (1976) series D-86," are the unemployment rates, by year, during Roosevelt's first two terms.

Roosevelt took office on March 4, 1933, as presidents assumed office on that date in those days.
1933
24.9 (Further, and this is significant, a substantial part of the workforce had been reduced to part time from full time work.)

1934
21.7 (3.2% drop)

1935 (1.6% drop)
20.1

1936
16.9 (3.2% drop)

1937
14.3 (2.6% drop)

1938
19.0 (4.7% increase. Roosevelt cut back on New Deal programs to try to balance the budget, an idea he abandoned, as the country registered a big downturn, quickly dubbed "The Roosevelt Depression," by conservatives. Those trying to discredit the New Deal use the unemployment number from this year as their point of comparison with 1933, not the intervening years, to claim that the New Deal was a failure.)

1939
17.2 (1.8% drop)

1940
14.6 (2.6% drop)

1941
9.9 (4.7% drop. In fairness, America was producing goods, including war goods, to help the Allies, and in an effort to build up our own military, in case of war, which of course came in December. I only included this number to show how government spending brought down unemployment.)

As you can see, unemployment dropped significantly between 1933 and 1937; 10.6%. Further, many more people were on full time rather than part time. Now, did the New Deal end the Great Depression? No, but it helped. Would we have rather had those 10.6%, and perhaps more, still out of work? Just as today, the "purists" can't accept that their system collapsed. It DIDN'T and it DOESN'T always work flawlessly. The interesting thing is, I've often heard from some how the New Deal spending didn't help, but then these same people cite World War Two spending for ending the Great Depression. You can't have it both ways!!! Then Hitler, that SOB, can also be cited for combating the Great Depression. There were something like 6.5 million unemployed Germans in 1933 when Hitler took power (January 30th), and many more had only part time work. Germany's situation is analogous to America's, at that time. Hitler started lots of public works, building roads, bridges, and such in an effort to sop up unemployment. After a year or so, he began a dramatic military build up. German unemployment dropped precipitously up until the start of World War Two. Ronald Reagan became president when the country was in a downturn, which worsened considerably in his first two years in office. Reagan proceeded to run big government deficits and initiated a huge military build up. Okay, I'm NOT saying Reagan was Hitler. I'm only comparing the similar economic policies they used to fight economic downturns.

Now, will the Obama Administration's policies on spending work? We'll have to see, but the severe downturn has slowed. I didn't agree with how it was handled,^^^ but let's hope they get this right. Will it end the downturn? Probably not, just as the New Deal needed more "OOOMMMPPPPFFFF," this "stimulus" needs to get out the door faster, and "may" need a boost. (A word history follows the notes)

***Roosevelt received 60.8% of the popular vote and 523 electoral votes from 46 states to Landon's 36.5% of the popular vote and just 8 electoral votes from 2 states. For those unaware, in 1936, the Unites States had only 48 states.

^^^See: http://pontificating-randy.blogspot.com/2009/02/what-about-stimulus-bill.html

Word History:
Prince-This word came into English during the 1200s from Old French "prince." It came to Old French from Latin "princeps," itself formed form Latin "primus;"^ that is "first," and supposedly a form of "capere," which meant "to take."^^ Thus we have "to take first place (in leadership)." During the 1300s, English acquired the feminine form, also from French, which was "princesse" in French and gave us PRINCESS.

^ Latin "primus" goes back to Indo European "per," with the notion of "in front (of), before, forward, foremost, first;" thus also indicating, "chief, leader."

^^ Latin "capere" goes back to Indo European "kap(h)," meaning "grasp," thus, "take, seize, capture, take in mentally;" thus also "understand, comprehend."