Wednesday, April 6, 2022

Roosevelt’s Manic Start: The Chaos of the New Deal

The election of 1932 was an expression of desperate hope. Poverty and unemployment were at high levels and threatened to go even higher. The campaigns of Hoover and Roosevelt were based more on sentiment than specific policy proposals.

Roosevelt projected hope and optimism. One of the few specific actions he presented to voters was that he would support the repeal of the eighteenth amendment. Procedurally, however, the amendment was repealed by the individual states. Roosevelt’s presidential appeal on the topic was at best symbolic, but also utterly ineffectual and irrelevant.

The Democrats had lost the 1928 presidential election. They thought that one reason for the loss was that their candidate, Al Smith, was a Roman Catholic. So in 1932, they nominated Roosevelt, a Protestant. There was, in fact, some anti-Catholic sentiment in the nation at that time; it is difficult to determine, however, whether that sentiment played a major role in the out come of the 1928 election.

Voter sentiment was against Hoover, rightly or wrongly blaming him for the Great Depression.

In the end, Roosevelt won by a landslide.

The nation was eager to see what Roosevelt would do when he took office. Because the campaign had been vague on details, the public wasn’t sure which actions he would take. He’d promised to take measures dramatically and swiftly, as historian Amity Shlaes writes:

By the time of his inauguration back on March 4, everyone knew that Roosevelt would experiment with the economy. But no one knew to what extent. Now, in his first year in office, Roosevelt was showing them. He would present it all in what came to be known as the Hundred Days, that first frenzied period of legislative activity.

Roosevelt’s actions were quick and significant, but not necessarily consistent or planned. His approach was one of experimentation. He simply wanted to what would work.

Two major obstacles confronted FDR. First, the stakes were high to simply experiment: people’s livelihoods were at risk. Second, so many variables were changed and changing that discerning cause and effect was difficult or impossible.

Several of FDR’s goals were in tension with each other: He hoped to raise prices, to increase income for both companies and workers. Yet an increase in price could lead to weaker demand, reducing sales and subsequently income.

The president and the nation were, however, impatient and not willing to conduct careful analysis. They simply wanted to see action, and they hoped that action would bring improvement, even if the action was random, as Amity Shlaes explains:

The main tasks Roosevelt assigned himself were simple. The first was that there be a broad sweep of activity; Americans must know Washington was doing something. If there were contradictions between experiments and within them, well, that did not matter.

So it was, then, that measures were taken to reduce agricultural output, even as food shortages shaped the market. No serious thought was given to the decreased income to farmers.

Likewise, the New Deal would inevitably lead to increased taxation and increased national debt, sooner or later, and those phenomena would similarly slow the economy.

The New Deal, which ultimately failed to offer significant help — economic variables hadn’t improved by 1937 — was the result of sentiment rather than analysis: a chaotic flurry of activity.