Changes

In foreign policy the New Deal pursued isolationism, set in motion by Roosevelt's "bombshell message" to the [[World Economic Conference of 1933]] which ended efforts to stabilize international exchange rates. Roosevelt—acting against the advice of his top aides—feared that cooperation with major nations would limit his abilities to manipulate the money supply and end the [[deflation]] that was a crippling element of the depression.  The major nations were appalled.  Nazi Germany, which promoted autarchy, rejoiced for it gained a free hand to expand its economic power across the globe.  A series of Neutrality Laws (see [[Neutrality Act]]) were passed that prohibited American business from selling munitions to nations at war.  

In foreign policy the New Deal pursued isolationism, set in motion by Roosevelt's "bombshell message" to the [[World Economic Conference of 1933]] which ended efforts to stabilize international exchange rates. Roosevelt—acting against the advice of his top aides—feared that cooperation with major nations would limit his abilities to manipulate the money supply and end the [[deflation]] that was a crippling element of the depression.  The major nations were appalled.  Nazi Germany, which promoted autarchy, rejoiced for it gained a free hand to expand its economic power across the globe.  A series of Neutrality Laws (see [[Neutrality Act]]) were passed that prohibited American business from selling munitions to nations at war.  

There was a peculiar affinity between the New Deal and the European dictatorships that on occasion extended even to [[fascism]] and [[national socialism]].  Early on, FDR referred to [[Benito Mussolini]] as “the admirable Italian gentlemen,” stating to his ambassador in Rome, “I am much interested and deeply impressed by what he has accomplished."  Mussolini, in turn, was flattered by what he saw as the New Deal’s copying of his own corporate state, in the [[National Recovery Act]] (NRA) and other early measures.  Even [[Hitler]] had kind words at first for Roosevelt’s “dynamic” leadership, stating that “I have sympathy with President Roosevelt because he marches straight to his objective over Congress, over lobbies, over stubborn bureaucracies.”   

There was a peculiar affinity between the New Deal and the European dictatorships that on occasion extended even to [[fascism]] and [[national socialism]].  Early on, FDR referred to [[Benito Mussolini]] as “the admirable Italian gentlemen,” stating to his ambassador in Rome, “I am much interested and deeply impressed by what he has accomplished."  Mussolini, in turn, was flattered by what he saw as the New Deal's copying of his own corporate state, in the [[National Recovery Act]] (NRA) and other early measures.  Even [[Hitler]] had kind words at first for Roosevelt's “dynamic” leadership, stating that “I have sympathy with President Roosevelt because he marches straight to his objective over Congress, over lobbies, over stubborn bureaucracies.”   

What linked the New Deal to the regimes in Italy and Germany, as well as in Soviet Russia, was their fellowship in the wave of [[collectivism]] that was sweeping the world. In an essay published in 1933, [[John Maynard Keynes]] observed this trend, and expressed his sympathy with the “variety of politico-economic experiments” under way in the continental dictatorships as well as in the United States. All of them, he gloated, were turning their backs on the old, discredited [[laissez-faire]] and embracing national planning in one form or another.   

What linked the New Deal to the regimes in Italy and Germany, as well as in Soviet Russia, was their fellowship in the wave of [[collectivism]] that was sweeping the world. In an essay published in 1933, [[John Maynard Keynes]] observed this trend, and expressed his sympathy with the “variety of politico-economic experiments” under way in the continental dictatorships as well as in the United States. All of them, he gloated, were turning their backs on the old, discredited [[laissez-faire]] and embracing national planning in one form or another.   

Fiscal conservatism was a key component of the New Deal, as Zelizer (2000) demonstrates.  It was supported by Wall Street and local investors and most of the business community;  mainstream academic economists believed in it, as apparently did the majority of the public. Conservative southern Democrats, who favored balanced budgets and opposed new taxes, controlled Congress and its major committees.  Even liberal Democrats at the time regarded balanced budgets as essential to economic stability in the long run, although they were more willing to accept short-term deficits.  Public opinion polls consistently showed public opposition to deficits and debt.  Throughout his terms, Roosevelt recruited fiscal conservatives to serve in his administration, most notably [[Lewis Douglas]] the Director of Budget from 1933 to 1934, and [[Henry Morgenthau Jr.]], Secretary of the Treasury from 1934 to 1945.  They defined policy in terms of budgetary cost and tax burdens rather than needs, rights, obligations, or political benefits.  Personally, the president embraced their fiscal conservatism.  Politically, he realized that fiscal conservatism enjoyed a strong wide base of support among voters, leading Democrats, and businessmen.  On the other hand, there was enormous pressure to act–and spending money on high visibility programs attracted Roosevelt, especially if it tied millions of voters to him, as did the WPA.   

Fiscal conservatism was a key component of the New Deal, as Zelizer (2000) demonstrates.  It was supported by Wall Street and local investors and most of the business community;  mainstream academic economists believed in it, as apparently did the majority of the public. Conservative southern Democrats, who favored balanced budgets and opposed new taxes, controlled Congress and its major committees.  Even liberal Democrats at the time regarded balanced budgets as essential to economic stability in the long run, although they were more willing to accept short-term deficits.  Public opinion polls consistently showed public opposition to deficits and debt.  Throughout his terms, Roosevelt recruited fiscal conservatives to serve in his administration, most notably [[Lewis Douglas]] the Director of Budget from 1933 to 1934, and [[Henry Morgenthau Jr.]], Secretary of the Treasury from 1934 to 1945.  They defined policy in terms of budgetary cost and tax burdens rather than needs, rights, obligations, or political benefits.  Personally, the president embraced their fiscal conservatism.  Politically, he realized that fiscal conservatism enjoyed a strong wide base of support among voters, leading Democrats, and businessmen.  On the other hand, there was enormous pressure to act–and spending money on high visibility programs attracted Roosevelt, especially if it tied millions of voters to him, as did the WPA.   

Douglas proved too inflexible, and quit in 1934.  Morgenthau made it his highest priority to stay close to Roosevelt, no matter what.  Douglas' position, like many of the [[Old Right]] was grounded in a basic distrust of politicians and the deeply ingrained fear that government spending always involved a degree of patronage and corruption that offended his Progressive sense of efficiency.  The Economy Act of 1933, passed early in the Hundred Days, was Douglas' great achievement. It  reduced federal expenditures by $500 million, to be achieved by reducing veterans’ payments and federal salaries.  Douglas cut government spending through executive orders that cut the military budget by $125 million, $75 million from the Post Office, $12 million from Commerce, $75 million from government salaries, and $100 million from staff layoffs.  As Freidel concludes, "The economy program was not a minor aberration of the spring of 1933, or a hypocritical concession to delighted conservatives. Rather it was an integral part of Roosevelt's overall New Deal."<ref>Freidel 1990, p. 96</ref> Revenues were so low that borrowing was necessary (only the richest 3% paid any income tax before 1942.)  Douglas, therefore, hated the relief programs, which he said reduced business confidence, threatened the government’s future credit, and had the "destructive psychological effects of making mendicants of self-respecting American citizens."<ref>Zelizer</ref> Roosevelt was pulled toward greater spending by Hopkins and Ickes, and as the 1936 election approached he decided to gain votes by attacking big business.   

Douglas proved too inflexible, and quit in 1934.  Morgenthau made it his highest priority to stay close to Roosevelt, no matter what.  Douglas' position, like many of the [[Old Right]] was grounded in a basic distrust of politicians and the deeply ingrained fear that government spending always involved a degree of patronage and corruption that offended his Progressive sense of efficiency.  The Economy Act of 1933, passed early in the Hundred Days, was Douglas' great achievement. It  reduced federal expenditures by $500 million, to be achieved by reducing veterans’ payments and federal salaries.  Douglas cut government spending through executive orders that cut the military budget by $125 million, $75 million from the Post Office, $12 million from Commerce, $75 million from government salaries, and $100 million from staff layoffs.  As Freidel concludes, "The economy program was not a minor aberration of the spring of 1933, or a hypocritical concession to delighted conservatives. Rather it was an integral part of Roosevelt's overall New Deal."<ref>Freidel 1990, p. 96</ref> Revenues were so low that borrowing was necessary (only the richest 3% paid any income tax before 1942.)  Douglas, therefore, hated the relief programs, which he said reduced business confidence, threatened the government's future credit, and had the "destructive psychological effects of making mendicants of self-respecting American citizens."<ref>Zelizer</ref> Roosevelt was pulled toward greater spending by Hopkins and Ickes, and as the 1936 election approached he decided to gain votes by attacking big business.   

[[File:Debt29-50.jpg|thumb|400px|left|National Debt as a percentage of GNP climbs from 20% to 40% as Hoover begins relief efforts with the [[Reconstruction Finance Corporation]] and levels off during the New Deal; soars during WW2  from ''Historical Statistics US'' (1976)]]

[[File:Debt29-50.jpg|thumb|400px|left|National Debt as a percentage of GNP climbs from 20% to 40% as Hoover begins relief efforts with the [[Reconstruction Finance Corporation]] and levels off during the New Deal; soars during WW2  from ''Historical Statistics US'' (1976)]]

Morgenthau shifted with FDR, but at all times tried to inject fiscal responsibility; he deeply believed in balanced budgets, stable currency, reduction of the national debt, and the need for more private investment.  The Wagner Act met Morgenthau’s requirement because it strengthened the party’s political base and involved no new spending.  In contrast to Douglas, Morgenthau accepted Roosevelt’s double budget as legitimate–that is a balanced regular budget, and an “emergency” budget for agencies, like the WPA, PWA and CCC, that would be temporary until full recovery was at hand.  He fought against the veterans’ bonus until Congress finally overrode Roosevelt’s veto and gave out $2.2 billion in 1936.  His biggest success was the new Social Security program; he managed to reverse the proposals to fund it from general revenue and insisted it be funded by new taxes on employees.  It was Morgenthau who insisted on excluding farm workers and domestic servants from Social Security because workers outside industry would not be paying their way.<ref>Zelizer 2000; Savage 1998</ref>

Morgenthau shifted with FDR, but at all times tried to inject fiscal responsibility; he deeply believed in balanced budgets, stable currency, reduction of the national debt, and the need for more private investment.  The Wagner Act met Morgenthau's requirement because it strengthened the party's political base and involved no new spending.  In contrast to Douglas, Morgenthau accepted Roosevelt's double budget as legitimate–that is a balanced regular budget, and an “emergency” budget for agencies, like the WPA, PWA and CCC, that would be temporary until full recovery was at hand.  He fought against the veterans’ bonus until Congress finally overrode Roosevelt's veto and gave out $2.2 billion in 1936.  His biggest success was the new Social Security program; he managed to reverse the proposals to fund it from general revenue and insisted it be funded by new taxes on employees.  It was Morgenthau who insisted on excluding farm workers and domestic servants from Social Security because workers outside industry would not be paying their way.<ref>Zelizer 2000; Savage 1998</ref>

Deficits held relatively constant throughout the 1930s at about 40% of the GDP.<ref>Economists at the time used GNP (gross national product) and today they prefer GDP (gross domestic product). For the US, GNP and GDP are almost the same.</ref>

Deficits held relatively constant throughout the 1930s at about 40% of the GDP.<ref>Economists at the time used GNP (gross national product) and today they prefer GDP (gross domestic product). For the US, GNP and GDP are almost the same.</ref>

===Civilian Conservation Corps===

===Civilian Conservation Corps===

One of FDR’s favorites was the [[Civilian Conservation Corps]] (CCC), a relatively small program designed to keep unemployed young men out of trouble while giving them food and clothing and discipline, and their families some cash.  Roosevelt described work camps as a means for getting youth "off the city street corners."  

One of FDR's favorites was the [[Civilian Conservation Corps]] (CCC), a relatively small program designed to keep unemployed young men out of trouble while giving them food and clothing and discipline, and their families some cash.  Roosevelt described work camps as a means for getting youth "off the city street corners."  

Young men were enrolled as amateur forest rangers, marsh-drainers, and the like, on projects designed to improve the countryside. The recruits were given room and board, clothing, and a dollar a day (they kept $5 a month, and the parents received the other $25). More than two and half million of them passed through the camps of the Civilian Conservation Corps, until the program was abolished in 1942, when the men were needed for the draft.

Young men were enrolled as amateur forest rangers, marsh-drainers, and the like, on projects designed to improve the countryside. The recruits were given room and board, clothing, and a dollar a day (they kept $5 a month, and the parents received the other $25). More than two and half million of them passed through the camps of the Civilian Conservation Corps, until the program was abolished in 1942, when the men were needed for the draft.

Garraty listed many other similarities between the New Deal and [[National Socialism]]. Like Roosevelt, Hitler prided himself on being a “pragmatist” in economic affairs, trying out one panacea after another. Through a multitude of new agencies and mountains of new regulations, both in [[Germany]] and America, owners and managers of enterprises found their freedom to make decisions sharply curtailed.

Garraty listed many other similarities between the New Deal and [[National Socialism]]. Like Roosevelt, Hitler prided himself on being a “pragmatist” in economic affairs, trying out one panacea after another. Through a multitude of new agencies and mountains of new regulations, both in [[Germany]] and America, owners and managers of enterprises found their freedom to make decisions sharply curtailed.

The Nazis encouraged working-class mobility, through vocational training, the democratizing youth camps, and a myriad of youth organizations. They usually favored workers as against employers in industrial disputes and, in another parallel to the New Deal, supported higher agricultural prices. Both FDR and Hitler “tended to romanticize rural life and the virtues of an agricultural existence“ and harbored dreams of the rural resettlement of urban populations, which proved disappointing. Characteristically for the collectivist movements of the time, “enormous [[propaganda]] campaigns” were mounted in the United States, Germany, and [[Italy]] (as well as in Russia) to fire up enthusiasm for the government’s programs.

The Nazis encouraged working-class mobility, through vocational training, the democratizing youth camps, and a myriad of youth organizations. They usually favored workers as against employers in industrial disputes and, in another parallel to the New Deal, supported higher agricultural prices. Both FDR and Hitler “tended to romanticize rural life and the virtues of an agricultural existence“ and harbored dreams of the rural resettlement of urban populations, which proved disappointing. Characteristically for the collectivist movements of the time, “enormous [[propaganda]] campaigns” were mounted in the United States, Germany, and [[Italy]] (as well as in Russia) to fire up enthusiasm for the government's programs.

It is no wonder, then, as Professor Garraty writes, that “during the first years of the New Deal the German press praised [Roosevelt] and the New Deal to the skies. . . . Early New Deal policies seemed to the Nazis essentially like their own and the role of Roosevelt not very different from the [[Führer]]’s.”

It is no wonder, then, as Professor Garraty writes, that “during the first years of the New Deal the German press praised [Roosevelt] and the New Deal to the skies. . . . Early New Deal policies seemed to the Nazis essentially like their own and the role of Roosevelt not very different from the [[Führer]]’s.”