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Permanent Depression

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America’s Permanent Depression – II

New Deal Takes Care of Bankers First;
Juggles Relief as Riot Insurance and for Political Machine

(August 1938)

From Socialist Appeal, Vol. II No. 32, 6 August 1938, p. 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Some day the “New Deal” era will be known as the “Years of the Great Deception.” Few political demagogues have demonstrated so great a divergence between the word and the deed, the promise and the fulfillment as has Franklin Delano Roosevelt. Borne into office on a tremendous tide of popular protest against the brutal indifference of the Hoover regime, Roosevelt has steered a course with such political adroitness that he has maintained his popular hold upon the masses of American people despite the fact that his policies have failed to effect a single fundamental change in our economic and social order.

The “money changers” whom Roosevelt stormed against in 1932 and vowed “to drive from our Temple” are very much with us. Indeed, his first political act, the Bank Moratorium, served merely to clean out the small independent banks and a host of small depositors. The major financial groups were given a new lease upon the country. Backed by government power and credit, finance capital consolidated its power.

For those who point the finger at Wall Street as the root of all evil, and pin a halo to the scalp of F.D.R., it is well to recall that the genial Great White Father, when he had the greatest opportunity ever presented to uproot the choking weeds of Wall Street by nationalizing the banking system, chose rather to nurture their growth.

Roosevelt, in his speeches, championed the “little man,” the small independent producer. He scored with fiery tongue the industrial monopolists. His new “Magna Charta,” the National Recovery Act, as its one outstanding achievement wiped out thousands of the “little men” by virtue of its price-fixing “codes of fair business practice” and further entrenched industrial monopoly. And, startling as it may sound, while we have read of innumerable investigations under the Anti-Trust laws, there has been not one successful prosecution since Roosevelt took office.

‘Subsidizing’ Home Owners and Destroying Crops

Much has been made of Roosevelt’s “social” legislation. Chief among his “reform” acts have been the Agricultural Adjustment Act, the establishment of the Home Owners Loan Corporation, and the Wagner Labor Act.

The first was an attempt to subsidize wholesale crop and livestock destruction, while a third of the nation was in dire want, and resulted in the ruin of tens of thousands of small dirt-farmers, tenant-farmers and sharecroppers. The rich landlord farmers continued to collect their rents and shares, and pocketed the bounty of the government.

The H.O.L.C., instead of protecting the small home-owners, has merely guaranteed interest payments to the banks, mortgage companies and insurance corporations. Thousands of small home-owners, unable to meet interest and amortization on government loans, have been foreclosed, while the mortgage sharks get good hard government cash in place of shaky mortgages and increasing property taxes.

Bargaining Rights Won on Picket Line

Another diamond in the Roosevelt crown has been the act defining the rights of collective bargaining for labor. Under this act, and its defunct predecessor, Section 7A of the N.R.A., organized labor was presumably guaranteed the rights of collective bargaining free from coercion and restraint by the employers. Yet, in every single great test of these acts, and there have been scores of them in the past four years, labor has won recognition for its bargaining rights only by blood and struggle.

The Maritime strikes, the Textile Strike (when Roosevelt threatened to call out the Federal troops against the strikers), the Minneapolis Teamsters strike, the Toledo Auto-Lite, the Milwaukee power, the Koehler, the Little Steel, the General Motors, the Rubber strikes, and thousands of other bitter physical struggles, testify to the fact that Roosevelt had given the workers merely the rights they always possessed, the rights they have always had to wrest from the ruling class in life and death conflicts.

How F.D.R. ‘Solved’ Unemployment

However, the greatest problem which faced Roosevelt when he took office was that of unemployment. There were 15 million unemployed in the U.S. when he became President. So far as the elimination of mass unemployment in this country is concerned, Roosevelt’s program has accomplished exactly nothing. There are 15 million unemployed in the U.S. today.

The “reasonable” leader, the liberal who seeks “good motives” instead of so u n d accomplishments, the “radical” who yearns for the green pastures of “popular” causes, all chant in chorus, “But Roosevelt has done more for the unemployed than Hoover!”

Granted! But these apologists fail to add how much more, and why Roosevelt’s concessions to the unemployed were made.

Roosevelt’s aid to the unemployed comes under two headings, the Social Security Bill and the work relief appropriations. Like almost every New Deal concession, the Social Security Bill is a bone with a string attached. Its benefits apply to less than ten per cent of the present unemployed. Further, the conditions under which a worker can receive any benefits are extremely restricted, and then the benefits last but a few weeks. The real pay-off is that workers obtaining unemployment insurance receive less, in most instances, than they might on relief.

This “benevolent venture,” adopted in most European countries years ago, is in reality a clever scheme of government taxation of the workers, whereby a tremendous fund is being built up, largely from deductions in workers’ wages. Thus, this grandiose scheme resolves itself into a gigantic swindle, a deferred payment of wages.

Riot Insurance and Political Expediency

The history of relief and work relief programs under Roosevelt is one of constant mass struggle by the workers for every slightest concession and the skillful use by Roosevelt of federal funds for political maneuvers. Relief comes under two headings on the Roosevelt Budget – riot insurance and political expediency.

It is significant to note that the order in which Roosevelt applied himself to the national problems when he took office were first to safeguard the bankers, next to entrench monopoly, and finally to throw a few crumbs to the unemployed, who in the spring, summer and fall of 1933 were in mass ferment.

The Emergency Relief fund which Roosevelt instituted in the summer of 1933 – after six months in office during the lowest point of depression in American history – was literally wrested from the “New Deal” regime by riots and bloodshed, by storming of food stores and warehouses, in which literally hundreds of thousands of desperate unemployed, led mainly by such organizations as the Unemployed Councils and Unemployed Leagues, took part.

These funds provided only a bare emergency relief in the form of food orders, and because of the necessity for state and local governments declaring themselves in practical bankruptcy in order to obtain these federal grants, many state and local communities refused to avail themselves of such funds. As a result scarcely a third of the needy unemployed received any of these starvation benefits.

C.W.A. Stifles Mass Jobless Revolt

As winter approached, and as the first year of Roosevelt’s tenure came to a close, with the promise of re-employment under the N.R.A. program completely fulfilled, Roosevelt instituted the first federal work relief program, the Civil Works Administration. This was more than a humanitarian gesture. On the one hand it was an attempt to stifle mass revolt during the most bitter months of winter; on the other, it was the beginning of that program of “pump priming” and credit inflation into which Roosevelt has been repeatedly forced when all his other measures have proved inadequate to solve the economic crisis. Within three months of its inception, the C.W.A. folded up. The unemployed went back to dandelion greens.

It is interesting to note that the wages paid under the C.W.A. for common labor were $15 per week. The “mistake” of maintaining such “high” wages has never again been repeated by Roosevelt. For as we shall note, every future work program was to mark a decline in the actual and real wages paid federal work relief employees.

The pump-priming of the C.W.A., a mere 400 million dollars failed to increase buying power to an extent whereby industry and business might revive. Roosevelt “prosperity” failed to materialize, and the unemployed were again on a rampage. Demonstrations and hunger marches swept the streets of every city. City halls, state legislatures and the federal capital were invaded by militant masses demanding relief. The answer of Roosevelt was the F.E.R.A. This program provided funds for direct and work relief.

FERA Wage Down to Relief Level

Work relief under the F.E.R.A. was initiated in September 1934. The full program was cleverly built up to provide the maximum of employment just prior to the 1934 and congressional elections. Even so, at its peak, the F.E.R.A. employed a million less workers than the C.W.A., although the need was just as great. Further, the wages paid amounted to a maximum of $12 per week, which in February 1935 were cut to the equivalent of each worker’s emergency relief budget. This was a fancy scheme to exact work for what amounted to direct relief, and was followed shortly by the rapid demobilization of the work program.

In June 1935, the federal government ended the F.E.R.A. At one stroke, 5½ million families were left to starve, or to go back to the tender charities of bankrupt local communities.

A recurrent pattern marks the entire course of Roosevelt’s treatment of the unemployed. Unemployment is considered temporary. Periods of starvation relief and jobs at coolie wages are followed by periods of outright starvation. This plan is calculated. The administration is testing how little it will take to satisfy the unemployed. Further, it is blindly hoping for a business pick-up which will relieve the problem. The pick-up fails. Demonstrations, hunger marches, riots. Shortly after the ending of the F.E.R.A., Roosevelt notes a decline in his popularity. Too many millions of workers have had to jam Section 7A down employers’ throats with their bare fists. Production has registered scarcely any rise. The unemployed are fuming.

Again the astute Magician of the White House pulls a trick rabbit from his hat. This time it is pump-priming on a larger scale, a super-super works program. The W.P.A. gets slowly under way in the fall of 1935.

(This is the second of a series of articles on unemployment. The next article will continue the story of The New Deal and the Unemployed, covering the Roosevelt unemployed program from the winter of 1935 up to the present.)

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