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One Year of New Deal

Arne Swabeck

One Year of Roosevelt’s New Deal

(March 1934)

From The Militant, Vol. VII No. 13, 31 March 1934, p. 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Article II

“The program comes from the American people,’” said President Roosevelt in his message to Congress on the New Deal, January, 3rd, 1934. And why not blame the American people. They have been blamed for so much anyway.

It is quite clear that the American people, to use that term, that is, the exploited and exploiters alike in their overwhelming majority, supported the New Deal program. But as it swings into operation on a large scale, the attitudes toward It begins to divide on class lines. Issues of labor unions versus company unions arise. Code regulations tie the workers to the crisis level of wages. And, besides that, the economics of the New Deal with its general inflation schemes hit the workers below the belt. It increases the money available – for those who own the means of production – by forcing the rate of exploitation of the workers upward due to the lowering of their real wages. The workers come face to face with the realities of a stronger monopoly capitalism functioning under governmental regulation and support.

Aid to Big Financiers

The very first steps in the New Deal program constituted an aid to the big financial overlords who had “suffered” so much from crisis and deprivation. Hoarding and exportation of bullion or currency were prohibited under presidential emergency powers. The Emergency Banking Act reopened the closed big banks and authorized their issuing new preferred stocks to obtain additional capital. Following on the heels of this came a whole series of legislation.

First, the Securities Act which established federal supervision over sales of investment securities. Then came the project to refinance farm mortgages on the plea of helping the farmers. It was well known that there could be no more farm foreclosures because such would hurt the bankers more than the farmers. The bankers had already too much farm property on their hands, so it was much better for them to obtain refinancing and interest on the farm mortgages. Next followed the Home Owners Loan Act to secure the interest payments to the bankers on outstanding mortgages due from small property owners. Then, the Bank Insurance Act which established a guarantee on bank deposits. It also provided for expansion of credits and authorization to the Reconstruction Finance Corporation to invest one billion dollars to “strengthen the banks and make it possible for them to respond to the credit needs of the country.”

But, as they many wailings and lamentations have since proven, the bankers cashed in on the dough but tailed to “respond.” They refused to lend unless they could see something profitable to use their money for.

Government Money Flows

Government money began to flow easy and all the pilfering pirates were gathering to get their share of the loot. The Reconstruction Finance Corporation was also authorized to aid the “hard-pressed” insurance companies, who gobble up the small savings of the gullible investors. Railroad companies am other monopoly enterprises got their heavy share until this orgy of credit expansion, through the R.F.C. subsidies and loans, reached the stupendous sum of six million dollars at the end of 1933.

The suspension of the gold standard and the dollar devaluation climaxed the series of inflationary schemes. They were all designed to raise the commodity price level at home and thus to reestablish the profit inducement for capital investments. In addition they also become preparations to facilitate the competition of American capitalism in the world market. Such is the picture of one side of the New Deal in operation. An enormous flow of easy money for finance monopoly institutions with the resulting inflated credits and rising price level for the things the workers need.

The slow moving index of 784 commodities compiled by the Bureau of Labor Statistics has advanced 23% and the more sensitive index of The Analyst 33% during the first year of the New Deal. Since farm prices, helped by the outright destruction of wheat, meat, and cotton, have risen more than those of non-agricultural products, it is quite easy to get an idea of the advancing cost of living which means a lowering of real wages to the workers.

Standardizing on a Lower Level

We have presented to us the New Deal program as a means of restoring and stabilizing the purchasing power of the broad masses. But this is, of course, to be on a distinctly lower level than the former “prosperity” equilibrium. It hovers around the industrial code minimum wage of $11 to $15 weekly. Is this not distinctly the crisis level of wages? Is it not a wage level as low if not lower than that of 20 to 30 years ago?

Quite cleverly, the first of the codes to be adopted was that for the textile industry. In that industry wages had always dipped the lowest. The code provides for a forty-hour week, the magnificent sum of twelve dollars in the South and thirteen dollars in the North. Being the first code adopted, it tended immediately to become a standard for wages and other provisions, from which other codes proceeded with as little variation as little variation as the exploiter could get away with.

Now we can add to this wage standard the combination of increased commodity prices and the devaluation of the dollar. As a consequence unbearable conditions have become the lot even of those workers fortunate enough to have a job. For the working class as a whole, and that includes the unemployed millions, the total income remains vastly reduced.

Unemployment and Reduced Hours

How do matters stand in regard to the other aspect of increased purchasing power of the broad masses by the spread of employment through a reduction of working hours? In administration circles much has been made about the shorter work day. Each reduction of hours made in any code regulation was widely advertised. But, as it turns out, only a few codes go below forty-hour weekly maximum and many remain above the forty-hour maximum.

As compared to 1929, when the average work week was forty-eight hours, this would even have some significance, but when compared to the crisis, none whatever. The average working hours of the first five months of 1933 in manufacturing industry, for full time workers and part time workers put together, were 34.7 weekly. Thus the code regulations of working hours attained so far could not appreciably increase employment. With the Civil Works schemes at an end, the unemployed army, according to all reliable estimates, will remain about as large as before.

Statistics on unemployment have become exceedingly scarce since the drop which followed the early flush of business revival, artificially stimulated by the various NRA schemes. Now whatever statistics are available are being manipulated. Facts and figures are turned upside down, inside out, and squeezed until they bleed from every pore. Yet they cannot hide the enormous numbers on the unemployment market. With the NBA in operation and the suspension of the anti-trust law, there is in motion a greater concentration in industry and a greater centralization of finance, all at the expense of the workers. What was formerly spent by big concerns for high pressure sales and for advertising purposes tends to go into so-called scientific management and elimination waste, which in reality means more speed-up and further elimination of labor power necessary to the productive forces.

The Real Aim of the New Deal

There should be little doubt left in the minds of the thinking workers that the New Deal represents a series of measure to save the capitalist system which was so badly dislocated during the crisis. The economic part of these measures does not aim to improve the conditions of the workers regardless of what temporary advantages they may offer. In the objective results of these measures the workers face a reduced level of real wages, an intensified speed-up system, and increased rate of exploitation. Mass unemployment remains in permanent form, and the workers are brought face to face with a stronger monopoly capitalism. That, of course, is the real aim of the New Deal.

It means a reorganization of American national economy to restore and increase capitalist profits. In the program as a whole are embodied the active preparations for further imperialist expansion. For that, tranquility of class relations is required. But this is another aspect of the New Deal program, to be dealt with separately. Meanwhile one important lesson must sink deeply into the; minds of the workers:

Preparations for further imperialist expansion as a means of issuing out of the crisis lead directly on the path of war. That, we can rest assured, is taken fully into account in the New Deal program.

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