New Deal: thru-way or roadblock?

Chris Harman: Was the ‘New Deal’ a good deal?

(January 2009)

It is accepted wisdom that President Franklin D. Roosevelt pulled the US out of the Depression with the New Deal. But in reality there were numerous forces at play

Will Barack Obama be another Franklin D. Roosevelt? That is the question many people are asking. Underlying the question is the assumption that Roosevelt, elected for the first time in November 1932, single-handedly brought about radical change in the US, providing a solution to the Depression that followed the 1929 Wall Street Crash.

It is a false assumption. Roosevelt’s election campaign included the same stress on spending cuts that we get from the Tories. His labour secretary later said, “The New Deal was not a plan with form or content. It was a happy phrase he had coined during the election campaign.”

But by the time of his inauguration in March 1933 an already terrible slump was getting worse. Industrial production had fallen sharply, and banks in 24 states had suspended or restricted their operations. The still large farmer population was unable to sell crops and keep their land. A third of people were unemployed and the only dole came from state and city authorities who were running out of money.

There was a desperate feeling that something had to be done among all classes – although there were diametrically opposed views as to what. Sections of capital were worried enough for the head of General Electric to launch a campaign for state intervention in the summer of 1932. The bankers felt the half-hearted efforts of the outgoing Herbert Hoover administration to help them were not enough.

Farmers began withholding crops from the market and using force to prevent seizure of their land for debt. And, very worrying for US capitalism, new moods of radicalism were beginning to grow among US workers.

There is a myth today that workers will not struggle during a slump. It was indeed difficult for workers in the early 1930s to make gains using the methods recommended by “moderate” union leaders. But there were repeated attempts to fight back.

In Detroit, the US motor industry capital, unions hardly existed and, although the left was very weak, its message now began to attract an audience. In March 1932 Ford’s security force opened fire on a Communist-organised demonstration outside the River Rouge plant, killing four people. B.J. Widdick, an activist from the time, tells how the Communist Party became “a significant political force in a new wave of radicalism sweeping the auto industry”.

Roosevelt may not have promised anything tangible to workers, but his vague words made them feel he was on their side. As Widdick put it, “Fresh hope sparked unprecedented social protest to shake Detroit from top to bottom.” A series of strikes against wage reductions broke in the city in January 1933.

The main measures the new president put through in March aimed to save capitalism. He solved the banking crisis by what an associate, Raymond Moley, described as “conservative policies”, when a much more radical one would have been possible, so that “capitalism was saved in eight days”.

He stopped a bill passed by both houses of Congress from coming into effect that would have cut the working week to 30 hours for 40 hours pay. His National Industrial Recovery Act (NIRA) handed over to associations of industrialists the power to fix prices and restore profits. His farm measures involved destroying food in order to raise its price.

But discontent was such that he had to do more. He introduced schemes to provide relief work to the unemployed – but this only helped about one in six, giving them only minimal wages and often harsh conditions. NIRA provided workers with the right to join unions, but, as historian Basil Rauch shows, it “left the way open for the building of company unions”. Employers were able to keep genuine unions out of their plants.

In the second half of 1933 attacks on union mass meetings and picket lines killed 15 strikers, injured 200 and led to the arrest of hundreds. Such methods broke a nationwide strike of 200,000 textile workers and reversed an initial rise in genuine union membership.

The new breed of radical socialists created by the slump were not prepared to give up. A memoir by revolutionary socialist John Anderson tells a typical story of how, as a young a man, he would get a job, begin to build a union, see a strike smashed, get victimised and then try again elsewhere under an alias.

The tide began to turn in 1934. Groups of left wing activists led strikes in San Francisco, Minneapolis and Toledo, using mass pickets and flying pickets to see off attacks by police and company thugs. Their victories changed the mood of activists everywhere. They even led a formerly conservative union leader, John L Lewis, to found a new union organisation, the CIO, committed to militant organising. Millions of workers joined it, with a massive wave of sit-in strikes, 90 percent of which were victorious.

Roosevelt responded with a new law which codified union rights, and by allowing the police, National Guard and state troopers to break a steel strike, killing 18, at the end of May 1937. It was not until the US entered the Second World War four years later that the slump finally came to an end.

There is a simple lesson from the Roosevelt experience. The bitterness bred by the economic crisis can lead to fightbacks. And the hope associated with Obama’s election victory can encourage them. But success depends on determined struggle from below in which socialists have a vital role to play, not on hoping for “another Roosevelt”.