FDR and Barack Obama: Leading the Nation through Hard Times

December 30, 2008

Two student readings summarize the condition of the country as Roosevelt was inaugurated and highlight the New Deal. A third reading summarizes the situation in the U.S. today and Obama's economic recovery plan. Discussion questions and suggestions for further exploration follow.

Three quarters of a century stand between the presidential inaugurals of Franklin Delano Roosevelt and Barack Hussein Obama. Of course the United States is a very different country in 2009 from what it was in 1933. But as the quotations from Jean Edward Smith's book FDR demonstrate in the student readings below, there are striking similarities. Among them: widespread and rising unemployment, foreclosures, bank failures, and business collapses. And fear that is almost palpable, just like the fear that FDR in his inaugural warned was "the only thing we have to fear."

As Smith recounts, at the time of FDR's inaugural, "Three years of hard times had cut national income in half. Five thousand bank failures had wiped out 9 million savings accounts. By the end of 1932, 15 million Americans, one out of every three, had lost their jobs." Today we watch as homes, jobs, health insurance and 401(k)s disappear.

The first two student readings summarize the condition of the country as Roosevelt was inaugurated and highlights of New Deal action during his first term. The third reading summarizes the situation in the U.S. today and major elements in the Obama economic recovery plan.

Discussion questions, a teaching/learning approach to Obama's first 100 days and other inquiry suggestions follow. In the high school section of TeachableMoment, teachers will find several sets of materials dealing with the current U.S. financial and economic crisis in the "Presidential Election: 2008" series and in "What Will President Obama Do About America's Economic Nightmare?"
 


Student Reading 1:

President Franklin Delano Roosevelt's first 100 days

"By the winter of 1930-1931, the nation and the State of New York had fallen into the trough of the Depression. Unemployment, which stood at 4 million in March 1930, zoomed to 8 million in March 1931. Desperate men selling apples appeared on urban street corners, breadlines stretched block after block, community soup kitchens ladled out thin porridge, and 'Hoovervilles' [named for then president Herbert Hoover]-little settlements of tin shacks, abandoned autos, and discarded packing crates-were springing up in the dumps and railroad yards of big cities to house the dispossessed. Every week, every day, more workers joined the ranks of despair."

"Roosevelt was elected on November 8, 1932. Inauguration was not until March 4, 1933. That four-month hiatus, coinciding with the fourth winter of the Depression, proved the most harrowing in American memory. Three years of hard times had cut national income in half. Five thousand bank failures had wiped out 9 million savings accounts. By the end of 1932, 15 million workers, one out of every three, had lost their jobs. U.S. Steel's payroll of full-time workers fell from 225,000 in 1929 to zero in early 1933.

"The situation in the countryside was equally bad. Gross farm income had declined from $12 billion in 1929 to $5 billion in 1932. At the same time crops and livestock that farmers could not sell rotted on farms or were plowed under. In Iowa a bushel of corn was worth less than a package of chewing gum.

"Children went hungry in every corner of the land. In the coal-mining areas of West Virginia and Kentucky, more than 90 percent of the inhabitants were suffering from malnutrition. In the nation's major cities, only one out of four unemployed workers was receiving any relief whatever. In Philadelphia, those fortunate enough to be to be on the relief rolls received $4.23 per week for a family of four. Many state and local governments, including the city of Chicago, ran out of money to pay their teachers. In Alabama, 81 percent of the children in rural areas went schoolless.  Home owners were being foreclosed at a rate of well over one thousand a day. Farmers lost their land because they could not pay taxes or meet mortgage payments."

"Violence simmered...In Iowa, farmers blocked highways with logs and telephone poles....Wisconsin dairy farmers dumped milk on the roadsides and fought pitched battles with deputy sheriffs."

— from FDR, a biography of President Franklin Delano Roosevelt by Jean Edward Smith

On May 22, 1932, in his final presidential campaign speech, Roosevelt had said, "The country needs, the country demands, bold, persistent experimentation. Take a method and try it. If it fails admit it frankly and try another. But above all, try something." In his nomination speech at the Democratic convention on July 2, he had told the delegates, "I pledge you, I pledge myself, to a New Deal for the American people."

On March 4, 1933, President Roosevelt delivered a 15-minute inaugural address at the Capitol before 150,000 people. He began with memorable words. "This great nation will endure as it has endured, will revive and will prosper. So first of all let me assert my firm belief that the only thing we have to fear is fear itself-nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance." The most pressing problem was to put people to work. "We must act and act quickly." He laid out his program briefly and said he would recommend to Congress "the measures that a stricken nation in the midst of a stricken world may require."

Then, in the first 100 days of his presidency, FDR, as he became known to everyone, put this New Deal into action. Bills approved by Congress or by executive order:

  • Raised the income of farmers by reducing surpluses and paying farmers not to grow crops beyond a certain prescribed amount
  • Funded the refinancing of mortgages held by farmers and homeowners facing foreclosure
  • Provided direct relief for the unemployed
  • Established a civilian conservation corps (CCC) that eventually put more than three million young men and a handful of women to work on a multitude of projects-flood control, planting trees, building bridges and reservoirs
  • Established a public works program that eventually put 1.2 million men and women to work on building lighthouses, city sewer systems, even battleships
  • Reformed the stock market by regulating securities, requiring sellers to file information on them with the Federal Trade Commission, and establishing the Glass-Steagall Act to prevent those selling securities from also handling the bank accounts of those who bought them
  • Created the Tennessee Valley Authority (TVA) to control the Tennessee River that ran through seven states and often flooded them, and to provide electricity, sanitation and economic development to an impoverished area of high infant mortality and rampant disease
  • Financed the rehabilitation of the nation's railroads
  • Created the Federal Deposit Insurance Corporation (FDIC) to guarantee deposits up to $2,500, which covered close to 100% of individual accounts in 1933, and to prevent depositors from losing their money when banks failed (as 40 percent of them had in the early days of the depression)

For discussion

1. What questions do students have about the reading? How might they be answered?

2. How is the situation in the U.S. today similar to the first years of the Great Depression? How is it different?

3. Why did FDR call for "bold, persistent experimentation"? Why do you suppose that his inaugural words about fear are still remembered?

4. Which New Deal programs of the first 100 days of the Roosevelt presidency might be appropriate today? Why?

5. In 1999 Congress repealed the Glass-Steagall Act. Some economists view that action as contributing to the current financial crisis. Why do you suppose that they do? If you don't know, how might you find out?
 


Student Reading 2:

The last two years of FDR's first term

New Deal critics

Despite all the Roosevelt administration's efforts, Smith wrote, "At the end of 1934 the recovery had yet to gain traction. National income was still little better than half of what it had been in 1929. And while more than 2 million persons had found jobs, the unemployment rate remained at an uncomfortable 21.7 percent."

During the remainder of his first term in office, FDR felt heat from critics on the left. One was charismatic Senator Huey Long, who traveled the country campaigning to make "every man a king." He proposed confiscating money from the rich to redistribute to American families. They would be guaranteed a yearly wage of $2,500, which was twice as much as family incomes of the time.

Another was Dr. Francis Townsend, who proposed a monthly pension for every American over 60 if he or she retired and promised to spend that money within the next month. A 2 percent business transaction tax would pay for the program. Supporters argued that a virtue of the plan was that it would help solve the job problem. Older workers would retire and leave their jobs to younger workers who did not have one.

FDR's answers to such critics came in 1935.

Social Security

As early as 1934 President Roosevelt had announced his intention to seek approval for another New Deal program—Social Security. This social insurance program included old age pensions, survivor benefits, unemployment insurance, and aid for dependent children and the handicapped. But in its original form the program covered only 60 percent of workers. It excluded farm laborers, domestics, teachers, nurses, and those who worked in companies employing fewer than 10 people. Years later they were included.

Like other New Deal programs that broke with conventional wisdom about what the government should and should not do, Social Security had its opponents. Alfred Sloan, president of General Motors, argued: "The dangers are manifest. With unemployment insurance no one will work; with old age and survivor benefits no one will save; the result will be moral decay and financial bankruptcy."

Said Representative John Taber of New York: "Never in the history of the world has any measure been brought in her so insidiously designed as to prevent business recovery, to enslave workers, and to prevent any possibility of the employers providing work for the people." Representative A. Harry Moor of New Jersey: "We might as well take a child from the nursery, give him a nurse, and protect him from every experience life affords."

In the spring of 1935, the House of Representatives voted 371-33 and the Senate 76-6 for the bill, which FDR signed into law on August 14, 1935.

The WPA

FDR had called upon Congress in his January 1935 State of the Union to close existing relief agencies and to adopt a plan to put 3.5 million people to work. In April, writes Smith in her biography of FDR, Congress authorized "the largest appropriation in American history: $4.8 billion for Roosevelt to spend largely as he saw fit."

In May, the president established the Works Progress Administration (WPA) by executive order. Its aim: "to move from the relief rolls to work on such projects or in private employment the maximum number of persons in the shortest time possible." He gave the task of putting people to work to a favorite aide, Henry Hopkins.

"In the first year of its existence the WPA put more than 3 million to work, and over a span of eight years it employed upward of 8.5 million while pumping some $11 billion into the economy." Projects included the construction of 5,900 school, 2,500 hospitals, 8,000 parks, 13,000 playgrounds, and 572,000 miles of highways.

Money also went into arts and entertainment. The Federal Music Project financed symphonies and jazz groups, the Federal Theater Project plays and puppet shows. The Federal Art Project hired thousands of artists and craftspeople, including Jackson Pollock and Willem de Kooning, to teach, to restore artworks, to paint murals. The Federal Writers Project employed such writers as Richard Wright and John Cheever to prepare guidebooks on major cities and each of the states (guides that are still useful today).

Worker rights

For the first time the right of workers to organize in labor unions and to bargain collectively with employers became law. In the summer of 1935, Congress passed the National Labor Relations Act or Wagner Act (named for Democratic Senator Robert Wagner of New York).

But the right did not come easily. It took a worker seizure of a General Motors plant in Flint, Michigan and a seven week sit-down strike before GM recognized the United Auto Workers and workers' right to a union there. Other workers across the country also took part in militant actions, demanding their right to union representation.

Partly as a result of the Wagner Act, unionization levels soared and, over time, workers' wages and benefits improved greatly.

Rural electrification

In 1935, the president also created the Rural Electrification Administration to bring electricity to the 89 percent of American farms where coal oil lamps provided light and cows were milked by hand.

An overview

FDR's New Deal emphasized experimentation, and at times ran into troubles of its own making. The National Industrial Recovery Act outlawed child labor but also led to price and wage-fixing and was declared unconstitutional by the Supreme Court. Dissatisfied with Court rulings, FDR campaigned to add more members to the Court who would support his programs — "court packing," as his opponents called it. And his own Democratic Party turned against him on this issue. By 1937, production, payrolls and the stock market were rising and unemployment was falling. Concluding that big federal spending was no longer necessary, Roosevelt reduced it sharply. His decision brought on a year-long recession.

The New Deal brought jobs, income, defense against homelessness, electricity, stock market reform, protection of bank deposits, unemployment insurance, social security, and bargaining rights for workers. It also brought hope to Americans. But it did not end the Great Depression. What did? The traditional answer is World War II. From 1939-1941 the U.S. economy profited from the sale of war-related goods to Europe before the country entered the war on December 7, 1941. After that, factory defense work and a military draft drove unemployment down sharply. But economists still debate how and when the Great Depression ended.

For discussion

1. What questions do students have about the reading? How might they be answered?

2. Why were some people opposed to social security? Why do you suppose that Alfred Sloan thought that social security would mean that people would not work?

3. Similarly, the Wagner Labor Relations Act resulted in bitter employer opposition. Why? Today the United Auto Workers have a good relationship with General Motors and other automobile manufacturers. What do you suppose brought about that change?

4. Would a new WPA be appropriate today? Why or why not?

 


Student Reading 3:

President Obama's first 100 days

And today? The stock market zigzags downward. People's jobs and homes disappear.
Typical is "Liz Perkins, 24, and the mother of four young children in Colorado Springs," reported the New York Times on December 8, 2008. Perkins "began looking for work in October after she learned that her husband, James, was about to lose his job at a bed making factory. But the jobs she found either did not pay enough to cover childcare or required her to work overnight. 'I can't do overnight work with four children,' she said. She has since stopped looking for work. The family has paid its bills by dipping into its savings and borrowing from relatives. But Ms. Perkins said that unless her husband found a job in the next three months, she feared the family would become homeless." (David Leonhardt and Catherine Rampell, "Grim Report on Jobs Not Showing Full Picture," New York Times, 12/8/08)

Department stores, automobile companies and airlines have cut prices and employees. Millions have lost the health insurance that went with their jobs. Millions owe more on their mortgages than their homes are worth because home values have nosedived. And the equity Americans thought they had in their homes, which once enabled them to pay off debts and finance new purchases, has evaporated. The chronically ill split pills. Banks and a huge insurance company fail or get federal bailouts. Investment banks vanish along with 401(k) pension plans. Foreclosure signs stand in front of more and more homes. This is what is happening in American cities and suburbs as a harsh recession that seems certain to worsen grips the country.

Sandra Peavley, 54, lives near Detroit, Michigan, a state with the highest unemployment rate in the country-9.6 percent, compared with 6.7 percent nationally. According to the New York Times story, she "had worked at a bank for 18 years before losing her job, and ran out of unemployment last month." She earned more than $60,000 a year and had health benefits and a 401(k) pension plan. Now she's divorced and has run out of unemployment benefits.

"Ms. Peavley said she could not afford health insurance anymore, and had come to ration the antistress pills her doctor prescribed. She has not paid debts she owed on credit cards, and says she changed her phone number only to have creditors, to her mortification, call her neighbors, even distant relatives, trying to track her down. 'I don't have the money,' Ms. Peavley said quietly. 'I'm out of work. What am I supposed to do?" ( New York Times, 12/8/08)

FDR told Americans told Americans in 1932 that "the only thing we have to fear is fear itself." But now a New York Times columnist and economist warns, "There is a new feeling in the land-fear-on a scale that I have never experienced. Chilling, right-to-the-bone fear. Fear that there is no bottom to our problems, that we got into this mess in some mysterious way we don't understand, and that no one knows how to get out of it.

"How did this happen? Simply put, the lenders lent with unimaginable foolishness and made incredibly risky bets. And the bets busted. Now lenders are terrified that their loans will go bad. The are terrified that the government doesn't know what it's doing. So they don't lend. And people cannot buy cars and homes. As Americans, we took credit for granted—and now it's gone for many people. This is not the time for timidity by government. For now, real people need real help." (Ben Stein, "Before the Fear, There Was Foolishness," New York Times, 12/14/08)

In a recent interview on 60 Minutes, Barack Obama sounded like FDR when he declared his commitment to "real help." When it comes to economic policy, Obama said he doesn't want to "get bottled up in a lot of ideology and 'Is this conservative or liberal?' My interest is finding something that works." He has also said that he wants to "make government cool again."

His economic team has been working to create a huge economic stimulus program whose cost will come close to $1 trillion, if not more. A major element in the program will be a New Deal-like jobs program to improve highways, strengthen bridges, fix schools, and develop green energy projects that will create or save 3 million jobs.

Other elements include:

  • Tax cuts for 95% of workers and their families
  • Extension of unemployment benefits and food aid
  • Help for homeowners facing foreclosure, including a modification of mortgage terms
  • Credit assistance to small businesses, municipalities and states
  • A new law to make it easier for workers to organize unions
  • Minimum wage increase
  • Subsidies for states and municipalities for health and education programs
  • Information technology for medical providers

"The Obama administration will find itself in a position very much like that facing the New Deal in the 1930s," economist Paul Krugman wrote. "Like the New Deal, the incoming administration must greatly expand the role of government to rescue an ailing economy."

Krugman, an op-ed columnist for the New York Times and professor of economics and international affairs at Princeton University, argues that the Obama administration must make big government clean by:

1) building independent, effective oversight into programs "from the beginning," as FDR did with the WPA
2) making sure that Congress does not "stuff stimulus legislation with pork," again as FDR insisted upon with the WPA
3) "Finally, the Obama administration and Democrats in general need to do everything they can to build an FDR-like bond with the public...He needs a solid base of support that will remain even when things aren't going well."
(Paul Krugman, New York Times, "Barack Be Good," 12/26/08)

For discussion

1. What questions do students have about the reading? How might they be answered?

2. All Americans are aware that the country is in a deep recession that probably will become worse. Ben Stein wrote that we're in this recession because of risky behavior by lenders whose "bets busted" and now it's very difficult, for example, for home and car buyers to get loans. Who are the lenders Stein refers to? Why were their loans risky? What happened as a result? If you don't know, how might you find out?

3. Compare and contrast the economic situations in 1932 and 2009.

4. Which of the likely Obama economic stimulus proposals do you support? Why? Which do you oppose? Why? Which do you need to learn more about to have an opinion? How might you learn about each?

5. What recommendations does Paul Krugman make to the Obama administration? In each case, why?

 


For inquiry and continued study

A. Invite the class to participate in a study of Obama's first 100 days, including his first day inaugural address.

1. What major themes run through Obama's address?

2. What programs are his priorities? Why? How, if at all, does he state how these
programs will be paid for?

3. What promises, if any, does he make to the American people?

4. In what ways is his inaugural similar to or different from FDR's?

5. Does Obama's address include any memorable phrases or sentences like FDR's "the
only thing we have to fear is fear itself"?

Assign, or have students form, small groups of two or three. Ask each group to study President Obama's actions for a prescribed period of time in newspapers, TV news programs, and online sites and blogs.

Ten groups of three students might make such a study for 10 days, meet in committee to prepare a class presentation, make that report and then conduct a discussion of it. Such questions as the following might guide this study.

1. What are the three top Obama actions for the period studied?

2. What form does each action take? Is it a proposal for congressional legislation? An executive order? A speech-making tour? Meetings with legislators or foreign leaders?

3. How does each action fit, or perhaps not fit, with the plans Obama described in his inaugural address? How can you explain any changes in the plan?

Complete the study with a writing assignment: Write a well-developed paper in which you discuss what you view as the three most important actions taken by President Obama in his first 100 days. Describe the actions and explain why you regard them as important.
How do they fulfill his inaugural address proposals and promises? How have any of these changed and why? How do Obama's first 100 days compare with FDR's?

B. Call for independent and small group inquiry into how the severe recession is affecting your school and/or community.

Students might consider such questions as the following:

1. What specific effects is the recession having on school and/or community life?

2. What actions are school and community officials taking to meet the crisis?

3. What citizen groups have formed and for what purpose?

4. What student groups have formed and for what purpose?

 

C. Other inquiry possibilities for independent or small group investigations:

  • Causes of the October 29,1929 stock market plunge
  • Causes of the 2008-2009 deepening recession
  • Responses of President Herbert Hoover to a growing depression
  • The New Deal farm subsidy program in the 1930s and today
  • The TVA
  • The 1930s sit-down strikes
  • Huey Long
  • Dr. Francis Townsend
  • Father Charles Coughlin
  • FDR's "court packing" plan

This lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email them to: lmcclure@morningsidecenter.org