This paper will discuss the history of the United States between the two decades of the 1920s and 1930s. It was a transition after the First World War, and the country needed to regain its footing on the economic front. It was achieved by the Republican government in the 1920s, when the US economy had flourished and many industries expanded. However, the early 1930s started with a wrong economic performance. It had eventually spanned over ten years. Then, it transferred into the Great Depression. During this era, the government was led by P0resident Roosevelt. He had tried many strategies to counter the poor economic performance. This paper will explore the economic strategies that the respective governments had employed to ensure the economic parity across classes. It will show the differences between the strategies and the eventual success or failure.
The National Struggle in Balancing Economic Growth and Economic Justice between the 1920s and 1930s
The United States of America underwent the rapid economic transformations between the 1920s and 1930s. The 1920s era saw a rapid economic growth, being arguably one of the best periods in the economy of the United States. But the economic justice was crippled. The government of the time adopted Laissez Faire capitalism where big corporations had been left to govern their markets. In fact, the government had put policies in place to ensure that these home corporations were shielded from external producers. The total control of the market and industries by these corporations had led to massive sufferings by the poor people. They were also not allowed to form unions, thus, reducing their bargaining power whenever they had been dissatisfied. The inequality between the rich capitalists and poor proletarians was vivid. The policies had encouraged the trend through inaction. The economic prosperity continued to increase, while economic justice was in a loss.
This era was succeeded by another worse period for the poor people, i.e. the Great Depression. The economic performance became so poor that even in the big corporations workers had a hard time sustaining their families. One newspaper excerpt wrote the following:
When the breadwinner is out of a job he usually exhausts his savings if he has any [...] He borrows from his friends and relatives until they can stand the burden no longer. He gets credit from the corner grocery store and the butcher shop, and the landlord forgoes collecting the rent until interest and taxes have to be paid and something has to be done. All of these resources are finally exhausted over a period of time, and it becomes necessary for these people, who have never before been in want, to ask for assistance.
It is a good explanation of how bad the situation was at that time.
The two eras saw different government’s strategies employed to bring parity. In the 1920s, the government encouraged domestic production. Farmers could get more harvest for cheaper prices and eventually lowered the pries of essential commodities. It was welcome by the poor workers. The government also encouraged the production of other industrial products in bulk, thus, lowering their prices in the market. The corporations eventually made profits. However, the poor ones could not also afford these products.
The 1930s’ strategies were different. The government stamped its authority in such a way the corporations had been run. It ensured that the prices of labor and production were maintained at a certain level. This idea empowered the poor people and took away some of the command that corporates had had. Other policies affected the producers. The government ensured that the capitalists were also guarded from the market forces. For example, it passed the laws that ensured the following. Some land was left fallow in order to reduce the surplus food production and overall reduction of price.
Economic Growth and Economic Justice Policies in the 1920s and New Deal
The 1920s’ era saw a period of the rapid and booming economic growth. After the war, the Republican government was tasked with ensuring that there had been increased vitality in economic empowerment. It achieved heights in this. First, the government practiced Laissez Faire capitalism, where it decided to let businesses run on their own. There was a little involvement in business processes. The corporations were allowed to hire and regulate the market prices, both in terms of the labor input and the price of their commodities. Consequently, there was a large boom and rapid economic growth. Secondly, the government introduced tariffs that increased taxes and other charges. They made importing products costly. It left Americans with one viable choice, which was to increase their domestic production and ensure that most of theory businesses had been conducted locally. While increasing these tariffs, the government encouraged the consumption of local products through the reduction of taxes and consequently the cost of goods. The effect of this strategy was an increased value for money as people could purchase more products. The local industries were, therefore, highly empowered as they had had a large market in the domestic population. Furthermore, the government encouraged trusts, which monitored the big corporations. It ensured that they had a healthy and constructive competition amongst themselves. The government reduced the role of politicians in a process of regulating the industries and guaranteeing that they were better off financially. The strategies used in this period were successful and saw a rapid emergence of new areas and new innovative products such as vacuum cleaners. It was a period that was very productive. It led to a progressive increment in the national GDP. The overall level of lives of Americans was better. The country was only recovering from the effects of the First World War.
While the strategies of the 1920s were highly progressive and effective in ensuring economic growth, the economic recession in the 1930s was disastrous. It was as well lethal to the sustainability of new developments. The recession led to the loss of disposable income and even to some people relocating to other countries such as France. There was a need to resurrect the drowning economy. President Roosevelt was elected as the president in 1933. Immediately he embarked into the process of creating new policies to revive the economy. In his campaign process, he had used the slogan of the New Deal to illustrate the following. He was going to revive the economy. He at once started off with the policies that affected banks. Three days of the presidency, all banks were closed and his government empowered the Federal Reserve. The use of gold as a measure of worth was relooked; and experts were tasked to determine different ways. They could do this through which the banks would be regulated. One of the biggest highlights of his regime was the abolishment of Laissez Faire capitalism, where the government became actively involved in business. It had been creating policies and laws that they had to follow. There was a regime change. The government was spearheading everything. The Congress gave the president more powers. Roosevelt was enabled to initiate some policies that could revive the economy. Later, after a few days and weeks, most of the banks were completely closed, while others were allowed to operate but under more strict and monitored conditions. During his tenure, laws governing business were passed, including Trading with the Enemy Act, Emergency Banking Act, and Agricultural Adjustment Act. The Federal Reserve Board was mandated with the regulation of the economic value of the dollar and general monitoring of the economy.
By the end of his era, President Roosevelt’s policies were seen as inconsequential. The Great Depression had plagued the nation; and none of his strategies seemed to work at all. There was a general dissatisfaction among the Americans. Most of workers that he had allowed to create unions for applied their unity to strike and made some demands towards their employers. There were few successes in the economic revival.
Countervailing power was a political policy that argued as follows. More than one center for power would lead to increased stability and better governance. During the New Deal period in the 1930s, the United States’ President started a political move. It was directed to empower workers to form unions and gain an ability to confront their employers. This strategy was very successful in ensuring that there was a better treatment of employees at work places, making them more satisfied and consequently more productive. This method of governance worked to a large extent, even though it faced some resistance from employers. The latter ones threatened and intimidated the grouping employees. It was, however, quickly rectified; and the employees’ willingness to unite and have a better bargaining power was not resisted.
Through this strategy, the corporations were put in check. They were required to give good products to their consumers on top of giving them at fair prices. The price would be set in a way that satisfied both of them, while still allowing the corporation to get adequate profits to keep them in business. These resolutions by the government of President Roosevelt were supported by the American Law. They were widely used to reduce the disparities created by the capitalism of 1910.
Despite these efforts, Roosevelt’s administration still failed in several key areas. Rauchway wrote, Although the Roosevelt administration may have worked to redistribute money and power geographically, it did not as directly use the state to redistribute money and power across the classes.
It failed to ensure that power and money had been distributed across different American classes. The rich people remained rich while the poor became poorer. Some of the middle class individuals appeared to be in the brackets of the poor ones. Further, he did not solve one of the biggest issues that led to disparities. The capitalist employers were a main source of income for the American population. Therefore, the poor would not have many chances of getting employed, because employers remained the same. By suppressing their freedom in their trade, the government was indirectly suppressing the investment and more sources of livelihood than they could realize. The government’s involvement would end the old practice of Laissez Faire capitalism being popular among investors and middlemen as well. The employers raised these issues. Rauchway states how they viewed their position as labor providers. He has written that, “Look out the window... and see the men waiting in line for your job.”
The president was having a populist method of solving issues, but there were weaknesses in the methods.
In his argument, Rauchway was a little harsh on the effects of the strategies that President Roosevelt had used. Even if he did not appreciate the deeds of the government, he should have at least appreciated the differences that these laws had created. There was a very strong impact of unions working in corporations. The audacious step by Roosevelt was the beginning of the empowered labor society governed by laws. It was incorporated in the United States’ law. It was a big victory for Roosevelt politically and employees for their renewed ability to bargain for their positions and welfare against the forces and intimidation of capitalists. Further, Rauchway should appreciate that the World War had left very conspicuous marks to the American Society. There were many international ties and unresolved disputes with such countries like England. These international issues would affect the market for the products from the United States, especially to the countries that had had a side with the enemy during the war. Rauchway remains numb over the effects of these domestic measures on the United States’ international trade being heavily affected. By creating consumer groups, the corporations were not only faced by a challenge of reducing their cost of production through salaries and wages. However, they also faced the problem of demands for better services by collective consumers. It was a big blow. They were earlier not closely regulated. The poor quality of products had been not strictly determined and maintained through legal processes. At this point, the international market was vital to ensure that some of the products had been sold outside the country. There the consumer protection laws had been less strong .
Although Rauchway has given a good account of Roosevelt’s ideas and their execution, there is much more that he has not covered and appraised properly. The Great Depression and the predicted and worsening economic conditions were looming. There was little that the president would have done. However, his ideas could have been possibly slightly improved.
Evidently, the two eras were managed differently. The first one resulted into a good economic performance, but the poor economic justice. Meanwhile the second tried to adopt a more economic just approach, but ended up in the depression. President Roosevelt was leading a government that wanted to control corporations while empowering the masses. Meanwhile the governments of the 1920s put in place some policies that protected the corporates from external competition. Everyone, including both corporates and the poor people suffered during the Great Depression.