4.8 The Riddle of Recovery: The New Deal

Planning, not just for regions, but the whole economy, seemed to many New Dealers, the key to recovery. Some held that if businesses were allowed to plan and cooperate with one another, the ruthless competition that drove down prices, wages, and employment could be controlled and the riddle of recovery solved.

The heart of Roosevelt’s early recovery program consisted of two massive efforts to stabilize and coordinate the American economy: the Agricultural Adjustment Administration (AAA) and the National Recovery Administration (NRA). The AAA, created in May 1933, aimed to raise the prices of agricultural commodities (and hence farmers’ income) by offering cash incentives to voluntarily limit farm production (decreasing supply, thereby raising prices).¹ The National Industrial Recovery Act (NIRA), which created the NRA in June 1933, suspended antitrust laws to allow businesses to establish “codes” that would coordinate prices, regulate production levels, and establish conditions of employment to curtail “cutthroat competition.” In exchange for these exemptions, businesses agreed to provide reasonable wages and hours, end child labor, and allow workers the right to unionize. Participating businesses earned the right to display a placard with the NRA’s Blue Eagle, showing their cooperation in the effort to combat the Great Depression.²

One of the most visible symbols of support of the period came from the newly created National Football League when DeBenneville Bell named a new team formed in Philadelphia, Pennsylvania, the Eagles and adopted the NRA Blue Eagle as its logo.³ For all the hoopla, the NRA failed to bring about recovery and was struck down by the Supreme Court as unconstitutional.

Other efforts of recovery met with varying degrees of success. The Public Works Administration (PWA) was created to provide jobs in hospitals, highways, housing, etc., and was designed to boost industrial activity and consumer spending with a $3.3 billion public works program. The companies put under contract and unemployed workers hired would help stimulate the economy and leave a legacy of capital improvement.

Agricultural Adjustment Act

As with planning for industry, New Deal planning for agriculture relied on private interests – the farmers – to act as the principle planners. Under the Agricultural Adjustment Act (AAA) of 1933, producers of seven basic commodities limited their own production. The AAA raised farm prices by stopping over production. The government, in turn, paid farmers for not producing, while a tax on millers, cotton ginners, and other processors financed the payments.

In theory, production quotas would reduce surpluses, demand for farm commodities would rise as would prices, and agriculture would recover. In practice, the AAA did help to increase prices. Not all the gains in farm income were the result of government actions or free from problems. In the mid-1930s, dust storms, droughts, floods, and other aspects of the Dust Bowl, helped to reduce harvests and push up prices. In 1936, the Supreme Court voided the Agricultural Adjustment Act claiming that the government had no right to regulate agriculture, either by limiting production or by taxing processors.

The New Deal in the South

The impact of initial New Deal legislation was readily apparent in the South, a region of perpetual poverty especially plagued by the Depression. In 1929 the average per capita income in the American Southeast was $365, the lowest in the nation. Southern farmers averaged $183 per year at a time when farmers on the West Coast made more than four times that.⁴ Moreover, they were trapped into the production of cotton and corn, crops that depleted the soil and returned ever-diminishing profits. Despite the ceaseless efforts of civic boosters, what little industry the South had remained low-wage, low-skilled, and primarily extractive. Southern workers made significantly less than their national counterparts: 75 percent of non-southern textile workers, 60 percent of iron and steel workers, and a paltry 45 percent of lumber workers. At the time of the crash, southerners were already underpaid, underfed, and undereducated.⁵

Major New Deal programs were designed with the South in mind. FDR hoped that by drastically decreasing the amount of land devoted to cotton, the AAA would arrest its long-plummeting price decline. Farmers plowed up existing crops and left fields fallow, and the market price did rise. But in an agricultural world of landowners and landless farmworkers (such as tenants and sharecroppers), the benefits of the AAA bypassed the southerners who needed them most. The government relied on landowners and local organizations to distribute money fairly to those most affected by production limits, but many owners simply kicked tenants and croppers off their land, kept the subsidy checks for keeping those acres fallow, and reinvested the profits in mechanical farming equipment that further suppressed the demand for labor. Instead of making farming profitable again, the AAA pushed landless southern farmworkers off the land.⁶

But Roosevelt’s assault on southern poverty took many forms. Southern industrial practices attracted much attention. The NRA encouraged higher wages and better conditions. It began to suppress the rampant use of child labor in southern mills and, for the first time, provided federal protection for unionized workers all across the country. Those gains were eventually solidified in the 1938 Fair Labor Standards Act, which set a national minimum wage of $0.25/hour (eventually rising to $0.40/hour). The minimum wage disproportionately affected low-paid southern workers and brought southern wages within the reach of northern wages.⁷

The president’s support for unionization further impacted the South. Southern industrialists had proven themselves ardent foes of unionization, particularly in the infamous southern textile mills. In 1934, when workers at textile mills across the southern Piedmont struck over low wages and long hours, owners turned to local and state authorities to quash workers’ groups, even as they recruited thousands of strikebreakers from the many displaced farmers swelling industrial centers looking for work. But in 1935 the National Labor Relations Act, also known as the Wagner Act, guaranteed the rights of most workers to unionize and bargain collectively. And so unionized workers, backed by the support of the federal government and determined to enforce the reforms of the New Deal, pushed for higher wages, shorter hours, and better conditions. With growing success, union members came to see Roosevelt as a protector of workers’ rights. Or, as one union leader put it, an “agent of God.” ⁸

Perhaps the most successful New Deal program in the South was the TVA, an ambitious program to use hydroelectric power, agricultural and industrial reform, flood control, economic development, education, and healthcare to radically remake the impoverished watershed region of the Tennessee River. Though the area of focus was limited, Roosevelt’s TVA sought to “make a different type of citizen” out of the area’s penniless residents.⁹ The TVA built a series of hydroelectric dams to control flooding and distribute electricity to the otherwise nonelectrified areas at government-subsidized rates. Agents of the TVA met with residents and offered training and general education classes to improve agricultural practices and exploit new job opportunities. The TVA encapsulates Roosevelt’s vision for uplifting the South and integrating it into the larger national economy.¹⁰

Roosevelt initially courted conservative southern Democrats to ensure the legislative success of the New Deal, all but guaranteeing that the racial and economic inequalities of the region remained intact, but by the end of his second term, he had won the support of enough non-southern voters that he felt confident confronting some of the region’s most glaring inequalities. Nowhere was this more apparent than in his endorsement of a report, formulated by a group of progressive southern New Dealers, titled “A Report on Economic Conditions in the South.” The pamphlet denounced the hardships wrought by the southern economy—in his introductory letter to the report, Roosevelt called the region “the Nation’s No. 1 economic problem”—and blasted reactionary southern anti–New Dealers. He suggested that the New Deal could save the South and thereby spur a nationwide recovery. The report was among the first broadsides in Roosevelt’s coming reelection campaign that addressed the inequalities that continued to mark southern and national life.¹¹

The New Deal in Appalachia

The New Deal also addressed another poverty-stricken region, Appalachia, the mountain-and-valley communities that roughly follow the Appalachian Mountain Range from southern New York to the foothills of northern Georgia, Alabama, and Mississippi. Appalachia’s abundant natural resources, including timber and coal, were in high demand during the country’s post–Civil War industrial expansion, but Appalachian industry simply extracted these resources for profit in far-off industries, depressing the coal-producing areas even earlier than the rest of the country. By the mid-1930s, with the Depression suppressing demand, many residents were stranded in small, isolated communities whose few employers stood on the verge of collapse. Relief workers from FERA reported serious shortages of medical care, adequate shelter, clothing, and food. Rampant illnesses, including typhus, tuberculosis, pneumonia, and venereal disease, as well as childhood malnutrition, further crippled Appalachia.

Several New Deal programs targeted the region. Under the auspices of the NIRA, Roosevelt established the Division of Subsistence Homesteads (DSH) within the Department of the Interior to give impoverished families an opportunity to relocate “back to the land”; the DSH established thirty-four homestead communities nationwide, including the Appalachian regions of Alabama, Pennsylvania, Tennessee, and West Virginia. The CCC contributed to projects throughout Appalachia, including the Blue Ridge Parkway in North Carolina and Virginia, reforestation of the Chattahoochee National Forest in Georgia, and state parks such as Pine Mountain Resort State Park in Kentucky. The TVA’s efforts aided communities in Tennessee and North Carolina, and the Rural Electric Administration (REA) brought electricity to 288,000 rural households.

Notes

1. Ellis W. Hawley, The New Deal and the Problem of Monopoly: A Study in Economic Ambivalence (Princeton, NJ: Princeton University Press, 1969); Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (Baton Rouge: LSU Press, 1986), 217.
2. Theodore Saloutos, The American Farmer and the New Deal (Ames: Iowa State University Press, 1982).
3. Rebecca Onion, “The Other NRA (Or How the Philadelphia Eagles Got Their Name),” Slate.com, May 22, 2013, accessed January 10, 2019, https://slate.com/human-interest/2013/05/national-recovery-administration-forgotten-symbol-of-new-deal-agency-gave-philadelphia-eagles-their-team-name.html.
4. Howard Odum, Southern Regions of the United States (Chapel Hill: University of North Carolina Press, 1936), quoted in David L. Carlton and Peter Coclanis, eds., Confronting Southern Poverty in the Great Depression: The Report on Economic Conditions of the South with Related Documents (Boston: Bedford St. Martin’s, 1996), 118–119.
5. Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (Baton Rouge: LSU Press, 1986), 217.
6. Ibid., 227–228.
7. Ibid., 216–220.
8. William Leuchtenberg, The White House Looks South: Franklin D. Roosevelt, Harry S. Truman, Lyndon B. Johnson (Baton Rouge: LSU Press, 2005), 74.
9. Press Conference #160,” November 23, 1934, 214, in Roosevelt, Complete Presidential Press Conferences of Franklin D. Roosevelt, Volumes 3–4, 1934 (New York: Da Capo Press, 1972).
10. Thomas K. McCraw, TVA and the Power Fight, 1933–1939 (Philadelphia: Lippincott, 1971).
11. Carlton and Coclanis, Confronting Southern Poverty, 42. .