After World War I, America experienced a period of time when the country was riding high.  It was called the Roaring Twenties. Prohibition had been enacted, drying up the source of liquor to the general populace.  To the rescue came the bootleggers to fill the void.  Fast money and fast women were on the rise.  Even the stock market expanded its sales by allowing small investors to buy on margin and thus attempt to achieve financial wealth.  This period of plenty lasted more than a decade, until October 1928.  On that fateful October day, Wall Street experienced a financial disaster.

Investors woke up one morning to find that their financial gains had gone with the wind. This was the cataclysm that sent America into the Great Depression.  The President Elect, Herbert Hoover, tried to quell the panic by treating the crash as a market correction.  He did not intervene in the process, but as time passed, the situation worsened.

Ordinary Americans found themselves not able to meet the demands of everyday life.  They looked to government to supply the answers, causing general unrest in the population, which then selected Franklin D. Roosevelt to replace Hoover in the next Presidential election.

When FDR assumed Presidential power, he knew he had the tiger by the tail and could not let go.  A Wall street market correction was not the answer.  A change in governmental policy was imminent.  To address the nation’s problems on a systemic basis, FDR consulted with leading economists as to the cause of our financial collapse.  In addition, he and his advisors had to institute preventive measures to restore the trust of the populace in a system that aspired to restore order in the country.

In FDR’s first few years in office, the country had witnessed massive unemployment.  Industrial production had declined by 45%, homebuilding sank by 80%, and more than 1 million families lost their farms. On the corporate front, profits declined by 10%.  11,000 of the country’s 25,000 banks failed, wiping out 9 million savings accounts.  At the same time, approximately 2 million people were migrating throughout the country, desperately searching for work on the remaining farms.

In 1933, Roosevelt’s administration initiated The New Deal or NRA, bringing sweeping changes to the workforce as well as banking and financial institutions.  Wage and price controls and the FDIC restored the nation’s trust in banking.  That trust was bolstered by the installation of the SEC as the governmental watchdog of the banking industry.  These were the moves that we needed to re-establish the order and move forward.

The President was a firm believer in the principle that the economy was based upon the spending power of its people.  With that in mind, he instituted the WPA to bring “shovel-ready” jobs to the unemployed.  These jobs, in turn, supplied consumer money to encourage entrepreneurs and business to expand their horizons.

The NRA that ended in 1939 ushered in:

1.       The mandating of maximums on prices and wages, and competitive conditions in all industries

2.       Encouragement of unions to raise the wages of working class by 93%

3.       A decrease in farm production, thus escalating consumer demand and causing higher prices to make

          farming more profitable

In the later years of the Depression (1934 to 1936), the Second New Deal added Social Security.  This was a pension fund established by a Federal directive and paid for by the American workforce.

The economy slowly recovered until 1937, when it had a downturn caused by the Federal Reserve tightening the money supply.  The Administration’s response was to ignore balancing the budget and launch a $5 billion spending program to increase mass purchasing power in the spring of 1938.

This program came without the consent of the Republican conservatives. Meanwhile, under the direction of Adolph Hitler, Germany decided to expand its borders.  This decision on the part of that madman sparked World War II.  With the defeat and occupation of France, European Allies looked to America to supply the materials needed to wage war.  This need created a job market that spurred on our the suffering economy.

With the Japanese attack on Pearl Harbor, the United States entered World War II.  Able bodied men aged 18 to 45 were conscripted into the armed services, leaving women to step in and assume the jobs of the men sent off to war, ’til Johnny came marching home.  From 1941 through 1945, America had drafted 17 million men.

During the war years, government invested in cost-plus contracts with  employers, to stimulate development of on the job training of unskilled workers.  By 1942, the New Deal no longer existed.  With the exception of Social Security, which was saved by the conservative Southern Democrats, the NRA laws were repealed.

Today, historians still debate the pros and cons of Franklin Delano Roosevelt’s New Deal.  Despite the criticism of socialism, his legacy led America through the Great Depression and World War II, and endeared him to the hearts of most American workers.

During his four elected terms of office, he used the media to talk to the American people in what he called Fireside Chats.  His was the calming voice in the depths of the Great Depression.  His was the rallying voice when the Japanese attacked Pearl Harbor.  And his was the reverent voice when he called our nation to prayer on June 6^th 1944 as our sons crossed the English Channel to establish a beachhead on France’s Normandy coast, leading to the liberation of France and the destruction of Hitler’s Europe.

On April 12^th 1945, Franklin D. Roosevelt passed away, not knowing that victory was but a few short months off into the future.  However, his dream still lingers on, the dream of a vibrant society empowered by the spending power of its people to keep the engines of industry regenerating.

To many of the children that lived through the Great Depression and later fought and won World War II, that era still holds fond memories of peaceful days spent enjoying family and friends. It was a time when a penny purchased two pretzels with mustard from a street vendor.  To echo the words of former President George H. Bush, “Life was simpler and kinder then.” 

The title of this story reflects a popular song that emerged during the Great Depression of the 1930s.  It was Tin Pan Alley’s way of advertising the plight of the American people during times of intense hardship.

In 1932, composer Jay Gorney and lyricist E.Y. Harburg combined their creative forces to deliver a song that struck at the heart of every man, woman, and child.  Brother, Can You Spare a Dime? became the heartbeat of the nation.  When the Stock Market crashed, many people lost their jobs, initiating a domino effect.  Without money, everything — like the old South — was gone with the wind.  Americans were devastated.  They lost faith in the government as well as the banks that had collapsed and taken depositors’ hard-earned money with them.  A lot of human suffering occurred with no safety net for the future, until President Franklin Delano Roosevelt was elected.

Succeeding President Herbert Hoover, FDR was burdened with the monumental task of restoring the country to solvency and resurrecting the nation’s faith in its lawmakers and banking institutions.  He began with by creating the NRA (National Recovery Act).  When that was declared unconstitutional, he replaced it with The New Deal.  Understanding that the economy hinged upon the spending power of the people, the President then organized the WPA (Works Projects Administration – originally named Works Progress Administration) to bring jobs back to the rapidly sinking economy. He also instituted the CCC (Civilian Conservation Corps), a paramilitary organization that took young men off the streets and employed them to restore public works.

To revive faith in the banking system, he introduced the FDIC (Federal Deposit Insurance Corporation), which insured depositor monies up to $100,000 dollars.  As a failsafe, he established the SEC (Securities and Exchange Commission) to monitor and regulate the financial markets and financial activity that had spawned the Great Depression.

In addition, FDR introduced the Social Security system, mandating the age of retirement as 65. By allowing younger people to fill the jobs of the retirees, the nation was assured of continuous source of employment.  Social Security would later become the model retirement system because it had the lowest administrative costs in the world.  After all his diligence, the Great Depression ended with the bombing of Pearl Harbor.

The fly in Social Security’s ointment, however, was this.  The monies collected for Social Security from the paychecks of future retirees, and intended to sustain people through their retirement, was placed into a general fund.  Into this fund, the government dipped its greedy hands again and again.  How many times have you heard present-day politicians say that there is no money in the fund, only IOUs.  Who do you think “borrowed” this money?  FDR must be turning over in his grave.

In retrospect, the differences between the Great Depression of the 1930s and the Great Recession begun in 2008 are that, in the ’30s:

1.  There was no government bailout of Wall Street.

2.  The Gold Standard regulated the amount of money that could be printed.

3.  Banks were more stringent in their lending policies.

4.  There was no credit card system to create escalating debt.

5.  Few people had health insurance.

6.  There was no charge for listening to the radio.

7.  Movie houses provided incentives, such as dishware, to increase patronage.

8.  There was no air conditioning in homes.

9.  Telephone service existed only through the local drugstore, at pay phones.

Overall, money was tight and life was simpler.  People used public transportation to travel.  Those of us who remember the Great Depression survived it and became stronger for it.

The old Depression songs, Brother, Can you spare a dime?,  Ain’t We Got Fun, and No More Money in the Bank still ring in my ears.  It was a time when chivalry, faith, hope, and charity still existed, and the pleasures of life were found not in fancy cars or expensive vacations, but in the company of family and friends.  No wonder we call them “the good old times.”