It recently gave a midterm exam in my U.S. history class, and like so many teachers, while students filled their bluebooks, I reviewed what we had learned and read ahead for our next class.
By way of review, I was reminded that America used to pay for its wars. Armed with a new income tax, President Woodrow Wilson raised rates on the rich to help pay for World War I, but he also implemented an “excess-profits tax” on corporations to make up the lion’s share of the revenue needed to pay for the conflict.
After the war, Republican administrations lowered income tax rates on the rich, ended the excess-profits tax, and ushered in as unsustainable period of growth that ended in a speculative bubble and the Great Depression. Throughout the Roaring 20s, the poverty rate hovered around 50 percent and wealth became increasingly concentrated at the top. The 20s were a period of intense cultural conflict with unmasked hostility against immigrants, a rejection of science by cultural conservatives, overt attacks on organized labor, and an experiment with prohibition that led to gang violence.
The failed conservative policies of the 1920s were followed by the New Deal of Franklin and Eleanor Roosevelt. The Roosevelt’s inherited a nation alive with activism. Whether it was the Bonus Army of World War I veterans marching on the capital to demand justice or Minnesotans in the Farm Holiday holding “penny auctions” to prevent foreclosures, after four years of depression, American’s were anything but complacent.
The Depression struck with ferocity. By 1932, national unemployment stood at 25 percent, but in Cleveland, Ohio, unemployment stood at 50 percent, in Akron it was 60 percent and in Toledo, 80 percent. Underemployment was widespread. Farm income was halved between 1928 and 1932, and record droughts combined with reckless framing practices on the plains led to the Dust Bowl, a massive ecological and human crisis. For people of color, things went from bad to worse, and in the middle of all this suffering, the poorest of the poor were the elderly. About 9 million families lost their savings when banks failed after the crash, leaving older people without anything to see them through.
Herbert Hoover, was unable to bring himself to answer the crisis with sufficient force. The Roosevelts, however, understood the problem. In his first inaugural address, FDR announced that “I shall ask the Congress for the one remaining instrument to meet the crisis — broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.” Roosevelt experimented with public policy; what worked was kept, and what didn’t was discarded.
New Dealers favored work over direct relief, and within months, millions of people were put to work on projects that did not compete with the private sector — repairing roads, bridges, or building schools and post offices. Eventually, the federal government hired writers, artists, actors and musicians. Young men in the Civilian Conservation Corps built Gooseberry Falls State Park on the North Shore, and a special contingent of unemployed World War I veterans built Camden State Park in Southwest Minnesota.
Millions of men and women found meaningful work and a modest paycheck, building a lasting legacy that still sustains us.
Social Security, minimum wage, eight-hour day …
In the middle of the Great Depression, we did not demand that the elderly work into their golden years, paradoxically causing them to compete for jobs with young people. Rather, in 1935, we taxed ourselves and created Social Security. That same year, Congress granted workers the right to organize and bargain collectively, and in 1938 the minimum wage, the eight-hour day, and abolition of child labor were made permanent.
The New Deal successfully used government to create the middle class. In the process, the rich still got richer, but so did everyone else.
Think about it. When we were much poorer as a nation, mired in the Great Depression, we taxed ourselves to build parks and schools and to provide security for our elders. We can do it again, if only we learn the lessons of the past.
Jeff Kolnick is an associate professor of history at Southwest Minnesota State University.
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