Freedom: The Burden of Accountability – Part 1

“Great power involves great responsibility” – Franklin Delano Roosevelt 

The following article is part of a larger, five–part series (part 2) on accountability and reform as they pertain to freedom. Focusing primarily on American politics and history, the series draws on America’s continual struggle towards that “more perfect society.”. 

“The idea of freedom is inspiring. But what does it mean? If you are free in a political sense but have no food, what’s that? The freedom to starve?” – Angela Y. Davis 

New Deal Timeline, as reported by The Balance 

1929.  

• • Hoover became president.  
  • The stock market crash in October kicked off the Depression.  
  • There was a $1 billion surplus. 
  • Unemployment was at 3.2%. 

1930.  

• • Congress passed the Smoot-Hawley tariff to protect jobs.  
  • Trading partners retaliated, driving world trade down 66%.
  • Another $1 billion surplus.  
  • The economy contracted 8.5%, and unemployment rose to 8.7%. 

1931.  

• • Fed raised rates to defend the gold standard, worsening the depression.  
  • The economy contracted 6.4%, unemployment rose to 15.9%, and debt increased by $1 billion.  

1932.  

• • FDR campaigned on New Deal promises.  
  • The economy contracted 12.9%, and unemployment rose to 23.6%. 
  • Lower revenues added $3 billion to debt.   

1933.  

• • FDR took office.  
  • He immediately launched 15 programs under the First New Deal.  
  • This added $3 billion to debt.  
  • Depression started to lift, as the economy only contracted 1.3%. 
  • Unemployment rose to 24.9%.  

1934.  

• • The economy grew by 10.8%, and unemployment fell to 21.7%.  
  • Five billion dollars was added to the debt.  

1935.  

• • FDR launched the Second New Deal, adding $2 billion to debt.
  • The economy grew 8.9%, and unemployment fell to 20.1%.  

1936.  

• • The economy grew 12.9%, reducing unemployment to 16.9%.  
  • Five billion dollars was added to the debt.  

1937.  

• • FDR started his second term.  
  • Fearing a budget deficit, he cut spending, only adding $3 billion to debt, despite rolling out the Third New Deal.  
  • The economy grew 5.1%, and unemployment fell to 14.3%.  

1938.  

• • No more New Deal legislation was passed.  
  • Spending was cut, so only $1 billion was added to the debt.  
  • Unemployment rose to 19%.  
  • The economy shrank 3.3%.  

1939.  

• • Dust Bowl drought ended. 
  • The United States spent to build up the military as Europe entered WWII. 
  • The expenditures added $3 billion to debt.  
  • The economy grew 8%, and unemployment fell to 17.2%.  

1940.  

• • The unemployment rate fell to 14.6% as the United States started the draft. 
  • FDR won reelection. 
  • America assisted Great Britain by sending weapons.  
  • This added $3 billion to debt.  
  • The economy grew by 8.8%.  

1941.  

• • FDR began his third term.  
  • Japan attacked Pearl Harbor in December.  
  • The United States entered WWII.  
  • Spending eliminated the Depression and added $6 billion to debt.  
  • The economy grew 17.7%, and unemployment fell to 9.9%.   

1942.  

• • War spending added $23 billion to debt. 
  • Unemployment fell to 4.7% while the economy grew 18.9%. 

1943.  

• • War added $64 billion to debt.  
  • Gross domestic product growth was 17%, and unemployment fell to 1.9%.  
  • Italy surrendered.  

1944.  

• • GDP growth was 8%, while unemployment was 1.2%.  
  • The Bretton-Woods Agreement made the dollar the global currency.  

1945.  

• • FDR died in April.  
  • Truman became president.  
  • He added $58 billion to debt.  
  • Germany surrendered in May.  
  • Truman dropped a nuclear bomb in August. Japan surrendered in September, ending WWII.  
  • The economy contracted 1%.  
  • Unemployment edged up to 1.9% as soldiers returned home. 

As you can see, once-unprecedented federal spending led to exceptionally strong economic growth during the entire New Deal timeline, except for post-war 1945, which had a very small contraction, as compared to the effective growth of the years preceding it, of 1%.  

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The New Deal had several components. Over time, it established all the following: 

Federal Deposit Insurance Corporation (FDIC) 

• • Responsible for insuring bank deposits against losses in the event of a bank failure and controlling the regulation of certain bank practices.  

Federal Housing Administration (FHA) 

• • Established to improve housing standards, facilitate home buying, increase employment in the housing industry, and encouraged banks to loan to prospective home buyers by insuring home mortgages.  
  • In 1955, it was proposed by HUD (Department of Housing and Urban Development) that the FHA be converted into a government-owned corporation. Others have frequently argued to axe it, leaving its role to the market, which would effectively end the benefits the FHA provides. 
  • The FHA is living proof that no government program is perfect, being chiefly responsible for the practice of redlining. 
  • After 1935, the FHA used guidance to steer private banks away from lending in “minority areas”. 
  • Between 1934-1968 only 2% of FHA-endorsed loans went to African-Americans.  
  • In 1968, the fair housing act was passed, making red-lining illegal. 
  • The effects of “red-lining” still affect black wealth, as home ownership leads to wealth and intergenerational wealth helps lead to home ownership. 

Federal National Mortgage Association (Fannie Mae) 

• • Designed to guarantee affordable housing would be available through ensuring mortgage bankers possessed enough funds to facilitate mortgages and low rates. 
  • It has since been privatized, which occurred in 1968, undermining the efficacy and accountability of this program.  
  • In 2008, this program was converted into a GSE, or government-sponsored enterprise as a result of the 2008 banking crisis. This left the operations and motives of Fannie Mae up to private capital but added the guarantee that the government would continue to bail it out if, and when, it struggled.  
  • In 2020, then-President Trump announced he would try to re-privatize Fannie Mae and child organization Freddie Mac. Whether or not it is re-privatized is now up to the Biden administration. 
  • Experts say re-privatizing these programs would reduce low-income family home-buying power. 
  • “Under their federal status, the GSEs enjoy a number of significant benefits that would be eliminated if privatized. Local and State tax exemptions, lower federal borrowing costs, and the market premium placed on their federally backed securities would all disappear and create a situation where capital costs would increase. Experts predict that these increased capital costs would be passed on to consumers in the form of increased mortgage costs. While a family at the higher end of the wealth spectrum may not feel this change, low and moderate income families would likely see their purchasing power take a hit.” 
    

Securities and Exchange Commission (SEC) 

• • Responsible for regulation and enforcement of the stock market and stock-related white-collar crimes.  
  • Created to restore investor confidence in the market by abolishing the manipulative practices that led to the 1929 Stock Market Crash. 

National Labor Relations Act (Wagner Act) 

• • This established the right of “most” workers to strike, join unions, and collectively bargain.  

Social Security Act of 1935 

• • This established a permanent, nationwide old-age pension system through individual and employer contributions. 

Fair Labor Standards Act (1938) 

• • First federal legislation providing compulsory regulation regarding wages and hours. 
  • Without it, there’d be no regulation mandating overtime, prohibiting child labor, and so on. 

There were also several Federal Jobs programs and other pieces of the New Deal that I didn’t include. It was a sweeping, broad, set of legislative packages that rose to the occasion and allowed everyday Americans to rebuild America and receive a social safety net, in addition to individual wealth. It also saved capitalism from the brink of revolution. 

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As important as the New Deal was, it’s equally important to realize the groups responsible for pushing Franklin Delano Roosevelt (FDR) “left” to institute and fight for these programs. 

Communist Party of The United States of America (CPUSA) 

• • After feeling the extreme isolation of and prior to Depression-era capitalism, middle-class professionals and intellectuals joined the ranks of CPUSA. 
  • Americans who were in favor of Marxist-inspired ideas but didn’t join the party eventually became known as “Fellow Travelers.” 

Huey P. Long 

• • A governor-turned-senator, he campaigned on far more than FDR promised. 
  • His “Share The Wealth” program was much more ambitious than the New Deal. 
  • He threatened to siphon votes from FDR and lead to a Republican win in 1936 but was assassinated before he had the chance. (in 1935) 

Father Coughlin 

• • Highly favored by the poor Americans in Northern cities, he initially used his radio program to champion the New Deal and redistributive politics.  
  • Unfortunately, he later became an ambassador of anti-Semitic, reactionary, and anti-democratic thought.  

As you can see, the poor and the middle-class fought together and used their labor and energy to “push FDR left.” Uniting against America’s capitalist class that had led them into unprecedented ruin and around shared ground, they succeeded in pushing reform. If FDR was as committed to austerity as someone like President Biden, and did not pass these reforms, there likely would’ve been a second, communist, American revolution.  

An American Red October would’ve changed world history. Organized religion also had a role in pushing FDR to be the most progressive president in history, one who achieved greatness for many through reform. Unfortunately, women and BIPOC were largely excluded from the gains of the New Deal, despite shouldering as much or even more of the work than the primary beneficiaries: cis and straight white men. 

“Americans are right to believe the American Dream is fading. But that dream only became a possibility for white men as a result of the labor struggles and reforms of the New Deal, and it began to extend to minorities and women only after the civil rights and women’s movements of the 1960s and 1970s.” – Stephanie Coontz