the death of capitalism and the rebirth of progressivism

The Death of Capitalism and the Rebirth of Progressivism

I. The Death of CapitalismA. Causes1) 20s economy overheating (tech + productivity justified?) Fed Reserve puts on brakes + econ begins slowdown (housing, durable goods, farm)Common view until 2007: Fed overshoots correction, too little too late, other mistake (1937) length + depthBut now?Monetary vs. fiscal policy (Friedman vs. Keynes: does the Pres matter?; liquidity trap); public rather than private sector failure?Stock crash spreads tight money, not v. important cause (mostly psych)

2) Global economy: 1) failure Versailles + 2) gold standard (Am not Britain, limits fiscal response; off first less hurt) + 3) tariffs + 4) leftist-govts (jobs over gold further disrupts) + 5) ag. glut= worldwide crisis

B. Blame HooverBeliefs:Not straight laissez-faire: the Great Engineer1) Opp. socialism2) Self-made man3) American system sound (1920s utopian): only need confidence to revive4) Jeffersonian economic individualism + property rights no compel voluntary action (saw success Secy Commerce)5) Foreign causes thinks globally, cant act locally

1st 60 DaysAgricultural Marketing Act (1929): ag. co-ops sustain markets, Federal Farm Board buy glut sustain pricesMix voluntary + direct intervention Prob.: a) missed WWI systemic; b) growing FFB surplus hangs over market lower prices1932: Cotton Corporation begs plow under (voluntary vs. AAA)

All of Its Powers" Post-Crash advocated heavy intervention 1) Fed Reserve eases credit, 2) "the first shock must fall on profits and not on wages" (pre-Keynesian: prop up consumption); 3) construction programsProb: 1) fed govt v. small: HH nearly 2x federal public works expenditures but still much less state + private; 2) wages high greater unemployment (maybe)

Reconstruction Finance CorporationBanking crisis (run)1931: National Credit Corporation: association of banks (not enough)1932: RFC: loans to banksLimited: 1) public list fear runs; 2) high cost to banks (collateral)Broke ideological barrier to fed relief greater demands20% unemployment (10 million); Midwest 50-80% (esp. big cities)

Blunders1) Hawley-Smoot Tariff (1930) highest ever (protectionist/ beggar-thy-neighbor) retaliatory tariff war globalization of Depression2) 1932: greatest tax hike US history (to point): balance budget (deficit $2.7B, 60% of expenditures; proportionally larger deficit any ND budget) + hoped revitalize credit markets (confidence + pay back debt) poor hit hardest

Death to the Great Humanitarian3) Refused direct Fed aid to poor: a) loss local control, b) undermine confidence, c) dole long-term econ prob (Europe), d) undermine character1930 drought: $45M save AR livestock, resisted $25M feed farmers (loan; Red Cross pick up slack)

4) Bonus Army/March/Expeditionary ForceJune 1932: vets demand $1000 bonus (1945) Congress denies, but pays way home for mostMore militant stay vagrants, squatters, Hoovervilles police riot federal cavalry (MacArthur, Eisenhower, Patton): tanks, tear gas

Claim made that Bonus Army full of communists (untrue)Response fueled by rise of Hitler and militarism: US revolution?V. unpopular killed chances election 1932

New York Times (March 2, 1930): "No one in his place could have done moreFDR adviser: "Practically the whole New Deal was extrapolated from programs that Hoover started his policies were substantially correct." C. Hoover Evaluated

Political ineptitude stymied success

Hoover unable to substantially break with old order and thinking must save system w/o violating basic ideas of capitalism and democracy

II. Rebirth of ProgressivismFDR far more successful in passing legislation (at least until 1938)Willing to experiment with anything to save capitalism and democracyBegan conservative (32 election: balance budget, Prohibition), pushed to radicalism (Wagner Act, Social Security)