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The GREAT DEPRESSION to 1935 (3 of 7)

By 1935, unemployment in the United States had fallen from its high around 25 percent down to around 17 percent. Many were working only part-time and many others had dropped out of the workforce. Industrial production was 25 percent lower than it had been in 1929.

Roosevelt was giving himself credit for having stopped the downward spiral -- something that had happened during the Hoover administration. And Roosevelt and Congress were still pursuing measures that were less than the massive government intervention that would eventually get the economy going in 1939 and 1940.

In 1935 there was nothing in the U.S. like the big emergency spending in Sweden, but there were projects that cost money. On April 8, 1935, the government enacted the Works Progress Administration (WPA) and Social Security, creating old age and unemployment pensions, the latter taking the United States close to what Otto von Bismarck had accomplished in Germany five decades before. The WPA started building roads and bridges across the country. It put women to work on useful sewing projects. The WPA included programs in the arts: in theater, music, literature and painting. And it included programs in education, including vocational training for needy youths.

A greater power to labor unions came on July 5,1935, with the signing into law of the Wagner-Connery Act. It established a federal agency, the National Labor Relations Board (NLRB), which had the power to investigate and decide unfair labor practice issues and to conduct elections in which workers could decide whether they wanted union representation. It would be the view of liberal economists that workers would benefit not only from better working conditions but that higher wages would improve the economy by creating greater purchasing power.

Roosevelt tried to maintain good relations with big business, but his administration managed to increase taxes for the wealthiest people to seventy-five percent of their income. In July came the National Labor Relations Act, designed to free interstate commerce from the effects of strikes. This act displeased some business leaders, as it gave workers the right to organize without interference from employers, compelling employers to bargain in good faith with unions. And the act included a National Labor Relations Board to hear complaints. Some supporting the bill saw strong labor unions as protection against fascism and communism and a way of increasing purchasing power, while opponents of the act complained that it gave too much power to labor, denied individual rights sacred to the American way of life, and was unconstitutional.

The slow recovery and low incomes were keeping tax revenues low, and by August 1935 the national debt rose above 30 billion dollars, exceeding by 4 billion the debt incurred during World War I and twice what it had been under President Hoover.

In 2008, the U.S. author Amity Shlaes would write about the Great Depression from a conservative-libertarian perspective and would describe Roosevelt's National Recovery Administration codes as "forcing businesses to pay an above-market minimum wage." She would write that the greater power that was given to labor unions contributed to higher wages that "hurt corporate profits and therefore hiring" and kept unemployment higher into the late 1930s. [note]