Because of the extreme conditions of the 1930s depression, the New Deal under Franklin Roosevelt went further in expanding the powers of the federal government than any previous administration in history, certainly far beyond the very limited role permitted to it by the conservative administrations of Warren G. Harding, Calvin Coolidge and Herbert Hoover in 1921-33. It was the worst depression in U.S. history, and led not only to the complete collapse of Wall Street and the financial system, but of industrial production as well, which fell 85% in 1929-33, while the Gross National Project fell by half and in some cities like Chicago the unemployment rate rose as high as 50-60%. At the same time, the entire banking system collapsed by 1933, as did agricultural prices, and money stopped circulating. John Maynard Keynes and other economists blamed this severe contraction on low incomes, unequal distribution of wealth, weak government regulations and lack of spending to stimulate the economy. As a result of the Great Depression, the role of the federal government in regulation and social welfare spending expanded greatly, and organized labor became a major for in American politics for the first time in history, while Keynesianism became the dominant type of economic policy for decades. Republicans and conservative organizations like the Liberty League and the Chamber of Commerce denounced the New Deal and its increases in deficit spending, regulation and taxation as 'socialistic' or 'communistic', and a menace to free enterprise and individual liberties. These arguments did not benefit them at all in the depths of the worst depression in U.S. history, and FDR won in landslides in 1932 and 1936, which were not even close in the Electoral College.
Election of 1932.
Election of 1936.
FDR and the News Dealers were successful in attempting a wide variety of expedients such as the National Recovery Administration in 1933-35 and the Agricultural Adjustment Act (AAA) to subsidize and inflate agricultural prices, as well as a new antitrust program in the Justice Department. Under the New Deal, Wall Street was regulated for the first time by the Securities and Exchange Commission (SEC), investment banking was separated from commercial banking, and new federal investments in roads, harbors, public power and infrastructure were made through the Reconstruction Finance Corporation (RFC) and Tennessee Valley Authority (TVA). In 1935, the Social Security Act laid the foundations for the American welfare state at the federal level, while the 1938 Fair Labor Standards Act abolished child labor and made the eight-hour day the standard in the U.S. economy.
One of the most important laws passed during the New Deal was the National Labor Relations Act of 1935 permitted organized labor to bargain collectively. Because of the sit-down strikes from 1937 onward, the Congress of Industrial Organizations (CIO) succeeded in unionizing heavy industry for the first time in American history, including steel, automobiles and electrical goods, and the CIO became a major force in American political and economic life for the first time in history. Prior to this time, almost all unions made been made up of skilled workers in the American Federation of Labor (AFL) unions, but the CIO appealed to the broad mass of unskilled and semiskilled labor. Unions had generally been kept out of heavy industry in the U.S. up to the Great Depression, but by using the tactic of sit-down strikes and occupying the factories, they finally found a method to force employers like U.S. Steel and General Motors to recognize the existence of organized labor (Fine 323). There were hundreds of these sit-down strikes in 1936-37 that spread from the automobile industry to textiles, steel, electrical goods and even hotels, restaurants, hospitals and other areas of the service sector. By the end of 1937, the United Auto Workers (UAW) had unionized almost all of the automobile industry, although Ford held out until 1941, and its membership grew from 80,000 in 1935 to nearly 700,000 by the time of Pearl Harbor, making the UAW the largest union in the country (Fine 329). Organized labor became the most important constituency in the Democratic Party and the New Deal coalition during the Great Depression, and remained powerful up to the 1970s and 1980s when many of the old Fordist manufacturing jobs began to disappear from the U.S. Or were moved to low-wage countries.
John Maynard Keynes was the most important economist to emerge during the Great Depression, and his policies became the norm in the Western world for the next four decades. In his book The General Theory (1936), he argued that governments should engage in deficit spending on jobs, public works and social welfare during depressions to stimulate the economy, rather than attempt to balance budgets and put austerity measures in place. Keynes argued that capitalism did not produce full employment in the absence of fiscal and monetary stimulus from the central government, which would increase aggregate demand (Mankiw 770). In the General Theory (1936) he declared that "inefficiency of aggregate demand was identified as the main economic problem" (Skidelsky 152). Governments had to ensure full employment to maintain maximum aggregate demand, while on the supply side taking action to ensure that monopolies and oligopolies did not keep prices artificially high. Keynes asserted that free market policies and failed in the past and that they were downright disastrous when attempted during the 1930s depression compared to his use of deficit spending and public investment to stimulate the Great Depression was the worst economic crisis in U.S. history, and resulted in major changes in politics, economics and the role of the federal government in national life. Organized labor became the most important force in the Democratic Party as a result of the Depression and the New Deal, and is still an important factor in that party today, although not nearly so much as in the 1940-70 period. Social Security, agricultural subsidies and the 40-hour workweek were all put in place during the New Deal as well, and these still exist despite conservative attempts to erode these over the last few decades, while the Tennessee Valley Authority still exits as an example of public power. Although it has been a weak and ineffective organization in the last twenty years, the Security and Exchange Commission still regulates Wall Street, and the country has learned to its detriment in the past few years that weakening controls over the financial industry can lead to disastrous consequences. Even John Maynard Keynes and his policies of deficit spending to stimulate the economy made a comeback in the current recession, despite hysterical conservative opposition.
Robert Kennedy's assassination in June 1968 was a tragic event for the country, as was the murder of Martin Luther King two months before. These two leading liberal voices that had been supporting civil rights and the antiwar movement were silenced quickly and with great brutality, and it is no wonder that many people believed there was some type of conspiracy at work. Eugene McCarthy had already declared himself as an antiwar candidate in the primaries, and came close to defeating Lyndon Johnson in the New Hampshire primary, which was a shocking upset for a sitting president. Robert Kennedy then entered the primaries, angering McCarthy and his supporters, while LBJ dropped out of the race, while still working behind the scenes on behalf of his vice president, Hubert Humphrey. George Wallace split openly with the Democratic Party, running openly as a pro-war, ant-civil rights candidate who vowed to run over demonstrators with his car. Kennedy and McCarthy battled in the primaries, with Kennedy winning all of them except Oregon, including the all-important California primary on June 4th. He was assassinated shortly after giving his victory speech, however, so no one will ever know if he would have gone on to win the nomination in Chicago and then the general election.
Johnson would have preferred to be remembered for his Great Society and domestic programs in health care, education and civil rights, but by 1968, with over 500,000 ground troops in South Vietnam, it had most definitely become his war. Hubert Humphrey had also spent four years as his vice president without daring to utter even a word or a hint of doubt about final victory, although the Tet Offensive in January 1968 had shattered illusions that the U.S. was winning the war or that it was fighting an enemy that intended to give up soon. Protests rocked the large cities and university campuses, while ghettos like those in Detroit and Newark went up in flames in 1967 -- as did over 100 inner cities after King's assassination in April 1968. Johnson admitted that he was driven over the edge by the protests against the war, by students singing that 'horrible song' of "Hey, hey, LBJ, how many kids did you kill today?," and they by his nemesis Robert Kennedy entering the primaries to unseat him in 1968. Even some of his closest advisors like Richard Goodwin thought him paranoid in the clinical sense, and…