Activity Excerpts from Two Speeches by Alfred E. Smith and Norman Thomas Background Franklin Roosevelt took extraordinary measures to stimulate the economy with his New Deal programs. Many Americans were divided on the issue of increased government intervention in the economy. Some claimed the New Deal was socialist and a violation of American values. Others thought the New Deal did not do enough to help Americans. Directions: Read the following two excerpts from speeches on the New Deal. The first is by a Democrat, Alfred E. Smith, and takes the position that the New Deal is in fact socialist. The second is by a socialist, Norman Thomas, who claims the New Deal is not socialist. Read each excerpt carefully. Then answer the questions that follow. Now what would I have my party do? I would have them re-declare the principles that they put forth in that 1932 platform [reduce the size of government, balance the federal budget].... Just get the platform of the Democratic Party and get the platform of the Socialist Party and... make your mind up to pick up the platform that more nearly squares with the record, and you will have your hand on the Socialist platform. You don t dare touch the Democratic platform. And incidentally, let me say, that it is not the first time in recorded history, that a group of men have stolen the livery of the church to do the work of the devil. Now, after studying this whole situation, you will find that that is at the bottom of all our troubles. This country was organized on the principles of representative democracy, and you can t mix Socialism or Communism with that. They are like oil and water; they refuse to mix. And incidentally, let me say to you, that is the reason why the United States Supreme Court is working overtime throwing the alphabet out of the window three letters at a time.... [I]t is all right with me, if they want to disguise themselves as Karl Marx or Lenin or any of the rest of that bunch, but I won t stand for their allowing them to march under the banner of Jackson or Cleveland. Alfred E. Smith, from a speech delivered January 25, 1936
Activity Cont. All of these leaders or would-be leaders out of our wilderness, however they may abuse one another, however loosely they may fling around the charge of socialism or communism still accept the basic institutions and loyalties of the present system. A true Socialist is resolved to replace that system.... The New Deal did not say, as socialism would have said, Here are so many millions of American people who need to be well fed and well clothed. How much food and cotton do we require? We should require more, not less. What Mr. Roosevelt said was How much food and cotton can be produced for which the exploited masses must pay a higher price? Norman Thomas, from a speech delivered February 2, 1936 Critical Thinking 1. Does Smith believe that the New Deal is faithful to the principles set forth in the 1932 Democratic platform? Explain. 2. What does Smith suggest doing to the Socialist Party platform? Why? 3. To what is Smith referring when he says that the United States Supreme Court is working overtime throwing the alphabet out of the window three letters at a time? 4. Does Thomas believe the New Deal is socialist? Why? 5. What is the basis of the comparison Thomas makes between the New Deal and socialism? 6. Which argument do you find more persuasive? Why?
Economics of History Activity Keynesian Economics When Franklin Roosevelt became president in 1933, he did not have a clear agenda or strong ideology. He believed that the country needed bold, persistent experimentation. As the Great Depression deepened, Roosevelt and his advisors turned to a new set of economic tools developed by John Maynard Keynes. Employing Keynesian ideas became central to Roosevelt s policy experimentation. The main ideas behind Keynesian economics were laid out in Keynes s 1936 work, The General Theory of Employment, Interest and Money. In this work, Keynes argued that classical economics failed to predict the Great Depression and could not provide tools for alleviating the economic crisis. The key difference between Keynesian and classical economics was Keynes s assertion that the government needed to use fiscal policy to even out major fluctuations in the business cycle. Classical theories emphasized short-term balanced budgets, whereas Keynes recommended deficit spending during times of crisis. Deficit spending, he argued, would spur economic growth and end the crisis. Economics Terms to Know classical economics economic theories based on the ideas of limited government intervention and free competition fiscal policy the use of government spending and revenue collection to influence the economy deficit spending when the government spends more than it takes in aggregate demand the total demand for goods and services in an economy inflation the loss of value of money surplus when revenue exceeds expenditures According to Keynes, deficit spending increases aggregate demand (AD), and when the economy is operating below its full-employment level (full employment is represented by Y F on the graph at P the right) for example, at the point Y 1 then an 2 increase in AD would raise output without raising AD 1 AD 2 the price level. This would spur a recovery because there would be greater employment and greater Y F income in society without serious inflation offsetting these gains. Once the economy was growing, the government could reduce its spending and allow private spending to maintain and grow aggregate demand, completing the economic Y 1 Y 2 Output (Y) recovery. The government would then increase taxes to run a surplus that would offset the debt incurred during the period of deficit spending, resulting in long-term balanced budgets. Price Level (P) AS 2
Economics of History Activity Cont. Applying Economics to History 1. Why do you think Keynesian ideas appealed to President Roosevelt? 2. Under what circumstances would deficit spending to increase aggregate demand have a negative effect? 3. Keynesian ideas were dominant in the U.S. from the mid-1930s through the 1970s, yet during that time the national debt increased steadily rather than going up and down. Why do you think the application of Keynesianism resulted in increasing deficits rather than a movement back and forth between deficits and surpluses as Keynes recommended?
Activity Franklin Delano Roosevelt s Second Inaugural Address, 1937 Background On January 20, 1937, Franklin Delano Roosevelt took the oath of office of the president of the United States for the second time. Although the U.S. economy had made modest gains, the country was still reeling from the economic collapse of eight years earlier. Roosevelt s second Inaugural Address did not sugarcoat the nation s pain, but it was, nonetheless, optimistic about the country and its people. Directions: Read the following excerpt from Roosevelt s second Inaugural Address. Then answer the questions that follow. "I see a great nation, upon a great continent, blessed with a great wealth of natural resources. Its hundred and thirty million people are at peace among themselves; they are making their country a good neighbor among the nations. I see a United States which can demonstrate that, under democratic methods of government, national wealth can be translated into a spreading volume of human comforts hitherto unknown, and the lowest standard of living can be raised far above the level of mere subsistence. But here is the challenge to our democracy. In this nation I see tens of millions of its citizens, a substantial part of its whole population, who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life. I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day; I see millions whose daily lives in city and on farm continue under conditions labeled indecent by a so-called polite society half a century ago; I see millions denied education, recreation, and the opportunity to better their lot and the lot of their children; I see millions lacking the means to buy the products of farm and factory and by their poverty denying work and productiveness to many other millions; I see one-third of a nation ill-housed, ill-clad, ill-nourished. It is not in despair that I paint you that picture. I paint it for you in hope because the Nation, seeing and understanding the injustice in it, proposes to paint it out. We are determined to make every American citizen the subject of his country s interest and concern; and we will never regard any faithful law abiding group within our borders as superfluous. The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. If I know aught of the spirit and purpose of our Nation, we will not listen to Comfort, Opportunism and Timidity. We will carry on."
Activity Cont. Critical Thinking 1. What was Roosevelt s purpose in the first paragraph of the excerpt? 2. Roosevelt says, I see millions lacking the means to buy the products of farm and factory and by their poverty denying work and productiveness to many other millions. How is it that the poor can deny employment to others? 3. Explain what Roosevelt calls the challenge to our democracy. 4. Why was Roosevelt at pains to state, in the last paragraph of the excerpt, that the picture of the United States he had painted in the previous paragraph was not done so out of despair?