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UPI Archives
Saturday, July 1, 1933
(Editor's note: Mailed to clients June 19, 1933. Written as the first in a series examining Roosevelt's "New Deal," the article was written to be used in the series or singly, for publication in July.)

New Deal responds to middle class need

WASHINGTON, July 1, 1933 (UPI) -- The sudden and extraordinary transformation in the economic life of the United States which was initiated by President Franklin D. Roosevelt and approved by the recent special session of Congress -- without abrogation of constitutional forms -- was a response to a tremendous demand from the American "middle class" for greater security in its property rights.

Roosevelt became President at a time when the savings accounts of millions of people were in jeopardy, when farmers in all sections were threatened with foreclosures because of inability to meet interest payments in a time of extremely low commodity prices, and other mil-lions of small investors witnessed an extraordinary shrinkage in the value of their foreign bonds, mortgage notes, or building and loan investments. These millions wanted a new sense of security.

The transformation in economic life now being put into effect here has not been accompanied by the stamping of proletarian feet, or the shrill cry of conservatives for relief. On the other hand, the masses are clearly bewildered by what has occurred; and Wall Street "high finance" is completely on the defensive. The political force evident in the last Congress is largely the force of the middle class, worried about the safety of homes, farms, small investments, equities in real estate and employment.

The Roosevelt program has not involved a political revolution here, but the terms of the Constitution have been found sufficiently elastic by interpretation to enable the adoption of drastic economic innovations. This has been accomplished in the main by giving the president "permissive" powers, rather than mandatory powers. Congress does not surrender its fundamental authority, but in some instances has delegated to the executive a considerable measure of its power.

President Roosevelt's evident success in the first stages of his program rests primarily upon the fact that he relied upon expert technical advice, rather than purely political counsels. In 1928, the country thought that the election of Herbert Hoover, engineer-economist, was the prelude to a better technical organization of national commerce, industry and finance. Through force of adverse circumstances, this transformation did not occur; and the deferred hope of the public became a strong support for President Roosevelt when he proclaimed the "new deal" this year.

Regarded from the broad standpoint of political science, the substantial changes in United States policy and purpose as the consequence of recent enactments are the following:

1--The term "inflation" lost its terror, and the machinery of government was directed to the restoration of a reasonably high average price level, even at the sacrifice of old concepts of "sound money" which had dominated American politics since the McKinley-Bryan campaigns in the last century.

2--Congress approved extra-ordinary innovations in the tax levying power, which in the long run may be the most controversial aspect of the "new deal." In the Agricultural Relief Act, for example, the Secretary of Agriculture is given powers to apply "processing taxes" of which the purpose is not primarily to raise revenues for the Federal Treasury, but to raise funds to be used as bounties to farmers in the curtailment of production. Again, in the Industrial Control Bill, the President is empowered, after investigation and findings by the Tariff Commission, to prescribe the terms of entry of imports of those articles which jeopardize the efficacy of the domestic "fair trade" codes;

3--The new agricultural and Industrial acts involve extensive relaxation in the application of the anti-trust laws which have guided United States commercial and industrial organizations in recent years. Farmers, for example, can enter into marketing agreements without fear of prosecution.

The far-reaching importance of this is evident, for example, in the case of, sugar. Since the World War all attempts to obtain an apportionment or quota marketing plan have been automatically frustrated by fear of the anti-trust laws. There is now no legal impediment to such organization. Trade organizations may now legally give practical effect to the desire of industrial or commercial units for closer general cooperation, although monopolies are still forbidden by law.

4--For the first time in national economic history there appears to he an effective coordination of official thought with respect to international trade and international finance.

It is now generally appreciated that a creditor country cannot indefinitely discourage the imports of goods and services; the issue that now develops in the light of this new realization is whether the trend of the country should be directed to-ward a new and healthy economic internationalism or the newly invented "intra-nationalism." In any event the sale of excessive quantities of unguaranteed foreign bonds seems at in end as the result of new securities control law.

5--The political practicality of President Roosevelt's administration had its most striking manifestation thus far in the prompt attention given to the hydroelectric resources of the counties The approval of the great Tennessee River and Muscle Shoals projects was a hint to the nation that the Federal Government is to keep a close eye on the fundamental sources of industrial energy.

Copyright 2007 by United Press International.