Who Made the New Deal?

Part 1: What Caused the Great Depression?

BY ADAM SANCHEZ

n the midst of one of our country’s worst economic crises, a new president is elected because he promises hope and change. The outgoing president is despised as a shill for the wealthy. The incoming president has promised to clean up the economic mess: high unemployment, industry crippled by overproduction, vast inequalities of wealth that have resulted in a dan- gerous debt bubble, and a financial meltdown bankrupting some of the biggest banks. This Iwas the United States in both 1932 and 2008. The similarities between Franklin Delano Roos- evelt’s campaign promise of a “New Deal” and Barack Obama’s “change you can believe in” are too much for an astute observer of history and politics to ignore.

There certainly was no shortage of “Much like Herbert Hoover,” Kevin Bak- High School in Portland, Oregon, I knew comparisons between the two in 2008. er wrote in a July 2009 article for Harp- that studying the 1930s would be espe- Time magazine’s November cover story, er’s, “Barack Obama is a man attempting cially pertinent to my diverse, largely “The New New Deal,” featured a picture to realize a stirring new vision of his so- poor and working-class students, whose of Obama superimposed over a photo- ciety without cutting himself free from families are still living with the effects of graph of FDR. The New York Times ran the dogmas of the past—without accept- the 2007–08 meltdown. My goal was to liberal economist Paul Krugman’s op-ed ing the inevitable conflict.” Indeed, as we get students to see the similarities and “Franklin Delano Obama?” near the end of his presidency, it is dif- pinpoint differences between the two Yet, less than a year later, some com- ficult to compare Obama’s achievements crises and the two presidents. I hoped mentators began comparing Obama in office with the vast economic reforms they would question why Roosevelt’s to another Depression-era president. created during the FDR era. presidency produced so many more ...... However one analyzes the impact and so much deeper structural reforms of Roosevelt or Obama, it is clear that than Obama’s. By the end of Roosevelt’s Adam Sanchez ([email protected]) the Great Depression and the New Deal first two terms in office, nonagricultural now teaches at Harvest Collegiate High School in New York City. He is a Rethinking Schools are vitally relevant to those grappling private-sector workers had the right to editor. This is the first article in a two-part with today’s economic crisis. As a 10th- organize unions and the National Labor series. Student names have been changed. grade U.S. history teacher at Madison Relations Board was created to enforce

34 > FALL 2015 Ford River Rouge Plant assembly line, 1930s

that right. The unemployed had access to Howard Zinn wrote, were they aimed at taught the New Deal itself). a new, permanent system of unemploy- “giving enough help to the lower classes Previously, when I taught the Great ment insurance, and the elderly could to keep them from turning a rebellion Depression, I was dissatisfied with the rely on social security. Millions of people into a real revolution?” Exploring these curriculum I used, especially the text- were put back to work through federal questions requires delving into a people’s book explanations of the causes of the jobs programs. history of the Great Depression and the economic crisis, which focus almost Did the differences indicate that New Deal—one too often overlooked in exclusively on the 1929 stock market FDR was a better politician? Was he the history textbooks. crash. For example, the “Causes of the more left-leaning than Obama and to- Great Depression” section of Portland’s day’s Democratic Party? Or was the dif- Beyond the Stock Market Crash adopted textbook History Alive! Pursu- ference the result of massive pressure on ing American Ideals devotes half-page Roosevelt from below—the strength of I knew the first step was helping my stu- sections to the crises of overproduction organized labor and other mass move- dents understand what caused the Great and underconsumption, but the authors ments of the 1930s? Were the New Deal Depression, and I wanted to do it in a spend three full pages explaining the reforms an instance when the govern- way that would help them understand stock market crash. ment genuinely intervened on the side of economic crises today. That’s the subject The problem with focusing narrowly poor and working people or, as historian of this article (Part II will describe how I on the crash is that it locates the explana-

RETHINKING SCHOOLS > 35 tion for the crisis in the financial sector, ket. As economist Richard Wolff explains: of the free market: Prices for agricultur- implying that the financial sector is not “Today’s global economic meltdown is al goods were too low to sell at a profit itself intimately linked to the real, produc- no mere financial crisis . . . [but rather] (even though there were millions of tive economy. This prevents students from a systemic crisis rooted in the conflicted people who needed those goods). So, in understanding the root causes not only of relation between employers and employ- order to raise the prices of agricultural the Great Depression, but any economic ees across all capitalist enterprises in the goods and make farming profitable, the crisis. It removes the role of ordinary peo- United States.” The problem, he insists, government reduced the supply. ple in the economy by focusing exclusively “engulfs households, enterprises, and the Similarly, on the advice of business on a small and privileged group: investors government. It is a crisis of capitalism and leaders, Congress passed the National with enough cash to play the stock mar- not merely of finance” (2009). Industrial Recovery Act, which suspend- To help students understand this ed antitrust laws put in place to prevent concept, I created a simulation, the Wid- monopolies, so businesses in a specific get Boom Game, which draws inspiration industry could come together in trade from Rethinking Schools editor Bill Big- associations and write “codes of fair elow’s Thingamabob Game simulating the competition.” From the perspective of a relationship of capitalist production to the worker or someone living in poverty, this climate crisis (see Resources). I wanted proposal was a disaster—it allowed busi- students to understand that a capitalist nesses to get together to keep wages low economy, in which businesses compete and prices high. But from the standpoint with each other in hopes of capturing a of a corporate executive, it made perfect larger and larger share of their market’s sense. If businesses could get together profits, is inherently prone to crisis. and agree on how much to produce, they Originally I tried to create a simu- could balance out the market to their lation that included both overproduc- mutual advantage. tion—when there are too many goods on the market to be sold for a profit— The Widget Boom Game and underconsumption—when workers make so little they can’t buy the products. After completing some background les- Unfortunately, the math got too compli- sons on the labor movement and early cated, so I decided to center the simula- struggles between workers and employ- tion on overproduction and deal with ers from The Power in Our Hands (see Re- underconsumption in the discussion sources), we were ready to play the Wid- afterward. get Boom Game. I separated students into I thought that having a strong grasp seven small groups of “widget” producers of overproduction would help students and generated some initial enthusiasm by understand what caused and continues taunting students with the chocolate bars to cause economic crises under capital- they would receive if they won. Then I ism, and also help them understand the encouraged each group to come up with early New Deal. For example, students— an original name for their company. I like much of the U.S. population dur- wrote the company names—Widgets ing the Great Depression—have a hard World Wide, Chocolate for Life, and so time understanding the logic behind the on—on the Widget Boom Game Scoring Agricultural Adjustment Act (AAA) of Guide, and then passed out the Widget 1933. The AAA paid farmers to not plant Boom Game Role Sheet, which we read on part of their land and to destroy crops together. As the role sheet explains, dur- and livestock. As my student Alberto de- ing the game the various companies com- clared on learning this, “It’s crazy to pay pete against each other to capture more farmers to destroy food while people all and more of the widget market: around the country are going hungry.” But, of course, it isn’t crazy if you are Your goal, of course, is to end up looking at the problem through the logic with a mountain of money. There

36 > FALL 2015 are several ways to increase your At this point, I made a show of se- capacity into their math as they filled out profits. One way to increase cretly writing the trigger number for the Widget Production Handout. profits is by reducing your la- overproduction on a piece of paper, fold- At the end of the fifth round, I bor costs. If you pay your work- ed it up, and taped it to the chalkboard to opened up the folded paper and revealed ers less, you have more money reveal at the end of the game. the trigger number. There was a collec- left over as profit. You can also For each of the five rounds, every tive “Awwww!” as students realized that make your workers work faster group filled out a Widget Production no one would get chocolate. Without or for longer hours without rais- Handout, which helped them calculate fail, the competition among teams for ing their pay. The problem is how many widgets they wanted to pro- chocolate led them well above the trig- that you’ve already done this. . . . duce and how much profit they would ger number. Even when students pro- Right now there isn’t much profit make that round. duced far beyond the 3,000,000 mark, to be made by reducing your la- During the first round, I circulated they eagerly waited for the reveal, hoping bor costs. around the room, helping groups that that somehow all those “market analysts” So the best way to increase didn’t quite understand what to do. I were wrong. your profits is to sell more wid- encouraged groups to keep their pro- “Can we still get some chocolate, Mr. gets by increasing productivity— duction values to multiples of a hundred Sanchez?” Juan desperately asked. “Sor- increasing the number of wid- to keep the math simple. Once it was ry, Juan, that’s not how capitalism works,” gets each worker can produce. clear all the groups knew how to play I replied. If I was worried that the ab- There are new machines that the game, I began encouraging them to sence of a chocolate payday would sour allow workers to produce more produce as much as possible, acting like my relationships with students, Jackie, widgets in the same amount of time. In fact, newer and better machines are being invented all “Can we still get some chocolate, Mr. Sanchez?” the time. With each new piece of productive machinery you buy, “Sorry, Juan, that’s not how capitalism works.” your business can produce more and more widgets.

Every member of the group with an infomercial for widget producers: who was typically more engaged with the most profits at the end of five rounds “Everyone wants a widget! They can’t get her latest text message than the topic we would receive a candy bar. However, as enough of them! They’re begging you to were studying in history class, quelled the role sheet explains, there’s a problem: make more!” my fears as she left the room. “Can we As each group finished their Widget do this every day? I can’t believe I had so There are only so many people Production Handout, I collected it. Af- much fun in history class.” I laughed and who need widgets. If there are ter collecting all the handouts, I focused took her comment as a compliment, try- too many widgets on the mar- the class’s attention on the Widget Boom ing hard not to see it as an admission that ket, there won’t be enough people Game Scoring Guide at the front of the the entire first quarter didn’t measure up. who want or can afford to buy room. The teams watched carefully as The next class, the students stepped them. If this happens, there is a I wrote down how many widgets each out of their roles as widget industry corpo- crisis of overproduction in the group had produced—and how much rate executives to discuss the simulation. I widget market. No one knows closer they were to producing past the started by projecting an infographic with exactly how many widgets is too limit of the market. 24 white houses and one red stick figure. many, but market analysts sus- After the first round, teams had the Text at the top of the graphic explained pect it to be somewhere between option of buying new machines that ex- that “one in seven houses in the United 1,000,000 and 3,000,000 widgets. ponentially increased their productive States is empty. One in 402 people in the If the total production of widgets capacity. This, of course, meant more United States are homeless.” To hammer for all rounds goes above this trig- profits for their group, but also threat- this point home, text below the graphic ger number, it will start an eco- ened that widget production would be stated: “Twenty-four empty houses are nomic depression. All the widget extended beyond the limits of the mar- available for each homeless person in the companies will go out of business ket. If they were buying a new machine, United States.” and no one will receive any candy. they incorporated their new productive “That’s awful!” Amelie cried out.

RETHINKING SCHOOLS > 37 “Why don’t we just give those homes to whose motto during the simulation had “Well, I do love chocolate, but if I the homeless people?” been “Go big or go home!” wasn’t encouraging you, do you think “Great question, Amelie. The rea- After the laughter died down, I tried you would have been able to avoid crash- son ‘we’ don’t just give homeless people to get them to dig a little deeper. “Be- ing the economy?” homes under our current economic sys- yond blaming individuals or particular “No,” Marilyn said. “Because you’re tem is because the companies that made groups, think about why no one stood still in competition with other compa- those homes wouldn’t get any profit if up and said: ‘This is crazy. We’re all going nies. You’re trying to produce as much as they were given away.” to lose. Let’s cooperate on this and not you can.” “Yeah, you can’t just give people free make as many widgets.’ Is there some- “That’s right. Because you’re all try- stuff,” Michael interjected. thing hidden going on here? What about ing to capture as much of the widget “But that’s horrible,” Amelie insisted. the rules of the game itself? How were market as possible, you end up produc- “Absolutely,” I said. “I started with the rules responsible for the crash?” ing too much. Now, would it be possible this graphic because this is a crisis of “It wasn’t particularly our fault,” said to have a different outcome? One where overproduction—just like our simula- King, a member of Ali’s group. you don’t crash the economy?” tion the other day. Under the economic “Yes, it was!” Lateesha insisted. “The “Yeah. You just need to limit the system of capitalism, a crisis of over- whole goal was to get the most money. widget production,” King answered.

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production doesn’t mean that millions So some people thought ‘we have to get “What would you have needed to do of people don’t need or want the ‘over- the most money’ and were too greedy. I’ll to limit the widget production?” produced’ goods. It just means that busi- admit it—I was thinking that, too.” “We could have all joined togeth- nesses can’t sell those goods at a profit. Michael added: “No one wanted to er and made one big company.” Maria This will be important to keep in mind cooperate because who cares about the responded. when we look at the proposals for how other companies; it’s all about you. I want “Absolutely. You could have created to fix the economy—in particular the the chocolate so I’m going to produce as a monopoly, where one company has all agricultural economy—during the Great much as I can.” or most of the control over the market. Depression.” “It was because of competition!” Al- That way you could make sure you never Then I asked who or what they berto confirmed. produced too many widgets. But let’s thought was responsible for the crisis “Yeah, you were really encouraging say there was a law against monopolies. of overproduction that we triggered in us to be competitive, Mr. Sanchez, be- What other ways could you have pre- class. “Ali!” Lateesha blurted out, refer- cause you didn’t want to give away any of vented the crash?” ring to a particularly animated student your chocolate,” Leo remarked. “Communicate? Cooperate instead

38 > FALL 2015 of fighting each other?” “These options are important to re- als would have on workers. For example, “Yes. If you all were able to get to- member because, during the Great De- think about how a monopoly would af- gether and decide on how much should pression, they were all ideas that various fect workers’ ability to organize. Would it be produced, you might be able to avoid people and groups suggested for how be easier for workers to organize a union producing too much without merging to fix the economy. The two main ideas at McDonald’s or at Little Big Burger (a into one big company,” I replied. “But from the business community were: Let’s local burger chain)?” how would you make sure that no one bring together all the businesses in an in- “Little Big Burger,” Desmond re- produced too much? Let’s think about dustry to cooperate in trade associations, sponded. “Because McDonald’s is so big the real world. If there was too much and let’s get rid of antitrust laws that pre- they don’t care if workers organize in production in one sector of the economy, vent monopolies. At the same time, other one store. You would have to organize all who would have the power to tell the people were saying: ‘No, we should regu- over the country.” businesses in that sector that they have late business; let’s put laws in place saying “Right. The bigger the company, the to cooperate and produce less?” what they can and can’t do.’ more power they have over their work- “The government,” answered Leo. “The Communist Party, Socialist ers. So if companies are allowed to merge “By doing what? What can the gov- Party, and other leftists went even further. into a monopoly or get together in trade ernment do?” They said that we needed a fourth option: associations, what is going to happen to The problem, they said, is the system of their workers’ working conditions?” capitalism itself. As long as businesses are “They’re going to be paid less.” competing against each other to make “And they’re going to have to work a profit, there will always be economic longer hours.” crises. Those organizations thought that I nodded agreement. “Now let’s go workers should own the businesses, back to the beginning of the game, when and instead of producing for profit they I said you couldn’t make any profit from should produce things based on what hu- reducing your labor costs because you mans need. So they would have wanted to were already making your workers work make sure that all those homeless people faster and longer for little pay. Imagine got to live in the empty houses.” for a second if every industry paid their At this point in the discussion, the workers this badly—the bare minimum limits of the simulation became obvi- they needed to survive. How might this ous. Although the Widget Boom Game affect the economy?” was useful in helping students’ grapple “Workers couldn’t buy anything be- with a key concept like overproduc- cause they don’t have any money,” said tion, the game’s lessons were inherently Desmond. limited because all students played the “Exactly! And that is called a crisis of role of capitalists. This shaped their im- underconsumption—the flip side of a cri- mediate perspectives on how to “fix” the sis of overproduction. These two concepts crisis they caused, and reinforced what are important because, depending on “They could pass a law.” is already the dominant perspective of which one you emphasized, you had a dif- “Exactly. They couldregulate the the media and their textbooks. Almost ferent solution to the Great Depression.” economy, meaning they would put regu- universally the go-to solution that sur- After this comment some students lations or restrictions on what business faced in the postgame discussion—or were losing focus, so I assured them I could and couldn’t do. occasionally during the game—was to only had one last question—even though “So, to sum up, we’ve got three pos- group businesses together and create a I really had two. “What if workers are be- sible scenarios for how to prevent the monopoly. I was glad that students had ing paid less than they need to get by? economy from crashing: 1. You could all experienced the lessons from The Power What options do they have? If you can’t become one big business—a monopoly; in Our Hands that put them in the roles afford something you need now, like 2. You could cooperate to try to prevent of workers. Recalling those experiences food for your children or rent money, each other from producing too much; or helped them understand the limits of the what could you do?” 3. There could be government regula- simulation. “Put it on your credit card,” said tion—laws that let the government limit I asked them: “I want you to think Jackie confidently. production. about what effects these different propos- “Right! You could go into debt to buy

RETHINKING SCHOOLS > 39 the stuff you need. And let’s say you’re a derstood the implications. Students were wished I had chosen an alternative read- business at the start of the game and you highly engaged in the simulation, but ing. Despite my emphasis on the real want to buy the biggest machine possible the lessons are ambiguous unless clearly economy, about a quarter of my students but you don’t have enough money, what drawn out through discussion. In the fu- still blamed the Great Depression on the could you do?” ture, I would like to find ways for them stock market crash. Apparently, even an “Get a loan!” said Pratima. to struggle more with the implications experiential simulation could not trump “Exactly. And this is how the banks themselves. the authority of the textbook. Many stu- get involved in the economy. Banks want After the discussion, we read the ex- dents, on the other hand, definitely got it. individuals and businesses to borrow cerpt from History Alive! on “Causes of Amy’s paragraph was one of the clearest: money, because then they get interest on the Great Depression.” Before reading, we the loans, and that’s how the banks make discussed what stocks were and how they The Great Depression was caused a profit. Loans and credit help to prolong fit into what we had just discussed. I tried by overproduction and under- the boom, but they ultimately make for a to emphasize that, like loans and credit, consumption. Companies pro- bigger crash when the crisis hits because stocks are connected to the real economy. duced too many products. Be- they encourage businesses to stretch So, although the focus of the textbook is cause workers were paid so little, their capacity way beyond the trigger on the stock market crash, the stock mar- they didn’t have enough money to number in the market, and they encour- ket crashed because there was something buy the products being made. For age consumers to stretch their spending wrong in the real economy. I encouraged a while, people borrowed money way beyond what they can afford. So them to focus on the small sections on from the banks so they could still banks, credit, and loans exacerbate the overproduction and underconsumption. buy the products they needed, crisis. They make the crash worse.” For homework, I asked them to write a but they had no way to pay back I wondered here if I had been draw- paragraph answering the question: What their debt. Stockbrokers bet on ing too many conclusions for students, caused the Great Depression? businesses, but when those busi- but I wanted to make sure that they un- After reading their paragraphs, I nesses started to fail because of overproduction, the stock market crashed. Banks ended up closing after giving out their custom- ers’ savings to stockbrokers, who didn’t have money to pay banks back after the crash.

Now we were ready to talk about what actually happened during the New Deal. n

RESOURCES Detailed instructions and materials for the Widget Boom Game available. Bigelow, Bill. 2014. “The Thingamabob Game.” A People’s Curriculum for the Earth. Rethinking Schools. Bigelow, Bill and Norm Diamond. 1988. The Power in Our Hands: A Curriculum on the History of Work and Workers in the United States. Monthly Review Press. Wolff, Richard. Sept. 7, 2009. “Capitalism Hits the Fan.” Harpers. Zinn, Howard. 2003. A People’s History of the United States: 1492–Present. HarperCollins.

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