Joy to the Word
Norman Rockwell
December 6, 1930
Get this framed at Art.com

Returning home to New York from the Philadelphia offices of The Saturday Evening Post in 1930, Norman Rockwell was a happy man. Editor George Horace Lorimer had OK’d the artist’s sketch for the December 6, 1930, Christmas cover.

Lorimer’s initials “GHL” gave the artist the green light to assemble models and start the painting as soon as he arrived back in his studio. The illustration was to feature the word “Christmas” below two 16th-century guards breaking protocol by dancing in the snow while observing indoor festivities at a roadside inn.

But as Norman positioned props and began the project, he noticed that his two models—Walter Botts and Rockwell’s ex-brother-in-law and close friend, Howard O’Connor—weren’t enthused about the idea. Truth be told, Rockwell’s own passion for the project was also waning.

With the Great Depression now in its 10th month, American citizens were struggling. The revelry in the proposed scene seemed wrong. Rockwell decided to change the idea, and he invited his models and his wife Mary to speak up. Mary underscored how inspirational her husband’s covers were to American families all across the country, how it was his responsibility to lift them up in hard times. Then Walter chimed in with the story of his parents’ hospitality. They were innkeepers in Sullivan, Indiana, providing shelter and food to homeless job-seekers.

That story triggered an idea. Walter would pose as this lone, cold, 16th-century guard standing outside a roadside inn, peering through a depressed arch window at those celebrating the Christmas season. The focus shifted perspective from the haves to the have-nots. When the message reached Lorimer, he quickly approved the change.

Editor’s note: We’ve gathered 114 spectacular Christmas illustrations by Rockwell and other beloved artists from The Saturday Evening Post in a special 128-page holiday edition of the magazine on sale now!

Room at the Inn The Saturday Evening Post

Click here to download “Big Shots or Pop Guns?” or read below.

Big Shots or Pop Guns? The Saturday Evening Post

It began in the colonial era when we had no conventional banks of our own. Banks were all in England, and England made sure they stayed there. So banks, right from the start, represented the wealth and domination of our foreign overlords. We didn’t even have a single kind of money; people used British and French coins and Spanish dollars, among other things, or just bartered goods. In Virginia, tobacco was used as money. Some colonies issued paper notes redeemable in gold. Not until 1775 did the Continental Congress issue the first all-American paper money used to fight the Revolution. With no gold or silver backing, the currency quickly lost value—thus the expression “not worth a Continental,” which survives even today.

It was Thomas Jefferson who gave birth to the American dollar and came up with the then-novel idea to divide it into an utterly rational 100 cents. Shortly afterward, Alexander Hamilton founded one of the new country’s first banks, the Bank of New York. He was still in his twenties at the time, and five years later he became the first Secretary of the Treasury.

1791: Our First National Bank

If you disapprove of the national debt, the blame goes back to Hamilton. He argued that the nation needed to be able to take on debt—to issue bonds and to invest in building and growth. National debt also was a tool that allowed the federal government to take over the various states’ crushing war debts. To oversee the flow of money, regulate all the country’s smaller banks, and manage the debt, he founded a national bank (the Bank of the U.S.).

Hamilton’s idea was that only a central bank could impose order on American money and banking. But Jefferson opposed the idea bitterly. He embodied the American horror of banks as manipulative tools of the rich. He once wrote, “My zeal against those institutions was so warm and open at the establishment of the Bank of the U.S. that I was derided as a Maniac by the tribe of bank-mongers, who were seeking to filch from the public their swindling, and barren gains.”

Jefferson was vindicated when almost right away there was a banking scandal. In 1792 people began starting up new banks and selling stock in them; there were rumors that the new national bank would buy at least some of the stocks, and a speculative bubble formed, expanded, and burst. The main speculator, William Duer, wound up in debtor’s prison, and Jefferson estimated that $5 million was lost.

In 1811 the Bank of the U.S.’s charter was allowed to expire, and, with no central authority, the banking business quickly became messier—true to Hamilton’s prediction. There was no national paper money, only banknotes printed by individual banks, and they were typically worth far less than their face value, depending on how much faith people had in the banks behind them. For the entire century, a series of tumultuous events periodically sapped American faith in the banking system. The major disasters included:

• Depression. A deep national economic depression that lasted for years hit in the late 1830s. The problem was caused by a rash of speculation on Western lands paid for with paper money issued by weak banks.

• Crash. Another big banking collapse followed in 1857. The blame is traced to the California Gold Rush, which pumped excessive amounts of money into the economy, leading to a tsunami of reckless borrowing and lending.

• Bad paper. In 1861 President Lincoln started printing the first federal paper money to pay for the Civil War. But without a federal bank behind the money, it lost value just like the old Continentals. In fact, the government itself didn’t accept these “greenbacks” for payment of taxes.

• Bust. Another speculative bubble burst in 1873 leading to still another depression that lasted six years.

• Panic. In 1893 a financial fever broke out that put more than 500 banks out of business, leaving many of their customers broke. The main problem this time was that silver strikes in the West meant there was suddenly a glut of silver. Therefore silver coins became worth less for the value of the raw metal than gold ones despite their equivalent face values. Naturally people started buying the more valuable gold coins with their silver coins, draining the federal Treasury.

1861: Confederate Money

Although the country had no federal bank in these years, it did finally get a head of banking, but a completely unofficial, self-appointed one. That was John Pierpont Morgan, by far the most powerful banker of his age. Morgan believed that the most important thing in business was character—an all-too-rare virtue then as now. He once said that “a man I do not trust could not get money from me on all the bonds in Christiandom.”

Morgan stepped in as America’s unofficial head banker to solve the crisis of 1893, finding a way to buy gold in Europe to keep the Treasury from running out of the metal that was the basis of American money. Still, the nation had to endure a depression that lasted for years, and in the 1896 presidential election people who had put their money in silver—largely Western and rural people who hated banks—rallied behind William Jennings Bryan and his famous proclamation that “you shall not crucify mankind upon a cross of gold.”

By 1907 the economy had grown much bigger than all the government’s gold could cover, yet the nation was still on a gold standard. That meant too much borrowing and too much circulating money against too little metal on reserve to guarantee the money’s worth. Another panic hit, and again Morgan had to come to the rescue. He announced that “if people will keep their money in the banks, everything will be all right.” That was entirely true, but saying so wasn’t enough. He singlehandedly called all the nation’s top bankers to his New York City mansion and got them to raise money so cash could keep flowing and to cooperate to keep weaker banks from going under.

This time a depression was averted, but the need for a strong central national bank was finally recognized. It came into existence in 1913 in the form of the Federal Reserve (Read on the Federal Reserve). The Federal Reserve could try to control the health of the economy and banks in general by setting interest rates for its own lending that would set a standard for how much or little borrowing and lending there would be, slowing down the economy when there was too much money and exuberance and speculation and then turning the spigot back on when there was too little. That worked, most of the time, until the Stock Market Crash of 1929 and the Great Depression that followed.

Financial game-changers who are on the money.
Click on the image to view it full size.

The Crash of 1929 was driven by the widespread belief in an endlessly growing economy. (continued on page 70) There was wildly excessive borrowing and investing in overvalued stocks. When it all came tumbling down, banks failed by the thousands. More than 3,000 of them went under in 1931 alone. Another 1,453 failed in 1932, and thousands more in 1933.

In 1933 Franklin Roosevelt was elected president. He leapt into action, immediately closing all the nation’s banks for several days as he pushed through Congress a bill to give the government unprecedented new powers to regulate the whole system. He also effectively took the nation off the gold standard, allowing the dollar to decline in value so that people’s debts would be worth less—and easier to repay. He made the Federal Reserve much stronger than it had been before. And, most important, he pushed through the Glass-Steagall Act. That law put a federal guarantee behind bank deposits, automatically increasing public confidence in them, and it also made banks choose to be either deposit businesses or investment businesses but not both. Banks could no longer be safe harbor for people’s hard-earned savings and casinos at the same time.

Finally, after more than a century and a half, the U.S. had a truly solid banking system. There had been runs on banks and major waves of bank failures throughout our history; there hasn’t been one since. This country has not been immune to crises, however. In the early 1980s there was the savings and loans (S&Ls) debacle. S&Ls were small local savings banks that dealt mainly in savings accounts and home mortgages instead of checking accounts and business loans. They ran into trouble because they weren’t allowed to raise the interest rates they paid on savings accounts when interest rates everywhere else were rising, so people started withdrawing their money from them. The government responded by letting them raise those rates, but the banks’ home mortgages didn’t make enough money to pay for the high rates. S&Ls went bankrupt en masse, and the federal government had to pay $20 billion in insurance to their depositors.

In the 1990s the federal government for the first time let banks operate across state lines, leading to a long series of mergers and the rise of the nationally operating institutions we’re all familiar with today. Unfortunately, it also—after more than half a century of dependable if unexciting banking—lifted Glass-Steagall’s ban on speculative investment by deposit banks.

2008: As banks teeter on verge of collapse, George W. Bush asks Congress for emergency funds. TARP Program loans banks $700 billion. Fallout: Most banks have since repaid TARP loans plus interest, but economic damage lingers. Many argue bailout undermines confidence in free enterprise system.

That development was one of the causes of the recent Great Recession, as banks discovered they could make the most of the housing boom—which turned into the housing bubble—by gambling on it, bundling ever-more-dubious mortgages, slicing them up, and blending them together to turn them into seemingly fail-safe investments. The banks’ gamble ended not only with millions of Americans bankrupt and homes in foreclosure but also with the huge government bank bailouts of late 2008. It then led to new attempts at stronger regulation again, including the Dodd-Frank Act and its Volcker Rule, which attempts to reinstate some of Glass-Steagall’s prevention of speculative betting by banks. However, many bankers are aghast at the new regulations, especially the Volcker Rule. Jamie Dimon, the head of JPMorgan Chase, recently said of the former Federal Reserve chairman who devised the rule, “Paul Volcker by his own admission has said he doesn’t understand capital markets. He has proven that to me.” The law is unquestionably extremely complex and expensive for banks to implement. Its proponents say it will keep the economy safe; its enemies say it will strangle the economy.

In other words, after centuries of hard experience, we still can’t agree about banking, how powerful banks should be, or how free they should be to do what they want to—or think they must—do. What then have we learned, after more than 200 years of banking disasters? We’ve learned a lot, actually. We’ve gone from a small, new, rural frontier nation of no banks at all to the world’s modern economic behemoth with banks and banking power to match. We’ve grown very painfully at times, but we’ve grown in ways no one ever could have begun to imagine. And we at least were able to keep the Great Recession from becoming another Great Depression. Unemployment reached 10 percent in 2009, but it hit 24.9 percent in 1932—and didn’t fully recover until World War II.

In the end there may, sadly, be a limit to what we can learn and how much we can control about banking. The people who run banks are only human. They see the world imperfectly, as we all do, yet they must make decisions of great consequence based on what they see. Only a national bank can try to control the sum of what all the nation’s bankers do, but that is almost like controlling the weather. An economy is the total of everybody’s activities everywhere, so it is as complicated as all the wind and rain and sunshine in the world combined. And even if bankers were superhuman and we could truly dominate something as complex as weather or an economy, there would still be that vexing choice between risk and opportunity. We all want a higher return on our investments, but that means taking a greater risk that we’ll lose it all. We all want to borrow at lower rates, but that means less money going into banks to create those higher returns we want. We all want to take chances, but we don’t want to be hurt if those chances go wrong.

Our whole economic system, like our political system, is but a reflection of the imperfectability of human nature. And that is why capitalism is, as Winston Churchill once said of democracy, the worst possible way of doing things—except for all the other ways that have ever been tried.

BANKS: A Love Hate Story

U.S. Banks: A Historical Timeline.
Click on the image to view it full size.

We can’t live without banks, but that doesn’t mean we have to admire them. Banking excesses and the attempts to curb them have shaped our economy since the founding of the republic.

In recent years we’ve seen the bailout of some of our largest banks—with the resulting hue and cry of such diverse groups as Occupy Wall Street and the Tea Party. Most banks have since paid off their loans, but critics warn that a “too big to fail” mentality will ultimately harm the nation.

Will a few big players—the top five banks today control more than half of all U.S. assets­—now be encouraged to engage in even riskier behavior, knowing the government will step in to catch them if they fall? Have we undermined the free enterprise system—not to mention the American sense of fair play—by sending the signal that the system supports the strong and abandons the weak?

Finally, did the bailout even work? Four years later the financial markets are in better shape, but unemployment continues to be unacceptably high, state and local governments are starved for cash, and housing has not yet recovered.

Some experts also ask whether it is even possible to manage domestic finance in a global economy: Today, more than ever, the collapse of a foreign country would have disastrous ripple effects on our shores.

Love it or hate it, the bailout is best understood in the context of the historical tug of war between those who support federal banking authority and those who oppose it. The latter group warns of the excess power and potential for corruption in a central bank; those favoring a centralized bank believe a united authority is essential for managing the money supply and the national debt. Key dates in banking history are at right.

Read Jekyll Island and the Secret Behind the Fed for more history from the Post.

Too Big to Fail? The Saturday Evening Post

"Mummy, they’re having so much trouble—
couldn’t I say a word for the stock market?"
from January 18, 1930

Out of the mouths of babes… This timely cartoon appeared in the Post in January 1930!

"In the 1930s, the entire country was suffering from a great depression.
Fortunately, they have pills for that now."
from September/October 2011

The kid knows his history! This is from one of our favorite cartoonists, Randy Glasbergen. Read more about him in our feature, Meet the Cartoonist: Randy Glasbergen.

"Boy, did we have some excitement around here last month."
from October 6, 1945

Any little bit will do.

from May/June 2006

Amen. This is from another favorite Post cartoonist, Harley Schwadron, featured in Meet the Cartoonist: Harley Schwadron.

"In today's economy, it's important to diversify!
Put some of your money in your mattress,
some in a cookie jar, bury some in the yard…."
from July/August 2009

Good advice, but it’s depressing when your 401K fits into a sugar bowl. Another great Glasbergen cartoon.

"I take it that business isn’t exactly booming."
from January/February 1993

This is from 1993, but it depicts where today’s economy is, in a nutshell.

"I finally put something aside for my retirement—
I put aside my plans to retire."
from May/June 2009

So much Glasbergen, so little time.

Cartoons: How’s Business? The Saturday Evening Post

Others choose risk over caution. With everything in life feeling like a gamble, these Americans began taking chances that they never would have considered in prosperous times. So it’s not surprising to read, in a 1935 Post article, “The Betting Boom,” that racetrack gambling had become one of America’s few booming industries that year.

The author, Bryan Field, told how talk of higher tax revenues and employment enticed several states to legalize race-track betting. In the past three years, he wrote,

the number of states having racing and betting has risen from seven to twenty-seven, with more getting ready to leap on the band wagon. At the moment of writing, several other states have racing and betting measures in process of passage.

In the same period of time, the money handled in legalized wagering has risen to about $500,000,000 annually. [Roughly translated into 2011 money: $7 Trillion!]

Racetrack wagering had dropped in states where it had been permitted for years. All this recent growth, Field said, was in states that had recently legalized betting.

It is in such places that Old Scrooges and Happy Charlies alike have unearthed the tin can from beneath the brickwork in the cellar and put rainy-day money into circulation.

Taking an average of eight horses to a race, we get approximately 120,000 Thoroughbreds in action in 1934, as against a fraction of that number theretofore. There are only about 10,000 Thoroughbreds available in this country, so they have to be run over and over again—practically worn to a frazzle—in order to make up the number of horses indicated above.

Since 1932, when the inflationary expansion of racing began suddenly, the number of days of racing given has increased to almost 2000… The number of races in 1934 approximated 15,000.

Inevitably, this army of novice gamblers attracted crooks and con men. In 1930, they built a scheme around a little-known rule at the Kentucky Derby, which allowed an owner to nominate a horse for the race with no intention of actually running the horse. The scheme backfired in a most satisfactory way.

Rear View of the Machinery of the Tote Which prints and delievers your wage ticket and adjusts the odds in the same operation

Virtue scored something of a triumph when a sorry nag named Dick O’Hara ran true to form and finished last in the Kentucky Derby of 1930; for the fact that he ran at all caused the utter rout of a ring of Chicago slickers who thought they had a foolproof shortcut to fortune.

They almost had—if it hadn’t been for Dick O’Hara’s owner, the late Stanley Joyce.

Though Dick O’Hara was one of the worst of the season’s two-year racer crop, Joyce had nominated him for the Derby, partly for a gag and partly for a bit of publicity. It cost only twenty-five dollars, and no one expected that the horse would run, since it would take $500 just to place his name in the starting box and a lot more for the jockey, the trainer, and so on.

The nomination of such a hopeless candidate inspired the slicker’s dream—a lottery pegged on the Derby, plus a super-special come-on. Every ticket bearing the name of a horse which even started in the Derby, regardless of how he finished, was to win fifty dollars. And they instructed the printer to run off the vast majority of the tickets with the name of Dick O’Hara.

The lottery took Chicago like wildfire. Clerks, scrubwomen, janitors and other small-time gamblers snapped up chances on this cinch to win fifty dollars. But gradually, as news of the scheme spread, it became apparent that nearly everyone’s ticket was on the unlikeliest starter of them all.

The story got to Joyce. Furious that his horse should be used as a means of swindling thousands, he ordered the beast taken into seclusion, away from possible tampering; put his name in the starting box, to the unbelieving horror of the lottery-syndicate leaders, and ran him in the Derby—last, but in the field.

It was said that Joyce had operatives who watched the ringleaders and forced all who could be cornered to pay off.

Others of them also ran—away.

Open Betting Returns to New York after a generation;
a Bookmaker and his slate in the Jamaica Ring

Starter George Cassidy sends a field away from the Bahr starting gatesat Miami's Hialeah RaceTrack

Depression America Goes To The Horses The Saturday Evening Post

With gasoline at 17¢ a gallon, and new Ford sedans available for a mere $450, Nina Wilcox Putnam told Post readers there was never a better time to drive to California.

The best bargain on the American market today is a trip across the country, which can now be had for practically the same price as staying at home.

Automobiles in 1931, she reports in her Post article, “What’ll It Cost Me To Drive To the Coast?” have greatly improved over the past ten years. When she first drove from New York to California in 1921—

I carried spare parts enough to make up a second car, including new magneto points, and used every darned one of them before the first California real ­estate salesman was sighted.

The roads are better, too. Back in 1921, she says, you wouldn’t think of driving across the western states without an axe “for chopping brush to get you out of gumbo roads during Missouri rainstorms” and an extra set of suspension springs “because you were practically certain to break a spring on what were playfully nick­named ‘roads’ in Arizona.”

But even in 1931, Porter says, you had better bring  better along a length of strong tow-rope, and a waterbag to hang on the front of the car so you won’t run out of water in the desert.

“And ah, yes, I almost forgot a water­proof tarpaulin. No matter how good the trunk on the back of your car, take it from me you’d better cover it with a tarpaulin. It’s a big square of treated canvas, and it really does prevent dust and moisture from working into the luggage and ruining that one good suit or dress which you’re taking along in case you feel like changing some night at a stylish hotel.

The modern driver of 1931 now has a choice of cross-country routes. Most travelers take the National Road, which runs from Atlantic City to San Francisco, but she recommends a new route between Washington, D.C., and Los Angeles.

If you are sick of cities and want a vacation from them; if you are tired of passing trucks and of being held up by traffic stop lights, let me submit the new Midland Trail. I’ll guarantee you’ll hardly meet a truck, see an advertising sign or lose a moment through traffic sig­nals.

But let’s return to the question in Putnam’s title: just how much does it cost to drive from New York in California in 1931. Before she started, a New York travel agent had told her—

“With a small car it will cost you five cents a mile, including good but not fashion­able hotels, food, gas and oil, and ordi­nary running repairs. We figure it will take you nine days.”

When she reached her destination outside Los Angeles, Putnam found that she had actually spent a little less than the predicted $165.

Before there were motels, travellers stopped overnight at rustic motor camps, whose comfort level can be guessed by the picture above.

That’s a sizeable figure for a year when unemployment had risen to 16% and was continuing to climb. Yet it’s fairly inexpensive for nine days of sightseeing, hotels, and meals.Yet you could take the same trip for much less today.

Adjusted for 80 years of inflation, $1.00 in 1931 has the purchasing power of $14.50 today. So Putnam’s trip cost her the equivalent of $2,392 in 2011 dollars.

Today, the drive from New York to Los Angeles is 500 miles shorter. Using the gas prices of this last week, AAA’s fuelcostcalculator.aaa.com, determines that a new, inexpensive car (comparable to what Putnam drove) would consume $440 in gas. Furthermore, you wouldn’t need nine days to cover that distance. While I’ve known people who drove that distance in a heroic, three-day marathon, I’ll allow a modern driver six days (450 miles/day) and a daily allowance of $80 for hotels and $50 for food.

The total cost would be $1,220. Divide that number by 14.50 to reverse inflation, and the price in 1931 dollars, would be $84.

Even with the price of gasoline so high today, our per-mile cost has dropped from 5¢ to 3¢ in 80 years. This doesn’t even factor in the three days saved by driving modern highways in more dependable cars—and three days is just as valuable in 2011 as in 1931.

The Cross-Country Drive: Cheap In 1931, Cheaper In 2011 The Saturday Evening Post

  Read “Toward Abolishing Poverty,” by Henry Ford and Samuel Crowther. Published August 16, 1930.

Toward Abolishing Poverty The Saturday Evening Post

Swigert, now 102, was pleased to be offered a $15-a-week job at a time when “there were men selling apples on the street corner.” His father, on the other hand, saw his own business falter in the harsh economic times, and ultimately went bankrupt.

It all has a familiar ring. What Swigert remembers from the ’30s echoes what millions of Americans are experiencing now. The economy has lost more than 8 million jobs since the recession began in December 2007. As of March this year, the unemployment rate stood at 9.7 percent for the third consecutive month, edging up to 9.9 percent in April, according to the Bureau of Labor Statistics. Although there are signs the recession is lessening, a record 6.7 million Americans have been out of work for 27 weeks or longer.

The comparisons between the ’30s and today are both painful and inevitable, but it’s pretty obvious this hasn’t been our fathers’ (or grandfathers’) depression. No economist has suggested our predicament is anything close to what occurred in the 1930s, when the market collapsed and 15 million people, one-fourth of the work force, were unemployed.

Nor has the current crisis led to as much imagery associated with the Great Depression: bread lines, shantytowns, homeless men—called tramps then—wandering door to door in search of handouts and charity.

A scene common in american cities during the 1930s, skilled and unskilled laborers alike stood in bread lines like this one near the Brooklyn Bridge in New York City.
Photo courtesy of the Library of Congress.

One reason, of course, is the New Deal itself. The Social Security Act of 1935 created, in addition to the retirement insurance for which it’s named, a federal and state system of unemployment compensation that provides temporary, partial wages to the newly out-of-work. It’s a cushion for families, and it helps stabilize the economy during recessions.

The safety net devised under Roosevelt protects the country today “from looking like it did in 1931 and 1932,” says Nick Taylor, whose book, American-Made: The Enduring Legacy of the WPA, analyzes the economic crisis that began under Herbert Hoover, brought FDR into office, and prompted creation of the Works Progress Administration (WPA), among other economic reforms.

Perhaps more significant, the New Deal forever changed the public’s expectation of the government’s role in times of hardship. The pre-World War II generation hit bottom before government stepped in. Republican Herbert Hoover, who prematurely declared “The Depression is over” in June 1930, steadfastly opposed government action, which led to his lopsided loss to FDR. In 2008 presidential candidates Obama and McCain stood together against laissez faire banking; to have done otherwise could have been political suicide.

“The Roosevelt administration was the first one to recognize that the government was responsible for the welfare of the people,” Taylor says. “One of government’s purposes is to have a humanitarian side.”

Roosevelt’s program was controversial then. It still is igniting debate that rages among pundits and economists. Did the New Deal help end the Great Depression, or was it just a distraction until World War II provided the real economic stimulus?

Wake Forest University economist Robert Whaples conducted a survey of economists in 1995 and asked if they agreed with the following: “Taken as a whole, government policies of the New 
Deal served to lengthen and deepen the Great Depression.” Fifty-one percent disagreed and 49 percent agreed (many 
with provisions).

The most glowing analyses credit the New Deal for lifting the country out of the worst of the Depression and improving the mood of a panicked nation. The most critical suggest that Roosevelt’s fiscal policies not only aggravated the crisis but extended the Depression by as many as seven years. But on one aspect of the New Deal, its humanitarian impact on suffering individuals, almost everyone agrees: Government-sponsored jobs improved the economic circumstances of the people who held those jobs.

Roosevelt first proposed the idea of a permanent jobs program during his annual message to Congress on January 4, 1935. A variety of temporary relief measures had been implemented by then, but Roosevelt considered them handouts and demeaning to human dignity. At that time, 5 million people were receiving some form of government aid, 3.5 million of whom Roosevelt felt were able-bodied and could be working.

The WPA renewed America's infrastructure, building roads, bridges, airports, and water and sewer systems, among other improvements.
Photos: Library of Congress

His proposal became the Works Progress Administration. At its peak in March 1938, the WPA rolls hit 3.4 million. By June 1943, when the program was ended because it was no longer needed—unemployment had fallen to 1.9 percent—the WPA had employed more than 8.5 million people on 1.4 million different projects.

After that, Taylor writes, “No one would care to look at the WPA again for quite some time. In the heat of war, there was too much else to think about, and the agency closed its doors without fanfare. Two years later, when the war was ending and life slowly began to return to normal, Americans did not want to remember the Depression.”

Its legacy, Taylor says, is measured in statistics and still evident all around us. The WPA fought floods, hurricanes, and fires; recycled toys; inoculated the sick; and “created works that even without restoration have lasted for more 
than 70 years.”

President Barack Obama consistently invoked the New Deal as historic evidence to support his stimulus plan. “With the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back into life. It is only government that can break the vicious cycle where lost jobs lead to people spending less money, which leads to even more layoffs,” he said.

The WPA produced unforgettable posters from 1936 to 1943 by drawing on the talents of hundreds of out-of-work artists. The posters were designed to promote health and hygiene, cultural activities, domestic travel, community involvement, and educational programs.
Poster courtesy of the Library of Congress

Many similarities can be found between the New Deal and the American Recovery and Reinvestment Act (ARRA) of 2009. The most obvious is that both were designed to save or create about 3.5 million jobs.

Yet Roosevelt himself could not have imagined the size of the government’s commitment this time around. The Works Progress Administration, massive as it was, spent $11 billion during its eight-year tenure. Adjusted for inflation, that would be more than $130 billion today. That pales in comparison to the $787 billion in the stimulus package, which has gone to tax cuts; extended unemployment benefits; and government spending on education, health care, weatherization, and infrastructure. That was all on top of the $700 billion financial services bailout passed by Congress earlier.

The enormity of the investment may be what most distinguishes ARRA from the New Deal. Quoted in a report by Voice of America, historian Alan Brinkley of Columbia University suggested that the weakness of the New Deal was that it wasn’t big enough to compensate for the loss of wealth of the Great Depression. “If you want to counteract a severe recession, you have to take big measures to generate economic activity. And I think that is what the stimulus package is designed to do,” he said.

In April, President Obama said the stimulus bill has succeeded and can be credited with helping business bounce back. Economic research firms Macroeconomic Advisers, IHS Global Insight, and Moody’s Economy.com estimate that the bill has added 1.6 million to 1.8 million jobs to the economy so far.

Without question, opportunities for waste and corruption have occurred just as they did during the ’30s, when “stories were legion about people leaning on shovels,” Taylor 
says. Indeed, the government agency charged with keeping track of expenditures and job creation has found the task next to impossible, releasing data that indicates stimulus money has been distributed to 440 congressional districts that don’t even exist: the “phantom zip code scandal.”

The stimulus act also has piled debt on taxpayers that may not get paid off for decades. That’s a concern for many, including J. Mack Swigert, the pavement-pounding Harvard graduate who eventually became a labor and litigation attorney. “I don’t know whether a stimulus package is good or not,” Swigert says. “On the one hand, it puts us further in debt. On the other hand, it keeps businesses going and people at work.”

That’s a sentiment he’s held ever since the Depression and experienced the relief that came from getting any kind of job, even a $15-a-week one. “My feeling then was if you had a job, you ought to be happy. And I was.” And that’s good advice for every generation, not just in times of want, but times of plenty.

Putting America Back to Work The Saturday Evening Post

It’s unofficial name — the only name it ever had — was the Blue Eagle, and it was the emblem of the National Recovery Administration (not of the National Rifle Association). It was displayed by businesses that supported the NRA codes for price and wage-controls.

The NRA was one of President Roosevelt’s first efforts to stimulate the depressed economy. It created codes that would reduce competitive pricing and increase employment.

It took time to write these codes for each industry. So, in 1933, the NRA asked businesses to accept a voluntary code for all employers. The NRA code set minimum wages and maximum hours, but allowed competing businesses to set prices for their industries.

The businesses that adopted the blanket code, according to John Kennedy Ohl, were asked to display “a Blue Eagle accompanied by the words ‘We Do Our Part,’ on a placard in their windows or on their products. Consumers were to give their business only to those firms that adhered to the code.”

The Blue Eagle from Egg to Earth By General Hugh S. Johnson January 19, 1935

The program was run by Hugh S. Johnson, a blunt and impassioned zealot who used every medium in his power to achieve compliance. Under this direction, says Ohl, “the NRA orchestrated a great outpouring of ballyhoo and patriotic appeal replete with radio speakers, motorcades, torchlight processions, mass rallies, parades, and a nationwide speaking tour by Johnson… The Blue Eagle appeared on posters, billboards, flags, movie screens, magazines, newspapers, and numerous products. Beauty contestants had the Blue Eagle stamped on their thighs, and in Philadelphia fans cheered a new professional football team dubbed the Eagles after the NRA’s icon.”

For all the wing flapping, though, the Blue Eagle never left the ground. After two years, and determined opposition from some industries, the Supreme Court declared the NRA unconstitutional.

Later that year, Hugh Johnson published a series of articles in the Post that attempted to justify what he called “the greatest social and economic experiment of our age.” In his article, he claimed the NRA had several achievements.

“Whatever may properly be criticized about NRA, it created 2,785,000 jobs at a desperate time and added about $3,000,000,000 to the annual purchasing power of working people. It did more to create employment than all other emergency agencies put together, and it did so by creating normal jobs everywhere and without drafts on the Federal Treasury… It abolished child labor. It ran out the sweatshops. It established the principle of regulated hours, wages and working conditions. It went far toward removing wages from the area of predatory competition. It added to the rights and freedom of human labor.”

National Archives

Few historians would agree with his assessment. By making these claims, David M. Kennedy says, “for neither the first time nor the last, Johnson was whistling ‘Dixie.’ Much of the modest rise in production and employment in the spring of 1933 owed not to the salutary ministration of NRA but to nervous anticipation of its impact.”
Kennedy points out that Johnson’s attitude proved a handicap for the agency.

“Johnson faced… persistent industrial recalcitrance with his trademark mix of bluster, bravado, and baloney. ‘Away slight men!’ he railed to a group of businessmen in Atlanta. ‘You may have been Captains of Industry once, but you are Corporals of Disaster now.’ Pleading for minimum wage standards, he declaimed that ‘men have died and worms have eaten them but not from paying human labor thirty cents an hour.’ The ‘chiselers’ who tried to shave NRA standards, he thundered, were ‘guilty of a practice as cheap as stealing pennies out of the cup of a blind beggar.’”

In his Post article, Johnson never considered apologizing for his devotion to what he called his “holy cause.”

“Perhaps I am overzealous or even fanatic on this subject, but I feel it so intensely that I will fight for it. I have sacrificed, and will sacrifice, for it. No personal interest — neither my own nor another’s — can stand in the way of anything which I think will help it.”

His passionate devotion sometimes blinded him to the impracticability of the NRA. In other areas, though, he was keenly perceptive, and some of his observations about business and employment were true for the 1920s as well as today:

“Savage wolfish competition without any direction whatever has proved to be one of the most destructive forces in our economic life. When it got savage and wolfish enough, it began immediately to gnaw upon the living standards of wage and salary earners, and that happened to include over 80% of our population.

“When times are fabulously good, the great prosperity of the few filters down to the many and tends to obscure this tendency. But in normal times, and especially when a depression such as that which began five years ago comes upon us like a blight and millions of men begin tramping the streets, looking for any kind of work that will afford a crust of bread for their families, the whole aspect changes.

“Families are no longer self-contained, economic units that can be put on wheels and trundled into a new environment to start things over again. Our nineteenth-century safety valve of cheap or free new lands and a constantly expanding country has ceased to exist. The old order of our frontier days is gone forever, and by no man’s designing.

“All this has brought benefits, but it has also brought great griefs. The roaring, clacking engine of our industry and commerce has become a vast and highly active machine of which no individual is more than an integrated part. Each performs a specialized function. In most cases, living income comes as a matter of determination by a power with whom there is no bargaining in any true sense. The individual worker accepts the wage scales decreed by employers and is thankful, and his separation from the particular ratchet in which he revolves may be a tragedy. At his doorway there is no longer an open road to high adventure in a new and brighter country, and even if there were such a road, his specialization has unfitted him to take it.

The official cause of death for the Blue Eagle was the Supreme Court’s decision in Schchter v. The United States. However, it faced a more immovable opponent in American industry, as Ohl points out:

National Archives

“Ultimately… the NRA failed because of its underlying premise… the belief that the various segments of the economy could look beyond their own interest and work together for the national welfare. This belief was naive in the case of organized business. Starved for profits and often unwilling to accept labor as even a junior partner, it pursued its own interests and used the NRA to restrict production, raise prices, and thwart labor’s aspirations.”

Sixty-six years later, the government rushed to the aid of American banks that were facing collapse. Within the year, though, bank executives were paying themselves large bonuses made possible by the support of taxpayers. Now, as in 1933, many businessmen in America view catastrophe and government emergency-assistance as an opportunity for profit.

Read the Blue Eagle from Egg to Earth [PDF].

“The National Recovery Administration,” John Kennedy Ohl,

Encyclopedia of the Great Depression

, Robert S. Mclvaine, Thompson Gale, 2004.

David M. Kennedy,

Freedom From Fear

, Oxford University Press, 1999.

The Eagle That Never Flew The Saturday Evening Post

So, I welcome the return of the short story to the pages of the Post. I hope you can find room for more than one per issue.

-Clifford, California

Welcome Back, Fiction The Saturday Evening Post