The Roosevelt Recession and the Hoover Depression
Charles R. Eckert
[A speech delivered in the U.S. House of
Representatives, Monday, 6 June 1938]
Mr. Speaker, in popular thought, business depressions are as natural
as the tides. They come and go - no one seems to know from whence nor
how nor why. Like erratic meteors of the sky, they are regarded by
many as a passing phase of nature over which man has no control. And
so it seems that nothing can be done except assuage the suffering that
follows in their wake. To meet this problem, all manner of measures
are proposed to remove the sting of these inexplicable and immutable
Business depressions play a large part in politics and government.
When a major depression hits the country, there is a tendency to blame
the party in power for the calamity and the President in the White
House becomes a target of abuse. Thus in the memory of many now
living, there settled upon the Nation the depression of 1894. Grover
Cleveland was President of the United States. He was a Democrat, and
according to the logic of those yearning for the control of government
for selfish ends, Cleveland and the Democratic Party were responsible
for the 1894 depression. They said it was a child of the Democratic
Party. With this cry, the reactionary forces won elections year after
year until 1932. By that time the slogan was exploded. Its magic force
For in 1929 when every rule of big business was in full operation
-easy money, unimpaired credit, unbounded confidence, and a balanced
Budget - the economic structure collapsed, and there came upon the
country the Hoover depression, the most severe, devastating, stubborn,
and pernicious in the Nation's history. The formula for good times
failed. The depression came in spite of easy money, unimpaired credit,
unbounded confidence, and a balanced Budget. If the conditions
preceding the collapse of 1929 could, as if by magic be brought into
play immediately, genuine prosperity would not be ours, for the reason
that the root cause of hard times, depressions, unemployment, and
poverty is a chronic defect in the very structure of our economic
system. And until this defect is removed and corrected, hard times and
depressions are as inevitable as the flow and ebb of the sea.
In the interest of fairness, the depression that came into being in
such shocking reality in 1929 was not a Hoover depression. Depressions
do not come and go at the whim and caprice of Presidents and the
fortunes of political parties. But as the 1929 depression was not a
Hoover depression, so the hard times that settled upon the country in
1894 was not a Cleveland depression. Henry George, one of the foremost
social philosophers of all time, in an article published in 1894,
To ascertain the cause of failure or abnormal .action in
that complex machine, the human body, the first effort of the
surgeon is to locate the difficulty. So the first step toward
determining the causes of business depression is to see what
business depression really is.
By business depression we mean a lessening in rapidity and volume
of the exchanges by which, in our highly specialized industrial
system, commodities pass into the hands of consumers. This lessening
of exchanges, which from the side of the merchant or manufacturer we
call business depression, is evidently not due to any scarcity of
the things that merchants or manufacturers have to exchange. From
that point of view there seems, indeed, a plethora of such things.
Nor is it due to any lessening in the desire of consumers for them.
On the contrary, seasons of business depression are seasons of
bitter want on the part of large numbers - of want so intense and
general that charity is called on to prevent actual starvation from
need of things that manufacturers and merchants have to sell.
It may seem, in first view, as if this lessening of exchanges came
from some impediment in the machinery of exchange. Since tariffs
have for their object the checking of certain exchanges, there is a
superficial plausibility in looking to them for the cause. While, as
money is the common measure of value and a common medium of
exchange, in terms of which most exchanges are made, it is, perhaps,
even more plausible to look to monetary regulations. But however
important any tariff question or any money question may be, neither
has sufficient importance to account for the phenomena.
Seasons of business depression come and go without change in
tariffs and monetary regulations and exist in different countries
under widely varying tariffs and monetary systems. The real cause
must lie deeper.
Every businessman sees that business depression conies from lack of
purchasing power on the part of would-be consumers, or, as our
colloquial phrase is, from their lack of money. But money is only an
intermediary performing in exchanges the same office that poker
chips do in a game. In the last analysis it is a labor certificate.
Thus what they really pay for commodities with is labor. It is
not merely true in the sense he meant it, that, as Adam Smith says,
"Labor was the first price, the original purchase money that
was paid for all things." It is the final price that is paid
for all things.
The lessening of "effective demand," which is the
proximate cause of business depressions, means, therefore, a
lessening of the ability to convert labor into exchangeable
forms-means what we call scarcity of unemployment.
What is employment? It is the expenditure of exertion in the
production of commodities or satisfactions. It is what, in a phrase
having clearer connotations, we term "work."
employ a man to black my boots. He expends his labor to give me the
satisfaction of polished boots. What is the 5 cents I give him in
return? It is a counter or chip through which he may obtain at will
the expenditure of labor to that equivalent in any of various forms
- food, shelter, newspapers, a streetcar ride, and so on.
Now, employment or work is the expenditure of labor in the
production of commodities or satisfactions. But on what? Manifestly
on land, for land is to man the whole physical universe. Take any
country as a whole or the world as a whole. On what and from what
does its whole population live? Despite our millions and our complex
civilization, our extensions of exchanges, and bur inventions of
machines - are we not all living as the first man did and the last
man must, by the application of labor to land? Try a mental
experiment: Picture, in imagination, the farmer at the plow, the
miner in the ore vein, the railroad train on its rushing way, the
steamer crossing the ocean, the great factory with its whirring
wheels and thousand operatives, builders erecting a house, linemen
stringing a telegraph wire, a salesman selling books, a bookkeeper
casting up accounts, a bootblack polishing the boots of a customer.
Make any such picture in imagination and then by mental exclusion
withdraw from it, item by item, all that belongs to land. What will
Land is the source of all employment, the natural element
indispensable to all work. Land and labor - these are the two
primary factors that by their union produce all wealth and bring
about all material satisfactions. Given labor - that is to say, the
ability to work and the willingness to work - and there never has
and never can be any scarcity of employment so long as labor can
obtain access to land. Were Adam and Eve bothered by "scarcity
of employment"? Did the first settlers in this country or the
men who afterward settled those parts of the country where land was
still easily had know anything of it? That the monopoly of land-the
exclusion of labor from land by the high price demanded for it - is
the cause of scarcity of employment and business depressions is as
clear as the sun at noonday.
Idle acres mean idle hands, and idle hands mean a lessening of
purchasing power on the part of the great body of consumers that
must bring depression to all business. Every great period of land
speculation that has taken place in our history has been followed by
a period of business depression, and it always must be so.
upas of our civilization is our treatment of land. It is that which
is converting even the march of invention into a blight.
Henry George here traces the primary cause of business depressions to
its very roots. It is clear that neither Presidents nor political
parties are responsible for business depressions excepting to the
extent that they fail to remove the causes. While it is unfair to
place the responsibility of the 1929 collapse upon President Hoover,
it is equally unfair to place upon President Roosevelt the
responsibility of the present recession. The so-called Hoover
depression is still on. It has not yet run its course. This is quite
clear when we view depressions in retrospect. The present recession is
simply a relapse of the 1929 collapse, due to the fact that the
underlying causes of the so-called Hoover depression have not yet been
removed or corrected. That task still lies ahead.
It may be asked, What about the New Deal? Is not the New Deal
intended to abolish poverty and unemployment and open the way for a
more abundant life for the great mass of American citizens? Exactly.
If the New Deal contemplates fundamental reforms and removes the root
causes of business depressions, prosperity, and the more abundant life
will be the lot of all.
It will be said, of course, that the New Deal has failed. It has
failed only in the sense that the fundamental causes of business
depressions have not yet been corrected and no discerning person
expects that to be accomplished in 5 short years. That will require
decades rather than months and years for it is a long, weary, and
There is nothing strange about the present business recession. It is
in keeping with the experiences of the past. Instability is of the
very nature of the present economic order. Disorders of the body
politic are not unlike the disorders of the human body. In the case of
human illness, a relapse frequently occurs. That is not necessarily
fatal. In many instances it is an indication of the need for different
and more drastic treatment for permanent recovery. The same is true of
the body politic. Those responsible for the treatment and cure of the
social organism when indisposed must exercise the same skill and
judgment that the wise physician displays. Frequently the patient,
after weeks and months of steady progress on the road to recovery,
takes a turn for the worse, and it is at such moments that the real
skill and genius of the healing art are subjected to the acid test.
Such moments come to the statesman. It is then that his mettle is
tested, his skill tried, his understanding brought to account.
Let it be repeated, the present recession is simply an incident to
the so-called Hoover depression. But in spite of the fact that the
recession is but a passing event of the economic disaster of 1929,
there will be no end to the cry of "Roosevelt depression" on
the part of the emissaries of reaction and the horde of hungry office
seekers, in the hope that the New Deal may be liquidated and the way
cleared for a return to the good old days of Government of, by, and
for the privileged few.
Short is the memory of man. So the friends of progress and reform
must keep in mind the facts in connection with the present recession
and the benefits of the New Deal. While the problem of unemployment
has not been solved yet, is anyone so bold as to say that the many
salutary and helpful acts of the Government during the last 5 years
have been useless and in vain? Those who seek to stir the prejudices
of the people and pit them against the administration would not dare
remind the country that the financial aid given to banks, railroads,
insurance companies, building and loan associations, farmers,
manufacturers, home owners, and others, and the help given to millions
of destitute Americans through agencies such as the W.P.A., the
P.W.A., the C.C.C., the National Youth Administration, the Federal
Housing Administration, and many other governmental agencies saved the
Nation from unspeakable disaster. To appraise the value of the
Government's activities during the dark days of 1933 is beyond human
Suffice it to say that a program less comprehensive and less
effective might have resulted in consequences too dire to contemplate.
During the early days of the Roosevelt administration, conditions
throughout the land were so charged with revolutionary dynamite that
the task confronting Roosevelt and the Democratic Party, in 1933 was
so herculean and disturbing that it stirs one to admiration and
surprise. There was a great job before the administration. It was
approached with courage and true patriotism. Let no one be deceived by
the cry of "Roosevelt depression," but rather be moved to
greater concern about the future needs essential for a lasting and
The New Deal must be reinforced with measures that will remove the
basic and ancient wrongs responsible for the ever-recurring
depressions. Mere palliatives will not suffice. That is amply proven
by the present recession. Steps must be taken to correct the glaring
inequalities and injustices that exist in the present economic system.
Assistance to the unfortunate and help for the needy are very
necessary in times of stress and strain. But commendable as such
efforts are and admirable as they may be in the sight of the Lord, yet
governments, both Federal and State, have not fulfilled their true
function so long as one able-bodied person in all the land is denied
the opportunity to work.
And this is not to be interpreted as saying that it is the duty of
anyone, be he industrialist, merchant, farmer, or what not, to provide
work for the unemployed nor is it primarily the function of
governments to furnish work for the unemployed. This becomes a duty
and a necessity on the part of governments only when they fail so to
adjust the economic structure as to keep open and accessible at all
times and under all circumstances the opportunities that Nature and
Nature s God have given to the children of men. Herein lies the great
sin of omission on the part of governments and, of course, so long as
governments persist in their sinful ways, providing relief and
employment properly and necessarily becomes the duty of government.
The aim, however, must ever remain as the first duty of government to
accord to everyone an equal right in the bounty of Nature. The New
Deal, if it is to meet the hopes and expectations of its many ardent
supporters and friends, must supplement its splendid work of relief
and its many other useful and splendid achievements by reforming the
economic structure so that the least as well as the greatest will
enjoy an equal share in the natural resources. Short of this, the New
Deal is due to fail in its ultimate objectives. For, after all, 'men
want freedom and independence and the opportunity to earn their own
livelihood and live their lives in their own way. True, sturdy,
stalwart men abhor the thought of being wards of governments. They
seek right and justice, and with right and justice, free men will take
care of themselves.
In order that the yearnings of the average American may be realized
the New Deal must be reformed by removing the ancient wrongs and
inequalities that lurk in the system. Unless this is done depressions
will continue to curse the Nation.