Recession of 1937 and recovery Recession of 1937–38

manufacturing employment in united states 1920 1940.

the roosevelt administration under assault during roosevelt s second term, presided on new dip in great depression in fall of 1937 continued until of 1938. production , profits declined sharply. unemployment jumped 14.3% in 1937 19.0% in 1938. downturn perhaps due nothing more familiar rhythms of business cycle. until 1937 roosevelt had claimed responsibility excellent economic performance. backfired in recession , heated political atmosphere of 1937.

business-oriented conservatives explained recession arguing new deal had been hostile business expansion in 1935–37, had threatened massive anti-trust legal attacks on big corporations , huge strikes caused organizing activities of congress of industrial organizations (cio) , american federation of labor (afl). recovery explained conservatives in terms of diminishing of threats sharply after 1938. example, antitrust efforts fizzled out without major cases. cio , afl unions started battling each other more corporations, , tax policy became more favorable long-term growth.

scene in agricultural worker s shack town, oklahoma city, july 1939

when gallup organization s poll in 1939 asked, think attitude of roosevelt administration toward business delaying business recovery? american people responded yes margin of more two-to-one. business community felt more so. fortune s roper poll found in may 1939 39% of americans thought administration had been delaying recovery undermining business confidence, while 37% thought had not. found opinions on issue highly polarized economic status , occupation. in addition, aipo found in same time 57% believed business attitudes toward administration delaying recovery, while 26% thought not, emphasizing subtle differences in wording can evoke substantially different polling responses.

keynesian economists stated recession of 1937 result of premature effort curb government spending , balance budget. roosevelt had been cautious not run large deficits. in 1937 achieved balanced budget. therefore, did not utilize deficit spending. between 1933 , 1941 average federal budget deficit 3% per year.

in november 1937 roosevelt decided big business trying ruin new deal causing depression voters react against voting republican. capital strike said roosevelt, , ordered federal bureau of investigation criminal conspiracy (they found none). roosevelt moved left , unleashed rhetorical campaign against monopoly power, cast cause of new crisis. ickes attacked automaker henry ford, steelmaker tom girdler, , super rich sixty families supposedly comprised living center of modern industrial oligarchy dominates united states .

left unchecked, ickes warned, create big-business fascist america—an enslaved america . president appointed robert jackson aggressive new director of antitrust division of justice department, effort lost effectiveness once world war ii began , big business urgently needed produce war supplies. administration s other response 1937 dip stalled recovery great depression had more tangible results.

ignoring requests of treasury department , responding urgings of converts keynesian economics , others in administration, roosevelt embarked on antidote depression, reluctantly abandoning efforts balance budget , launching $5 billion spending program in spring of 1938, effort increase mass purchasing power. roosevelt explained program in fireside chat in told american people government create economic upturn making additions purchasing power of nation .