The depression continued in 1932 and President Herbert Hoover actively intervened to reverse it. Congress passed and the president signed the Reconstruction Finance Act. It authorized the establishment of a Reconstruction Finance Corporation, modeled after the War Finance Corporation of World War I, and loaned money to banks, railroads, and agricultural organizations. The RFC also extended aid to state and local governments. In 1932, it dispersed a total of $1.5 billion. By 1932 the federal government’s budget balance was seriously in deficit and President Hoover pushed the Revenue Act of 1932 through Congress. It raised individual tax rates with the top rate increasing from 25 percent to 67 percent, doubled inheritance taxes, and raised corporate income taxes by 15 percent.

In the November presidential election campaign, Governor Franklin D. Roosevelt of New York criticized the incumbent President Hoover for increasing government spending, blocking trade, and putting millions of Americans on the dole. Governor Roosevelt won the election in a landslide of 42 states to 6 and a popular vote of 57 to 40 percent over President Hoover. In the Senate elections the Democrats picked up 12 seats, and in the House elections an additional 97 seats. In the new 73rd Congress the Democrats controlled the Senate with 59-36 seats, and in the House with 313-117 seats.

Bailing Out Businesses with the RFC

content

Intention: intent	Liberal Line: lib
Outcome: outcome	Conservative Line: con

Raising Tax Rates in the Middle of a Depression

By the start of 1932 the Hoover adminstration had become very concerned about the federal government�s solvency. Federal spending had surged from $3 billion to $7 billion and the surplus of 1929 had become a $4 billion deficit. Something had to be done. The solution was the Revenue Act of 1932 that increased federal income tax across the board, with the top rate increasing from 25 percent to 63 percent. The estate tax was doubled, and corporate income tax rates were raised by 15 percent.

Intention: The increase in taxes was seen as a necessary action to staunch the hemorrhaging of the federal government�s finances.	Liberal Line: Typical President Hoover, trying to balance the budget instead of helping people.
Outcome: The expected revenue did not materialize. Government spending continued to increase and the revenues continued to collapse. Spending in fiscal year 1932 was $6.92 billion and the deficit ballooned from 0.8 percent of GDP in 1931 to 6.8 percent of GDP in 1932.	Conservative Line: Hoover�s attempt to increase revenue by increasing tax rates was bound to fail.

all years | 1929 | 1930 | 1931 | 1932 | 1933 | 1934 | 1935 | 1936 | 1937 | 1938 | 1939

1929-1939: “A Decade that will live — in stupidity.”

Why Stuck on Stupid?

Seventy years ago the leaders of both US political parties turned away from the policies that had created an economic powerhouse we call the Roaring Twenties. For ten long years Americans suffered through wrenching economic dislocations: deflation, inflation, a four-year economic contraction, endless unemployment, mindless political experiments, and ruthless attacks on businessmen for political gain as their leaders stayed Stuck on Stupid.

Today, after a twenty-five year economic boom, Americans are once more faced with a political elite that wants to monkey with success. It wants to raise tax rates. It wants to restrict trade. It wants to increase government power.

It’s time to look back and remind ourselves how it came to be, starting in 1929, that America got itself Stuck on Stupid. Otherwise it could happen again.

— Christopher Chantrill

SOURCES

UAH monthly satellite record
UAH satellite temperature record on global temperatures

Archived News Releases for Employment Situation
Monthly BLS Employment Situation Summaries

The world's 50 most powerful blogs
at least as far as the lefty Guardian is concerned.

IRS Income Tax Share Table
the rich pay the income taxes

No Freedom Without Economic Freedom
US is fifth on Economic Freedom Index this year. Is that good enough?

Liberal-Conservative Self-Identification
from 1972.

US Current Dollar and "Real" GDP (xls)
US GDP series from 1929 to present

US GDP Percent Change from Preceding Period (xls)
US GDP change from 1929 to present

US Money Supply Historical Series
money supply from 1867 to 1970; Historical Statistics of US: X. Financial Markets and Institutions: Series X-415; p.992 (pdf)

Historical US Federal Spending
Table No. HS--47. Federal Government -- Receipts and Outlays: 1900 to 2003 (xls).

US Consumer Price Index time series
Consumer Price Index from 1800 to 1970; Historical Statistics: E. Prices and Price Indexes: Series E-135; p.211 (pdf)

US Unemployment
Historical US Unemployment from 1900; Statistics and Analysis on Unemployment, Poverty, Urbanization, etc., in the United States

Money Supply and CPI in Great Depression
includes annual employment rate in 1930s

Employment Situation Summary

Compensation from before World War I through the Great Depression

Democratic Capitalism

Three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Government Expenditure

The Union publishes an exact return of the amount of its taxes; I can get copies of the budgets of the four and twenty component states; but who can tell me what the citizens spend in the administration of county and township?
Alexis de Tocqueville, Democracy in America