THE GREAT DEPRESSION

1930-33

"Booms and panics were once regarded as an order of nature," Secretary Davis had stated in 1927. "We do not now believe this to be true; we believe it is within our own hands to wipe out depression and make prosperity permanent." (1927: 137) This expression of belief accorded with that of most thinkers of Davis' day. However, a little more than a year after he wrote these words, the most damaging economic depression in its history descended upon the United States.

The burden of facing this challenge in its initial bewildering manifestations fell to the Administration of President Herbert Hoover and the third Secretary of Labor, William N. Doak, formerly acting president and national legislative representative of the Brotherhood of Railroad Trainmen.

The history of Doak's secretaryship is brief, but his reports reflect the essence of the tremendous problem facing the Nation:

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'. . . the efforts of the department, in the face of economic trials, have been directed, primarily, to preserving the opportunities for work that remain to our citizens . . . and to extend these opportunities whenever and wherever it was possible to do so.

"Wage earners and their families are the chief buying power of the land. It follows necessarily that with the great numbers now unemployed, the purchasing power of our people has been drastically curtailed, thus checking the flow of the streams into the channels of trade, reducing the products of manufacturers and the consumption of the products of the farm.

"Rents have decreased, values of properties have been affected, and dividends and interest rates have been lowered appreciably. The wage earner, however, has been and is suffering more than others because depression's weight falls first upon him.

“The finding of means to better this condition is taxing the minds of all our people, and the energies of our Nation. .

...

"The Federal Government is expanding judiciously its powers in a way that it never before has done in times of peace. It has been alert to create employment by a broad program of construction of public buildings, and... it has provided work that otherwise could not be attempted in these times.

"The purpose behind all of these efforts and assistance is so to advance the interests of the people that employment can be stimulated and made secure. ." (1932:1-3)

The specter of poverty and unemployment hung over the country, and the fear it aroused retarded the return of better times and conditions.

"These recurrent periods of unemployment seem to me to be an indictment of our civilization," Secretary Doak told Congress. "A new industrial concept appears to be demanded, one which will make such times as we have been passing through impossible or exceedingly rare in the future. The wage earner should be safeguarded, and whether this will be brought about by a reduced work week with a consequent spread of employment, accompanied by some universal system of unemployment compensation insurance, or otherwise, is an immediate problem, but there is every reason to believe that the solving and removal of these recurring cycles of unemployment will not be impossible to an enlightened and aroused Nation, one which possesses all the elements and requisites for the proper support and general well-being of its people." (1932: 1–3)

"Aside from the abnormal amount of unemployment occasioned by the financial and economic depression . . . is the ability of many of our major industries to produce . . . more goods and products than the purchasing power of the country can absorb . . . ... This situation will remain, even when normal conditions return, unless and until we are able to devise a solution or adjustment of the attendant problems; such as the absorption of the surplus of commodities or a decrease in production [with] reduced hours or days of work . . . . [A] high standard of wages is necessary for a resumption of commodity purchases on a large scale . . . (1932: 20)

Commenting on the effects of the depression on the work of his department, the Secretary told legislators:

"To no other branch of the Government are the unfortunate conditions of unemployment so fully and intimately known, and it is this department which keeps its hand on the pulse of developments in matters particularly affecting the labor of men, women, and children of the country...." (1932: 19-20)

Employment Service

One would expect, in view of earlier war emergency experience, that the most significant departmental function during the depression would have been that of the Employment Service. However, measures taken during the first few years of the depression were piecemeal and hesitant. The full impact of the problem was greater and more acute than even the most perspicacious had at first imagined.

Additional funds were appropriated by Congress in 1931 and succeeding years, and the Service was reorganized. In each State a director was appointed, to "represent the Federal Employment Service in matters pertaining to cooperation with the State and municipal employment offices [and to] keep in touch with ... employers and employees, with civic organizations, and with all other individuals and groups that can assist in performing [their] duties."

(1931: 37) Supplementary appropriations permitted the establishment of new offices in various sections of the country.

By the end of June 1932, the Service consisted of 101 general placement offices, 30 specialized veterans' placement offices, and 22 farm labor placement offices. Total placements for the year exceeded 2 million. Nevertheless, industrial and agricultural employment trends "showed little fluctuation and remained generally far below what [was] recognized as normal." (1932:43)

It was not until the enactment of the Wagner-Peyser Act, in June 1933, that the Service began to function at a level commensurate with the scope of the unemployment problem. This act provided for the establishment of a cooperative Federal-State employment system, based on the allocation of grants in aid to cooperating States.

Labor Statistics

Before passage of the Wagner-Peyser Act, the most significant contribution to an understanding of the unemployment situation was made by the factcollecting agencies. As the Commissioner of Labor Statistics stated in his report for 1931:

"During the past several months interest in labor statistics probably has been more intense than ever before in the history of the country. This interest has been directed primarily to matters of employment and unemployment, but by no means exclusively so, as discussions of employment problems inevitably lead to questions of wages, hours of labor, cost of living, productivity of labor, the older worker in industry, labor turnover, and similar topics." (1931: 76)

The Commissioner deplored the popular misuse of cost-of-living data based on conditions in 1918. He pointed out that according to the Wholesale Price Index the dollar was worth $1.43—a figure used to show that the cost of living of workers had been reduced in proportion to wages. In terms of retail prices, however, it was worth only $1.16. In other words, the facts were being misrepresented. He therefore pleaded that conditions "should be studied by men whose mental training has been industrial rather than commercial and diplomatic." (1931: 99)

He also pleaded for the appointment of attachés to be located abroad, who would be trained investigators in labor matters, "thoroughly equipped and acquainted with the labor men and labor methods, labor policies, and labor ideals and practices [in those countries] to be able to make a thoroughly competent and trustworthy report" of use as much to the Department of State as to the Department of Labor. (1931:99)

A problem of special interest to which the Bureau turned its attention was that of so-called "technological" unemployment:

"The rapid development, especially during the past few years, in machinery and in the technique of management has resulted in enormous increase in the average output per employee in practically all lines of industry, fewer

workers being needed to produce the same output as formerly. Because of this, and entirely aside from the matter of the present depression, there would necessarily result a serious displacement of labor, unless increasing demand for the commodities affected or the development of new industries should be sufficient to absorb the labor power displaced by the increasing use of labor-saving devices and methods. It is even possible that the present depression has stimulated still further the use of such machinery and methods. In any case, the problem raised is clearly one of very great importance. . . (1932:57)

To meet a Senate inquiry, a special study of "all the known plans for the payment of unemployment benefits or for guaranteed employment in this country and of unemployment-insurance systems in foreign countries" (1932:59) was also initiated. Another special study was made of the 5-day week in American industry, in which it was found "that a considerable number of those plants which are now working temporarily five days or less per week will, when the depression has passed, readjust their working schedules on a permanent 5-day week basis." (1932:63) The Bureau conducted its third survey of old-age pension laws. (1932: 69) A major project described in the 1932 report was the proposed dictionary of occupations:

"In connection with its surveys of wages and hours of labor in the principal American industries, the bureau has compiled periodically a glossary of occupations and occupation terms found in these industries, together with a detailed description of the duties performed. This is essential, as, to be of greatest usefulness, wage data must be reported by occupation. The bureau is now engaged in bringing together, supplementing, and revising these various industry glossaries, with the intention of publishing in a single volume a general glossary or dictionary of occupations covering at least the major industries of the United States." (1932: 69)

The Bureau's monthly survey of employment was considerably expanded. Using as a jumping-off point a questionnaire on unemployment included in the Federal census for the first time in 1930, the Bureau projected a series of monthly employment estimates based upon as large a sampling as possible of all major industries. At the end of 1930 the survey covered some 40,000 establishments. By the end of 1933 it covered 70,000.

Conciliation

In 1931 the Congress enacted the Davis-Bacon prevailing-rate law, the administration of which was placed by the Secretary with the Conciliation Service. This law provided that "the rate of wages for laborers and mechanics employed on public buildings of the United States . . . shall be not less than the prevailing rate of wages for work of a similar nature [in the area] in which the buildings are located." (1931:7) The principle upon which the law was based was that "in order to be potential buyers it is necessary that our workers receive wages sufficiently high to permit not only