The Great Depression Before the “New Deal”

What was America like in the early days of the Great Depression? What steps could the federal government take to help the American public? American life would be transformed forever as the country slipped further into an economic decline. 

            

As the 1920s neared an end, many were convinced that prosperous times would go on forever. On September 3, 1929, stock prices reached their highest level yet, but a slow decline began.  On October 24th, an abrupt dip led bankers to attempt stemming the tide.  On October 29th, Black Tuesday, a record 16,410,030 shares were traded as huge blocks of stock were dumped for whatever they would bring. 

By December 1st, stocks on the New York Stock Exchange had dropped in value by $26,000,000,000 ($391,770,000,000 today). The day after the crash President Herbert Hoover assured the public that the business of the country was on a sound and prosperous basis.  All that was needed was time. In November 1929, he had summoned business leaders to the White House and secured promises to maintain wages. He also received commitments  to spend $1.8 billion ($15 billion) for new construction and repairs to stimulate employment. 

     At first, Hoover was praised by the press for his actions, which allowed Long Beach and other parts of the nation to grow throughout most of 1930.  In Long Beach, the Ford Motor factory opened, ground was broken for the Procter & Gamble soap plant, a new wharf to allow bigger cargo ships access to the harbor was completed, and a $100,000 water plant was put into service.  Residential districts such as Bixby Knolls started selling new homes, and two new schools, Lindbergh and Naples, opened to meet the educational needs of the many families moving to Long Beach. Economic conditions improved somewhat in early 1931 until a series of bank collapses in Europe and the drought and dust hitting the Plains states sent another wave of terror through the American economy. Farmers were unable to sustain their crops and, as a result, some 2.5 million people would leave the Plains states, most headed to California.

            Long Beach did have oil, new industries, and a seemingly bright future, but it could not deal with all of the displaced workers from Dust Bowl states seeking employment in Long Beach.   In an attempt to remedy the downturn in the job market, the American Legion asked that only American citizens be employed by business firms, resulting in the repatriation of 120,000 Mexican laborers from California.  Going a bit further, the Long Beach City Council passed an ordinance mandating that only residents of the city could be hired to build the new municipal auditorium. 

                By late November 1930, the veneer that everything was O.K. began to crumble.  Long Beach churches were asked to open their doors and give homeless men a night’s lodging.  Nearby Fort MacArthur furnished 100 cots and bedding for the itinerant men who had come to seemingly prosperous Long Beach looking for work.  Business sales were sagging. 

            In January 1931, those municipal employees not dependent on their salaries for a living, were asked to take a leave of absence so their jobs could be filed by men who had to support their families.  Married women were chiefly affected by this proposal.  At a county conference in Los Angeles, it was agreed that every possible dollar of county money should be spent in employing manpower.  Contractors doing public work were asked to abandon machines and use hand labor so far as possible.  One rule was that persons who refused to work, although able to do so, would not be carried on the charity list, and would have to "shift for themselves."

            In March 1931, $174,000  ($3 million) was appropriated by the Los Angeles County Board of Supervisors for Long Beach street projects. Men paid $4 ($68) a day were employed two days a week. Under this system as many as 1500 were put to work.

  

          The five-month period, which ended in May 1931, marked the heaviest drain ever on the social service organizations of the city.  The Social Welfare League, American Red Cross and Catholic Welfare Bureau went into 4,000 Long Beach homes, providing relief in the form of food, fuel and clothing.  Five thousand grocery orders were distributed by the agencies; 2000 pairs of shoes and 11,000 pieces of clothing were given out.  From December 1, 1930 to May 1, 1931, the Salvation Army served 10,473 meals and provided beds for 7100 men.  By mid-May 1931 the resources of these agencies were beginning to wear thin, agencies were forced to evaluate requests for aid based on need.

            The City Council looked at ways to cut expenditures.  Oil revenues were down and Long Beach was feeling severe financial pressures.  A cost-savings study recommended a ten percent reduction in all salaries.  Police and Fire wages could not be touched, however, since they were mandated under a city ordinance.  On June 11, 1931, the City Manager decided to set an example and announced plans to cut his own salary, even though the city charter said he should not be paid less than $7500 ($128,000) a year.  Establishment of a five-day work week (employees used to work 9-1 on Saturdays), with appropriate salary cuts to reflect the shortened work period, was also recommended.  City employee sick leave cost the city $28,000 ($475,000) per year; it was proposed employees receive no pay for the first three days of illness and that a nurse from the Health Department visit them to verify they were really sick.

            City Manager Claude C. Lewis worked on consolidating departments; when city managers retired they were not replaced, their duties assigned to another department head. Lewis, however, did create a new position, that of Assistant City Manager whose job duties included being director of personnel and looking into the efficiency of each city department. 

            New taxes were considered.  The city began to charge for the collection of garbage from business places, hotels, clubs and restaurants. Individual houses were still exempt.  A business and professional tax was also instituted--any member of any profession who maintained or occupied an office or place of business within the city was required to pay a license tax.

Ford Motor Co. Long Beach

            By year's end, the Ford Motor company had laid off 500 employees and trimmed their operations to a bare minimum. In February 1932, Seaside National Bank was forced to close its doors.  County funds were depleted, and money no longer available to cities to provide jobs for the unemployed.  In January 1932, the City Council put a public relief bond measure on the ballot.  It was the only way Long Beach could legally raise money for public relief.  The measure was overwhelmingly defeated.  People had lost confidence in city government; they didn't like the new taxes or the unemployment situation.  In 1932, a recall petition to oust the City Council, City Manager and City Attorney was instituted.

            The City Council told the public that a recall measure would bring disaster.  There was no provision in the City Charter to hold a special election to fill the vacancies should the recall prove successful.  The running of Long Beach would be turned over to the State.  The 1932 recall election was defeated, but in 1934 a recall was approved and eleven city officials were without a job.

            Public relief was something city, county, state and federal governments had never dealt with before.  It had always been handled by charitable institutions.  Now new rules and new players were getting into the game.  Long Beach had done what it legally could to raise money for public relief, and the measure had been defeated.  While they were looking into the legality of tapping into Gas Department revenues, the American Legion proposed holding a drive to raise $100,000 ($1.7 million) for employing out-of-work men in planting trees along Long Beach streets.

                By October 21, 1932, the County was giving aid to 151,628 people, or one-tenth of the county population.  On the charity rolls were an ex-brigadier general, working for $3.20 ($60) a day; an ex-State's attorney of a Midwestern State, an Austrian countess who formerly mingled with the crowned heads of Europe, a graduate of West Point and a former head of a newspaper publishers association who turned down the chance to become Governor of his home State eight years earlier in order to go into business in California.  Southern California was becoming the Mecca of transient families from all parts of the country.  Lured by the fine climate and promise of a better future, thousands left their homes for the sunshine of the Southland.  Such wanderings created untold problems for the areas they wanted to call home.

            Though a Republican town by tradition, Long Beach gave Franklin D. Roosevelt a majority of 7181 votes in the November election.  It was time for a change and new solutions to the economic woes of the nation.

            More about the Roosevelt’s “New Deal” in the 4^th and final part of this series.