The “New Deal”

  As we look ahead to an uncertain economic future brought on by the Coronavirus pandemic, let's look back at what steps government took to propel the Depression economy forward.          


On March 4, 1933, a huge crowd gathered around radios on Pine Avenue to listen to the inauguration of a new President, Franklin D. Roosevelt. 

This new invention, the radio, brought the ceremonies in Washington to life.  To many, it felt as if they were actually witnessing the event, listening to the music, the cheers, the vows taken and the inaugural address itself.  Some thought it was actually better than being there, for how else could you get a first-hand, detailed report of things as they happened?  It was definitely preferable to being part of the crowding, milling mass in Washington.

            Later that evening there was a gathering in the Municipal Auditorium to celebrate the new Democratic regime. Various speakers, the Municipal Band, and the American Legion Drum Corps helped celebrate the new leadership that most hoped would pilot the country to a more prosperous era.

            Roosevelt was quick to act.  On March 6, 1933, in order to keep the banking system of the country from collapsing, FDR used the powers given by the Trading With the Enemy Act of 1917 and suspended all transactions in the Federal Reserve and other banks and financial institutions.  On March 9, Congress met in a special session and passed the Emergency Banking Relief Act.  This gave the president the power to reorganize all insolvent banks and provided the means by which sound banks could reopen their doors without long delay.  As Roosevelt was "shaking up" the financial community, Long Beach experienced a "shaking up" of its own.

           

Earthquake

          

  In late February 1933, demolition work on the picturesque old Hotel Virginia began.  It was estimated that it would require fifty men over a period of sixty days to complete the work   Huge fifteen ton air compressors operating 18 compressed air hammers were brought in and huge steel chutes running from the building to a continuous line of trucks  were employed.  However, the demolition crew got some help they weren’t expecting---at 5:54 p.m. on the evening of March 10, 1933, an earthquake struck.

         Memories for thousands were flash frozen --- preserved for a lifetime --- when the ground around Long Beach shook for 11 seemingly never ending seconds.  The killer force quake, measuring 6.3 on the Richter scale, occurred at the optimum time to save lives.  Most people were home for dinner, off the streets and away from the schools that would face almost total destruction.  Still, 51 people were killed in Long Beach and an additional 91 in surrounding areas.

            Bricks and debris rained down on the streets, loosened by the powerful movement of the earth.  Buildings crumbled, streets buckled and fires erupted in several spots. Telephone poles swayed and snapped, putting the city's 32,052 phones out of service.  Electricity was gone but an alert gas company worker turned off the city's gas lines during the temblor preventing further fires.

            Fortunately, the city had a disaster plan, and the help of the Pacific Fleet anchored off the Long Beach coast. Electricity was restored to the downtown area by 7:30 p.m., but outlining hospitals were without power.  The city disaster center got on their portable radio and called on anyone with access to bootleg liquor to bring it to the command center.  From here they took it to hospitals to use in sterilizing surgical instruments.  Within an hour after the first jolt, all roads leading into the city were patrolled with the help of 2000 Navy men who came ashore with loads of blankets and supplies immediately after the first shock.  They stayed for almost a week, helping anywhere they could.

            In the area affected by the earthquake, 4,883 people were injured; 1,893 homes were destroyed, 31,495 damaged; 207 buildings were declared uninhabitable, 1,550 were deemed repairable.  All of the Long Beach schools suffered considerably, as did the city's churches.  On March 13, the State Legislature voted $50,000 ($996,000 today)for emergency relief in the way of food and clothing.  Later $150,000 ($3 million today) was appropriated for rehabilitation work in the quake struck area.  On March 14, the Senate passed a bill appropriating $5,000,000 ($100 million) as an outright gift for relief.  Long Beach, however, declined to accept any of this money, advising Washington authorities it did not desire charity, but rather an opportunity to borrow the money needed to carry on the work of rehabilitation.  Acting on this, Congress amended the act permitting loans from the funds.

            Long Beach bounced back quickly.  Rebuilding operations began the day after the quake.  By March 16, more than 5000 men were employed at removing debris and putting the town back together. Business activities resumed as quickly as possible.  By March 15, 75 stores had reopened.

            Tourists flocked to Long Beach to see the damage.  On March 20, over 200,000 cars and one million sightseers were in town.  By April, Long Beach was more or less back to normal. 

The Economy in 1934

            1934 marked the turning point in Long Beach's economic decline; after all, it would be hard to sink any further after the disasters of 1933.  Things were getting better. Long Beach was recovering from the effects of the earthquake; the Pacific Coast Club reopened in January with a week-long celebration; the renovated, redecorated and refurbished Imperial Theater opened its doors in August.  On June 30, 1934, beachgoers had a treat in store for them when a new $400,000 ($7.7 million), 37-acre state park on Alamitos Bay Peninsula opened. On September 1, 1934, five thousand attended the opening of the new Long Beach post office. The seven-story steel and concrete building was a far cry from the original one-story frame structure at Pine and Ocean which housed the first Long Beach Post Office forty-nine years earlier. 

            Gradually the Depression was lessening, but conditions in Long Beach were not as rosy as they seemed. In 1934, the finances of the city were at the lowest ebb in years.  In January, a petition was filed to recall all nine members of the City Council, the City Manager and the City Attorney.  Failure to prosecute the oil companies, who owed the city large sums of money on royalties, was given as the major reason for the recall.  Other charges cited were: incompetence, mismanagement, misuse of public funds, carelessness and a disregard for the rights of the citizens of Long Beach.  On July 10, voters ousted all City Council members and the City Attorney.

  

          It was an interesting time for Long Beach.  How was the city to run when there were no elected officials?  The City Charter stated recalled officials had to leave office at once. City Attorney Reid complied and George Trammell was appointed by the Council to fill the vacancy.  But what to do without a City Council?  There were two options:  the governor could intervene and appoint a temporary Council until the vacancies were filled, or, based on State law, the recalled Council could continue to hold sessions and transact business until the election of their successors.  Since State law superseded local laws, the second option was instituted, but not for long -- an election for new officials was called for August 17, 1934.

            It was a fascinating election.  There were more than 130 candidates for the nine offices and when election records were checked it was found that a vast throng of men and women registered to vote were not qualified to do so.  Despite these problems, Frank Barnes, Clarence Wagner, John Schimmer, Benjamin Kirkland, Thomas Eaton, Carl Fletcher, Melvin Campbell, Leroy Cederberg and Virgil Spongberg were voted into office.  The new Council members pledged to institute strict economic measures in running city government and balancing the budget.  It would be up to them, according to the City Charter, to either keep the current City Manager and City Attorney or seek new ones.

            The new regime faced the immediate problem of balancing the budget.  On August 24, 1934, trying to live up to their campaign pledges, the Council voted an eighteen per cent salary cut for all city employees. By doing this, they balanced the budget and avoided raising tax or gas rates or abolishing free trash collection. City employees were outraged, having already taken cuts ranging from 13 to 30 per cent during the past three years.  The firemen, with their wages fixed by city ordinance, flatly refused to accept a wage reduction.  The Council quickly backed down coming up with an indefinite plan for slashing here, pinching there and raising the gas rate.  The Council needed help and help was to come in the form of a new City Manager -- Randall Dorton.

  

12/12/1938

          On September 13, the City Council agreed on the selection of Randall M. Dorton, City Manager of Monterey for nine years, as the new City Manager of Long Beach.  Dorton was a graduate of the University of California, holding a master's degree in political science.  This was the first time since the appointment of Charles E. Hewes in 1921 that Long Beach had selected a candidate from outside the city to fill the important administrative role.  Hewes had tried to be an impartial manager, abiding by the City Charter, not the political machinations of the city.  He had been recalled the following year, and a "Long Beach man" appointed in his stead.  Would another "outsider" fall victim to the Long Beach political machine?  Amazingly, Dorton set a record for time in office.  The average time spent in the role of City Manager by his eight predecessors (Charles Hewes, Charles Windham, Charles Henderson, H.S. Callahan, George Buck, C.C. Lewis, E.S. Dobbin, James Bonner) was eighteen months, Dorton, who began serving on October 1, 1934 left office on August 31, 1939.

            Dorton had a hard road ahead of him.  Within six months of their election, another recall attempt was aimed at the new City Council.  Proposition 17, on the ballot in 1935, was designed to stop what was called "recall racketeering."  It was common practice for hired people to take voters to City Hall to sign recall petitions.  Often those who signed were given monetary rewards.  Proposition 17 prohibited such practices and also increased the required number of recall petition signers from 10 to 25 percent of qualified voters.  It also exempted the City Manager from recall, making the Long Beach Charter conform to the general plan of the Council-Manager form of government, which stipulated Councilmen were responsible to the people, and the City Manager to the Council.  The charter amendment carried by a majority of 5150 and the anti-recall forces swept all but one of the 137 precincts in the City.

The WPA

            Long Beach survived an earthquake in 1933 and a recall election in 1934. Better times were to follow when, on May 6, 1935, Roosevelt established the Works Progress Administration by executive order, to organize "light" public works projects for those workers not employed by the "heavy" public works agencies such as the Public Works Administration (PWA) and the Tennessee Valley Authority (TVA). All were to work for their money because Roosevelt shared former President Herbert Hoover's aversion to the dole, calling it, “a narcotic, a subtle destroyer of the human spirit."

            In order to qualify as a WPA project, the projects could not compete with private enterprise and had to have a persuasive social value.  Where people had useful skills, the WPA eagerly used them.  Discovering that artists, musicians, and writers were hit hard by the economic times of the 1930s, the WPA organized projects to utilize their talents.

Naples Canal Walls After 1933 Earthquake

            Not all proposed WPA projects were approved, much to the dismay of Naples residents. Since the early 1930s, the canal walls of Naples, built in 1905, had been crumbling.  The 1933 earthquake was the final straw, collapsing the already fragile walls.  For four years, Naples residents petitioned the City and the federal government to repair them, even threatening to secede from Long Beach if their demands weren't met.  They were outraged when WPA Administration officials turned down funding saying the canals should be filled in.  The costs were too high in proportion to the number of people to benefit, the government claimed.  Eventually, with the aid of state, county and city funds, reconstruction work started.

            On August 26, 1939, Naples held a celebration and formally dedicated the new walls.  In attendance was Arthur M. Parsons, 81, known as the "father of Naples."  It was due to his efforts that the community had begun.  Adding a touch of pageantry to the afternoon's celebration was the appearance of King Neptune and his court, which floated down the Rivo Alto Canal.  Perhaps the most popular event was the men's bathing beauty contest, which brought lots of laughter from the on lookers.

            A few days after the Naples dedication, war broke out in Europe. On September 1, 1939, Germany invaded Poland. On September 3, Poland’s allies declared war on Germany. World War II had begun. The Great Depression was soon over as European nations looked to America and the country’s industrial strength to supply their economic and war needs. Industry and employment skyrocketed in the United States, especially in Southern California with the growth of shipyards, aviation and oil production.

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.