1933 - Commerce

Commerce

German industrialist Fritz Thyssen flees to Switzerland after a falling out with Adolf Hitler; now 59, he loses all his money and property.

Michigan's governor William A. Comstock, 55, orders a bank holiday February 6 and about 20 other states follow suit, but Detroit defaults on its $400 million debt February 14 when bank closings prevent completion of a $20 million emergency loan. The city has been caught between reduced tax revenues and the need for greater welfare support arising from the collapse of the automobile industry, and the debt will not be fully repaid until 1963.

President Roosevelt enters the White House March 4 with more than 15 million Americans out of work and says, "The only thing we have to fear is fear itself." Blacks, unskilled workers, and workers in heavy industry are especially affected by the widespread unemployment, but even Americans with jobs have had their wages and hours reduced. Wage-earner incomes are 40 percent below 1929 levels, and the new president embarks on a frenzied 100 days of activity aimed at improving conditions.

President Roosevelt's Boston-born secretary of labor Frances (originally Fannie Coralie) Perkins, 50, is the first woman cabinet member and for the next 12 years will oversee an unprecedented program of government interest in labor while the trade-union movement gains power and political influence. She directed studies of female and child labor as executive secretary of the Consumers League of New York from 1910 to 1912.

New York-born American Agriculturist editor Henry Morgenthau Jr., 41, gives up his job to become President Roosevelt's secretary of the treasury, working to finance ambitious New Deal programs despite his personal belief that a balanced budget is essential to the national welfare. In the next 12 years he will supervise the spending of $370 billion—three times the amount spent under all 50 previous secretaries of the treasury combined.

Executive Proclamation 2039 issued by President Roosevelt March 5 proclaims a nationwide bank holiday until March 9 and forbids gold exports. Falling real estate values have undermined bank loans; some 5,504 banks with total deposits of $3,432 million have closed their doors since January 1, 1930; more than 11,000 have failed or had to merge; the total number of banks has fallen 40 percent from 25,000 to 14,000; and fear of further closings has brought the country to the verge of panic. The Emergency Banking Act passed by Congress March 6 after just 1 day of deliberation gives the Treasury Department control over banking transactions and foreign exchange, forbids hoarding or export of gold, and authorizes banks to open as soon as examiners determine them solvent. The president's Executive Order 2039 extends the bank holiday indefinitely, but Executive Order 6073 issued March 10 requires the banks to reopen. They begin to do so March 13, and about 75 percent are open by March 16.

Reconstruction Finance Corp. (RFC) director Jesse Jones becomes RFC chairman, replacing Eugene Meyer (see 1932). Jones will head the RFC until 1939, forcing loan applicants to increase efficiency, obliging top executives to accept salary cuts and in some cases hire financial experts, putting pressure on corporate boards to replace inadequate CEOs, requiring Postal Telegraph to merge with Western Union in an industry that will no longer support both, and saving thousands of jobs by returning many companies to profitability. By the time it is dissolved in 1946 the RFC will have disbursed $50 billion in federal money, but every penny will be returned, and the RFC will serve as a model for future federal bail-out loan guarantees (see Federal Loan Agency, 1939).

The Economy Act approved by Congress March 20 reduces government salaries by 15 percent. Congress has convened March 5 for an emergency session that will continue for 100 days, during which time President Roosevelt will sign 15 historic bills.

President Roosevelt's Executive Order 6102 issued April 5 requires that all private gold holdings (gold coins, gold certificates, and bullion) be surrendered to Federal Reserve banks in exchange for other coin or currency. The United States abandons the gold standard April 19 by presidential proclamation, the last of the $20 gold pieces ("Double Eagles") minted since 1907 have been struck, owning such coins becomes illegal, and many bankers and financiers view the move with horror (see American Liberty League, 1934); a Joint Resolution to Suspend the Gold Standard and Abrogate the Gold Clause adopted by Congress June 5 nullifies all U.S. contracts that promise to repay interest or principal in gold, but Roosevelt rejects a currency-stabilization plan proposed by the gold-standard countries meeting in July at a World Monetary and Economic Conference at London. In October he authorizes the Reconstruction Finance Corp. to buy newly mined gold at $31.36 per ounce, 27¢ above the world market. Aiken, S.C.-born U.S. District Court judge John M. (Munro) Woolsey, 56, at New York upholds the constitutionality of the anti-gold hoarding provisions in the Emergency Banking Act in November (Campbell v. Chase National Bank).

Germany's new Nazi regime holds elaborate May Day celebrations but outlaws the nation's free trade unions May 2, throwing their leaders into prison. By late June the free unions will have been dissolved, replaced by a German Labor Front headed by Hitler's drunken henchman Robert Ley, 43, who will confiscate union funds and use the money to finance a Kraft durch Freude (or Strength through Joy, KdF) program intended to increase productivity.

A Federal Emergency Relief Act passed by Congress May 12 establishes a $500 million fund that can be distributed in grants to the states. Former social worker Harry (Lloyd) Hopkins, 43, is appointed federal administrator of emergency relief. The Thomas Amendment to the Emergency Banking Act allows direct purchase of federal securities by Federal Reserve Banks; adopted May 12, it also permits the Federal Reserve Board to double reserve requirements of member banks.

A U.S. Employment Service created June 6 tries to find jobs for the unemployed. Congress enacts the first minimum wage law July 12, setting the minimum at 38¢ per hour (see Fair Labor Standards Act, 1938).

The Banking Act of 1933 (Glass-Steagall Act) signed into law by President Roosevelt June 16 creates a wall between commercial banks and the securities industry. Banks have been investing their own assets in securities and making unsound loans to shore up companies or the prices of their shares. Glass-Steagall forbids banks to deal in stocks and bonds (J. P. Morgan Co. will split off Morgan Stanley to comply) and insures bank deposits. The diminutive Sen. Carter Glass (D. Va.), now 76, and Rep. Henry B. (Bascom) Steagall (D. Ala.), 60, have proposed the measure (Steagall agreed to co-sponsor it after Glass agreed to authorize bank deposit insurance for the first time). Senators opposed to the measure have filibustered for 3 weeks to block it, bankers denounce it, but it will not be totally repealed until 1999.

A National Industrial Recovery Act (NIRA) passed by Congress June 16 provides for "codes of fair competition" in 700 industries and for collective bargaining with labor, whose unions have dropped in membership from 3.5 million to fewer than 3 million (Section 7a of the new act gives workers the right to join unions). Industry agrees to shorten working hours, pay minimum wages of $12 to $13 per week, limit child labor to 40 hours per week, and in some cases limit production and fix prices. President Roosevelt appoints former U.S. Army Provost Marshal Hugh S. (Samuel) Johnson, 50, as National Recovery Administration (NRA) director (Johnson is a protégé of Bernard M. Baruch, with whom FDR frequently consults), and the first NRA Blue Eagle signs of cooperation with the National Recovery Administration appear in store and factory windows August 1: "We Do Our Part" (but see court decision, 1935).

U.S. textile companies adopt a fair practice code that reduces the workweek from 6 days to 5 and the workday from 12 hours to 8, but the companies will "chisel" on the code and start demanding that workers produce as much in 8 hours as they did in 12 (see strike, 1934).

A National Labor Board established by President Roosevelt August 5 under the NRA works to enforce the right of collective bargaining under the chairmanship of U.S. Sen. Robert F. Wagner, 56 (D. N.Y.) (see NLRB, 1934; Wagner Act, 1935).

The U.S. national income falls to $40.2 billion, down from $87.8 billion in 1929; the national wealth falls to $330 billion, down from $439 billion.

Typical annual U.S. earnings: congressman $8,663, lawyer $4,218, physician $3,382, college teacher $3,111, engineer $2,250, public school teacher $1,227 (5,000 Chicago schoolteachers storm the banks for back pay April 24 after being paid for 10 months in scrip), construction worker $907, sleep-in domestic servant $260 ($21.66 per month), hired farm hand $216.

A Stetson hat sells for $5, a gas stove for $23.95.

Dun & Bradstreet is created by a merger of New York's R. G. Dun & Co. with Cincinnati's Bradstreet Co. Dun was founded in 1841, taken over in 1859 by mercantile authority Robert Graham Dun, and has published Dun's Review since 1893; Bradstreet was founded by John M. Bradstreet in 1849 under the name Bradstreet's Improved Mercantile Agency; Dun & Bradstreet will provide financial data and credit ratings of U.S. business firms and business executives, many of them now in dire straits.

A strike by cotton workers at Pixley, Calif., October 10 brings out some 18,000 employees demanding higher pay; they will win the strike, but only after four have been killed.

Harry Hopkins persuades President Roosevelt to establish a Civil Works Administration (CWA) November 9 to provide emergency jobs for 4 million unemployed Americans through the winter (see 1934; WPA, 1935)

Workers at the Hormel Packing Co. plant at Austin, Minn., stage the first sit-down strike November 13.

Wall Street's Dow Jones Industrial Average closes December 30 at 99.90, up from 59.93 at the end of 1932.