7 - Shock tremors and their repercussions, 1937–38

Summary

The contrast between the mood of the first hundred days in 1933 and that prevailing in the opening months of the second Roosevelt administration in 1937 could not have been more striking. The former case was dominated by an atmosphere of crisis calling for immediate responses to conditions of economic emergency. In 1937, on the other hand, the economy – though still containing all too many idle workers and machines – appeared to be on a sustained recovery trajectory and seemed no longer to require high-priority attention. The agenda at the start of Roosevelt's second term was dominated instead by his proposals for governmental reorganization, notably plans to restructure the executive and judicial branches, including a politically inflammable proposition to enlarge the Supreme Court from 9 to 15 members.

In the economic environment of early 1937, Roosevelt believed that he was standing on solid ground when insisting that a genuinely balanced budget (as conventionally understood) was achievable in the fiscal year beginning on July 1, 1937. “The programs inaugurated during the last four years to combat the depression and to initiate many new reforms,” he wrote in his Budget Message to the Congress in January 1937, “have cost large sums of money, but the benefits obtained from them are far outweighing all their costs. We shall soon be reaping the full benefits of those programs and shall have at the same time a balanced Budget that will also include provision for redemption of the public debt.”