The New Deal, The CCC and Today

The economic recovery is going nowhere, and trending more and more toward a double-dip recession. Most knowledgeable economists and forecasters are saying that it won't happen, but I notice more and more in the last two weeks that their resolve is becoming a little weaker. And why wouldn't it? Most of the economic news over the last two weeks has been bad, topped off with the dramatic drop in the Consumer Confidence Index. In the stories and commentaries that I read, the same word appears over and over - jobs.

Now, step back in time to the New Deal. Wave that name and around in a crowd and there will be much weeping and gnashing of teeth from those who believe that anything that the government does to stimulate the economy is tantamount to mating with the devil. No matter what anyone thinks about it, consider one New Deal program that was specifically designed to create jobs - the Civilian Conservation Corps - the CCC. Over its life span from 1933 to 1942 the CCC provided 3 million jobs, mostly to men whose families were on relief. Among the hundreds of CCC projects, it planted almost 3 billion trees and built more than 800 parks across the country, many of which became the beginnings of subsequent state parks. The way the CCC worked was that enrollees worked 40 hours a week for which they were paid $30 a month, and it was compulsory that $22 to $25 of that was sent home every month to a family dependent. The program itself was housing and feeding the men.

Yes, different time and different place, but 3 million jobs for people who had none, and more than likely, that $22 to $25 a month was spent into the local economy, keeping many businesses from failing. So let's say that the government spent $1 of stimulus money that was added to the deficit. But it gave someone a job. That income bought vegetables at a grocery store that bought them from a wholesaler who bought them from a farmer who had purchased the seed from a seed company that owned their building and was paying a mortgage. That string could keep going, but the fact is that there was a long line of people who benefited. So that $1 was not just thrown out there with little or no hope that it was going to be paid back. It was paid back by helping people live from day to day and helping the business that served them. Whether it was $1 or not doesn't matter. It kept things going until the economy finally righted itself and probably saved a lot more jobs. And at least some of it did come back through tax payments at the time, and later after the economy had recovered, eventually the whole dollar came back because people had jobs and were paying taxes.

Today we have crumbling infrastructure all over the country plus many other things in different states that have to be neglected because many state governments are in extreme financial difficulty and are going to continue to be for at least two or three years. Pay attention to the news long enough and you hear stories of police being laid off; fire departments having to idle equipment; teachers being laid off, and much more. Yet in Washington the cry now is going up to stop spending and start cutting the deficit, and it is critical that we start to do that. But at a time when the economy is in dire shape with something like 15 million people either without a job a job which barely covers their living expenses, removing stimulus which only government can provide could be a colossal mistake. And yet, when a really big crisis comes along where in the early stages the government is being roundly criticized for its lack of response (the oil spill), all of a sudden the rhetoric changes and people start calling on the government to do something. Those dots don't connect. If lawmakers want to see a grim view of the future, imagine what several years of high unemployment will do to the country, and they are well on the way to finding out.

About this Author

Doug Carleton has worked in SBA lending since 1994, is a nationally published expert in financing for the bed and breakfast industry, and has spoken on bed and breakfast financing as well as SBA and small business financing as well as. He consults regularly with small business owners on matters related to financing.

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