Buying Power under the Recovery Program

October 28, 1933

Report Outline
The Central Question of Prices and Purchasing Power
Divergent Elements of Recovery Program
Progress in Industry Under Recovery Program
Progress in Agriculture Under Recovery Program
Changes in Workers' and Farmers' Buying Power
Problems and Tendencies of Recovery Program
Special Focus

The Central Question of Prices and Purchasing Power

The Farmer's Revolt against the N. R. A., the new gold purchasing plan and the pressure for inflation, the Buy Now campaign, the administration's credit program, and the re-doubled efforts to speed up construction and increase employment in heavy industry all emphasize the extreme importance of consumers' buying power to the success of the recovery program. There has been a marked falling off in production and business activity since July, coinciding with rapidly rising retail prices and a drop in prices received by farmers for their products. The inferences to be drawn from these facts appear to be that prices are overtaking, or already have overtaken, the increase of buying funds in the hands of consumers, and that a recession in the demand for goods will be the result. This belief is supported by the available statistics on sales. The public is not buying as much as it did during the summer months—in fact it is not buying as much as it did at this time last year.

The Federal Reserve Board reports that retail sales in September were only two per cent greater in value than those in September, 1932. Retail prices, however, were approximately 17 per cent higher, so that actual quantity sales of goods were probably some 13 per cent smaller than a year before. Whatever the cause of such a decided slump in the demand for goods, continuation of the downward trend in sales must mean the defeat of the recovery program. When goods are not sold over the counter, replacement orders cannot be given, factories must slow up, the railroads carry less freight, and men and women are thrown out of work all along the line; shrinking pay rolls result in lessened buying power, ever smaller sales, and again the spiral of deepening depression is experienced.

The Central Question of Prices and Purchasing Power

Due to the increase in prices, the person who is now receiving the same income he did five or six months ago finds that it will go less than four-fifths as far in his purchasing. It is true that some 3,500,000 workers have been re-employed and now have funds with which to buy, that weekly earnings of others have risen, and that in general the purchasing power of the farmer's income has improved over last year. In other words, there has been a re-distribution of income along the lines contemplated by the administration, favoring some of the least fortunate groups in the population. But the vital question from the standpoint of national recovery is whether the total buying power of the population has been raised; whether the aggregate income of consumers has increased more rapidly than prices.

ISSUE TRACKER for Related Reports
New Deal, Great Depression, and Economic Recovery
Feb. 20, 2009  Public-Works Projects
Jul. 25, 1986  New Deal for the Family
Apr. 04, 1973  Future of Social Programs
Nov. 18, 1944  Postwar Public Works
Apr. 12, 1941  Public Works in the Post-Emergency Period
Mar. 08, 1940  Integration of Utility Systems
Feb. 26, 1938  The Permanent Problem of Relief
Jun. 08, 1937  Experiments in Price Control
Jan. 05, 1937  Credit Policy and Control of Recovery
Nov. 27, 1936  New Deal Aims and the Constitution
Oct. 16, 1936  Father Coughlin vs. the Federal Reserve System
Sep. 25, 1936  Roosevelt Policies in Practice
Feb. 11, 1936  Conditional Grants to the States
Dec. 11, 1935  Capital Goods Industries and Recovery
Sep. 25, 1935  Unemployment Relief Under Roosevelt
Jul. 17, 1935  The R.F.C. Under Hoover and Roosevelt
Jul. 03, 1935  Six Months of the Second New Deal Congress
Jun. 04, 1935  The Supreme Court and the New Deal
Mar. 05, 1935  Public Works and Work Relief
Feb. 16, 1935  Organized Labor and the New Deal
Dec. 04, 1934  Rural Electrification and Power Rates
Oct. 26, 1934  Federal Relief Programs and Policies
Jul. 25, 1934  Distribution of Federal Emergency Expenditures
Jul. 17, 1934  Debt, Credit, and Recovery
May 25, 1934  The New Deal in the Courts
Mar. 27, 1934  Construction and Economic Recovery
Mar. 19, 1934  Price Controls Under N.R.A.
Feb. 15, 1934  Federal Promotion of State Unemployment Insurance
Jan. 10, 1934  Government and Business After the Depression
Jan. 02, 1934  The Adjustment of Municipal Debts
Dec. 12, 1933  The Machine and the Recovery Program
Dec. 05, 1933  Winter Relief, 1933–1934
Nov. 11, 1933  Power Policies of the Roosevelt Administration
Oct. 28, 1933  Buying Power under the Recovery Program
Oct. 19, 1933  Land Settlement for the Unemployed
Sep. 20, 1933  The Capital Market and the Securities Act
Jul. 18, 1933  Public Works and National Recovery
Jul. 01, 1933  The Plan for National Industrial Control
May 03, 1933  Economic Readjustments Essential to Prosperity
Apr. 26, 1933  Government Subsidies to Private Industry
Mar. 25, 1933  Rehabilitation of the Unemployed
Feb. 17, 1933  Federal Cooperation in Unemployment Relief
Nov. 16, 1932  Systems of Unemployment Compensation
Nov. 09, 1932  Policies of the New Administration
Aug. 18, 1932  Emergency Relief Construction and Self-Liquidating Projects
Dec. 28, 1931  Relief of Unemployment
Aug. 01, 1931  National Economic Planning
Jul. 20, 1931  Dividends and Wages in Periods of Depression
Feb. 19, 1931  Insurance Against Unemployment
Jan. 19, 1931  Business Failures and Bankruptcy Administration
Jan. 01, 1931  Federal Subsidies to the States
Dec. 08, 1930  Federal Relief of Economic Distress
Sep. 25, 1930  The Extent of Unemployment
May 16, 1930  Politics and Depressions
Dec. 20, 1929  The Federal Public Works Program
Jun. 08, 1929  The Federal Reserve System and Stock Speculation
Apr. 14, 1928  The Federal Reserve System and Price Stabilization
Feb. 25, 1928  The Federal Reserve System and Brokers' Loans
Economic Crises