Tag Archives: industry

The Rise and Fall of Australia’s Mining Tax

Julia Gillard and her “Mining Tax” have been stomped into the ground by Tony Abbott and Australia’s “Mining Industry,” depicted as an elephant, representing Australia’s Mining Tax controversy of the early 2010s.
Julia Gillard and her “Mining Tax” have been stomped into the ground by Tony Abbott and Australia’s “Mining Industry,” depicted as an elephant, representing Australia’s Mining Tax controversy of the early 2010s.

In the 2000s and early 2010s, Australia’s mining industry was booming. Australia’s economy had always been resource dependent (Critchlow, “Australia Abandons Mining Tax…”), but increased demand from Asian countries had caused steadily rising prices on coal and iron since 2003. This increased demand led to increased industry profits and a bolstered Australian economy moving into the 2010s (Phillips, “The Mining Boom…”), insulating it against the Global Financial Crisis (GFC) of 2008. In 2010, the Australian government led by then Prime Minister, Kevin Rudd, began to create a mining tax on these booming coal and iron ore industries to fund new pensions and tax cuts on new businesses throughout the nation. This tax was called the Resource Super Profit Tax (RSPT), and caused much controversy among the mining behemoths of Australia and throughout the population. The RSPT eventually failed and was replaced by the Minerals Resource Rent Tax (MRRT).

John Ditchburn’s political cartoon “Where Gillard and Abbott Stand on the Mining Tax,” published on March 20, 2012, depicts Tony Abbott, the Australian Prime Minister from 2013 to 2015, standing proudly atop an elephant labeled “Mining Industry.” The elephant appears to have just stomped Julia Gillard, the Australian Prime Minister from 2010 to 2013, into an elephant-foot-shaped hole. Gillard has a large lump atop her head, and is looking at a piece of paper titled “Mining Tax” in disbelief (Ditchburn). Around the time that this cartoon was published, there was much controversy surrounding the mining tax, and Gillard and Abbott were at the center of it. As the Prime Minister replacing Kevin Rudd, Gillard was working to amend and pass Rudd’s RSPT, resulting in the MRRT; while at the same time, Abbott’s political campaign for Prime Minister was built upon the opposition of Gillard’s MRRT. The humor depicted in Ditchburn’s cartoon alludes to the flawed development and implementation of the MRRT, as well as the response of Australia’s mining conglomerates.

In 2008, economies across the globe were suffering from the GFC, the worst economic depression since the Great Depression of the 1930s. The GFC was triggered by the 2007 collapse of the United States housing market, when many homebuyers with poor credit were unable to pay off their mortgage loans, leading to a lack of liquid funds in the United States’ banking systems. The collapse of the United States housing bubble was the catalyst for the GFC, causing stock markets around the world to crash and become highly volatile (Davies, “Global Financial Crisis”). The GFC was impacting nations across the globe, but largely due to Australia’s mining boom – the biggest boom since the United States’ gold rush of the mid-1800s (Phillips) – Australia was well insulated from the negative effects of the GFC. The Australian mining boom began in 2003, and was fueled by the rapid development of Asian nations, especially China. These developing countries drove up demand for natural resources like coal and iron ore, which led to massive price increases for those resources. Iron ore prices were around $25 per ton, and peaked at $170 per ton during the boom; while coal prices were around $45 per ton and peaked around $180 per ton during the boom (Phillips).

In 2010, Prime Minister Kevin Rudd proposed the RSPT, a single, simple forty percent taxation rate on all profits of mining corporations in Australia, which would replace the previously complex, confusing taxation policy on natural resource mining corporations. The RSPT was projected to generate twelve billion dollars of government revenue in its first four years; however, it was heavily criticized by mining corporations, due to a lack of corporate consultation regarding the tax rate during its development. This led the new Prime Minister, Julia Gillard, to negotiate with Australia’s biggest mining conglomerates: Rio Tinto, BHP Billiton, and Xstrata, in order to amend the tax. The result of these negotiations was the MRRT, which taxed mining operations for twenty-two and a half percent of their total profits; rather than taxing them for forty percent of their total profits, like the RSPT. Even then, the MRRT only taxed coal and iron ore mining operations which made more than seventy-five million dollars annually, rather than all mining operations (“Australian Government Repeals…”). While the RSPT was projected to generate twelve billion dollars in its first four years, the MRRT only generated 480 million dollars in the two years before it was repealed, less than a tenth of a percent of the Australian national budget in 2012 and 2013 (Critchlow). The MRRT’s failure can largely be attributed to the immense influence that Australian mining behemoths had on the development of the tax. Their influence hindered the MRRT’s ability to produce any real government revenue which helped preserve as much corporate profit as possible.

The MRRT was enacted on July 1, 2012, but was repealed just two years later by Gillard’s replacement, Prime Minister Tony Abbott, on September 2, 2014. Abbott’s repeal of the tax was largely thanks to the Palmer United Party – Australian oil tycoon Clive Palmer’s conservative, pro-industry political party – controlling the senate vote to repeal the MRRT (“Australia’s Mining Tax Repealed”). Shortly after the repealing of the tax, Chief Executive of Australia’s Business Council, Jennifer Westacott, claimed that “The Senate’s vote to repeal the [MRRT removed] an unnecessary weight [from] Australia’s economic growth and competitiveness … [improving] Australia’s reputation as an attractive investment destination … [ensuring] a strong, growing resources industry into the future.” This claim was proven to be true, as many other nations welcomed the repealing of the tax, and were ready and willing to invest in Australian resource industries (“Australian Government Repeals…”). This exemplified the positive effects that the repeal of the MRRT benefited Australia’s economy, in the long run. Despite these benefits, there were still naysayers to the repeal of the MRRT, arguing that the revenue generated by the tax could be used to strengthen Australian communities and infrastructure (Gaille, “Eight Mining Tax…”).

While Ditchburn’s cartoon was created two years before the MRRT was repealed, it accurately portrays many of the elements of the mining tax controversy around the time of its creation. Abbott standing atop an elephant labeled “Mining Industry” shows that he was working with Australia’s mining corporations in order to repeal the MRRT. Additionally, Abbott is shown shirtless, baring his hairy chest. This is a humorous commentary on the sexist, and borderline misogynistic, comments he made during his campaign for Prime Minister, which contributed to his feud with Gillard (Badham, “Why Some Australian…”). The mining industry being represented by a massive elephant shows the massive power that the mining corporations wielded in Australian politics at the time. This immense influence of the mining corporations is represented by the elephant stomping Gillard into an elephant-foot-shaped hole – along with her “Mining Tax” paper, representing the MRRT. This is representative of the way that the mining corporations essentially neutered the RSPT, turning it into the non-functional, ineffective MRRT. Overall, the cartoon’s various features humorously depict the ways that Australian mining corporations, along with Abbott, stunted the development and implementation of the MRRT, removing its effectiveness; leaving Gillard to wonder what went wrong with the tax.

Australia’s mining tax controversy of the early 2010s is very reminiscent of the debate surrounding increasing taxes on the Texas sulphur industry of the late 1930s. This debate was touched on in John Knott’s 1937 cartoon, “Legislator with the Sales Tax Complex” (Knott) and its accompanying editorial “Taxing Natural Resources.” In both Australia’s debate – touched on by Ditchburn – and Texas’s debate – touched on by Knott – the debate was centered around whether government revenues or industrial development should be prioritized, and in both cases, industrial development was prioritized. Additionally, both debates were set against the backdrops of horrible economic depressions, significantly impacting the debates and their outcomes. Even the two cartoon’s compositions are strikingly reminiscent of one another. In Ditchburn’s cartoon, Australian mining industries are depicted as a massive elephant trampling an attempt at taxation (Ditchburn). In Knott’s cartoon, Texas mining industries are depicted as the towering “Old Man Texas” (“Knott, John Francis”) threatening an attempt at taxation with a powerful resistance (Knott).

Australian mining corporations warping the RSPT into the MRRT in order to support their own development and the eventual repeal of the MRRT to invite foreign investment in Australia’s resource sector is shockingly reminiscent of Texas’s 1937 debate regarding taxation of natural resource industries. In both cases, the mining industry’s long-term growth and development were prioritized over short-term revenue gains for the government. Whether by the influence of mining conglomerates or by the government’s own choice, it seems that industrial development is prioritized very highly in politics. Through these historical examples, we can learn that history very often does repeat itself, and that by learning from our past, we can better understand our present.

Works Cited:

“Australian Government Repeals Controversial Super Profits Mining Tax.” Allen & Overy, Allen & Overy, 9 Sept. 2014, www.allenovery.com/publications/en-gb/Pages/Australian-Government-repeals-controv rsial-super-profits-mining-tax.aspx.

“Australia’s Mining Tax Repealed.” BBC News, BBC, 2 Sept. 2014, www.bbc.com/news/business-29009479.

Badham, Van. “Why Some Australian Women Loathe Tony Abbott.” The Telegraph, Telegraph Media Group, 16 Sept. 2013, www.telegraph.co.uk/women/womens-politics/10313055/Why-some-Australian-women-oathe-Tony-Abbott-especially-now.html.

Critchlow, Andrew. “Australia Abandons Mining Tax as China’s Resource Demand Weakens.” The Telegraph, Telegraph Media Group, 2 Sept. 14, www.telegraph.co.uk/finance/commodities/11069343/Australia-abandons-mining-tax-a Chinas-resource-demand-weakens.html.’

Davies, Justine. “Global Financial Crisis.” Canstar, Canstar, 18 Sept. 2017, www.canstar.com.au/home-loans/global-financial-crisis/.

Ditchburn, John. “Where Gillard and Abbott Stand on the Mining Tax.” Inkcinct Cartoons Australia, Inkcinct Cartoons, 20 Mar. 2012, www.inkcinct.com.au/web-pages/australian/political/2012–political.htm.

Gaille, Brandon. “Eight Mining Tax Pros and Cons.” Brandon Gaille: Marketing ExpertBrandon Gaille, 15 Mar. 2016, brandongaille.com/8-mining-tax-pros-and-cons/.

Knott, John F. “Legislator With the Sales Tax Complex.” Dallas Morning News, 24 Mar. 1937, p. 2. Web. 26 Sept. 2017.

“Knott, John Francis.” Texas State Historical Association, 15 June 2010, shaonline.org/handbook/online/articles/fkn05.

Phillips, Keri. “The Mining Boom That Changed Australia.” ABC Radio National, ABC, 13 Apr. 2016, www.abc.net.au/radionational/programs/rearvision/the-mining-boom-that-changed-austrlia/7319586.

To Tax, or Not To Tax?

KnottCartoon
A small legislator is attempting to hang a “Sales Tax Token” on “Old Man Texas,” representing Texas’s 1937 debate regarding taxation of natural resource industries.

 

In the late 1800s and early 1900s, Texas’s natural resource industries were booming. Texas oil industries had been slowly on the rise since the late nineteenth century, and were super-charged on January 10, 1901, when the Spindletop oil field was discovered (Wooster, “Spindletop Oil Field”). The discovery of Spindletop completely revolutionized Texas industry, producing around 100,000 barrels of oil a day (Wooster)! This caused Texas industry to explode and begin to focus on petroleum and mining in 1937, however, backdropped by the Great Depression and FDR’s New Deal programs, sales taxes on natural resources were being created and increased – sometimes even doubling – to tax industry and create government revenues to fund new ventures for the Texas government.

John Knott’s political cartoon “Legislator With the Sales Tax Complex,” published on March 24, 1937, depicts a small legislator holding a weight labeled “Sales Tax Token” which he is attempting to hang on a much larger man labeled “Texas.” The old man was a popular political cartoon character of Knott’s, known as “Old Man Texas:” a hardy old man created in 1906 that “[symbolized] rural Texas, [its] honesty in government, [its] low taxes, and [its] property ownership” (“Knott, John Francis”). In the cartoon, “Old Man Texas” is walking out of the frame, and the legislator is closely following him – tiptoeing in an attempt not to be noticed – trying to hang the weight on “Old Man Texas,” who shouts, “Don’t you hang that thing on me!” when he realizes what the legislator is attempting to do (Knott). In the editorial accompanying Knott’s cartoon, “Taxing Natural Resources,” a new sales tax on sulfur is described, which would provide the Texas government with increased revenues for new ventures. This new sales tax, however, would drastically increase production costs in the sulfur industry and significantly damage its ability to produce profits (“Taxing Natural Resources”). The cartoon and its accompanying editorial express that increasing sales taxes on industries’ natural resources will benefit the state in the short-term, but harm its long-term development.

Much like petroleum drilling, sulfur mining had slowly been on the rise in the late 1800s, thanks to new mining methods like the Frasch process, where superheated water was pumped into previously drilled wells, melting the sulfur and forcing molten sulfur to the surface. Unfortunately, the Frasch process proved to be impractical and very expensive, which led to its eventual discontinuation (Kleiner, “Sulfur Industry”). Sulfur was (and still is) a valuable natural resource in the production of matches, gunpowder, insecticides, skin treatments, and glass (“Sulfur Mining & Processing”), and during the mid to late 1930s its demand was rising (Wasson, “Solons Rap Business…”). Fortunately, the discovery of Spindletop not only ignited a new oil and gas industry in Texas, but breathed new life into the sulfur industry as well. The expensive, inefficient Frasch Process was replaced with a much more cost-effective method: using the newly affordable, abundant oil supply in the state as fuel for extracting sulfur from the ground. Additionally, sulfur deposits were being found more frequently, due to the growing oil and gas industry, because sulfur deposits were typically located in the same salt domes that miners explored for oil (Kleiner). These changes led to Texas producing around eighty percent of the United States’ sulfur supply (Kleiner).

Around 1937, Texas’s industries were booming; however, many industries related to natural resources were becoming the subjects of increasingly expensive sales taxes on natural resources. These taxes were being levied to help generate government revenue for Texas to fund health care reforms for those with disabilities such as deafness and blindness, expand schooling and educational systems within the state, and other governmental obligations (“Legislature Told By Allred…”). Since the early 1920s, the sulfur industry had been the target of increasing taxes, and until the mid-1930s, the taxes had been causing increased revenue for the state government. In 1923, taxes on the sulfur industry produced $73,900 of government revenue; in 1924, they produced $244,796; in 1929, they produced $901,125; and in 1931, they produced $1,237,701. Moving into the mid-1930s, however, the government tripled the sales tax on sulfur, which led to a decrease of almost half a million dollars in government revenue, providing only $764,532 in 1932 (Wasson, “Solons Rap Business…”). This sudden decrease in revenue was due to the increasing sulfur tax hindering sulfur industries to the point that they could no longer generate as high a profit as they used to, on account of higher operating costs. This led to a net decrease in tax revenue.

The editorial accompanying the cartoon uses the sulfur industry as a lens through which to shed light on the effect of these increasing taxes on natural resource production, arguing that setting the sales tax on sulfur at $1.28 per ton – an increase of almost seventy-five cents from past rates (Wasson) – the government is “[gouging] for revenue” rather than “[encouraging] development” of industry (“Taxing Natural Resources”). In doing so, the editorial argues that while it may seem a conservative adjustment in the sulfur tax, the increased government revenue isn’t really needed, and the state is too focused on its own short-term benefit to consider long-term growth of Texas industry – which will provide much more for the state in the long run. The editorial also argues that conservative policy in regards to taxing industry would be wise, as it would allow industries to grow and continue to support Texas more in the long run – moving towards an “era of industrial development,” rather than “killing the goose that lays the golden eggs” (“Taxing Natural Resources”).

The aforementioned ideas are all embedded in Knott’s “Legislator with the Sales Tax Complex” cartoon: Texas and its industries being represented by “Old Man Texas,” the increasing sales taxes on those industries being represented by the “Sales Tax Token,” and the Texas government being represented in the small and impish legislator (Knott). In the cartoon, “Old Man Texas” is pictured walking out of frame. He is twice as tall as the legislator, towering over him with his massive fist clenched, yelling “Don’t you hang that thing on me!” “Old Man Texas” represents Texas and its industries, not only because of how massive, powerful and willing to fight for their development they were, but also because he is walking out of frame, towards an “era of industrial development” which Texas industries were progressing towards (“Taxing Natural Resources”). The “Sales Tax Token” in the cartoon is a heavy weight plate, which, if hung on “Old Man Texas,” would impede his progress towards his “era of industrial development.” The legislator is described as having a “sales tax complex,” because he is obsessed with hanging the “Sales Tax Token” on “Old Man Texas,” a metaphor for Texas government being fixated on taxing natural resource industries in the late 1930s. This is why he is portrayed as small and impish, because he is selfish, on account of only being focused on the short-term benefits of hanging the weight on “Old Man Texas,” or taxing industries; rather than the long-term gains of allowing “Old Man Texas” to move toward his goal, and allowing Texas industries to grow.

In 1935, the Connally Hot Oil Act was created in to combat independent oil distributors from driving industries’ profits down. The act was scheduled to expire on June 15, 1937; however, on January 14, 1937, the act was extended and written into permanent law (Goodwin, “Connally Bill Gets Approval for Extension”). The Connally Act and other legislation continued to support industrial growth in in the late 1930s, showing that in the end, industrial development was prioritized by the government, as advocated in the cartoon and accompanying editorial. Even in today’s society, the debate of prioritizing governmental revenue versus prioritizing industrial development still rages on, shown by the Australian Mining Tax controversy. This tax was introduced in 2012 and would take thirty percent of Australian mining profits, for government revenue. Much like the Texas government of the late 1930s, the Australian government also supported industrial development, later repealing the mining tax in 2014 (“Australia’s Mining Tax Repealed”). As they say: history truly does repeat itself.

Works Cited:

“Australia’s Mining Tax Repealed.” BBC News, BBC, 2 Sept. 2014, www.bbc.com/news/business-29009479. Goodwin, Mark L.

“Connally Bill Gets Approval For Extension.” Dallas Morning News, 15 Jan. 1937, p. 9., phw02.newsbank.com/cache/ean/fullsize/pl_010162017_2314_26789_194.pdf. Web. 15 Oct. 2017.

Kleiner, Diana J. “Sulfur Industry” Texas State Historical Association, 14 June 2010, tshaonline.org/handbook/online/articles/dks04. Web. 9 Oct. 2017.

Knott, John F. “Legislator With the Sales Tax Complex.” Dallas Morning News, 24 Mar. 1937, p. 2. Web. 26 Sept. 2017.

“Knott, John Francis.” Texas State Historical Association, 15 June 2010, shaonline.org/handbook/online/articles/fkn05.

“Legislature Told By Allred to Halt Its Tax Remission” Dallas Morning News, 25 Mar. 1937, p. 2., http://phw01.newsbank.com/cache/ean/fullsize/pl_010162017_2121_48289_672.pdf. Web. 13 Oct. 2017.

“Sulfur Mining & Processing: What to Know.” General Kinematics, 17 Sept. 2014, www.generalkinematics.com/blog/sulfur-mining-processing-know/. Web. 10 Oct. 2017.

“Taxing Natural Resources.” Editorial. Dallas Morning News, 24 Mar. 1937, p. 2. Web. 26 Sept. 2017.

Wasson, Dean. “Solons Rap Business With One Hand, Then Invite It With Other” Dallas Morning News, 25 Mar. 1937, p. 3., http://phw01.newsbank.com/cache/ean/fullsize/pl_010102017_0211_29652_4.pdf. Web. 9 Oct. 2017.

Wooster, Robert, and Christine Moor Sanders. “Spindletop Oil Field.” Texas State Historical Association, 15 June 2010, tshaonline.org/handbook/online/articles/dos03. Web. 15 Oct. 2017.

 

Toyota Gets Rustled By Rick Perry’s Texas

toyota-gets-rustled-by-rick-perrys-texas-horsey

 

David Horsey’s cartoon Toyota Gets Rustled by Rick Perry’s Texas provides a hyperbolic illustration of the relocation of industries from California to Texas. Through the depiction of former-governor Rick Perry and two other Texans dressed as stereotypical cowboys taking the Toyota headquarters from California, the Texans are likened to rustlers, stealing something that belongs to California (Horsey). Although Toyota decided to relocate to Texas because of Texas’ favorable business climate and to be closer to their Southern manufacturing hubs, the portrayal of the Texans in the cartoon casts an unfavorable light on Texas, further communicating California’s feelings that they had been stolen from (Hirsch). The accompanying editorial “Toyota exit from Torrance inflames Texas/California rivalry” goes on to provide more background behind the tension between the two states’ vastly different economic models. With two powerhouse economies, California and Texas can be “seen as the perfect contrast between a high-regulation blue state and a low-regulation red state” (Horsey). Since the Toyota industry was moving from California to Texas, it only added fuel to the fire for people arguing over which economic model was superior (Horsey). Overall, Horsey’s depiction of Toyota being stolen away to Texas provides insight to the relocation of industries in response to push and pull factors, as well as Californian sentiment about Toyota’s departure.

The car production company Toyota had been in California since 1957 (Ohnsman). Although it started as a Japanese company, Toyota eventually grew large enough to begin international sales, setting up a headquarters in California to be closer to the American market (Toyota History). However, over the 50 years that Toyota was stationed in California, California’s regulations grew stricter and taxes increased (California Code of Regulations). California’s businesses were “strangled by red tape that [made] starting and running a successful business difficult” (Fleeing California). All of these issues created a push factor, pushing businesses to look to other states for a more business-friendly climate. When compared to California, Texas had far less restrictive regulations. Since “[b]eing unfriendly to business isn’t good for the economy,” Texas’ regulatory simplicity, lower tax rates, and decreased red tape were all pull factors for industries in highly-regulated states, incentivizing them to relocate to Texas (DeVore).

In addition, the sentiment depicted in the cartoon is worth noting. Because the cartoon and editorial were published in the LA Times, they take on a very California-sympathetic tone. Instead of objectively showing Toyota making the choice that best benefited their business, the cartoon’s imagery makes the Texans out to be the bad guys. It is not coincidental that former-governor Rick Perry is portrayed as a rustler. The term rustler is used to describe cattle thieves, but it is commonly associated with the wild west cowboy era during the second half of the 1800s. Because California felt Texas had taken something from them, the Texans were likened to rustlers, stealing hard-working ranchers’ cows for profit in the time of the cowboy. By choosing to depict the Texans as rustlers, the cartoon is not only equating the Texans to thieves, but also presenting them as old-fashioned and stereotypical. The humor lies in understanding the common stereotype of Texans as antiquated cowboys, giving an additional layer of negative connotation to the representation of Texans as rustlers.

The factors surrounding the relocation of production from one state to another closely parallels the decentralization of industries towards the end of the Great Depression. In a similar fashion, John Knott’s cartoon Come to Texas! depicts industries coming to Texas to take advantage of Texas’ better business climate in the late 1930s (Knott). Just like how northern centralized industries decentralized to combat the problems of the Great Depression and the utilize the benefits of production in Texas, Toyota left California’s harsher business climate and regulation in favor of the advantages of being stationed in Texas. Even 70 years later, industries like Toyota still decentralize production to Texas because of its more business-friendly environment.

In conclusion, David Horsey’s political cartoon Toyota Gets Rustled by Rick Perry’s Texas provides commentary on the relocation of Toyota’s industry from California to Texas, including insight to the Californian viewpoint of the events. Despite some sour feelings in California, Toyota chose to come to Texas to escape high levels of regulation and take advantage of the business-friendly climate, similarly to the proceedings portrayed in Knott’s cartoon. Whether in the 1930s or the 2000s, Texas continues to draw in industries due to its lower regulations and environment that’s kinder to businesses.

 

 

Works Cited

“California Code of Regulations.” Westlaw. N.p., n.d. Web. 29 Nov. 2016. https://govt.westlaw.com/calregs/index?__lrTS=20161130033726038&transitionType=Default&contextData=%28sc.Default%29

DeVore, Chuck. “What Makes Texas The Most Small Business-Friendly State, And Rhode Island The Least.” Forbes. Forbes Magazine, 18 Aug. 2015. Web. 29 Nov. 2016. http://www.forbes.com/sites/chuckdevore/2015/08/18/less-regulation-taxes-unionization-make-texas-most-small-business-friendly-rhode-island-least/#71f9cff76d37

“Fleeing California.” The Washington Times. The Washington Times, 17 Feb. 2015. Web. 29 Nov. 2016. http://www.washingtontimes.com/news/2015/feb/17/editorial-businesses-flee-californias-high-taxes-a/.

Hirsch, Jerry. “3,000 Toyota Jobs to Move to Texas from Torrence.” Los Angeles Times. Los Angeles Times, 28 Apr. 2014. Web. 06 Nov. 2016. http://www.latimes.com/business/autos/la-fi-toyota-move-20140429-story.html

Horsey, David. “Toyota Exit from Torrance Inflames Texas/California Rivalry.” Los Angeles Times. Los Angeles Times, 1 May 2014. Web. 06 Nov. 2016. http://www.latimes.com/opinion/topoftheticket/la-na-tt-toyota-exit-20140501-story.html

Knott, John. “Come to Texas!” Cartoon. Dallas Morning News. 27 March 1937. Sec 2: 2. Print.

Ohnsman, Alan. “Tesla Leads in California Auto Jobs as Toyota Plans Exit.” Bloomberg.com. Bloomberg, 16 May 2014. Web. 06 Nov. 2016. http://www.bloomberg.com/news/articles/2014-05-16/tesla-edges-out-toyota-as-california-s-top-auto-employer

“Toyota History: Corporate and Automotive.” Toyoland. Toyoland, n.d. Web. 29 Nov. 2016. http://www.toyoland.com/history.html

The Campaign is On!

Cartoonist John Knott provides his audience with a glimpse of various points of views on New Deal policies implemented by the Roosevelt Administration prior to the 1936 presidential election.
Cartoonist John Knott provides his audience with a glimpse of various points of views on New Deal policies implemented by the Roosevelt Administration prior to the 1936 presidential election.

The Campaign is On! is a political cartoon by John Francis Knott displaying the partisan views of New Deal policies as a solution to the Great Depression preceding the 1936 presidential election. It shows Franklin D. Roosevelt, the incumbent president and democratic nominee, holding up a sign with the words “MORE FOOD AND BETTER HOMES”, both promises of his New Deal policies. It also shows two men walking directly beside him, one labeled as a farmer and the other as a city worker. The cartoon then depicts a frustrated-looking elephant, symbolizing the Republican party, wearing a coat with the words “ANTI-NEW DEAL” and holding a sign that asks “WHO’S GOING TO PAY FOR THEM?” (Knott 2) This cartoon suggests that Franklin Roosevelt, farmers, city workers and the Democratic party wish to continue on with the New Deal as the solution for the depression, while it displays the Republican party’s skepticism and disapproval of such a measure.

The editorial “The Roosevelt address”, which the cartoon was paired with, described Roosevelt’s speech at the National Democratic Dinner in 1936. It explained that this particular speech was utilized by Roosevelt to launch his campaign for his second term in office. The writer also asserted how the two main points of his speech left him vulnerable to economic criticism. The first of Roosevelt’s claims being that the national income had increased dramatically during his presidency from 1932 to 1936, which the writer explained did not take into account the devaluation the dollar underwent during his first term in office. Roosevelt’s second claim expressed his disagreement with the Republican ideology that simply lowering manufacturing costs would lead to economic recovery. He believed it instead would result in either the displacement of workers by machinery or a decrease in wages while hours on the clock increased for workers. The writer of the editorial then followed up with citing Henry Ford’s manufacturing model which gave worker’s fair pay scales while still lowering manufacturing and sell cost (“The Roosevelt Address” 2).

In the late 1920s and the 1930s the worst economic depression the nation had ever endured took place. This infamous period is known as the Great Depression. Prior to total economic collapse, the country had already been trending towards a recession, however, a notable start to the depression took place on October 29, 1929 when the stock market crashed (McElvaine 151). This event alone was not the sole cause of the Great Depression, but it did spark a general reluctance of the population to invest in stocks. From 1929 to 1933, the overall “consumption levels declined by 18 percent and investment levels declined by 98 percent.” (Lawson 61) As a result of this, one-quarter of the available labor force was unemployed. The streets began to fill with homeless and breadlines began to grow. It became clearer and clearer that government intervention was required. Herbert Hoover, Roosevelt’s predecessor and a Republican, implemented some measures to combat the economic downturn, although not much was done under his administration. An honest effort by the government to relieve the economic pains of the Great Depression was not put into motion until Franklin Roosevelt’s presidency.

During his first term in the White House, Roosevelt implemented a series of programs and agencies, which became known as the New Deal, to combat the damage being done by the Great Depression. The Federal Emergency Relief Administration, the Civil Works Administration, the National Recovery Administration and the Agricultural Adjustment Administration were the first of many programs created under the banner of the New Deal to help control “prices, wages, trading practices, and production.” (Savage 845) The second major wave of New Deal legislation came in the form of the Social Security Act, the Wagner Act, and the Works Progress Administration. These measures aimed to increase consumption and decrease unemployment and also added “new social welfare benefits, such as retirement pensions and unemployment insurance.” (Savage 846) When the 1936 presidential election and the illustration of Knott’s cartoon came about, the country needed to decide whether to continue with such policies and reelect Roosevelt or to abandon the New Deal and bring in a Republican presidential elect.

Before the Great Depression was in full swing, the nation’s agricultural sector began to suffer in the 1920s. World War I had brought a large amount of agricultural growth to the United States. However, following the conclusion of the war, there began to be an overproduction of crops that flooded the market and impeded the farmers’ ability to make a profit (Lawson 62). Many of the country’s farms, particularly the ones at a larger scale, were being held afloat by New Deal policies such as the Agricultural Adjustment Administration. This measure aimed to limit the production of crops in order to raise prices to profitable levels. This straightforward plan by the Roosevelt Administration, as well as many incentives from the government, may have swayed many farmers of the time to align with the implementation of the New Deal. This is evident in a 1936 election report by the Los Angeles Times titled the “Vote of the Drought States” that shows major agricultural states of the Midwest displaying a majority of party votes for Roosevelt (“Vote of Drought States” 14).

Major cities in the United States, such as Los Angeles, Akron, and Detroit, experienced a rapid growth in population during the 1920s because of the increase in the number of industrial jobs, as well as the retail and service industries. The occurrence of the stock market crash of 1929 and the persistent economic decline that followed proved to be a challenge for the ill-equipped city governments to combat. This resulted in a decrease in the consumption of products which led to a surplus in the goods being produced. In reaction, industry began to cut production and commit massive layoffs of its workers. These now unemployed city workers could no longer afford to pay their mortgages and rents, this is lead to an increase in the presence of homelessness of these major industrial centers (Flanagan 311). This put these people in a position where government aid was a necessity and the Roosevelt administration up until the 1936 election had a demonstrated a willingness to do so. The New Deal policy, the Federal Relief Act, provided monetary aid to state funded unemployment compensation programs. Also the Civilian Conservation Corps provided work for thousands of jobless young men on federal oriented projects, such as reforestation, road building, and flood control (Kennedy 430). Through agencies, such as the National Recovery Administration (NRA), Roosevelt aimed to “secure the agreement of major industries to government-backed codes designed the to stop the downward slide of payrolls, prices, and production.” (Kennedy 431) Those specific measures might have proven to be ineffective because even after their implementation the economy still “remained sickly.” (Kennedy 432) However, these and many other policies displayed to city working voters a clear effort by the Roosevelt administration to provide assistance to a suffering demographic of the United States’ population. This is possibly what coerced many wage earning voters to side with Roosevelt during the 1936 election. This is displayed when an article that was published in the New York Times following the election stated that “the wage-earner votes might easily account for the landslide” Roosevelt victory (Huston E4).

The Republican party during the 1936 presidential election was firmly against the measures implemented by the Roosevelt Administration and as a result were “anti-New Deal”, as Knott’s cartoon suggests. During the Republican Convention of 1936 in Cleveland, Ohio, the party’s platform began with the sentence, “America is in peril” and “focused on the alleged threat of New Deal policies to American Constitutional government.” (“1936 Conventions” 117) Essentially the Republicans wished to place the majority of the burden of unemployment relief back into local and state governments. They also wanted to restrict the federal government from placing production regulations on agriculture and industry, which was done by the National Relief Administration and the Agricultural Adjustment Administration. Alfred M. Landon, the Republican candidate, and the Republican party as a whole believed the New Deal had slowed the recovery of the economy by placing unnecessary obstacles in the way of private enterprise and industry (Merz E3).

The Democratic party during the 1936 presidential election was prepared to back Roosevelt and his New Deal policies. The Democratic Party Convention of 1936 in Philadelphia, Pennsylvania “was one of the most harmonious in party history.” (“1936 Conventions” 117) The party’s platform “supported the continuation of the extensive federal programs undertaken by the Roosevelt Administration” and expressed a necessary collaboration between federal and state governments to handle the issues brought about by the Great Depression (“1936 Conventions” 118). In an article published by the New York Times it is expressed that Roosevelt wished to divide the cost of relief between the national and state governments. Also Roosevelt expressed that the policies implemented by his administration did not slow down economic recovery, but instead brought “the return of confidence and the advance of business.” (Merz E3)

The Campaign is On! by John Francis Knott provides the viewer with a snapshot of various points of views on New Deal policies leading into the 1936 presidential election. Farmers at the time experienced a substantial loss in profit as a result of crop overproduction and the Great Depression. This group tended to side with Roosevelt and his New Deal policies for regulation and guaranteed profit. City workers began to struggle as a result of massive layoffs that took place in response to a rise in the surplus of goods. Wage-earners sided with the Roosevelt because of the measures taken in the form of industrial regulations and social projects implemented by his administration. Republicans at the time called for the abandonment of the New Deal, believing that it violated the United States’ Constitution and slowed down economic recovery. On the other hand, the Democrats and Roosevelt vouched for the continuation of the New Deal arguing that it had led to apparent improvements in the economy during his first term as president.

Works Cited

Flanagan, Richard. “Great Depression and Cities.” Encyclopedia of American Urban History. Ed. David Goldfield. Vol. 1. Thousand Oaks, CA: SAGE Reference, 2007. 311-313. Print.

 

Huston, Luther A. “Labor and Farm Groups Big Factors in Voting: Credit for Outcome Shared by Small Cities and Large, Negroes and Whites, New Voters and Old.” New York Times, 8     Nov. 1936, p. E4.

 

Kennedy, David M. “Franklin D. Roosevelt.” Presidents: A Reference History. Ed. Henry F. Graff. 3rd ed. Detroit: Charles Scribner’s Sons, 2002. 427-443. Print.

 

Lawson, Russel M. and Benjamin A. Lawson. “Great Depression.” Poverty in America: An Encyclopedia. Westport, Ct: Greenwood Press, 2008. 61-65. Print.

 

McElvaine, Robert S. “Causes of the Great Depression.” Encyclopedia of the Great Depression. Ed. Robert S. McElvaine. Vol. 1. New York: Macmillan Reference USA, 2004. 151-156. Print.

 

Merz, Charles. “Issues the Campaign Has Brought to the Fore: With President Roosevelt Himself as the Chief Issue, These are Also Vital.” New York Times, 1 Nov. 1936, p. E3.

 

Savage, Sean J. “Roosevelt, Franklin D.” Encyclopedia of the Great Depression. Ed. Robert S. McElvaine. Vol. 1. New York: Macmillan Reference, 2004. 838-849. Print.

 

“Vote of Drought States.” Los Angeles Times, 9 Aug. 1936, p. 14.

 

“1936 Conventions.” National Party Conventions 1831-2008. Washington DC: CQ Press, 2010. 116-118. Print.