The crisis, which took place in the United States in the early 1930s, brought unemployment and a drop in the standard of living of Americans. Only in 1930, industrial production fell by 25 per cent. In 1933, the country’s GDP fell by 45 per cent compared to 1929, to 56.4 billion dollars. Unemployment reached 25 per cent.
The crisis also hit the transport industry. The decline in rail transport was the strongest, but car carriers also felt the taste of the crisis. Already functioning carriers complained that there were no restrictions on entering the profession.
President Roosevelt had a solution for difficult times: the liquidation of competition through price regulation (in the form of the National Recovery Administration, which imposed minimum wages and weekly working hours on the economy) and public investments. In 1933, as soon as he took over the government, at the request of Roosevelt, Congress agreed to spend 3.3 billion dollars on public works, and two years later he added 4.9 billion.
Roosevelt imposed restrictions on the economy and subjected the state administration control market. One of the most bizarre actions was “Executive Regulation 6102”, which ordered all US citizens to hand over their gold to a federal bank. The state paid the owners 20.67 dollars per ounce of gold and thousands of tons of gold were stored in the newly erected Fort Knox. Those who opposed the government risked 10 years in prison or receive 10,000 dollars fine. Only one case is known when the owner of 160 kg of gold refused to sell the metal to the government. He did not make it to the prison, but he lost the investment.
The US Supreme Court unanimously recognized in 1935 that the NRA was an unconstitutional solution and abolished this agency. The government reacted with a new law that encouraged workers to form trade unions.
Businessmen were also united. Combined on October 1, 1933, the American Highway Freight Association and Federated Truck Associations of America created American Trucking Association and prepared a set of requirements that should be met by entrepreneurs planning to enter the industry.
Remedy for the crisis
As part of the Roosevelt New Deal, the government encouraged trade unions and limited entry to various professions, supporting corporatism. In 1935, the Federal Motor Carrier Act came into force, which imposed on carriers of goods the obligation to obtain a transport license for specific lines. Already operating carriers, if they could prove earlier transport (which was not so easy), received licenses, while the new ones mostly did not. Licenses were issued by the Interstate Commerce Commission. The new act unified rates and facilitated the functioning of the majority of 78 thousand carriers who have registered in the commission.
The United States Congress created the Interstate Commerce Commission in 1887 to regulate the rail market. It was the first government agency of this type in the United States. ICC was created as a result of the pressure of farmers demanding protection from railway companies, which imposed very high prices for food transport.
Because state legislation turned out to be insufficient, the farmers managed to secure their interests at the federal level thanks to the establishment of the ICC. The new agency began by advising Congress, but at the beginning of the 20th century, it already supervised the railway oligopoly independently. Until 1940, she controlled the rates of all modes of transport, including air transport.
In the next episode of History of transport in Trans.INFO:
Where the speed limits, the tonnage of trucks and the taxes imposed on them came from?
Previous episodes:
How the railway lost its orders for transport for the benefit of trucks
Why the hump yards were too expensive for the railways
How trucks broke railway monopoly
How clever company president persuaded carriers to use pneumatic tyres
Through the continent without a flat tyre
Where did the idea of three-axle trucks come from?
Golden years of steam locomotive
Where did the car transport licenses come from?
How car transport has become a political issue
How construction of motorways contributed to eradication of unemployment in Germany