The economic crisis of the 1930s revealed serious weaknesses in the U.S. economy. Herbert Hoover was hampered by the concept of limited power in economic matters so it was up to local governments and charities to provide temporary relief. Texas was not immune to the rock-bottom market prices, unequally distributed resources, and struggling railroad, textile, and coal industries impacting the nation.

Texans Confront the Depression, 1929 – 1935

The Great Depression impacted regions and states in distinct ways. All Texas cities instituted austerity programs, fired married women, cut teachers’ salaries, reduced appropriations for public education, eliminated some urban services, and froze employee salaries. Some cities took even stronger measures. To conserve resources for “deserving” whites, Houston refused to provide relief to blacks and Mexicans. By 1932, most Texas civic leaders warned that they could not continue relief efforts.

Once jobs grew scarce, white men came first. The inadequacies of local resources were revealed in dwindling tax revenues, falling property values, decreases in the prices of cotton or oil, and the large increase in the number of unemployed. Ross Sterling, a business progressive with substantial personal wealth, easily defeated Miriam “Ma” Ferguson in a run-off election. Despite four special sessions called by Sterling, the 1931 legislature failed to act. Fortunately, Franklin D. Roosevelt was able to work around the concept of “rugged individualism” that had prevented Hoover from confronting the crisis.

Oil, Agriculture and “Fergusonism”

However, Texas found itself in a unique situation. The East Texas oil boom occurred in the early years of the Great Depression, offering some relief to the poorest part of the state through an explosion of jobs and a sudden increase in land prices. The Railroad Commission, authorized to establish maximum amounts of oil that could be pumped, did not act fast enough to prevent major companies from controlling the refineries in the state. As a result, the price of oil dropped considerably. Nonetheless, a handful of Texas oilmen amassed enormous fortunes.

Sterling’s two terms were marked by hostility over the “hot oil” issue and heightened economic distress that significantly impacted small and marginal farmers in North and East Texas. Both state and federal governments attempted to control the marketing of cotton in order to keep it off of the market until prices stabilized, but national and state opposition surfaced — shippers, merchants, ginners, and manufacturers would also be impacted negatively. Sterling called a special legislative session in September of 1931. Huey P. Long’s “drop a crop” plan, proposed at an earlier governors’ conference, was rejected as having too significant an impact on Texas’ extensive production. The legislature did, however, limit cotton acreage in 1932 to 30% of that cultivated in 1931. Only three other southern states passed similar acts.

Miriam “Ma” Ferguson challenged Sterling for the Democratic nomination in 1932. Although Sterling asserted that fraudulent election returns had ensured Ferguson’s nomination, she easily defeated the Republican nominee in the general election based on strong support in East Texas. Her second administration coincided with Franklin Roosevelt’s first two years in office. Texas faced a $14 million debt, lacking resources to meet the crisis. Ferguson endorsed early New Deal legislation, including federal control of the price of oil. Creating the Texas Relief Commission  to distribute funds from the Reconstruction Finance Corporation, assertive national action would soon prevail, complicating any local actions.

Unfortunately, charges of corruption surfaced once again. Critics charged an overall disdain for law and order as seen in Ferguson’s previous policy of generously pardoning convicts and her dismissal of forty-four Rangers to replace them with men of “dubious character.” Establishing a venue for political patronage, she created a new “Special Ranger” commission (distributed to 2,344 men).

The New Deal and Texas

Texans held significant positions in Roosevelt’s administration as they had in Woodrow Wilson’s. Franklin Roosevelt won the southern vote with a Texan as his running mate ― John Nance Garner, former Speaker of the House of Representatives. Although Garner eventually broke with FDR, he remained a life-long Democrat. Even more influential than Garner was Jesse H. Jones of Houston as head of the Reconstruction Finance Corporation (RFC) and other economic posts until 1945. The role of the RFC changed—it now loaned money to banks and bought up their preferred stock to establish more stable banks. The Federal Reserve System controlled interest rates, and government regulation separated investment and commercial banking. Public confidence was restored and financial stability ensued.

Other ardent New Dealers included Maury Maverick, administrator of one of the wartime mobilization agencies; Wright Patman, progressive reformer; and Lyndon B. Johnson, youngest New Deal state agency head (National Youth Administration). Although a vigorous opponent of the New Deal, Martin Dies of Orange headed the House Un-American Activities Committee.

The National Recovery Administration price codes affected Texas primarily as they applied to “Hot Oil” production. More important to Texans were the minimum wage standards and the guaranteed right to collective bargaining. Even though labor unionization never gained great strength, the Congress of Industrial Organization (CIO) organized among the Gulf Coast refineries and defense industries in spite of the anti-union bias. The modern Texas infrastructure began with the Public Works Administration (PWA), but thousands more found employment in the Works Progress Administration (WPA). FDR’s favorite New Deal program, the Civilian Conservation Corps (CCC), provided full-time jobs in reforestation, flood and erosion control, building of public structures, and sewage and water treatment systems. A youthful Lyndon Baines Johnson headed the National Youth Administration (NYA) that provided part-time jobs to needy high school, undergraduate, and graduate students. The majority of jobs went to white males, but many Hispanic Texans were hired and substantially fewer African Americans.

Eighty-nine percent of Texans voted for FDR in 1932, even before the New Deal was off the ground. The Agricultural Adjustment Act (AAA) paid subsidies to farmers who took land out of production in order to stabilize farm market prices through government control. Before the AAA was declared unconstitutional in 1936, Texans signed considerably more crop-reduction contracts than their counterparts in other states. Texans promptly complied with passage of the new AAA act of 1938 by diverting 4 million acres out of production, three times that of any other state.

Another significant gain was the Rural Electrification Administration (REA) that helped electric cooperatives string power lines to isolated rural areas. The REA was significant in moving Texas farmers into the modern era. Overall, New Deal programs pumped $716, 694,849 into the state economy from March 4, 1933 to January 1, 1938. Only New York, Pennsylvania and Illinois received more.

Some New Deal programs, however, negatively impacted minorities. The number of African American tenant farmers in Texas decreased by 50% as a result of farm programs that encouraged taking land out of production, reducing credit and mechanizing. However, the number of black agricultural laborers rose by 25,000 and some 20,000 left the state looking for better job opportunities. Unfortunately, local relief agencies placed blacks only in unskilled jobs and the Federal Housing Authority guaranteed loans only in segregated areas for blacks.

However, a growing political awareness was taking hold. Black leaders, led by the Dallas and Houston chapters of the NAACP, decided to challenge Texas’ all-white primary law. In 1944 the Supreme Court ruled the white primary was unconstitutional in Smith v. Allwright.

Although the economic downturn checked the flow of immigration, New Deal programs were withheld from those who could not prove their American citizenship. In fact, the 1930s were years of massive deportation and repatriation drives, sometimes voluntary but often forced.  Mexicans and their American-born children were ousted from the rural regions of Texas. An estimated 250,000 Texas Mexicans relocated to Mexico. Some who stayed in Texas joined labor unions to protest subsistence salaries and deplorable working conditions. In San Antonio, Emma Tenayuca, labor organizer for the Workers Alliance of America, led pecan shellers on a 1938 strike. Although they won some concessions, the factory owners dealt the final blow by mechanizing the industry.

Texas Mexicans also gained a political voice with the founding of The League of United Latin American Citizens in 1929. The first legal challenge to the segregation of Mexican American schoolchildren came in 1930 with Del Rio Independent School District v. Salvatierra. Even though the Court ruled that school authorities could not segregate students simply because they were Mexican American, the school districts countered that the language barrier justified separation.

State and National Politics, 1935 – 1938

The Great Depression dominated state politics, including the 1935 gubernatorial race in Texas. James V. Allred, firmly identified with the Roosevelt administration, established the Texas Planning Board to guide the legislature in coordinating state efforts with New Deal relief funds. His major accomplishment was the reorganization of the Texas Rangers and the Highway Department into the Department of Public Safety. Allred’s second term was hindered by ever-increasing financial burdens. He called several special sessions of the legislature but no agreement was reached on the issue of taxes, aid to the elderly, and prohibition.

On the national level, conservatives railed over the increasing power of the federal government and the undermining of traditional American values of self-help and individual responsibility. Liberals, on the other hand, pointed out how much more the federal government could be doing to provide relief. In order to appease the latter, the Wagner Act barring unfair labor practices was permanently implemented in a state that did not favor unionization. Although a civil rights direction was mostly outward show and some New Deal programs imposed racial and ethnic inequities, the Democratic party gained strength throughout the South. Mexican Americans remained affiliated with the party, and blacks executed an almost complete transfer of allegiance from Lincoln’s party to FDR’s.

FDR’s “court-packing” scheme (1936) and an antilynching bill (1937) threatened traditional southern race relations even more. The growing power of the Congress of Industrial Organization and more “pump priming” due to the recession of 1937 also added to conservative discontent. Maury Maverick, FDR’s strongest advocate in the state, was defeated at the polls, reflecting changing attitudes as conservatives won control of the state and national government.  FDR’s progressive social legislation came to a stalemate in the late 1930s.

The End of the New Deal in Texas

Confusion reigned during the gubernatorial campaign of 1938. Thirteen candidates sought the seat; but W. Lee “Pappy” O’Daniel, known around the state for his radio show featuring O’Daniel and the Light Crust Doughboys, a hillbilly band, won the race. Eventually, O’Daniel’s platform included abolition of the poll tax, opposition to capital punishment, state assistance for all elderly persons, and a promise of no sales taxes. his accomplishments were minimal; the legislature did not address the long-term problem of the source of state revenue but eventually compromised on the Morris Omnibus Tax Bill that increased taxes on the gross receipts of some businesses as well as on oil and gas and tobacco.

O’Daniel’s anti-union stance coincided with an upsurge in conservativism. Promising to introduce antistrike legislation once elected to Congress, O’Daniel ran for the congressional seat opposing the young and dedicated New Dealer, Lyndon B. Johnson. Johnson believed that his defeat by a little more than 1,000 votes was the result of illicit returns. O’Daniel served one regular Senate term and had a worse record than that as governor. However, he was a popular figure, carefully cultivating an antiestablishment country bumpkin image and using his camp-meeting campaigns to reinforce voters’ perceptions of him as a good, honest and down-to-earth man representing those who had no voice in state politics. He also capitalized on the conservative discontent with organized labor and the New Deal, symbolizing the end of the New Deal in Texas.