The Dawn of the Great Depression
In the United States, the stock market crash of October 1929 sent the economy into a complete freefall. Lack of capital investment and an effective monetary policy left many Americans struggling with bank runs, bread lines, and crippling unemployment. Indiana, whose last ten years had seen expansive economic growth, also felt the ripple effects of the Great Depression. Specifically, many major cities in the Hoosier state were not immune. In LaPorte, Indiana, unemployment assistance requests also increased, from “$60,000 for the last three months of 1931…,” to “$…112,590 for the first quarter of 1932.” LaPorte County even authorized over $500,000 in bond sales in 1932 to provide relief for the unemployed.
This was a common practice during the early years of the Great Depression; President Herbert Hoover insisted on state and local governments as the remedy for unemployment. Fort Wayne, like LaPorte, also set up a localized system of recovery resources called the Greater Fort Wayne Development Corporation (GFWC). The GFWC acted as a land purchaser and lender of last resort to failing businesses in the city, and along with the Allen County Emergency Unemployment Committee (ACEUC), helped stave off further economic hardships in the region during the depression. Like many states during the early years, Indiana kept its governmental programs local and largely private.
In the years 1929-1932, the Indiana General Assembly did little by way of direct aid to alleviate the crippling unemployment and poverty brought on the Great Depression. However, to say that they did nothing would be misleading. Many reforms of the late 1920s, particularly the beginnings of a state-wide road system and the state Budget Committee, created the governmental infrastructure necessary to both fund and implement large-scale government projects. 1925 saw the state’s largest budget and, by 1929, highway construction amounted to 37 percent of the Indiana state budget. Indiana’s Department of Conservation, formed a generation before, ran seven state parks with massive budgetary requirements by the end of the 1920s. Even though the legislature enacted some reforms, unemployment in the state reached nearly unprecedented levels by 1933. Jobless benefits in October of 1933 comprised 9.2% of the total Indiana population, or 503,076 persons. The state and its legislature had to address some of these destructive forces of the Great Depression. Under the leadership of Governor Paul V. McNutt and the Democratic-led General Assembly, they did just that.
The McNutt Era (1933-1937)
Indiana’s government is generally typified by a weaker executive and a stronger legislative branch. However, two key eras of its history reversed that paradigm. The first was the Civil War under Governor Oliver P. Morton and the second was the governorship of Paul V. McNutt. Known as the “nation’s most powerful Governor,” McNutt oversaw an expansion of state government that Indiana had ever seen, before or since. Democrats had a powerful hold on state government after the Republican scandals of the 1920s, culminating in the 1932 elections. Rarely has a governor been given such an electoral mandate. As historian James H. Madison notes, “Democrats won 91 of 100 seats in the Indiana House of Representatives, 43 of 50 in the Indiana Senate, and all 12 congressional seats.” At the heart of McNutt’s philosophy of government laid a commitment to what historian Dean Kotlowski called “security,” which came in social, political, and especially economic forms. This commitment certainly influenced the actions of McNutt and the Indiana General Assembly. Between 1933 and 1935, the state government passed a whole slew of reforms tailored to face the economic realities of the Great Depression.
This period brought several major reforms, most coming out of what was described as the “bill factory,” a group of unelected advisors (mostly former legislators) that helped craft McNutt’s governmental vision. From this group came many of his reforms, including the repeal of Indiana’s prohibition laws, an income tax reform bill, and a law known as the “Executive Reorganization Act,” which gave the governor control over patronage jobs and streamlined state government offices. The Great Depression also pushed the legislature to create an old-age pension system for citizens of the state, which served as a precursor to the National system known as Social Security. Banking reform also came to the state in 1933, which insured banks would be reopened, failed banks would be liquidated, and all banks be overseen by a new agency, the Department of Financial Institutions. The 1933 session was McNutt’s crowning achievement, and while many other reforms came during the 1935 session, it began to slow down after the Democrats lost their two-thirds majorities in both the House and the Senate. During the later years of his term, McNutt continued to support the New Deal, ensuring that Indiana would be one of the first states to support Social Security and also secured short-term jobs through state and federal infrastructure projects. Paul McNutt’s time as Governor, alongside the Indiana General Assembly, provided many Hoosiers from relief from the Great Depression while simultaneously changing the structure and purpose of Indiana state government.
After McNutt’s time as Governor, the state government under Governor M. Clifford Townsend pledged to continue McNutt’s course, although in a more tempered form. However, the midterms of 1938 ensured Republican victories and a scale back of some of McNutt’s reforms. The patronage system developed by McNutt spiraled out of control, and by 1939, Republicans in the Indiana House of Representatives wanted to impeach then-Governor M. Clifford Townsend for executive overreach. While the plan failed, it showed that the era of McNutt and his political control over the state was not always met with support. In 1941, Indiana Governor Henry Schricker fought for the Executive Reorganization Act and its patronage powers and won, stopping a proposed bill that would limit his authority. Schricker’s grace and political acumen left much of McNutt’s governmental legacy intact, with serious reorganization efforts stalled until the 1960s. Overall, the era after the New Deal saw a splintering of support within the Democratic Party and a renewed vigor in the Republicans within the General Assembly, especially after they accepted some of the New Deal’s reforms.
- Roberta Nicholson
Roberta Nicholson was one of the most remarkable persons to have ever served in the Indiana General Assembly, and her impact on the role of women in Indiana government and public life is profound. Born January 17, 1903 in Cincinnati, OH, Nicholson was born into privilege, yet “devoted herself to fighting injustice wherever she perceived it.” Nicholson was a liberal champion and ardent feminist, generations before the movement became more established. She helped found the first birth control clinic in the city of Indianapolis in 1931 and served a director of Marion County League of Women Voters before being elected to the Indiana General Assembly in 1934. As the only woman of the 1935 session, her pet issue was a law that would “abolish civil cases of action for alienation of affections,” which basically would outlaw the suing of an extra-marital partner in the event of a divorce. Her shrewd political management of the bill, particularly with Lieutenant Governor M. Clifford Townsend, ensured its passage into law during the session. After her time in the legislature, she worked to abolish race restrictions on soldier recreational areas in Indianapolis during World War II and served as the head of the Indianapolis branch of Planned Parenthood. Roberta Nicholson was one of Governor Paul McNutt’s ardent supporters and a woman far ahead of her time, both in political and social life of the state.
- Chester Perkins
As a counterpoint to Nicholson’s liberalism, Chester Perkins openly opposed McNutt’s policies and took drastic steps to make his opposition known. Born January 3, 1881 in Portage Township, Indiana, Perkins lived all over the country in his early years until he settled down in South Bend, Indiana in 1919. He was a proprietor of many businesses, mostly construction, contracting, and also spent time as a realtor. First elected to the Indiana State Senate as a Democrat in 1922, Perkins went on to serve in the General Assembly for ten years. When McNutt and the progressive Democrats were at the height of their power in 1933, Perkins remained a stalwart conservative who stood against all their reforms. He especially disliked the Governor’s new tax plan, and when it passed on February 25, 1933, Perkins resigned. He argued that he could no longer represent his constituents effectively and that McNutt’s governorship and the General Assembly’s actions were unlawful and violated the Indiana Constitution. While McNutt may have enjoyed praise and support for many of his reforms, Perkins’s own dedication to principles stood out among his peers.
 George W. Boudreau, “Memory, Identity, and Heritage in the Great Depression The LaPorte, Indiana, Centennial of 1932 as a Case Study,” Indiana Magazine of History 103, no. 2 (June 2007), 156.
 Iwan Morgan, “Fort Wayne and the Great Depression: The Early Years, 1929-1933,” Indiana Magazine of History 80, no. 2 (June 1984), 122.
 Ibid, 124.
 Ibid, 127.
 Federal Emergency Relief Administration, Unemployment Relief Census, October 1933 (Washington DC: Government Printing Office, 1934), 12.
 James H. Madison, Hoosiers: A New History of Indiana (Bloomington: Indiana University Press, 2014), 257.
 Dean J. Kotlowski, Paul V. McNutt and the Age of FDR (Bloomington: Indiana University Press, 2015), 43-44, Ebook.
 Justin E. Walsh, The Centennial History of the Indiana General Assembly, 1816-1978 (Indianapolis, Indiana Historical Bureau, 1987), 443.
 Ibid, 444.
 Ibid, 446.
 Madison, Hoosiers, 258-239.
 Walsh, Centennial History, 484.
 Ibid, 579.
 Ibid, 280.
 Charles W. Calhoun, Alan F. January, Elizabeth Shanahan-Shoemaker and Rebecca Shepherd, A Biographical Directory of the Indiana General Assembly, Volume 2: 1901-1984 (Indianapolis, Indiana Historical Bureau, 1980), 331.
 Justin E. Walsh, The Centennial History of the Indiana General Assembly, 1816-1978 (Indianapolis, Indiana Historical Bureau, 1987), 579