More than the New Deal: Ohio State Finance During the Great Depression

Abstract

Individual states varied in their responses to the Great Depression and federal New Deal programs, and these reactions affected the success of relief efforts. A combined historical and data-based econometric approach is employed to characterize the impact of state policies on outcomes. At first, Ohio relied on charity and local governments rather than state public assistance. The state legislature was divided between rural and urban interests and few taxation mechanisms existed. Eventually, use and sales taxes were imposed, though income taxes did not prove feasible. Political squabbles and the resurgence of the Republican party somewhat derailed state relief efforts, leaving many areas dependent on New Deal programs until the national recovery took hold. State-reported data and federal statistics were used to generate four initial econometric models of per capita state revenue. The effects of real per capita state income, real per capita federal tax revenue, per capita auto registrations, and percent of democratic representatives in the state legislature’s lower house were statistically significant in at least one model, while those for the mean democratic vote percent in presidential elections from 1896 up to the most recent election and real per capita federal grants to states were not.