The Great Depression and the New Deal

1933-1939

I. FDR: Politician in a Wheelchair 1932 – Republicans re-nominate

Hoover and the Democrats nominated an up and coming NY governor Franklin D. Roosevelt

Roosevelt from a wealthy NY family, distant cousin of TR

Suffered from paralysis caused by polio that made him tolerant, patient and able to “feel the pain” of the common man

One of his major assets was his wife, Eleanor

She campaigned for her husbands policies, the oppressed and the poor

Was one of the most active first ladies

I. FDR: Politician in a Wheelchair

Political appeal was that he was a great speaker and uplifting confidence

As governor of NY he used the state to relieve the suffering caused by the depression

To dispel doubts about health he vigorously campaigned

Promised to balance budget and sweeping social and economic reforms, although the specifics were vague

Preached a New Deal for the “forgotten man”’ Won the election easily Election of 1932 was the first that African

Americans voted heavily Democratic Election was as much anti-Hoover as pro-

Roosevelt During Hoover’s lame duck months Roosevelt

did little to help out until he took office

III. FDR and the Three R’s Winter after election saw the hard times getting worse,

over 80% of banks were closed During inauguration speech he reassured the American

people and said the government must wage a war to end the depression

“New Deal”, federal gov’t takes more active role in promoting recovery, provides direct relief to individuals

Promoted three R’s –relief, reform and recovery Relief to help immediately Reform- pass legislation so depression would not occur

again Recovery- short and long term goals to improve

economy The First New Deal (1933-1935) was characterized

by relief of the immediate problems of unemployment Roosevelt was a pragmatist rather than an ideologue

and he was open to using many different approached to problems

Acted decisively from the beginning, known as “First 100 days”

Roosevelt relied on a select group of advisers to known as the “Brain Trust”, a group of young reform minded intellectuals that helped author New Deal legislation

III. FDR and the Three R’s First 100 days (March 9-June 16,

1933) cranked out legislation that set Roosevelt’s New Deal in motion, many ideas had progressive roots

Roosevelt introduced idea of president as legislative leader

Insurance for elderly, disabled, unemployed, restriction on child labor and concern for the environment

Congress gave Roosevelt broad powers to fight Depression, any action at all was important to the public confidence

Favored work relief over direct aid First act was to close the banks for

four days, declared nationwide bank holiday

IV. Roosevelt Manages the Money

1933 –Emergency Banking Relief Act- banks called for immediate action, closed for 4 days

Good, solvent banks allowed to reopen, reorganized banks to put financial system on sound footing

Banks put under the control of the Treasury Department Roosevelt gave fist “fireside chat” to reassure public, optimistic

speeches help keep Americans calm during Depression FDR close relationship with press assured positive response for projects Used mass media as tool to promote programs June, Congress created the FDIC, which guaranteed bank deposits of up

to $5,000 At about the same time, the Federal Securities Act was passed to

help strengthen confidence in the stock market--the SEC also created to regulate the stock and bond markets

Roosevelt pushed for managed currency to cause inflation and relieve debt burdens

FDR also officially abandoned the gold standard to help raise stock and commodity prices

To increase government revenue the first steps at repealing prohibition happened

V. Creating Jobs for the Jobless Another urgent priority n 1933 was creating immediate relief for

widespread unemployment Roosevelt used government and Congress to create a number of

programs aimed at relief Used federal money to “prime the pump of the economy March, CCC created to provide useful jobs for young men aged 18-25 3 million men took to woods and fields in national forests, parks, and

recreation areas, and to help with soil conservation projects Pay $30/month,($25 went home) but that was more than many people

got at the time Directed by army officers and foresters, men worked under a semi-

military atmosphere--discipline and living in a camp May, Federal Emergency Relief Administration (FERA) passed,

headed by Harry L. Hopkins (who became the second most powerful person in administration)

Hopkins spent $5 million within 2 hours of taking office FERA aimed at working through states $500 million in FERA funds supported state construction projects--over

5,000 public buildings and 7,000 bridges, organized adult literacy programs, financed college education for poor students, and set up day-care centers for low-income families

Congress passed laws to help ease the acute debt problem for farmers and homeowners--the Farm Credit Administration and the Home Owner's Loan Act--which gave low-interest rates on refinancing mortgages

V. Creating Jobs for the Jobless 1933 Civil Works Administration

established Provided “make work” projects for many

unemployed Americans Improving infrastructure, providing

teachers for schools Program became too expensive and was

abandoned after 4 months 1935- Replaced by Works Progress

Administration (WPA) headed by Hopkins

Built nations roads, dredged rivers, municipal buildings

$5b program Federal Art Project, Federal Writers

Project, Federal Music Project- artists, writers program, set precedent of federal funding for arts

Program ended, accused artists of spreading radical beliefs

Ended in 1943 provided work for over 9 million

VI. A Day for Every DemagogueConservatives- New Deal made

government too powerful (conservatives/ for limited gov’t)

Undermined individualism, free enterprise

Socialists- New Deal did not do enough

Only concern was for banks, business

Socialism: If you own two cows you give one to your neighbor.Communism: You give both cows to the government and the government gives you back some milk.Fascism: You keep both cows, but the government takes your milk, and sells some of it back to you.New Deal: You shoot both cows and milk the government. Republican joke of the 1930s

VI. A Day for Every Demagogue Populist movement seen as voice for poor,

challenge power of elite, capitalized on discontent of Americans

Father Charles Coughlin Catholic priest with radio program broadcast

out of Detroit, large following after turning against Roosevelt, Coughlin tells

his listeners that capitalism is dying, and that a new system based on "social justice" should be created  (not always clear on what "social justice" exactly means)

Coughlin forms the National Union of Social Justice in Nov. 1934

He argues that nation's problems were caused by bankers--and that the banks should be controlled by the national government

Arguments against banks took a steadily increasing anti-Semitic tone as time goes on

Coughlin's support wanes by mid-1935, and he is censured for his political activities by Catholic church

VI. A Day for Every Demagogue Huey Long ("Kingfish") Governor of Louisiana (then U.S. Senator)--very

ambitious, calls for redistribution of American wealth

Starts a Share Our Wealth program in Jan. 1934

Long proposed to: A. liquidate all personal fortunes above a

certain amount B. give every family enough money to buy a

home, an automobile, and a radio C. elderly would receive pensions D. worthy boys would be sent to college E. would establish a minimum wage, shortened

work week, a balanced farm program, and immediate payment of soldiers' bonuses

Long's program drew immense following nationwide--claimed more than 27,000 Share Our Wealth clubs and 7.5 million followers

Long assassinated in 1935--Share Our Wealth continues but declines swiftly

VII. Helping Industry and Labor June 1933 Congress enacted National Industrial

Recovery Act Most far reaching and complex New Deal Act, designed to

help industry, labor, unemployed Two parts- economic recovery and public works projects Most controversial part was the NRA (National

Recovery Administration) It tried to insure minimum wage, maximum hours (more

money to spend, spread out more jobs) Tried to regulate competition and set industry wide codes

that business had to follow, set standard wages and prices, production quotas (rule for “fair competition)

Labor guaranteed to have power to collectively bargain, form unions and organize into unions without interference (did not create adequate enforcement standards)

NRA also launched huge publicity program (Blue Eagle), urging consumers to buy only from companies that adhered to the NRA's codes of conduct

Public Works Administration (PWA), part of the NIRA also approved $3.3 billion dollars for a public-works program to create work for the jobless, pumping money back into the economy

PWA spent $4 billion (in all) on nearly 35,000 projects--constructing dams, bridges, and public buildings (post offices in particular)

VII. Helping Industry and Labor Worked for a time because it was viewed as doing something When economy began to improve many businesses began to criticize

codes, too many competing interests to succeed Many criticized that large companies had more power than smaller ones

(concentration of industry Roosevelt saw a good thing), robbed small companies of a chance to compete

Limiting industrial production discouraged investment Shot down by Supreme Court in the Schechter Poultry Corp. v. United

States, that stated the federal government had no right to regulate commerce in the states

Paved way for National Labor Relations Act (Wagner Act), 1935 Stimulates union growth , requires employers to recognize and bargain

with their employees' unions Establishes the National Labor Relations Board to act as a watchdog

in labor-management relations 1938- Fair Labor Standards Act- set up minimum wage, maximum

hours Wage codes excluded agricultural workers, service workers and

domestic workers (jobs held by women and minorities) Positive legacy- 40 hour workweek, minimum wage, abolition of child

labor, spurred growth of unions, helped stabilize business

VII. Regional Planning New Deal reformers set out to regulate the

huge electric power industry Public utility affected lives of most

Americans Often accused of excessive rates Tennessee Valley region one of the poorest

regions, rural and without electricity in many homes was a perfect place for the New Dealers to experiment

Idea was to develop hydroelectric power 1933- Tennessee Valley Authority

(TVA) established to build 6 dams, bring jobs, help with river navigation, help with environmental conservation, improves industry, schools and mostly to send cheap, government supplied power through the remote valleys

Helped regulate utility rates across country, paved way for electrification of rural America over the next decade

Criticized by some for government entering into private enterprise

VIII. Three R’s for Farmers Low prices because of

overproduction made farming situation desperate

1933 Agricultural Adjustment Administration (AAA) enacted to help farmers

Goal to raise prices through artificial scarcity

Eliminate surplus by giving farmers money to reduce crop acreage, money raised through tax on processors of farm products

Farmers had to plow under crops and destroy livestock (destruction of food when country was hungry)

Brought up commodity prices over the next two years over 50%

VIII. Three R’s for FarmersPaying farmers did actually increase

unemploymentSupreme Court killed program in 1935

declaring taxation provisions unconstitutional

1936 Congress reorganized relief for farmers with Soil Conservation and Domestic Allotment Act omitted processing taxes, provided benefit payments for soil conservation (emphasis on conservation)

1938 Second AAA same as earlier program but left out processing taxes, combination of conservation and not farming

IX. Dust Bowl Southern Plains experienced a decade

long drought during 1930’s Dried soil and wind created huge dust

storms that made life miserable Human development made situation

worse High grain prices pushed farmers into

marginal lands Planted vast acreage with mechanical

plows, and farmed too intensively Disrupted ecology of plains and

loosened soil that blew away during drought

Many families left region Refugees known as Okies, no matter

where they were from Most headed out west- CA, OR, WA-lured

by promise of jobs, did not find them (competition for seasonal work with Latinos, Asians)

Rural states lost population Large farmers bought up cheap

abandoned land at cheap prices, expanded operations

X. Opposition from the Court Court killed many New Deal programs Killed NIRA, AAA Court thought New Deal was upsetting the

balance between the three branches of government

FDR reaction add six new justices to court Critics call plan “court packing”, accused of

upsetting balance of power 1937 for various reasons Supreme Court

begins to rule in favor of New Deal programs

Many older justices begin to retire Replaced with judges more friendly to

Roosevelt Court more willing to expand role of gov’t

for years to come Weakened FDR politically, seen as trying to

make pres. too powerful

XI. 2ND New Deal Despite the challenges from the left and right, FDR remains

popular with most Americans and easily wins reelection in 1936 Reason for FDR's continued popularity comes from a shift in

New Deal policy--what is called the Second New Deal By the middle of 1935, FDR is fed up with his critics in business

and industry--refuses to try and please everyone FDR argues that Second New Deal saves the capitalist system

by "reforming its excesses and addressing its less desirable social consequences”

2nd New Deal focuses on needs of urban and rural poor and the workers, aimed at long term reform and recovery

These new programs greatly expand federal relief efforts to American workers and pump money into economy

Driving idea behind many of Second New Deal programs is deficit spending

Proposed by British economist John Maynard Keynes Federal Deficit 1932- $460 m, 1936 $4.4b Some thought spending was wasteful Roosevelt following Keynesian Economic Theory Government deficit spending/ intervention necessary when

economy is bad Put money in hands of consumers (work, public projects) so

they have money to spend (pump priming)

XII. 2nd New Deal Legislation Improved labor relations through National Labor Relations Act, Fair

Labor Standards Act 1935 Social Security Act- pension system for elderly,

unemployment insurance, insurance for work related accidents, Helped poverty stricken families and disabled, did not cover all equally

(widows, farm workers) Possibly greatest legacy of New Deal Program paid for by tax on earnings (regressive tax because it took

money from pockets of all at fixed rate) Decreased money supply, money was needed to bring us out of

Depression Did not cover domestic workers, self employed, farm workers 1935 Revenue Act - raised tax rates on incomes over

$50,000,created federal estate and gift taxes, established federal tax on corporations

Resettlement Administration (1935) Loans money to small farmers, tenants, and sharecroppers so they can

acquire their own farms on productive land Replaced in 1937 by the Farm Security Administration to make loans to

prevent marginal farmers from sinking further. Rural Electrification Administration (REA)--provides power to rural

America

XIV. Twilight of the New Deal

During first Roosevelt term economy showed signs of recovery

By 1937 economy was slipping again because of Social Security tax and pullback in massive government spending because of concern for balanced budget

This is when Roosevelt really adopted Keynesian economic spending and pushed for massive spending to prevent another depression

1936- Coalition of conservative southern Democrats and Republicans blocks further reform and attacks some of New Deal agencies

1939- FDR and Congress begin to turn attention to foreign affairs--WWII--no new domestic reforms attempted

Revival of economy begins but it did not fully recover until WWII

XV. Women and Minorities Women began to carve a niche for

themselves First woman cabinet Secretary Frances

Perkins (Sec. of Labor) African American woman, Mary McLeod

Bethune, was director of National Youth Administration

Minorities did not fare well under the New Deal, Roosevelt failed to address racism and segregation for fear of alienating Southern Democrats, was not a high priority

Many New Deal programs favored whites or were for whites only (Federal Housing Administration, CCC,TVA all practiced racial segregation)

Minority unemployment as around 50% Many small and tenant farmers were driven

off land by AAA because marginal lands were the first to be cut out of production, also eliminated jobs for migrant workers

XV. Women and Minorities Mexican Americans could not receive

benefits of federal relief because of inability to produce proof of citizenship

Many left and went back to Mexico Native Americans did see some

benefits, tried to reinvigorate tribal lands and autonomy (Indian New Deal)

NAACP did gain some ground in the fight for racial justice

Racial prejudice gained momentum in Scottsboro case in 1931 where nine black youths were accused of raping a white woman in Alabama and the men were denied equal protection under the law (because of all white juries) and received inadequate defense

XVI. Effects of the New Deal Relieved the worst of the financial crisis Changed role between government and citizens, assure minimum level

of well being Gov’t assumed responsibility for caring for sick, poor, elderly, disabled,

unemployed Established principle that gov’t responsible for welfare of Americans Safety net for needy Americans Critics said expansion limited freedoms for Americans Prevented collapse of economic system, allowed people to gain self

respect Purged capitalism of excesses and abuse by few, prevented a more

radical swing to the left First New Deal experimented with managed economy, Second New Deal

enforced competition using government to prime the economy with spending

Changed nature of presidency Executive branch created new federal agencies, large bureaucracy with

little supervision from Congress FDR used presidency to set social, economic agenda FDR used relationship with press assured positive response for projects,

tool to promote programs

XVI. Effects of the New Deal

Expanded role of the federal government Increased size and scope of government Increased regulatory functions New things- taxes taken directly from checks Created foundation for post-war growth Gov’t accepted responsibility for economic growth Restored confidence to financial system Labor laws protected workers, increased economic

power Life improved for rural Americans (REA,TVA)Created a new political coalition Democratic Party gains power Brought together southern whites, northern blue

collar workers, Midwestern farmers, African Americans

African Americans begin to vote Democratic during 1930’s

Democrats majority in both houses of Congress (controlled Congress all but four years 32-95)

Social/ethnic tensions decreased, minorities, immigrants felt part of mainstream culture

Work programs brought diverse groups together

XVII. Culture of the 1930’s Mass entertainment (movies, radio) allowed

Americans to escape worries of Depression By the end of the 1930’s most homes had a

radio National radio networks broadcast comedians

(Bob Hope, Jack Benny), soap operas, series Daily news and commentary People listen each week for their favorite shows FDR used fireside chats to explain ideas

promote New Deal Movies- triumph of the common man, gangster

films show declining faith in government, comedies (Marx Brothers especially) tried to laugh people out of the depression

Movies provided means of escape from everyday worries (Wizard of Oz in 1939)

Comic book heroes become popular (Superman, Dick Tracy, Flash Gordon), showed ordinary people could defeat evil