Dealing with the Great Depression and the New Deal

U.S. History

New Deal Homework Quiz Answer

• Let’s see how we did!!

What was the purpose of the Bank Holiday?

• March 6, 1922: Bank Holiday – proclamation closing every bank in the nation for a few days

• Designed to stop massive withdrawals

• Save the banks!

What actions did Pres. Roosevelt take to improve Banking?

• Examined banks for financial soundness, encouraged people to deposit money, created FDIC

What actions did Pres. Roosevelt take to improve Industry?

• Passed NIRA to stabilize prices and contract with business for public projects

What actions did Pres. Roosevelt take to improve Agriculture?

• Passed AAA to limit production and raise prices

Who was John Maynard Keynes and what impact did he have on the

Great Depression?• John Maynard Keynes – the Government

needs to spend money to encourage investment and consumption.

• This is what Roosevelt did to fight the Depression he put money into the economy through federal loans and government spending

A $100 Dollar Bill

A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in

your pocket easily

Believe it or not, this next little pile is $1 million dollars (100 packets of

$10,000). You could stuff that into a

grocery bag and walk around with it.

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a

standard pallet...

And $1 BILLION dollars... now we're

really getting somewhere...

Next we'll look at ONE TRILLION dollars. This is that number we've been hearing so much about. What is a trillion dollars? Well, it's a

million million. It's a thousand billion. It's a one followed by 12 zeros.

(And notice those pallets are double stacked.)

“I do not believe that the power and duty of the [federal] Government ought to be extended to the relief of individual suffering…The lesson should be constantly enforced that though the people support the Government, the Government should not support the people.”Herbert Hoover

Hoover’s Philosophy

• He characterized the depression as a “temporary halt in the prosperity of a great people.”

• He agreed with what the NY Times advised that “the fundamental prescriptions for recovery [are] such homely [simple] things as savings…and hopeful waiting for the turn.”

• Hoover thought “the way to economic recovery was through individual effort and not from government assistance.

Opposing Direct Relief

• Americans demand relief for the needy (food, clothing, shelter, money)

• “Why are we reduced to poverty and starving and anxiety and sorrow so quickly under your administration as Chief Executor. Can you not find a quicker way of executing us than to starve us to death?”

• Hoover continued to reject the idea of government aid.

Why?

Direct federal relief would:

• create a large bureaucracy in government

• Inflate the federal budget

• Reduce the self-respect of people receiving aid

Hoover’s advice: Lift yourself up through hard work and strength of character – rugged individualism.

Rugged Individualism

• Success comes through individual effort and private enterprise

• Private charities and local communities, not the federal government, could best provide for those in need

• “A voluntary deed,” is infinitely more precious to our national ideas and spirit than a thousandfold poured from the Treasury.”

What Hoover Does

• 1930, Hoover creates the President’s Committee for Unemployment Relief (PCUR)[ Community Chest, Red Cross, Salvation Army, YMCA]

• It collected information about relief agencies and distributed it to Americans interested in aiding the unemployed

• It did very little beyond urging Americans to contribute more to charity

Boosting the Economy

• Presidential Advice from Secretary of Treasury: Andrew Mellon

“Government should keep its hands off the economy. American businesses need to deal with the crisis on their own.” – Laissez-faire Approach

Hoover says something has to be done!!

• Within weeks of the stock market crash (Oct. 1929), Hoover calls a White House conference of top business, labor, and political leaders to discuss solutions to the economic crisis.

• Hoover urged these leaders to voluntarily maintain predepression levels of production, employment, and wages.

Hoover and the Great Depression

Effort Description Effectiveness

Public-works Programs

Poured money into public construction projects such as the Boulder Dam

Failed to affect the entrenched depression

Agricultural efforts

Created the Federal Farm Board; made loans, established cooperatives, and bought surplus goods

Helped some farmers take advantage of cooperatives and avoid foreclosure, but failed to end the farm crisis

Reconstruction Finance Corporation (RFC)

Loaned taxpayer money to stabilize industries

Helped some companies avoid bankruptcy; used money for businesses, not people

Impact

• Hoover’s policies fail to end the Great Depression

• However, his policies did represent a major shift in government policy. The President and Congress accepted the idea that the federal government can and should do something to boost the economy in times of crisis

Impact

• 1932 – President Hoover was perhaps the most hated man in America. His appearance in movie newsreels provoked boos and catcalls from audiences.

• “In Hoover we trusted and now we are busted.”

The 1932nd PsalmE. J. Sullivan wrote the following satire in 1932.

“Hoover is my shepherd, I am in want,He maketh me to lie down on park benches,

He leadeth me by still factories,He restoreth my doubt in the

Republican Party.He guided me in the path of theUnemployed for his party’sake,

Yea, though I walk through the alley of the soup kitchens,I am hungry.

I do not fear evil, for thou art against me;Thy Cabinet and thy Senate, they do discomfort me;

Thou didst prepare a reduction in my wages;In the presence of my creditors thou anointed my income with taxes,

So my expense overruneth my income.Surely proverty and hard times will follow meAll the days of the Republican administration.

And I shall dwell in a rented house forever.Amen.”

Source: McElvaine, Robert. The Depression and New Deal: A History in Documents, page 28.

Election of 1932

• Republicans reluctantly renominate Herbert Hoover (no one else wanted the nomination)

• Democrats nominate N.Y. Governor Franklin D. Roosevelt (FDR)

FDR

• Distant cousin of Theodore Roosevelt

• Married to TR’s niece Eleanor Roosevelt

• Believed in progressive and social reform

• Vice Presidential Candidate in 1920

• 1921: Polio paralyzes him from the waist down

• 1928: Governor of N.Y. overcomes physical challenges

FDR

As Governor of N.Y.:

• Relief programs

• Instituted unemployment benefits

• Supported failing industries

FDR for President

“Republican leaders not only have failed in material things, they have failed in national vision, because in disaster they have held out no hope…I pledge you, I pledge myself, to a new deal for the American people.”

Franklin D. Roosevelt

The Election of 1932

Candidate (Party)

Electoral Vote

Popular Vote

Roosevelt (Democratic)

472 (88.9%)

22,809,638 (59.1%)

Hoover (Republican)

59 (11.1%)

15,758,901 (40.5%)

FDR Wins!!

• Roosevelt: 42 states, 23 million popular votes, 472 electoral votes

• Hoover: 16 million popular votes, 59 electoral votes

• Additionally, the Democrats win majorities in both houses of Congress

President Franklin D. Roosevelt

“The whole country is with him, just so he does something. If he burned down the Capitol, we would cheer and say, “Well, we at least got a fire started anyhow.”

Will Rogers

First Inaugural Address

“First of all, let me assert my firm belief that the only thing we have to fear is fear itself – nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days….”The people of the U.S. have not failed. In their need they have registered a mandate that they want direct, vigorous action. They have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it.”

Question

What words or phrases does Roosevelt use to inspire confidence?

That New Deal

Roosevelt Confronts Emergency

• 1932, while campaigning for the Presidency, Roosevelt formed an advisory group known as the Brain Trust.

• They develop the “New Deal”

• 15 relief and recovery programs

Inaugural Address

• Roosevelt told the nation that a “temporary departure” from the “normal balance of executive and legislative authority” might be necessary. If needed the President would ask Congress for “broad executive power to wage a war against the emergency.”

• March 15, 1933 Roosevelt calls a special session of Congress in which all 15 programs of the New Deal are passed – in 100 days.

Banking Reform

• March 6, 1922: Bank Holiday – proclamation closing every bank in the nation for a few days

• Designed to stop massive withdrawals

• March 9, 1933: Emergency Banking Act – authorized the federal government to examine all banks and allow those that were financially sound to reopen

Fireside Chats

• March 12, 1933, President Roosevelt addresses the nation on the radio on the first of many “fireside chats”

• Roosevelt asks the people to reinvest in banks, explaining how the people’s money is now safe in the bank

• It worked! By the end of 1 Month $1 Billion is back into banks – consumer confidence is restored!

More Banking Reform

• Federal Deposit Insurance Corporation (FDIC) – June 1933

• Insured each bank deposit up to $5,000 [up to $100,000 today]

Home Owners Loan Corporation

HOLC formed to assist home owners who could not meet their mortgage payments.

June 1936, HOLC had saved the homes of 1 million American Families with low – interest, long term mortgage loans

Helping the Farmers

• 1933, Executive Order from the President – creates the Farm Credit Administration (FCA)

• Provided low-interest, long-term loans to farmers

• Allowed farmers to pay off mortgages and back taxes, buy back farms, purchase seed and farm equipment

Relief for the Needy – Help!

How to help 13 million unemployed?• May 1933, Federal Emergency Relief

Administration (FERA)• Created to distribute $500 million in relief

aid to state and local agencies – at least half of FERA’s money went to states for direct distribution to needy families

• 8 million American families receive public assistance

But…People don’t just want a handout – they want jobs!

• Civil Works Administration (CWA)

• Created federal, state, and local “make-work” projects (raking leaves, picking up park litter, etc.)

• 1933-34, CWA paid more than $740 million in wages to 4 million men & women.

Unemployed Young men 18-25

Civilian Conservation Corps (CCC), 1933

• 250,000 young men left their homes for army camps for CCC training

• They planed trees, created park trails, developed campgrounds

• $30/month – money sent back mostly to their families

Question

• In what ways did FERA, the CWA, and the CCC, provide different types of relief?

Helping the Nation Recover

• Economic Relief = short-term remedy

• Economic Recovery = long-term goal

• How? Reform business practices!

Business Reform

Federal Securities Act – created the Securities and Exchange Commission (SEC)

• Regulates companies that sell stocks and bonds.

“Priming the Pump”

• Put money into the economy through federal loans and government spending

• Idea from John Maynard Keynes – the Government needs to spend money to encourage investment and consumption.

How?

National Industrial Recovery Act (NIRA), 1933

• Stimulates industrial and business activity and reduces unemployment

• Stabilizes prices, raising wages, limiting work hours, providing jobs

NIRA creates to do this:

Public Works Administration (PWA)• Uses federal funds to contract businesses to

build roads, public buildings, and other public works projects

National Recovery Administration (NRA)• Encourages businesses to draw up “codes of

fair competition.” Under these codes, businesses agreed to work together to set hours, prices, production levels, and wages.

NIRA conti.

• To help protect labor, the NIRA also guarantees workers the “right to organize and bargain collectively through representatives of their own choosing”

• Problems: NIRA not popular since many companies ignored the codes, it kept workers pay down, and prices up

• 1935, Supreme Court declared it unconstitutional

Agricultural Recovery

To help farming, Roosevelt asked farmers to cut production – believing that this would cause the price of agricultural goods and farmers purchasing power to rise

Legislation

Agricultural Adjustment Administration (AAA), May 1933

• Paid farmers to reduce their output of corn, cotton, dairy products, hogs, rice, tobacco, wheat, etc.

• This increased the income of farmers, decreased the amount of agricultural goods, but also increased prices for consumers

Supreme Court Again

• 1936, the Supreme Court strikes down the AAA, reflecting the courts attitude against New Deal Legislation

Revitalizing a Region

Largest New Deal Program was the Tennessee Valley Authority (TVA) program, May 1933.

• Purpose to aid a rural 7 state region that was scarred by deforestation and flooding. Disease, illiteracy, malnutrition, and poverty affected 2 million people

TVA Goals for the Tennessee River Valley

• Provide Electricity

• Combat malaria

• Combat illiteracy

• Provide flood control

• Provide recreational facilities

• Improve standard of living

• Combat soil erosion

Problems Continue

“President Roosevelt was elected on November 8, 1932…This is January 1935. We are in our third year of the Roosevelt depression, with the conditions growing worse…We must become awakened! We must know the truth and speak the truth. There is no use to wait three more years. It is not Roosevelt or ruin; it is Roosevelt’s ruin.”

Criticism of the New Deal from the Left

• Father Coughlin – wanted the government to nationalize banks and return to the silver standard

• Francis Townsend – wanted the government to grant a pension of $200 a month to Americans over 60 years old

• Huey Long – wanted the Share Our Wealth program

Criticism of the New Deal from the Right

• American Liberty League/ Al Smith – claimed New Deal measures were destroying the Constitution and free enterprise; accused New Deal supporters of “irresponsible ravings against millionaires and big business.”

The Second New Deal

• Increased emphasis on long-term reform

• Roosevelt continues strong with more seats in Congress for the Democratic Party

• More reforms!

Works Progress Administration (WPA)

• Designed to help Americans find work

• $5 billion for WPA jobs

• 8.5 million employed

• Built or rebuilt 350 airports, 100,000 public buildings, 78,000 bridges, and 500,000 miles of roads.

National Youth Administration (NYA)

• Provided high school and college age Americans with part-time jobs that allowed them to stay in school

Social Security – Social Security Act, Aug. 1935

3 provisions:

• Provided unemployment insurance to workers who lost jobs

• Provided pensions to retired workers older than 65

• Provided payments to people with disabilities, the elderly, and wives and children of male workers who died

Rural Electrification Administration (REA)

• Provided electricity to isolated rural areas

Revenue Act of 1935 – Wealth Tax Act

• Raised taxes for the nation’s richest people

Election of 1935

Franklin D. Roosevelt vs. Alfred M. Landon

• Roosevelt: 28 million popular votes and every state but Maine and Vermont

• Landon: 17 million popular votes

• Roosevelt Wins!!

Evaluating the New Deal

Read pp.485-486

• How did critics and supporters evaluate the New Deal?

• How did New Deal programs address both physical and psychological needs of Americans?

• What do you think? Was the New Deal successful? Explain your answer.

How did critics and supporters evaluate the New Deal?

• Critics said the New Deal created a welfare state, but supporters argued that the programs were necessary to help Americans survive the Depression.

How did New Deal programs address both physical and

psychological needs of Americans?• The programs provided money and food

but also allowed people to work for these benefits, thus giving the recipients a sense of meaning and accomplishment.

The Wagner Act (NLRA)The National Labor Relations Act (NLRA) guaranteed workers the right to join unions without fear of management reprisal.  It created the National Labor Relations Board (NLRB) to enforce this right and prohibited employers from committing unfair labor practices that might discourage organizing or prevent workers from negotiating a union contract.

Key Provisions

Section 7

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid and protection. It protects employees who take part in grievances, on-the-job protests, picketing, and strikes.

Section 8

Five types of conduct are made illegal:Employer interference, restraint, or coercion directed against union or collective activity Employer domination of unions Employer discrimination against employees who take part in union or collective activities Employer retaliation for filing unfair-labor-practice charges or cooperating with the NLRB Employer refusal to bargain in good faith with union representatives

1930

1932

1934

1936

1938

1940

Union Members (in millions)

1

2

3

4

5

6

7

8

9

Impact of the Wagner ActSource 1:

Fireside Chat

President Roosevelt’s Fireside Chat, March 9, 1937

“What is my proposal? It is simply this: Whenever a judge or justice of any Federal court has reached the age of 70 and does not avail himself of the opportunity to retire on a pension, a new member shall be appointed by the President then in office, with the approval, as required by the Constitution of the Senate of the United States.”“The number of judges to be appointed would depend wholly on the decision of present judges now over 70 or those who would subsequently reach the age of 70.”“ If, for instance, any one of the six justices of the Supreme Court now over the age of 70 should retire as provided under the plan, no additional place would be created.….”

Source: Franklin D. Roosevelt Presidential Library and Museum, http://www.fdrlibrary.marist.edu/firesi90.html