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HIGH EXPECTATIONS 1929-1932. Chapter 26—Part I. What is a “Depression”?. - PowerPoint PPT Presentation
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HIGH EXPECTATIONS1929-1932
Chapter 26—Part I
What is a “Depression”?
“The Great Depression which followed the [stock market] crash of 1929 was the most
devastating economic blow ever suffered by the nation. It lasted for more than ten years,
dominating every aspect of American life during the 1930s. . . . It left enduring
psychological scars—never again would the Americans who lived through it be quite so
optimistic about their economic future. . . . The Depression led to a profound shift in American
political loyalties.”
The Roots of the Great Depression—The Scorecard
Hoover—Republican presidential candidate in 1928
Hoover “did not view business and government as antagonists. Instead, he saw them as partners, working together to achieve efficiency and affluence for all Americans. His optimistic view of the future led him to declare in his speech accepting the Republican presidential nomination in 1928 that ‘we in America today are nearer to the final triumph over poverty than ever before in the history of any land.”
Al Smith—Democratic Presidential Candidate in 1928
“Smith succeeded for the first time in winning a majority of votes for the Democrats in the nation’s twelve largest cities. A new Democratic electorate was emerging, consisting of Catholics and Jews, Irish and Italians, Poles and Greeks. Now the task was to unite the traditional Democrats of the South and West with the urban voters of the Northeast and Midwest. . . .
“[Smith] symbolized the emergence of the city as the center of twentieth-century American life. An older nation founded on rural values had given way to a new urban society in which the production and use of consumer goods led to a very different lifestyle. Just as nineteenth-century American culture had revolved around the farm and the railroad, modern America focused on the automobile and the city. . . . Only after World War II would the American people finally enjoy an abundance and prosperity rooted in the urban transformation that began in the 1920s.”
On a Roll. . .
Lexicon of the 1920s
• Speculate—purchase of land or stock by an investor at a low price, hoping that the price would rise giving the opportunity to make a quick profit
• On Margin—investor paid only part of purchase price of stock in cash
• Broker borrowed the remainder of the money from banks or corporations
• Margin Call-broker asks investors buying on margin to put up more money to cover their loans on stocks that were now worth less
Financial Indicators in Farming and Industry Pointing to an Economic Slowdown in the 1920s
• Wages of industrial workers failed to keep up with rising costs of goods
• Workers could not purchase the goods that they made • Factories had to lay off workers • As workers lost their jobs, demand for goods fell further
(a vicious cycle) • For farmers, increased supplies of crops kept crop prices
down—a part of an agricultural decline that dated from 1919
• Meanwhile, the expenses of farmers’ increased (vicious cycle again)
Hoover and Smith: Differences in Beliefs and Backgrounds
• Professional engineer• Very popular• Experienced Secretary of
Commerce• Self-made millionaire• Efficiency expert• Humanitarian• Quaker• Believed in rugged individualism
and efficiency• Supported laissez-faire
Al Smith• Four-term governor of New York• Familiar with machine big-city politics• Son of Irish immigrant parents born on
lower side of east Manhattan• Roman Catholic• Lacked good education• Poor grammar with heavy New York
accent• Wanted government to play an active
role• Wanted public ownership of some public
utilities/power companies• Wanted government to aid farmers• Eastern provincial outlook
Smith’s Political Career:
• Subpoena server
• State legislator
• Governor of New York State
Both Smith and Hoover “were self-made men who embodied the American belief in freedom of opportunity and upward mobility. Neither advocated any significant
degree of economic change nor any redistribution of national wealth or power.”
Types of Investment Attracting Investors in the 1920s
• Land
• StocksHow Public Attitudes, Business, and Government Contributed to Conditions Leading to the Stock Market Crash of 1929
The Stock Market Collapse and the Great Depression 25A
• “Black Thursday”—a wave of selling on the New York Stock Exchange. “The great crash in October [29,] 1929 put a sudden and tragic end to the speculative mania.”**
• By 1932, stock prices had fallen to 80% below their 1929 highs. Unemployment stood at 12 million workers or 25% of the American work force. Gross National Product (GNP) fell to 67% of its 1929 level.
How Could this Happen?**
• Public ignored warning signs of coming depression
• Some people gambled on the stock market
• Many banks made risky loans to speculators in the stock market
• The government took no steps to regulate stock market prices
Impact of the Depression 25A
• Durable Goods—products designed to last several years before being replaced
• Business Inventory—quantity of unsold goods on hand
How Economic Relations Between Supply and Demand Became Unbalanced in the
1920s
• Supply greatly exceeded demand in the late 1920s
• Workers didn’t make enough money to purchase the products made by industry
Role of a Weak Banking System in Leading to Economic Collapse
• Banks that had loaned large sums to speculators tried to collect
• Speculators were unable to repay the banks
• Many banks collapsed, went bankrupt
Causes for the Great Depression of the 1930s**
• Excessive speculation in the stock market• U.S. factories produced more goods that American
buyers could consume• Americans could not afford products coming off
the assembly lines—a maldistribution of wealth• Agricultural decline over the previous decade• Corporate mismanagement• Instability of the economic conditions of Europe
Faced with their own economic problems, European banks withdrew money from U. S. banks; a key Vienna
bank failed, and the German economy collapsed
Impact of Massive Unemployment and Grinding Poverty on American Society 25C
• It reduced the standard of living
• It sapped people’s sense of personal worth
• It made homelessness and hunger major social problems
Ironically, the Great Depression had less impact on the poor than the middle class. Poor folk already knew how to exist in the midst of poverty. But depressed economic
condition with no letup in sight was a powerful psychological blow to a middle
class with high expectations, to white collar professionals too proud to ask for
charity. Even the well-to-do had to forfeit many of their traditional luxuries. During the decade, youths dropped out of college
and vagrancy increased.
Searching for a Solution
• Federal Farm Board loaned money to • Aid cooperatives• Buy surplus crops on open market
• Reconstruction Finance Committee (RFC)– Congressional creation of early-1932– Given power to loan money to banks, railroads,
and insurance companies (and later granted power to lend money to local communities for public works projects) to save them from bankruptcy
– Congress gave the RFC the right to lend money to communities for public works programs
“As the Depression deepened, Hoover reluctantly began to move beyond voluntarism to undertake more sweeping
governmental measures.”
The Bonus Army 25C-2
• Some 22,000 ragged, former American soldiers who marched on Washington, D. C. in hopes of persuading the government to grant them their veterans bonus immediately rather than waiting until 1945
• They took up residence in ramshackle huts in Anacosta Flats along the Potomac River
Bonus Army continued. . .
• Hoover authorized General Douglas McArthur to clear out the bonus army**
• The brutality of this operation did Hoover irreparable harm in terms of public relations**
Actions President Hoover Thought He Should Take at Beginning of Depression**
• Voluntarism—essentially inaction—Hoover believed the government should not get involved in helping the economy
• Received wisdom of the day suggested that handouts from the federal government (or elsewhere) would undermine the proud spirit and penchant for hard work that had made America great in the first place.
• Rather, private businesses and charities should step in to feed and clothe those in need
• Bold forecasts of “better days” ahead, of recovery “just around the corner”
• The Republican promise that things would work out in the long run prompted the Democrats’ rejoinder, “People don’t eat in the long run.”
• Hoover invited business leaders to the White House for an economic conference
• He agreed to federal public works projects that used only cash
Failure of Republican leadership or provision of relief to suffering Americans left the door open for a resurrection
of the Democratic Party. Government inaction bred widespread cynicism and mistrust. Under the dynamic, confident, positive leadership of Franklin D. Roosevelt,
the Democrats would get a fresh opportunity to sit in the seats of power and influence.
"As the end of his term approached, President Hoover seemed to grow daily more petulant and pessimistic. . . . His
attitude as the election neared alienated many voters and turned defeat into rout."
Herbert Hoover and Public Opinion After the Stock Market
Crash of 1929
"The whole world was gripped by depression, but as it deepened, Americans began to blame Hoover
for some of the disaster. The president became isolated and bitter. . . . Unable to admit mistakes and to take a new tack, he could not communicate
personal empathy for the poor and the unemployed. . . . He believed that the greatest
problem besetting Americans was a lack of confidence. He could not communicate with these
people or inspire their confidence."
Hoover’s Policy Distinguished by the Four D’s
• Destruction
• Delay
• Deceit
• Despair
Many Americans were demoralized, and rejected "a discredited leader, a man who had been exposed now as cold,
uncaring, doctrinaire, and incapable of acting against the causes of popular
distress.“ The public grew increasingly resentful of the president's doctrinaire adherence to principle while breadlines
lengthened and millions of willing workers searched fruitlessly for jobs."
"When Hoover refused to take measures strong
enough to relieve people's hardships,
voters turned him out of office in the election of
1932."
Franklin Delano Roosevelt—Democratic governor of New York State 26A
FDR, The Man 26A-1&2• From a wealthy New York family, well traveled, schooled, and a
socialite. He had a charming and optimistic personality• Pampered Upbringing**• His mother came from an upper class family and her father had
owned copper lands, coal mines, acreage on New York Harbor, and a fleet of clipper ships
• His father dabbled in Democratic politics, owned a stable of trotting-horses, and lived in leisure on a Hyde Park estate; he was unusually indulgent with Franklin
• Educated at exclusive private Groton School and Harvard University
• “He became a prodigious doer and joiner, with memberships in more than a half-dozen campus clubs. . . . [He wrote] exhortations about 'school spirit' and football morale.“ At Harvard, he moved "'from one extracurricular triumph to another.'"
FDR, The Man continued
• As a child, owned his own pony, a 21 foot sailboat, and went to Europe eight times before entering adolescence
• Studied briefly at Columbia Law School• Local volunteer at Hyde Park fire department• Director of First National Bank of Poughkeepsie• Delegate to 1910 New York Democratic convention• Democratic Mayor of Poughkeepsie, 1910—this earned
him a party nomination for state senator• Elected Democratic state Senator, 1910• Assistant Secretary of Navy during World War I
FDR—A Natural Born Politician 26A-1&2
FDR’s Ambition**"Ambition as much as desire to render public service motivated his
career in politics; even after an attack of polio in 1921 left him badly crippled in both legs, he refused to abandon his hopes for high office." FDR’s polio attack came at his summer home on Campobello Island.
Hofstadter observes, "To be sick and helpless is a humiliating experience. Prolonged illness also carries the hazard of narcissistic self-absorption. It would have been easy for Roosevelt to give up his political aspirations and
retire to the comfortable privacy of Hyde Park. That he refused to relinquish his normal life was testimony to his courage and
determination, and also to the strength of his ambition. From his bed he resumed as many of his affairs as possible. . . . In the long run this siege of infantile paralysis added much to Roosevelt's political appeal. As a
member of the overprivileged class with a classic Groton-Harvard career he had been too much the child of fortune. Now a heroic struggle against
the cruelest kind of adversity made a more poignant success story than the usual rags-to-riches theme; it was also far better adapted to
democratic leadership in a period when people were tired of self-made men and their management of affairs.
There has been much speculation about the effect of Roosevelt's illness upon his sympathies." Frances Perkins, who
knew him both before and after notes that FDR, "a pleasant but somewhat supercilious young man. . . underwent a
'spiritual transformation,' in which he was purged of 'the slightly arrogant attitude' he had occasionally shown before.
She now found him warm-hearted,' and felt that 'he understood the problems of people in trouble." The notion that
FDR "read widely and studied deeply during his illness and developed a firm social outlook that aligned him forever with the underprivileged. . . is not sustained by Roosevelt's history
during the prosperity of the 1920s. His human capacity, enlarged though it probably was, was not crystallized in either
a new philosophy or a heightened interest in reforms."
FDR the Politician**Many considered FDR "rather a lightweight intellectually. . . .
Roosevelt soaked up information and ideas from a
thousand sources. . . . To those seeking specific answers to the
questions of the day, he was seldom satisfying. On such vital matters as farm policy, the tariff, and government spending, he equivocated, contradicted himself, or
remained silent."
After his loss on the Cox-Roosevelt Democratic ticket in 1920 (right), he
returned to private life until becoming a two-term governor of New York State
"His mind. . . . was generous and sensible, but also superficial and complacent."
"Roosevelt proved to be an adept politician. He was not well read, especially on economic matters, but he had the ability to learn from his advisers and yet not be dominated by them. He took ideas, plans, and suggestions from conflicting sources and
combined them."
When running for the Senate in 1910, Roosevelt "conducted a vigorous, unconventional campaign by automobile, ran well ahead of his ticket, and [in spite of the fact that the district had elected only 1 Democrat since 1856] was elected on the
crest of a Democratic wave. In the legislature Roosevelt promptly became a leader among Democratic insurgent. . . . He appeared a typical progressive in his voting record, stood for the civil service, conservation, direct primaries, popular
election of Senators, women's suffrage, and social legislation."
FDR’s Rapport With the Masses 26A-1&2**
"No personality has ever expressed the American popular temper so articulately or with such exclusiveness. . . . In the age of the New Deal, it was monopolized by one man, whose
passing left American liberalism demoralized and all but helpless. . . . At the heart of the New Deal there was not a
philosophy but a temperament. The essence of this temperament was Roosevelt's confidence that even when he was operating in unfamiliar territory he could do no wrong,
commit no serious mistakes. From the standpoint of an economic technician this assurance seemed almost mad at
times. . . . And yet there was a kind of intuitive wisdom under the harum-scarum surface of his methods. . . .
“[Although] reared on a social and economic philosophy rather similar to Hoover's, he succeeded at once in communicating the fact that his temperament was
antithetical. When Hoover bubbled that it was necessary only to restore confidence, the nation laughed bitterly.
When Roosevelt said: 'The only thing we have to fear is fear itself,' essentially the same threadbare half-true idea, the
nation thrilled. Hoover had lacked motion; Roosevelt lacked direction. But his capacity for growth, or at least for change, was enormous. Flexibility was both his strength and his weakness. Where Hoover had been remote and abstract,
a doctrinaire who thought in fixed principles and moved cautiously in the rarefied atmosphere of the managerial
classes, Roosevelt was warm, personal, concrete, and impulsive. . . .
He had little regard for abstract principle but a sharp intuitive knowledge of popular feeling. Because he was
content in large measure to follow public opinion, he was able to give it that necessary additional impulse of
leadership which can translate desires into policies. Hoover had never been able to convey to the masses a
clear picture of what he was trying to do; Roosevelt was often able to suggest a clear and forceful line of policy
when none in fact existed. . . . Roosevelt's admirers, their minds fixed on the image of a wise, benevolent, provident father, have portrayed him as an ardent social reformer and sometimes as a master planner. . . . He displayed a broad, easygoing tolerance, a genuine liking for all sorts of people; he loved to exercise his charm in political and
social situations."
FDR "was a marvelous campaigner. He traveled back and forth across the country, radiating confidence and good humor. . . . Like every great political leader, he took as much from the people as he gave them, understanding the causes of their confusion and sensing their needs." One member of the Hoover Administration noted that "'the people seem to be lifting eager faces to Franklin Roosevelt, having the impression that he is talking intimately to them. . . . I am glad of his enthusiasm and buoyance but it cannot escape the sense that he really does not understand the full meaning of his own recitations.'"
"One element was rapport with the masses, created through a mixture of antiestablishment appeals to the 'forgotten man' with a charismatic radiation of warmth, confidence, compassion, and even vigor despite his crippled legs."
FDR’s Advantages**
• His antiestablishment appeals to the "forgotten man"
• He radiated a charismatic warmth, compassion, an optimism, a confidence, and vigor
"His sunny, magnetic personality contrasted favorably with that of the glum and colorless Hoover." He knew how to use flattery to win supporters. He easily transmitted his
effervescent confidence to others.
FDR’s Advantages continued
• He invocated a political demonology
• The accommodation/balancing of conflicting prescriptions and pressure groups
"Roosevelt displayed a buoyancy and a willingness to experiment that helped restore public
confidence in the government and the economy." He was a master at using the media of the period
to his advantage.
FDR’s Advantages continued
• He proposed greater relief & work expenditures
• He used of the prestigious Roosevelt name
Theodore Roosevelt was a distant cousin. Like TR, he had a quick and agile mind.
Hoover• Often ill-
informed
• Generally shy and ill at east
FDR • Master of all facets of various questions
• Relaxed, informal, and cordial
"Operating in terra incognita did not seem to trouble him [FDR] in the
least."
A whole generation of “children grew up thinking that economic deprivation
was the norm rather than the exception in America. . . . Herbert Hoover was the
Depression’s most prominent victim.”
FDR AND THE NEW DEAL1932-1935
Chapter 26—Part II
Dorothea Lange's "Migrant Mother"
The Dust Bowl. . . and Migration West
How did the election of 1932 drastically change the direction of
the United States of America?
The election of 1932 brought Franklin D. Roosevelt to office and in so doing, drastically reshaped American attitudes about the role and rights of government in
relationship to the people.
THE EARLY NEW DEAL 26
FDR: Savior or Satan?
"It has often been said that he betrayed his class; but if by his class one means the whole policy-
making, power-wielding stratum, it would be just as true to say that his class betrayed him. . . . [When he came to office,] the economic machinery of the nation had broken down and its political structure
was beginning to disintegrate. People who had anything to lose were frightened; they were willing to accept any way out that would leave them still in possession. During the emergency Roosevelt had practically dictatorial powers. He had righted the keel of economic life and had turned politics safely
back to its normal course. Although he had adopted many novel, perhaps risky expedients, he had
avoided vital disturbances to the interests. . . .**
Nothing that Roosevelt had done warranted the vituperation he soon got in the conservative press or the
obscenities that the hate-Roosevelt maniacs were bruiting about in their clubs and dining-rooms. . . . . The New Deal
was designed for a capitalistic economy.. . . For success in attaining his stated goals of prosperity and distributive justice he was fundamentally dependent upon restoring
the health of capitalism."
Franklin D. Roosevelt in classic pose—his smile and body language exuded an irrepressible confidence
and optimism
"His political achievement also reveals the true nature of Roosevelt's success. He was a brilliant politician who recognized the essence of leadership in a democracy—
appealing directly to the people and infusing them with a sense of purpose. Thus despite his limitations as a reformer, Roosevelt proved to be the man the American people needed in the 1930s—the leader who gave them the psychological lift that helped them endure and survive the Great Depression."
"No single ideological position united all the programs, for Roosevelt was a pragmatist who was willing to try a variety of
programs. More than Hoover, however, he believed in economic planning and in government spending to help the
poor. . . . The truth was that Roosevelt did not have a master plan to save the country."
The Early New Deal—The Scorecard 26A-2
• Brain Trust**—name for FDR’s economic, social, planning, and legal advisers
• Harold Ickes—Secretary of the Interior (**progressive Republican and evidence of FDR’s non-partisan appointments); leader of reform politics from Chicago
• Henry A. Wallace—Secretary of Agriculture (progressive Republican and evidence of FDR’s non-partisan appointments)
Ickes
Wallace
Brain Trusts continued
• Francis Perkins—Secretary of Labor—1st woman cabinet member**
• Harry Hopkins—overseer of FERA (1933), WPA (1935), Secretary of Commerce (1938), and U.S. Lend Lease (1941)
Perkins
How FDR’s upbringing, illness, and political experience influenced his attitude in fighting
the Great Depression
• Raised to believe those with wealth should help others
• Illness taught him compassion
• Political experience taught him that government should help people
Main principles underlying the New Deal**
• Provide immediate relief to unemployed
• Bring about economic recovery
• Reform conditions causing the Depression
The Election of 1932
When he accepted the Democratic presidential nomination in 1932, he
spoke to party delegates in Chicago declaring, “I pledge
you—I pledge myself to a new deal for the American people.” From this point of
origin, the Roosevelt administration came to be
known as:THE NEW DEAL
"View[ing] each other across the transfer of power in 1933, the Hooverites and the New Dealers tended to see much
greater differences than recent historical scholarship has been able to discern. The Hooverites. . . were not the laissez-faire fundamentalists excoriated in New Deal
rhetoric. Nor were the New Dealers the collectivizing anti-capitalists depicted in Hooverian oratory. Both are best
seen as seekers of a managed capitalist order committed to the realization of traditional liberal ideals. Both had also drawn much of their inspiration from the organizational
experience of the war period. And the early New Dealers, at least, were remarkably similar to the Hooverites in their
willingness to work through established organizational elites and concerts of organized interests. . . . Much of the early New Deal might more aptly labeled 'Hooverism in
high gear.'"
The “New” Democratic Party
“Farmers and workers, Protestants and Catholics, immigrants and native born
rallied behind the new leader who promised to restore prosperity. Roosevelt
not only met the challenge of the Depression but also solidified the shift to
the Democratic Party and created an enduring coalition that would dominate American politics for a half century.”
Inaugural Address
"It was unquestionably Franklin D. Roosevelt who provided the spark that reenergized the American people. His inaugural address reassured the country and at the same time stirred it to action. 'The only thing we have to fear is fear itself'" was the main thread in his brief address. "The inaugural captured the heart of the country."To the left, U.S. Supreme Court Justice Charles Evans Hughes swears in Franklin D. Roosevelt as president.
FDR the Pragmatist 26A
FDR was willing to change his opinions as long as they got the job done. For him, the end justified the means.
"Far from being a radical. . . during the 1920s he had not seriously challenged the basic tenets of Coolidge prosperity. He never had much difficulty adjusting his views to prevailing attitudes. . . . Indeed, his life before the depression gave little indication that he understood the aspirations of ordinary people or had any deep commitment to social reform. . . . Many critics judged him too irresolute, too amiable, too eager to please all factions to be a forceful leader. . . . Walter Lippmann [left]. . . called him 'a pleasant man, who, without any important qualifications for the job, would very much like to be President.' . . . [His pronouncements contained] dozens of conflicting generalities]."
Ironically, in the 1920s, FDR's philosophy was not all that different from Hoovers. He
warned against government regulation that he deemed unwieldy and expensive; also against
the union of business and government
• Biting criticism of Hooverian extravagance and deficits
• Denunciation of Republican tariff
• Calls for greater economic nationalism
"At the very beginning of his candidacy Roosevelt, without heed for tradition or formality, flew to the 1932 nominating convention and addressed it in person instead of waiting for weeks in the customary pose of ceremonious ignorance." A trivial act in itself, the device gave the public an impression of vigor and originality that was never permitted to die."
“Roosevelt was perhaps the most controversial president the United States ever had. For thousands of Americans, he was a folk hero: a
courageous statesman who, crippled by polio, saved a crippled
nation from almost certain collapse and whose New Deal salvaged the
best features of democratic capitalism while establishing
unprecedented welfare programs for the nation. For others, he was
a tyrant, a demagogue who used the Depression to consolidate his
political power, whereupon he dragged the country zealously down the
road to socialism.
In spite of his popular appeal, Roosevelt became the hated enemy of much of the nation's business and
political community. Conservatives denounced him as a Communist. Liberals said he was too conservative. Communists castigated him as a tool of Wall Street. And socialist dismissed him as a reactionary. "He caught hell from all sides,' recorded one observed, because nobody knew how to classify his political
philosophy. Where, after all, did he fit ideologically? Was he for capitalism or against it? Was the New
Deal itself revolutionary or reaction? Was it 'creeping socialism' or a bulwark against socialism? Did it lift
the country out of the Depression, or did the economy right itself in spite of the New Deal?"
An Absence of Policy? 26A
"Roosevelt has no real policy." Edmund Wilson, FDR critic (1934)26D"Roosevelt had the power and the will to act but no comprehensive plan of action. . . . [Rather, he] proceeded in a dozen directions at once, sometimes wisely, sometimes not, often at cross-purposes."
"Roosevelt's premises, far from being intrinsically
progressive, were capable of being a adapted to very
conservative purposes. . . . The polar opposition
between such a policy and the promise of making
prosperity uniform and distributing purchasing
power anticipated a basic ambiguity in the New Deal."
“Fireside Chat”--FDR nationwide broadcasts or informal talks in
conversational tones to the American people
FDR calmed American uncertainties via the "fireside chat," an informal report direct to the man on the
street, an innovative & popular new use of the media (radio)
"His warmth and steadiness reassured millions of listeners. . . . The Roosevelt 'magic,' unfeigned and
inexhaustible, amazed his associates."
Initiated March 5, 1933 26A
The Blue Eagle The emblem of the National Recovery Administration
The WPA slogan “We Do Our Part” became a
rallying cry for Americans
The New Deal 26A-2
"Roosevelt's basic position was unmistakable. There must be a 're-appraisal of values,' a 'New Deal.' Instead of adhering to conventional limits on the
extent of federal power, the government should do whatever was necessary to protect the unfortunate
and advance the public good. Lacking concrete answers, Roosevelt advocated a point of view rather
than a plan: 'The country needs bold, persistent experimentation. It is common sense to take a
method and try it. If it fails, admit it frankly and try another. But above all, try something.'"
"Roosevelt's 1932 campaign utterances indicate that the New Deal had not yet taken form in his mind." Indeed,
one of his main premises was that Hoover had been spending too much money; he urges cessation of
borrowing to meet continuing deficits.
"Psychologically the nation turned the corner in the spring of 1933. Under FDR, the government seemed to be
responding to the economic crisis, enabling people for the first time since 1929 to look to the future with hope."
OR
How FDR Tried to Solve the Bank Crisis**
• Declared a bank holiday • Proposed Emergency
Banking Relief Act (put banks under federal supervision) Permitted sound banks to borrow federal funds
• Closed unsound banks FDR signs Bank Holiday draft Proclamation
The Hundred Days 26B
This was the appellation given to FDR’s presidential initiatives to aid industrial and agricultural recovery upon FDR’s taking office. His fifteen major requests to Congress
for action yielded fifteen major pieces of legislation. Over the long haul, many New Deal creations were temporary in
nature—“designed to meet specific economic problems of the Depression.” Moreover, none were uniformly successful.
“Psychologically, the nation turned the corner in the spring of 1933. Under FDR, the government seemed to be
responding to the economic crisis, enabling people for the first time since 19209 to look to the future with hope.”
The Hundred Days**
• Purpose of Federal Emergency Relief Act (FERA) 26B
• Gave money to local governments to give to the unemployed
• Purpose of Civil Works Administration (CWA) 26B
• Gave people jobs instead of relief payments
• How the Agricultural Adjustment Administration (AAA) helped farmers 26B
Agricultural Adjustment Administration (AAA)
The AAA limited production to prevent surpluses. Consequently, prices rose for farm products. The government offered subsidies to farmers who took some land
out of production, and in other instances, actually paid farmers to plow
under crops and kill livestock, all to boost farm prices. In 1936, the Supreme
Court found the AAA to be unconstitutional.
The “Dust Bowl”Farmer woes were complicated by the extended drought and dust storms that pummeled areas of Nebraska, Kansas,
Oklahoma, and the panhandle of Texas. Scores of rural families were forced to abandon their homes and seek greener
pastures in other areas of the nation. The so-called “Dust Bowl” experience was the backdrop of John Steinbeck’s heralded
novel, Grapes of Wrath.
Main provisions of National Industrial Recovery Act (NIRA) 26B
The NRA permitted trade associations to draft codes to regulate production, prices, and working conditions. It
was “FDR’s attempt to achieve economic advance through planning and cooperation between government, business and labor.” Use of the blue eagle was aimed at tying patriotism to support of NRA programs. Section
7A of the NIRA ostensibly protected labor by establishing maximum hours and minimum wages. In fact, it favored big business over small competitors. In
1935, the Supreme Court judged the NRA unconstitutional.
Main purpose of Public Works Administration (PWA) 26B**
Stimulate employment by spending money on public works projects
A future president—LBJ—with FDR during the heyday of public projects
Tennessee Valley Authority (TVA)
• Build Dams• Construct hydroelectric dams• Plant trees to stop erosion• Introduce educational and health
facilities
The most successful and enduring of all New Deal legislation
26B
Voices of Protest--The Scorecard** 26D
The Anti-Roosevelt Triumvirate
Dr. Francis Townsend
"Collectively they [his critics] represented a threat to Roosevelt; their success helped to make the president see that he must move boldly to restore good times or
face serious political trouble in 1936. Political imperatives had much to do with Roosevelt's
decision. . . . [FDR's advisors Justice Brandeis & Felix Frankfurter] urged Roosevelt to abandon his pro-business programs, especially the NRA, and stress
restoring competition and taxing corporations more heavily. The fact that most businessmen were turning
away from him encouraged the president to accept this advice; so did the Supreme Court's decision in
Schechter v. United States (May 1935), which declared the National Industrial Recovery Act
unconstitutional."
Huey Long
• Governor of Louisiana
• Critic of FDR• Preached a “Share
the Wealth” gospel encouraging the redistribution of wealth in America
Long’s Program
• Shrewd• Ruthless• Witty• The absolutism of an
oriental monarch• A demagogue• A racist
Take money from the rich and distribute it.
Long’s Style
• Raffish• Totally unrestrained
"Long did not question segregation or white supremacy. . . . He used the word n****r with total un-self-consciousness."
Long’s Reform Program
• Hated bankers and “the interests
• Believed poor people should have chance to earn decent living, get good education. . . regardless of race or color
In late 1935, An assassin’s bullet ended Long’s threat to FDR in the 1936 election.
Charles Coughlin
– Detroit priest who labeled the Depression as an international conspiracy of bankers
– Coughlin’s weekly radio program had an audience of over 30 million
– He had strident Anti-Semitic racist views
– He proposed various crank monetary schemes
– Monetary inflation– Nationalization of the
banking system
Francis E. Townsend
– Retired California doctor who wanted government to help older citizens through pensions
– He proposed a monthly pension to everyone over age 60 of $200 a month
– Recipients had to spend the amount within 30 days
American Liberty League
Founded in 1934 by bitter opponents of FDR; encouraged private enterprise and use of property
Scherter v. U.SSupreme Court decision declaring the National Industrial Recovery Act unconstitutional since the government did not have power to regulate interstate commerce (trade
within boundaries of a state)
"The Supreme Court broke the mainspring of the original New Deal by declaring the NRA unconstitutional. . . . The
Court had torn up his entire program for labor and industry. Labor seemed on the verge of withdrawing political support"
playing into the hands of FDR's adversary, Huey Long
Why FDR and his advisers did not ignore these critics
In the abnormal times, Americans would not ignore such appeals
Unconstitutional New Deal laws
• National Industrial Recovery Act—federal government cannot regulate commerce within a state
• Agricultural Adjustment Act—government cannot tax one part of the population to help another
FDR’s Adversaries: The “Nine Old Men”
Assessing FDR’s First New Deal 26B
Hofstadter writes of sharp swerves in FDR's policy, dating the First New Deal from 1933-1934,
"conceived mainly for recovery. Reform elements and humane measures of immediate
relief were subsidiary to the organized and subsidized scarcity advocated by [various
agencies]. . . These great agencies, the core of the first New Deal, representing its basic plans for
industry and agriculture, embodied the retrogressive idea of recovery through scarcity."
Continued. . ."Herbert Hoover. . . called the New Deal 'the most stupendous invasion of the whole spirit of Liberty that the nation has witnessed.'. . . [He & many others] believed that it was undermining the foundations of American freedom."
FDR never accepted Keynes' theories, was
unable to grasp his "rigmarole of figures"
with which Keynes deluged him. Keynes
argued that governments should unbalance their
budgets by reducing interest rates & taxes & increasing expenditures
to stimulate consumption & investment.**
British economist John Maynard Keynes
Continued
“Roosevelt had little regard for the wisdom of economists as a professional cast.” However, the imperatives of the depression forced FDR to adopt deficit spending policies, i.e., a partial Keynesian approach.**
A “Second” New Deal--The Scorecard** 26C
• The Wagner Act• Public Utilities Holding Company Act—
empowered government to prohibit holding companies from owning more than one utility company in any one part of the U. S.
• Utility Company—distributors of gas and electricity
• Unemployment Compensation—temporary income for people who had lost their jobs
The Wagner Act**
• Outlawed company unions• Outlawed other unfair labor
practices• Ensured collective
bargaining for unions• Created National Labor
Relations Board to preside over labor-management relations
“The Wagner [National Labor Relations] Act, the most far reaching of all New Deal measures, led to the revitalization of t
he American labor movement and a permanent change in labor-management relations.”
The Wagner Act was “the most far reaching of all New Deal measures.” It “led to the revitalization of the American movement and a permanent change in labor-management relations. . . . With this unprecedented government sanction, labor unions could now proceed to recruit the large number of unorganized workers throughout the country.”
Rights the Wagner Act guaranteed for workers
RQ25
• Right to organize
• Right to bargain collectively
How Works Progress Administration tackled problem of unemployment 26B
The WPA put people to work on a wide variety of projects in the fields in which the people had been trained. In fact,
the WPA “failed to prime the American economy by increasing consumer purchasing power. . . . The American
people still did not have money. . . . [Nonetheless,] Roosevelt had made the Depression bearable. The New Deal’s
failure. . . to go beyond relief to achieve prosperity led to a growing frustration and the appearance of more radical
alternatives that challenged the conservative nature of the New Deal and forced FDR to shift to the left.”
Effects of the Public Utilities Holding Company Act 26C
• Ended most of the large utility empires
• Put the rest under direct supervision of government agencies
Groups affected by the Social Security Act of 1935 26C
• The elderly• People who had lost their jobs• The handicapped• Certain dependent children
Major provisions of the Social Security Act of 1935** 26C
• Old-age pensions financed by tax on both employers and workers (in equal amounts)
• States given federal matching funds for pensions to aid the destitute and elderly
• System of unemployment compensation set up on a federal-state basis
• Direct federal grants given to states on matching basis for welfare to blind, handicapped, needy elderly and dependent children.
Created a national system of pensions for retired people as well as aiding the disabled and
unemployed.
Roosevelt established “the principle of government
responsibility for the aged, the handicapped,, and the
unemployed. Whatever the defects of the legislation, Social Security stood as a landmark of
the New Deal, creating a system to provide for the welfare of individuals in a complex
industrial society.”
ConclusionFDR’s record on reform proved to be a
“modest success but no sweeping victory. A cautious and pragmatic leader, FDR
moved far enough to the left to overcome the challenges of Coughlin, Townsend, and
Long without venturing too far from the mainstream. His reforms improved the
quality of life in America significantly, but he made no effort to correct all the
nation’s social and economic wrongs.”
. . . but looming on the horizon were FDR opponents outside the United
States
