The Great Depression &The New Deal

1933 - 1938

Election of 1932

Republican – Herbert Hoover Democrat – Franklin D. Roosevelt

Deep concern for the plight of the “forgotten man” Eleanor Roosevelt – became the most active First Lady

in history Platform:

Repeal of prohibition & a balanced budget FDR promised to experiment with bold new programs

for economic & social programs

FDR is Elected

Boldly declared a nationwide banking holiday. Why? March 6-10, 1933 Reopen on a sounder basis

Called Congress into an emergency session “Hundred Days” (March 9-June 6, 1933) Introduced his New Deal program

aimed at the 3 R’s: Relief Recovery Reform

FDR Tackles Money & Banking

Emergency Banking Relief Act of 1933 President had power to regulate banking transactions &

foreign exchange & to reopen banks FDR started his “fireside chats” to convince the public to

put their money back in the banks

Glass-Steagall Banking Reform Act created the Federal Deposit

Insurance Corporation (FDIC) Ensured individual deposit up to $5,000

FDR & Money

Ordered all private holdings of gold to be surrendered to the Treasury in exchange for paper currency

Took the nation off of the gold standard He hoped his “managed currency” would cause inflation Feb 1934 – FDR returned the nation to a limited gold

standard for purposes of international trade only

FDR Creating Jobs

Civilians Conservation Corps (CCC) created jobs for young men in gov’t wilderness camps

Federal Emergency Relief Act (FERA) granted about $3 billion for wages on work projects

Works Progress Administration (WPA) spent $11 billion on public housing, bridges, & roads FERA & WPA headed by Harry Hopkins

More of the New Deal

Home Owners’ Loan Corporation (HOLC) Refinance mortgages on nonfarm homes

Civil Works Administration (CWA) Provided purely temporary jobs “boondoggling” tasks

New Deal Critics and Demagogues

Father Charles Coughlin (Michigan) Called for “social justice” for all Americans but became

anti-Semitic & fanatic

Huey Long, Louisiana Senator Proposed a “share our wealth” program

which would make “every man a king”

Francis Townshend Called for every American over 60 years of age receive

$200 a month

New Deal Programs conti

National Recovery Act (NRA) attempted to work out codes of “Fair competition”

between industry & labor / benefited organized labor Shot down in 1935 in Schechter “sick chicken” case

Congress could not delegate legislative powers to the executive

Public Works Administration (PWA) spent $4 billion on long ranged plans –

public buildings, highways, & parkways Headed by Harold Ickes

Social Security created Federal-State Unemployment Insurance & pensions for retired workers

New Deal Amendments

20th Amendment Moved up the presidential inauguration from March 4th

to Jan 20th Got rid of the lame duck session of Congress & shorten

that of the President

21st Amendment Repealed prohibition

FDR & Farmers

Agricultural Adjustment Act (AAA) Millions of dollars to help farmers meet their mortgages Paid farmers not to farm// increased unemployment

Soil Conservation & Domestic Allotment Act (1936) Paid farmers to plant soil-conserving crops or let their

land lie fallow Second Agricultural Act 1938

Continued conservation payments

Dust Bowl & Black Blizzards

1933 – prolonged drought in Great Plains caused severe dust storms Overproduction during WWI contributed Hardest hit: Missouri, TX, KS, AR, OK

Refugees fled to California – “Okies” & “Arkies” John Steinbeck’s The Grapes of Wrath portrayed the

story of these human “tumbleweeds”

Help for Farmers

Frazier-Lemke Farm Bankruptcy Act – 1934 Suspension of mortgage foreclosures for 5 yrs. Voided by Supreme Court

Revised – grace period for 3 years

Resettlement Administration (1935) Removed near-farmless farmers to

better land

CCC planted young trees as

windbreaks

Native Americans

Forced Assimilation Policies were resisted by John Collier – Commissioner of Indian Affairs

Indian Reorganization Act of 1934 “Indian New Deal” Encouraged tribes to establish local self-gov’t & to

preserve their native crafts & traditions Helped stop the loss of Indian lands & revived tribes’

interest in their identity & culture

Battling Bankers & Big Business

“Truth in Securities Act” – Federal Securities Act Required promoters to transmit to the investor sworn

information regarding the soundness of their stocks & bonds

Securities & Exchange Commission (SEC) (1934) Watchdog administrative agency

Public Utility Holding Company Act of 1935 Stop bloated growth

TVA

Tennessee Valley Authority 1933 – most radical provided for government ownership of an electrical

power plant at Muscle Shoals on the TN River Proposed by Senator George W. Norris of Nebraska Used as a “yardstick” to test the fairness of rates charged

by private companies Utility corporations charged that the low cost was

due to dishonest bookkeeping & the absence of taxes

Is this a good program in your opinion?

Housing Reform & Social Security

Federal Housing Administration (FHA) 1934 Provided small loans to householders, both for improving

their homes & for building new ones US Housing Authority (USHA) 1937

Designed to lend money to states or communities for low-cost construction of public housing

Social Security Act of 1935 Provided for federal-state unemployment insurance Pensions for retired workers financed by both employers &

employees Money for handicapped, delinquent children, & other

dependents ALL STILL IN USE TODAY

New Deal for Unskilled Workers

Wagner-National Labor Relations Act 1935 Assisted the right of labor to bargain collectively &

created a National Labor Relation Board which encouraged unskilled workers to organize themselves

Committee for Industrial Organization (CIO) formed within the ranks of the AF of L – 1938 separated from AF of L Organized all workers within an industry Headed by John L. Lewis Used sit-down strike –General Motors at Flint, Michigan 1938 – included blacks

More Help for Labor

Fair Labor Standards Act - 1938 Created a minimum wage of $.40 an hour & a maximum

work week of 40 hours Child labor under 16 forbidden; under 18 if occupation

was dangerous Excluded agriculture, service, & domestic workers

Blacks, Mexican-Americans & women did not benefit

Election of 1936

Democrats – FDR Appealed to the “forgotten man”

Republicans – Alfred M. Landon Wanted more reform but condemned FDR’s reforms

FDR wins & Democrats take Congress again FDR supporters:

Left-wingers * Blacks Southerners * Urbanites Poor * New Immigrants

FDR’s “Court Packing” Scheme

FDR asked Congress for legislation to permit him to add a new justice to the Supreme Court for every justice that was over 70 Maximum membership would be 15

Viewed as a break down of the 3 branches of gov’t Congress would not agree

Justice Owen J. Roberts changed from conservative to more liberal

The Supreme Court

March 1937 – upheld state minimum wage for women

Upheld Wagner Act & Social Security Act FDR voted full pay for justices over 70 who retired

Justice Hugo Black replaced one retiring justice Congress did pass a court reform bill but it only

applied to the lower courts FDR did get to appoint 9 justices

More than anyone since Washington

The Twilight of the New Deal

1937 – economy took a sharp downturn “Roosevelt recession” still 15% unemployed Caused by gov’t policies, with Social

Security taxes biting into payrolls and gov’t

cut back on spending for balanced budget

April 1937 – FDR announced a bold program to stimulate the economy by planned deficit spending “Keynesianism” - after economist John Maynard Keynes Government would have to spend more to stimulate recovery

Hatch Act of 1939

Act barred federal administrative officials, except the highest policy-making officers, from active political campaigning & soliciting

Forbade the use of gov’t funds for political purposes as well as the collection of campaign contributions from people receiving relief payments

Broadened in 1940 Placed limits on campaign contributions

& expenditures Clever ways were found to get around the new rules

Problems with the New Deal

Americans were getting a bad case of the “gimmies”

Failed to cure the depression Not until WWII that unemployment problem was solved Many believed more deficit spending would have helped More farm surpluses under FDR Millions still unemployed in 1939

FDR’s Balance Sheet

New Dealers pointed out that relief was primary objective

Claimed it relieved worst of crisis of 1933 Accepted principal that the gov’t was morally

bound to prevent mass hunger and starvation by “managing” the economy

Purged American capitalism of some of its worst abuses so it could be saved from itself

Jeffersonian or Hamiltonian?

Jeffersonian Bold reform without

bloody revolution Concern for the

“forgotten man”

Hamiltonian Espousal of big

government Took middle road