The Great Depression and the New Deal

Chapter 33

Hoover blamed for Depression

• Did not believe government should get involved

• Private organizations should help people out

• If people worked hard enough, they would succeed

FDR and election of 1932• Background

– Governor of NY, former Assistant Secretary of Navy– Wealthy– related to Teddy Roosevelt– married Eleanor Roosevelt

• Was a major advisor, campaigner and worker for FDR. Advocate for poor, women and blacks

– had polio and was in a wheelchair– Excellent speaker, and conveyed empathy for “forgotten

man” – the hard working poor• Hoover insisted depression would have been worse without his

policies and FDR’s would lengthen depression• Election of 1932

– FDR wins in dramatic landslide– FDRs reform policies begin to encourage blacks to shift from

Republican to Democrat party– Between November election and March inauguration very

little happened to change the political or economic situation

First Inaugural Address• I am certain that my fellow Americans expect that on

my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impel. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, 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

FDR and the Three R’s: Relief, Recovery, Reform

• People take money out of banks causing the banks to go out of business– FDR declares 4 day bank holiday (March 6-10) to stop the

withdrawals

• First Hundred Days– Beginning of FDR’s administration where many programs

were implemented– Relief, Recovery and Reform (see page 774, 777)

• “Alphabet soup” of programs – CCC, AAA, TVA, NWA, PWA, FDIC, NRA, Glass Stegall Act, etc.))

– Relief (Meet needs of hungry and jobless); Recovery (Help agriculture and industry); Reforms (Change the American Economy)

• Congress rubber stamped many FDR initiatives– Nation supported ANY change, as long as it appeared

government was doing something– Many programs had foundations in Progressivism

Roosevelt Manages the Money• Emergency Banking Relief Act (1933)

– Gave president power to regulate banking and foreign exchange

– Fireside Chats• FDR used radio broadcasts to build support for his

policies, reassure the public and pressure Congress into action

• Glass-Stegall Banking Reform Act– Created the FDIC (Federal Deposit Insurance Corporation)

which insured individual deposits in banks– Tighter regulation and prohibit banks from selling securities

(stocks/bonds)• Created separation between commercial and investment

banks• Gramm-Leach-Bilely Act of 1999 repealed bans on

commercial/investment firm affiliations – eliminated most Glass-Stegall barriers between types of banking

• Managed Currency– FDR ordered all gold to be surrendered to Treasury– Wanted to stimulate inflation by buying gold at high prices

Roosevelt Manages the Money• Civilian Conservation Corps (CCC)

– Provided 3 million jobs working in national forests, flood control, swamp drainage

– Required to send majority of wages to their families

• Federal Emergency Relief Act (FERA)– Aim was immediate relief– Harry Hopkins ran FERA, gave $3 billion in direct payments

• Agricultural Adjustment Act (AAA)– Made money available for farmers to pay mortgages

• Home Owners Loan Corporation (HOLC)– Helped Americans refinance home mortgages so that they

would keep their house

• Civil Works Administration (CWA)– Part of FERA– Gave temporary jobs such as raking leaves

Opponents to FDR• Father Charles Coughlin

– “Social Justice” – argued in favor of radical monetary reforms; – advocated for poor and against businesses; – over 30 million people listened to him on radios; – eventually accused of being anti-Semitic and was forced to stop

giving speeches by the Catholic Church

• Huey “Kingfish” Long – Governor of Louisiana

• Opposed FDR and New Deal– Share Our Wealth

• Guaranteed Family Income; Money to buy a home; Free Education; Cheap food; Paid with tax on wealthy

– 4.5 million people joined Long; but was assassinated in 1935

• Dr. Francis Townsend– Argued for guaranteed income for senior citizens to be funded by

sales tax– Social Security Act was proposed partially to stop support for

Townsend• WPA created to quiet critics

– Provided jobs for unemployed

Liberty League

• Opposed New Deal

– Did not want large government created by New Deal

– Believed New Deal threatened free enterprise

– Did not want to have to pay for New Deal programs

– Feared Huey Long’s proposals

– Only wealthy supported league

New Visibility for Women• Eleanor Roosevelt

– Took a lead in advocating for women’s and minority rights• Frances Perkins

– First female member of cabinet as Secretary of Labor– Helped write Social Security Act and Fair Labor Standards Act

• Mary McLeod Bethune– Director of Office of Minority Affairs – highest ranked African

American• Advances in science and literature

– Ruth Benedict, Margaret Mead and Pearl Buck

Frances Perkins

Industry, Labor and Farmers• National Recovery Administration (NRA)

– 200 industries worked out “fair competition” guidelines– Hours reduced to increase number of jobs available– “Yellow Dog” contracts prohibited– Both management and labor had to give up independence to

benefit from program• Schechter v US (1935)

– Ruled Congress could not delegate legislative power to executive. Ruled against the NRA

• Public Works Administration (PWA)– Led by Harold Ickes – made large public works projects like

the Grand Coulee Dam• Prohibition repealed by 21st Amendment (1933)• Agricultural Adjustment Administration (AAA)

– Paid farmers not to farm to induce scarcity thereby driving up prices

– Created unemployment, was ruled unconstitutional in 1936• Soil Conservation and Domestic Allotment Act (1936)

– Paid farmers to leave land fallow to conserve land– Since it was conservation; Supreme Court allowed it

Dust Bowl• Dust Bowl originated from droughts through mid 1930s that

destroyed 50 million acres of land• Created by combination of over farming and lack of rainwater

– Dry farming and mechanized farming weakened topsoil and sped the process

• Okies and Arkies– Bankrupt farmers fled midwest in hopes of better life in

California– Shown in Grapes of Wrath by John Steinbeck

• Frazier Lemke Farm Bankruptcy Act– Early attempt to stop farm bankruptcies but it was ruled

unconstitutional• Resettlement Administration

– Attempted to relocate farmers to better land• Indian Reorganization Act

– Led by John Collier; allowed for reversal of Dawes Act– Ended forced assimilation of Indians and allowed for

traditional (i.e. non farming) ways of life– Established new tribal governments

TVA, Social Security and HousingTennessee Valley Authority (TVA)

•Electricity developed into a big business•Federal government owned land in Tennessee Valley and around Muscle Shoals in Alabama

• Also was one of the poorest areas of US – it provided work, electricity, housing and clean water

• Intent was to establish a “fair price” for private companies to charge

•Plan was copied in rivers throughout Rocky Mountains

•Social Security and Housing•FHA (Federal Housing Administration) (1934)

• Provided loans to build and improve people’s homes•USHA (United States Housing Authority) (1937)

• Designed to promote low income housing; met with mixed results

•Social Security Act (1935)• Provided old age insurance and unemployment insurance to

mitigate influence of future depressions• Paid for with payroll tax on employers and employees• Not as generous as European pension schemes

Second New Deal

• Wagner Act – (National Labor Relations Act) (1935)– Passed in response to the unconstitutionality of NRA– Protected unions and establish a board to mediate disputes between labor and

management; created principle of collective bargaining – Encouraged the creation of unions like United Mine Workers led by John L. Lewis

• CIO (Committee of Industrial Organization)– Sub group of American Federation of Labor (AFL) to protect unskilled workers– Eventually splits with AFL in 1938, led by John Lewis – becomes changes “C” to

Congress• Fair Labor and Standards Act (Wages and Hours Bill)

– Passed in response to bloody suppression of CIO strikes steel industries– Established minimum wage, maximum hours limits and ended child labor under

16

• WPA – Works Progress Administration– Large scale national works program to create jobs– Built schools, bridges, public buildings etc

Election of 1936 and Court Packing Scandal

Election of 1936•Republicans argued FDR’s growing government threatened freedom

– Picked Al Landon to run against FDR•FDR argued that too many people are “ill housed, ill clad, ill nourished”•FDR won in landslide

– Established loyalty between Democratic Party and unions, city voters, Catholic, Jewish and black voters

Court Challenges New Deal•Supreme Court rejects FDR’s New Deal programs

– Said would give federal government too much power– FDR’s programs violated the policies of checks and balances

Court Packing Scandal•FDR tries to increase size of Supreme Court from 9 to 15 unless Justices over 70 retired

– Would allow FDR to pick 6 justices•Plan rejected because it gave President too much power•Justice Roberts began voting liberal, which protected some New Deal programs

Twilight of New Deal

• FDR’s attack on Court ended Congress’ unquestioned support of New Deal programs• Economic recovery slow despite “pump priming”• “Roosevelt Recession” 1937 resulted from increased taxes and spending• Hatch Act (1939) passed to ban administrative officials from soliciting campaign

money or using government funds for campaigning• Critics of New Deal

– Argued it led to waste, corruption, bloated government, communistic ideas and policies that were implemented before thought through. National debt doubled in 7 years. Philosophy of handouts undermined virtues of thrift and initiative.

– Business and conservatives accused FDR of class warfare and socialism– New Deal did not end depression, economists believed greater deficit spending

was needed– WWII ended depression but also created modern debt (from $40 to $258 billlion)