The New Deal

• Recap: FDR and the 100 Days

• The NRA and the AAA

• Social Security: The Heart of the New Deal

• The New Deal Political Coalition

“Our government is not the master but the creature of the people. The duty of the state towards the citizens is the duty of the servant to its master.”

-- Franklin D. Roosevelt on creating the Temporary Emergency Relief Administration (TERA) in New York

Direct Relief:

Harry Hopkins and the Federal Emergency Relief Administration (FERA)

Work Relief:

Public Works Administration

(PWA)

Works Progress Administration

(WPA)

Civilian Conservation Corps (CCC)

Two Goals of the New Deal

• Relief: Helping to Improve the Dire Conditions Produced by Unemployment and Depression – Often seen as Temporary and Emergency Measures.

• Recovery: Fixing the Long Term Issues that caused volatility and instability in the American economy

The National Recovery Administration (NRA), 1933-1935

The NRACreated by the National Industrial Recovery

Act of 1933

• Sought to suppress competition and standardize hours, wages, and working conditions in American industries.

• Set production agreements to balance prices and reduce competition.

• Establish minimum wages to allow more steady consumption.

• A key: Voluntary Compliance

NRA is Out of Business, 1935

• However, out of the “wreckage” came many other laws that accomplished some of the original main goals, such as:

– Fair Labor Standards Act (1938) – Established Federal Minimum Wage Law and also outlawed child labor.

The Agricultural Adjustment Act (AAA), 1933-1936

AAA

• Take land out of cultivation to reduce production, which will raise prices to stable levels.

• Farm Mortgage Act, which gave farmers low interest loans that would prevent them from losing their farms to banks.

• Also Voluntary

.”

Louisiana Senator Huey P. Long and the “Share Our Wealth” plan

Huey Long’s “Share Our Wealth” Plan

• Used the Slogan “Every Man a King”• Some of the Plan:

– Set Maximum Wealth Limit – Set at 100-300 times Average Family fortune (about 1.5-5 million) Any extra taken in Capital taxes.

– Family Minimum Income at 1/3 average– No One allowed an annual income higher

than 100-300 times the average Family income. Heavy Income Taxes.

– Old Age Pensions for All

“You may have heard, for six years, that I was driving the nation into bankruptcy; and that I breakfasted every morning on a dish of grilled millionaire! Actually, I am an exceeding mild-mannered person, a practitioner of peace, both domestic and foreign, a believer in the capitalist system, and for my breakfast a devotee of scrambled eggs!”

-- Franklin D. Roosevelt.

“I’m that kind of liberal because I’m that kind of conservative.”

-- Franklin D. Roosevelt.

“[T]here is no reason why just the industrial worker should get the benefit of [Social Security]. Everybody ought to be in on it – the farmer and his wife and his family. I don’t see why not […] Cradle to the grave—from the cradle to the grave they ought to be in a social insurance system.”

-- FDR on the Social Security

Act of 1935

Social Security Models

Pay As You Go: Communal model in which taxes on current workers (you and me) pay for current retirees (our parents and grand parents).

Trust Fund: Individual model in which each worker pays a part of her / his current paycheck into an account. When the worker retires, s/he is paid out of her / his individual account, proportionately.

“I guess you’re right on the economics, but those [payroll] taxes were never a problem of economics. They are politics all the way through. We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”

-- FDR on Social Security

Pre- New Deal Coalition: Republican Dominance

• From 1860 – 1932 Republicans Owned the Presidency:– Lincoln, Johnson, Grant, Hayes, Garfield, Arthur,

Harrison, McKinley, Roosevelt, Taft, Harding, Coolidge, Hoover

– 56 Years of Republican Presidents

• Only Two Democrats: Grover Cleveland and Woodrow Wilson– 16 Years of Democratic Presidents

Democratic Dominance: Between 1933 and 1968 only one Republican is able to win the presidency (Dwight D. Eisenhower)

The New Deal Coalition

• A Potentially Very Unstable Coalition of:

– The Solid South– Labor Unions– Urban Ethnics– African Americans

Section 7(a) of the NRA, 1933The Wagner Act, 1935

Craft Unionism: Samuel Gompers and the American Federation of Labor (AFL)

Two Kinds of Unions

• “Craft Unionism” – Usually only included those with special skills and training. Plumbers, electricians, carpenters were included. Dates back to older “Craft” traditions. (AFL)

• Industrial Unions – Include everyone in a particular industry, even those doing largely unskilled work. (CIO)

John L. Lewis and the United Mineworkers

Union

The Congress of Industrial Organizations (CIO):

Industrial Unionism as the Dominant Force in the Union Movement

Sit-Down at Flint Michigan, 1937:Organizing the Auto Industry

John L. Lewis, Frank Murphy, and the Flint Strike

Lewis’s Response

• You want my answer, sir? I give it to you. Tomorrow morning I will personally enter General Motors plant Chevrolet No. 4. I shall order the men to disregard your order, to stand fast. I shall then walk up to the largest window in the plant, open it, divest myself of my outer raiment, remove my shirt, and bare my bosom. Then when you order your troops to fire, mine will be the first breast that those bullets will strike! And as my body falls from that window to the ground, you will listen to the voice of your grandfather as he whispers in your ear, “Frank, are you sure you are doing the right thing?”

Felix Frankfurter, First Jewish Supreme Court Justice