THE GREAT DEPRESSION AND THE NEW DEAL

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THE GREAT DEPRESSION AND THE NEW DEAL

• Chapter 34

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FDR A Politician In A Wheelchair

• Voters in a foul mood in 1932.
• Numerous businesses closed 11 Mill. out of work.
  Depression is deepening.
• No one could receive a bank loan. The
  unemployment rate was 25 and higher in major
  industrial and mining centers. The agricultural
  sector was possibly in worse shape than the
  industrial sector. Farmers were having
  difficulties selling their products and a part of
  the country known as the dust bowl . Mortgages
  were being foreclosed by tens of thousands
• Hoover renominated by Republicans without great
  enthusiasm.
• Dems nominate FDR.

3
Eleanor Roosevelt

• Eyes of FDR
• Early Civil Rights advocate
• Lefty
• Probably the most active first lady in history
• Do what you feel in your heart to be right- for
  you'll be criticized anyway. You'll be damned if
  you do, and damned if you don't. Eleanor
  Roosevelt

4
FDR

• FDR easily nominated by Dems.
• Premier orator of his generation.
• Commanding and electric personality with
  incredible charm.
• Strong believer in the need of government to
  relieve the suffering of the forgotten man
• Roosevelt broke precedent by giving acceptance
  speech to convention.
• Called for a New Deal for America.

5
1932 Campaign

• FDRs campaign is long on energy but vague on
  details.
• Preached a New Deal and new benefits and hope.
• Brain Trust
• Theme song (and theme) Happy Days are Here
  Again.

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Hoover It Could be Worse

• Hoover campaigns on idea that prosperity is just
  around the cornerstay the course.
• Doesnt generate much enthusiasm.
• Hoover has been beaten down by Depression
• Runs on the idea that Roosevelt will make things
  worse.
• Hoover doesnt stand a chance.

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The Humiliation Of Hoover In 1932

• FDR wins 22 Mill to 15 Mill 472-59 in EC.
  Hoover carries only 6 staunchly republican
  states.
• Beginning of shift of black voters from Rep.
  party to Democratic Party.
• Was an easy win. Public blamed Republicans for
  Depression and were crying out for change.
• Depression worsens during the lame-duck period.
  (Nov. to March)
• Hoover-Roosevelt deadlock
• 20th Amendment adopted in 1933.

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Election of 1932
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FDR And The Three Rs

• Hundred Days
• FDR has an unprecedented mandate
• FDRs philosophy.
• Three Rs
• Relief
• Recovery
• Reform
• Many of the reforms were old ideas from the
  Progressive Movement

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Roosevelt Tackles Money

• Banking Crisis most immediate problem
• Emergency Banking Relief Act of 1933.
• Act allowed a plan that would close down
  insolvent banks and reorganize and reopen those
  banks strong enough to survive
• Fire-side chat.
• The fireside chats were a series of thirty
  evening radio speeches given by United States
  President Franklin D. Roosevelt between 1933 and
  1944.

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Roosevelt Tackles Money

• Glass-Steagall Banking Reform Act.
• FDIC
• Included banking reforms, some of which were
  designed to control speculation.1 Some
  provisions such as Regulation Q, which allowed
  the Federal Reserve to regulate interest rates in
  savings account.
• Prohibited a bank holding company from owning
  other financial companies

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Roosevelt Tackles Money

• Executive Order 6102 required U.S. citizens to
  deliver on or before May 1, 1933, all but a small
  amount of gold coin, gold bullion, and gold
  certificates owned by them to the Federal
  Reserve, in exchange for 20.67 per troy ounce.
• Violation of the order was punishable by fine up
  to 10,000 (167,700 if adjusted for inflation as
  of 2010) or up to ten years in prison, or both.
  Most citizens who owned large amounts of gold had
  it transferred to countries such as Switzerland

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Bank Failures Before and after the Glass-Steagall
Banking Reform Act of 1933
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Unemployment, 19291942
15
Creating Jobs For The Jobless

• Unemployment is 1-in-4, highest in nations
  history, before or after.
• Civilian Conservation Corps.
• Unemployed, unmarried men, ages 1825, between
  1933-42
• Members received a base pay of 30 per month and
  lived in work camps that were generally operated
  by the Department of War.
• About 3 million men received employment on
  projects that included such work as
  reforestation, construction of fire-observation
  towers, laying of telephone lines, and
  development of state parks.

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Creating Jobs For The Jobless

• Federal Emergency Relief Act
• Money for states for jobs programs
• FERA's main goal was to alleviate adult
  unemployment.
• In order to achieve this goal, FERA provided
  state assistance for the unemployed and their
  families.
• From when it began in May 1933 until it closed
  its operations in December 1935, it gave states
  and localities 3.1 billion to operate local work
  projects and transient programs.

FERA camp in Pennsylvania
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Creating Jobs For The Jobless

• Agricultural Adjustment Act
• Restricted agricultural production paying farmers
  to reduce crop area. Its purpose was to reduce
  crop surplus so as to effectively raise the value
  of crops.
• The farmers were paid subsidies by the federal
  government for letting a portion of their fields
  lay fallow.
• The Act created a new agency, the Agricultural
  Adjustment Administration, to oversee the
  distribution of the subsidies.
• It is considered the first modern U.S. farm bill.
• tax underwriting the AAA was declared
  unconstitutional by the Supreme Court in the case
  United States v. Butler, because, among other
  stated reasons, it taxed one farmer in order to
  pay another.

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Rise of Demagogues

• Huey Long-Louisiana Governor/Senator who
  advocated a Share the Wealth program
• Father Charles Coughlin

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National Recovery Administration

• Most ambitious of the early New Deal programs
• NRA allowed industries to create "codes of fair
  competition and to help workers by setting
  minimum wages and maximum weekly hours. It also
  allowed industry heads to collectively set
  minimum prices.
• Enforcement
• Massive publicity campaigns designed to make
  selfless participation in NRA seem patriotic.

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NRA, Cont.

• Led to short-term rise in production and economy.
  
• About 23,000,000 people worked under the NRA fair
  code.
• However, violations of codes became common and
  attempts were made to use the courts to enforce
  the NRA.
• The NRA was discovering it could not enforce its
  rules. Black markets grew up
• Schecter Poultry Corp. v. US 295 U.S. 495 (1935),
  the Supreme Court declared the NRA as
  unconstitutional because it attempted to regulate
  commerce that was not interstate in character,
  and that the codes represented a unacceptable
  delegation of power from the legislature to the
  executive

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Work Progress Administration

• Created in 1935
• Harry Hopkins.
• Employment on useful projects
• 11 Billion spent building public buildings and
  parks, bridges and roads.
• Over 8 years, 9 Mill. given jobs.
• It fed children and redistributed food, clothing
  and housing. Almost every community in America
  has a park, bridge or school constructed by the
  agency

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Creating Jobs For The Jobless

• Home Owners Loan Corp.
• established in 1933 by the Homeowners Refinancing
  Act
• Its purpose was to refinance homes to prevent
  foreclosure. It was used to extend loans from
  shorter loans to fully amortized, longer term
  loans (typically 20-25 years).
• Through its work it granted long term mortgages
  to over a million people facing the loss of their
  homes.
• The HOLC stopped lending circa 1935, once all the
  available capital had been spent.

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Creating Jobs For The Jobless

• Civil Works Administration
• Established to create manual labor jobs for
  millions of unemployed. The jobs were merely
  temporary, for the duration of the hard winter.
• The CWA was a project created under the Federal
  Emergency Relief Administration (FERA). The CWA
  created construction jobs, mainly improving or
  constructing buildings and bridges. It ended on
  March 31, 1934, after spending 200 million a
  month and giving jobs to 4 million people.
• CWA provided much employment there were many
  taxpayers who saw leaves being raked but nothing
  of permanent value. society

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Public Works Administration

• Public Works Administration (PWA) designed to
  help industries and the unemployed.
• Under the Sec. of Interior Harrold Ickes
• Primary purpose
• 4 Billion to be spent on 34,000 public projects
  such as buildings, highways and parks.

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Dust Bowls And Black Blizzards

• Late in 1933 prolonged drought hits the
  trans-Miss. Great Plains.
• No rain, high heat, high winds and over-tilling
  of land
• Great storm clouds of dust that would sweep over
  towns.

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Dust Bowl

• Diaspora of farmers from Kansas, Oklahoma Texas
  and Eastern Colorado. Grapes of Wrath.
• Frazie-Lemke Farm Bankruptcy Act (1934).
• Resettlement Administration relocates farmers to
  better land and plants trees across the prairie
  to act as wind-breaks

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Indian New Deal

• Indian New Deal Wheeler-Howard Act
• Indian Reorganization Act of 1934.
• Essentially does away with the Dawes Act.
• Allows tribes to re-establish tribal governments
  and to preserve their culture.

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Battling Bankers And Big Business

• Congress determined to fix the problems in the
  financial sector that had led to the stock crash.
  
• Truth in Securities Act.
• Securities and Exchange Commission (SEC) to help
  enforce and to act as a watchdog.
• Also strict regulations of public Utility holding
  companies

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The TVA

• Two problems
• Electric utilities.
• Tenn. River valley.
• Hundred Days Congress passes an Act creating
  Tennessee Valley Authority (TVA).
• Damn Tennessee river and tributaries to build
  electric power stations.
• Goals?

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Map 34.2 TVA Area
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TVA Assessed

• Although criticized as socialism, was a huge
  success
• Brought employment
• Brought recreational area
• Flood Control
• Cheap Power
• Soil restoration and reforestation
• Led to similar federally-funded flood control
  projects on other rivers
• Columbia, Colorado, and Missouri.
• Power and water from these projects helped the
  development of the west.

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Housing Reform

• Federal Housing Authority (1934).
• Very successful and popular. Outlives the New
  Deal.
• to improve housing standards and conditions to
  provide an adequate home financing system through
  insurance of mortgage loans and to stabilize the
  mortgage market

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Social Security

• Social Security Act of 1935 one of most
  significant New Deal achievements.
• Federal and state unemployment insurance to
  cushion the blow of future economic downturns.
• Old-age pensions to give a security net to the
  elderly
• Financed by payroll taxes paid by both employers
  and employees.
• Criticized by Republicans as Socialism.

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A New Deal For Unskilled Labor

• Wagner (National Labor Relations) Act of 1935.
  Milestone victory for Labor.
• Right to organize unions
• Prompts new union organization by unskilled
  workers.
• Creates the National Labor Relations Board NLRB.

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A New Deal For Unskilled Labor

• John L. Lewis. Boss of United Mine Workers, he
  formed the CIO within the AFL in 1935.
• Lewis takes the CIO out of the AFL.
• Sit-Down strike against GM

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Rise and Decline of Organized Labor
37
Roosevelts Coddling Of Labor

• Unskilled workers pressed their advantage and
  took on US Steel.
• Little Steel savagely resisted. 1937, Memorial
  Day Massacre, 20 or so killed
• 1938 Fair Labor Standards Act.
• The FLSA established a national minimum wage,3
• guaranteed 'time-and-a-half' for overtime in
  certain jobs,
• and prohibited most employment of minors in
  "oppressive child labor," a term that is defined
  in the statute
• CIO broke completely with the AFL in 1938 and
  becomes the Congress of Industrial Organizations,
  By 1940 has 4 Mill, including 200,000 blacks.

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Election of 1936

• Democrats were riding high.
• Republicans nominate Alf Landon of Kansas.
• Democrats blame Republicans for depression
• Republicans claim New Deal is inefficient and
  waste of money.
• Was a bitter campaign. Shades of class warfare.
• Roosevelt wins easily

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Court-Packing

• Roosevelt saw the Supreme Court as biggest
  obstacle to New Deal.
• Reasons
• Court had ruled against Roosevelt In 7 of 9 New
  Deal cases
• Court had many ultra-conservative hold-overs from
  Laissez faire. Six were over 70. None had been
  appointed by FDR.
• Appoint an additional Justice to the U.S. Supreme
  Court for every sitting member over the age of
  70½, up to a maximum of six.

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Court-Packing

• Roosevelt misjudged badly.
• Roosevelt is resoundingly vilified.
• Court, though, did respond.
• Owen Roberts
• "the switch in time that saved nine?
• One of the oldest conservatives resigns.
• Undercuts support for Roosevelt plan.

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The Twilight Of The New Deal

• In FDRs first term recovery had been modest.
• 1937. Roosevelt recession.
• Causes
• John Maynard Keynes deficit spending.
• The deficits run are still much too small to cure
  the depression.
• But major departure in the practice of government
  spending that lasts for many years.

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• NEW DEAL OR RAW DEAL
• Students get on their own.
• FDRS BALANCE SHEET
• Students get on their own.