The Great Depression and the New Deal 1933-1939

1
The Great Depression and the New Deal1933-1939
2
FDR  Politician in a Wheelchair

• Franklin D. Roosevelt's wife, Eleanor Roosevelt,
  was to become the most active First Lady in
  history.  She powerfully influenced the policies
  of the national government, battling for the
  impoverished and oppressed.
• Roosevelt's commanding presence and golden
  speaking voice made him the premier American
  orator of his generation.

3
Presidential Hopefuls of 1932

• In the Democratic campaign of 1932, Roosevelt
  attacked the Republican Old Deal and concentrated
  on preaching a New Deal for the "forgotten man." 
  He promised to balance the nation's budget and
  decrease the heavy Hooverian deficits.
• Although the campaign for the Republicans was
  dire, Herbert Hoover reaffirmed his faith in
  American free enterprise and individualism.  He
  predicted prosperity if the Hawley-Smoot Tariff
  was repealed.

4
Hoover's Humiliation in 1932

• Franklin Roosevelt won the election of 1932 by a
  sweeping majority, in both the popular vote and
  the Electoral College.
• Beginning in the election of 1932, blacks became,
  notably in the urban centers of the North, a
  vital element of the Democratic Party.

5
FDR and the Three R's  Relief, Recovery, Reform

• Franklin Roosevelt was inaugurated on March 4,
  1933.
• On March 6-10, President Roosevelt declared a
  national banking holiday as a prelude to opening
  the banks on a sounder basis.  The Hundred Days
  Congress/Emergency Congress (March 9-June 16,
  1933) passed a series laws in order to cope with
  the national emergency (The Great Depression).
• Roosevelt's New Deal programs aimed at 3 R's 
  relief, recovery, reform.  Short-range goals were
  relief and immediate recovery, and long-range
  goals were permanent recovery and reform of
  current abuses.
• Congress gave President Roosevelt extraordinary
  blank-check powers  some of the laws it passed
  expressly delegated legislative authority to the
  president.
• The New Dealers embraced such progressive ideas
  as unemployment insurance, old-age insurance,
  minimum-wage regulations, conservation and
  development of natural resources, and
  restrictions on child labor.

6
Roosevelt Tackles Money and Banking

• The impending banking crisis caused Congress to
  pass the Emergency Banking Relief Act of 1933. 
  It gave the president power to regulate banking
  transactions and foreign exchange and to reopen
  solvent banks.  President Roosevelt began to give
  "fireside chats" over the radio in order to
  restore public confidence of banks.
• Congress then passed the Glass-Steagall Banking
  Reform Act, creating the Federal Deposit
  Insurance Corporation (FDIC).  A reform program,
  the FDIC insured individual bank deposits up to
  5,000, ending the epidemic of bank failures.
• In order to protect the shrinking gold reserve,
  President Roosevelt ordered all private holdings
  of gold to be given to the Treasury in exchange
  for paper currency and then the nation to be
  taken off the gold standard-Congress passed laws
  providing for these measures.
• The goal of Roosevelt's "managed currency" was
  inflation, which he believed would relieve
  debtors' burdens and stimulate new production. 
  Inflation was achieved through gold buying the
  Treasury purchased gold at increasing prices,
  increasing the dollar price of gold.  This policy
  increased the amount of dollars in circulation.

7
Creating Jobs for the Jobless

• President Roosevelt had no qualms about using
  federal money to assist the unemployed in order
  to jumpstart the economy.  Congress created the
  Civilian Conservation Corps (CCC), which provided
  employment for about 3 million men in government
  camps.  Their work included reforestation, fire
  fighting, flood control, and swamp drainage.
• Congress's first major effort to deal with the
  massive unemployment was to pass the Federal
  Emergency Relief Act.  The resulting Federal
  Emergency Relief Administration (FERA) was headed
  by Harry L. Hopkins.  Hopkins's agency granted
  about 3 billion to the states for direct relief
  payments or for wages on work projects.  Created
  in 1933, the Civil Works Administration (CWA), a
  branch of the FERA, was designed to provide
  temporary jobs during the winter emergency. 
  Thousands of unemployed were employed at leaf
  raking and other manual-labor jobs.
• Relief was given to the farmers with the
  Agricultural Adjustment Act (AAA), making
  available millions of dollars to help farmers
  meet their mortgages.
• The Home Owners' Loan Corporation (HOLC) assisted
  many households that had trouble paying their
  mortgages.

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A Day for Every Demagogue

• As unemployment and suffering continued, radical
  opponents to Roosevelt's New Deal began to
  arise.  Father Charles Coughlin's anti-New Deal
  radio broadcasts eventually became so
  anti-Semitic and fascistic that he was forced off
  the air.  Senator Huey P. Long publicized his
  "Share Our Wealth" program in which every family
  in the United States would receive 5,000.  His
  fascist plans ended when he was assassinated in
  1935.  Dr. Francis E. Townsend attracted millions
  of senior citizens with his plan that each
  citizen over the age of 60 would receive 200 a
  month.
• Congress passed the Works Progress Administration
  (WPA) in 1935, with the objective of employment
  on useful projects (i.e. the construction of
  buildings, roads, etc.).  Taxpayers criticized
  the agency for paying people to due "useless"
  jobs such as painting murals.

9
A Helping Hand for Industry and Labor

• The National Recovery Administration (NRA) was
  designed to assist industry, labor, and the
  unemployed.  Individual industries, through "fair
  competition" codes, were forced to lower their
  work hours so that more people could be hired a
  minimum wage was also established.  Workers were
  formally guaranteed the right to organize and
  bargain collectively through representatives of
  their choosing, not through the company's
  choosing. 
• Although initially supported by the public,
  collapse of the NRA came in 1935 with the Supreme
  Court's Schechter decision in which it was ruled
  that Congress could not "delegate legislative
  powers" to the president and that congressional
  control of interstate commerce could apply to
  local fowl business.
• The Public Works Administration (PWA) was
  intended for both industrial recovery and for
  unemployment relief.  Headed by Harold L. Ickes,
  the agency spent over 4 billion on thousands of
  projects, including public buildings and
  highways.
• In order to raise federal revenue and provide a
  level of employment, Congress repealed
  prohibition with the 21st Amendment in late 1933.

10
Paying Farmers Not to Farm

• Congress created the Agricultural Adjustment
  Administration (AAA).  It established "parity
  prices" for basic commodities.  "Parity" was the
  price set for a product that gave it the same
  real value, in purchasing power, that it had from
  1909-1914.  The agency also paid farmers to
  reduce their crop acreage, eliminating surpluses,
  while at the same time increasing unemployment.
• The Supreme Court struck down the AAA in 1936,
  declaring its regulatory taxation provisions
  unconstitutional.
• The New Deal Congress passed the Soil
  Conservation and Domestic Allotment Act of 1936. 
  The reduction of crop acreage was now achieved by
  paying farmers to plant soil-conserving crops.
• The Second Agricultural Adjustment Act of 1938
  continued conservation payments if farmers
  obeyed acreage restrictions on specific
  commodities, they would be eligible for parity
  payments.

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Dust Bowls and Black Blizzards

• Late in 1933, a prolonged drought struck the
  states of the trans-Mississippi Great Plains. 
  The Dust Bowl was partially caused by the
  cultivation of countless acres, dry-farming
  techniques, and mechanization.
• Sympathy towards the affected farmers came with
  the Frazier-Lemke Farm Bankruptcy Act, passed in
  1934.  It made possible a suspension of mortgage
  foreclosures for 5 years.  It was struck down in
  1935 by the Supreme Court.
• In 1935, President Roosevelt set up the
  Resettlement Administration, given the task of
  moving near-farmless farmers to better lands.
• The Indian Reorganization Act of 1934 encouraged
  Native American tribes to establish
  self-government and to preserve their native
  crafts and traditions.  77 tribes refused to
  organize under the law, while hundreds did
  organize.

12
Battling Bankers and Big Business

• In order to protect the public against fraud,
  Congress passed the "Truth in Securities Act"
  (Federal Securities Act), requiring promoters to
  transmit to the investor sworn information
  regarding the soundness of their stocks and
  bonds.
• In 1934, Congress took further steps to protect
  the public with the Securities and Exchange
  Commission (SEC).  It was designed as a watchdog
  administrative agency.

13
The TVA Harnesses the Tennessee River

• Zealous New Dealers accused the electric-power
  industry of gouging the public with excessive
  rates.
• 2.5 million of America's most poverty-stricken
  people inhabited Muscle Shoals.  If the
  government constructed a dam on the Tennessee
  River in Muscle Shoals, it could combine the
  immediate advantage of putting thousands of
  people to work with a long-term project for
  reforming the power monopoly. 
• In 1933, the Hundred Days Congress created the
  Tennessee Valley Authority (TVA).  It was
  assigned the task of predicting how much the
  production and distribution of electricity would
  cost so that a "yardstick" could be set up to
  test the fairness of rates charged by private
  companies.
• The large project of constructing dams on the
  Tennessee River brought to the area full
  employment, the blessings of cheap electric
  power, low-cost housing, abundant cheap nitrates,
  the restoration of eroded soil, reforestation,
  improved navigation, and flood control.  The
  once-poverty-stricken area was being turned into
  one of the most flourishing regions in the United
  States.
• The conservative reaction against the
  "socialistic" New Deal would confine the TVA's
  brand of federally guided resource management and
  comprehensive regional development to the
  Tennessee Valley.

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Housing Reform and Social Security

• To speed recovery and better homes, President
  Roosevelt set up the Federal Housing
  Administration (FHA) in 1934.
• To strengthen the FHA, Congress created the
  United States Housing Authority (USHA) in 1937. 
  It was designed to lend money to states or
  communities for low-cost construction.
• The more important success of New Dealers was in
  the field of unemployment insurance and old-age
  pensions.  The Social Security Act of 1935
  provided for federal-state unemployment
  insurance.  To provide security for old age,
  specified categories of retired workers were to
  receive regular payments from Washington.
• Republicans were strongly opposed to Social
  Security.  Social Security was inspired by the
  example of some of the more highly industrialized
  nations of Europe.
•  In an urbanized economy, the government was now
  recognizing its responsibility for the welfare of
  its citizens.

15
A New Deal for Unskilled Labor

• When the Supreme Court struck down the National
  Recovery Administration (NRA), Congress,
  sympathetic towards labor unions, passed the
  National Labor Relations Act of 1935 (Wagner
  Act).  This law created a powerful National Labor
  Relations Board for administrative purposes and
  reasserted the rights of labor to engage in
  self-organization and to bargain collectively
  through representatives of its own choice.
• The stride for unskilled workers to organize was
  lead by John L. Lewis, boss of the United Mine
  Workers.  He formed the Committee for Industrial
  Organization (CIO) in 1935.  The CIO led a series
  of strikes including the sit-down strike at the
  General Motors automobile factory in 1936.
• Congress passed the Fair Labor Standards Act
  (Wages and Hours Bill) in 1938.  Industries
  involved in interstate commerce were to set up
  minimum-wage and maximum-hour levels.  Labor by
  children under the age of 16 was forbidden.
• In 1938, the CIO joined with the AF of L and the
  name "Committee for Industrial Organization" was
  changed to "Congress of Industrial
  Organizations."-led by John Lewis.  By 1940, the
  CIO claimed about 4 million members.

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Landon Challenges "the Champ" in 1936

• As the election of 1936 neared, the New Dealers
  had achieved considerable progress, and millions
  of "reliefers" were grateful to their government.
• The Republicans chose Alfred M. Landon to run
  against President Roosevelt.  The Republicans
  condemned the New Deal for its radicalism,
  experimentation, confusion, and "frightful
  waste."
• President Roosevelt was reelected as president in
  a lopsided victory.  FDR won primarily because he
  had appealed to the "forgotten man."  He had
  forged a powerful and enduring coalition of the
  South, blacks, urbanites, and the poor.

17
Nine Old Men on the Supreme Bench

• Ratified in 1933, the 20th Amendment shortened
  the period from election to inauguration by 6
  weeks.  FDR took the presidential oath on January
  20, 1937, instead of the traditional March 4.
• Roosevelt saw his reelection as a mandate to
  continue the New Deal reforms.  The
  ultraconservative justices on the Supreme Court
  proved to be a threat to the New Deal as the
  Roosevelt administration had been thwarted 7
  times in cases against the New Deal.
• With his reelection, Roosevelt felt that the
  American people had wanted the New Deal.  If the
  American way of life was to be preserved, he
  argued, and then the Supreme Court had to get in
  line with public opinion.  President Roosevelt
  released his plan to ask Congress to pass
  legislation allowing him to appoint one new
  justice to the Supreme Court for every member
  over the age of 70 who would not retire the
  maximum number of justices would now be 15. 
  Shocking both Congress and the public, the plan
  received much negative feedback.

18
The Court Changes Course

• President Roosevelt was belittled for attempting
  to break down the checks and balances system
  among the 3 branches of government.
• Justice Owen J. Roberts, formerly regarded as a
  conservative, began to vote liberal.  In March
  1937, the Supreme Court upheld the principle of
  state minimum wage for women, reversing its stand
  on a different case a year earlier.  The Court,
  now sympathetic towards the New Deal, upheld the
  National Labor Relations Act (Wagner Act) and the
  Social Security Act.
• A succession of deaths and resignations of
  justices enabled Roosevelt to appoint 9 justices
  to the Court.
• FDR aroused conservatives of both parties in
  Congress so that few New Deal reforms were passed
  after 1937.  He lost much of the political
  goodwill that had helped him to win the election
  of 1936

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The Twilight of the New Deal

• In Roosevelt's first term, from 1933-1937,
  unemployment still ran high and recovery had been
  relatively slow.  In 1937, the economy took
  another downturn as new Social Security taxes
  began to cut into payrolls and as the Roosevelt
  administration cut back on spending out of the
  continuing reverence for the orthodox economic
  doctrine of the balanced budget.
• The New Deal had run deficits for several years,
  but all of them had been somewhat small and none
  was intended.  Roosevelt embraced the
  recommendations of the British economist John
  Maynard Keynes.  The newly-accepted
  "Keynesianism" economic program was to stimulate
  the economy by planned deficit spending.
• In 1939, Congress passed the Reorganization Act,
  giving President Roosevelt limited powers for
  administrative reforms, including the new
  Executive Office in the White House.
• Congress passed the Hatch Act of 1939, barring
  federal administrative officials from active
  political campaigning and soliciting.  It also
  forbade the use of government funds for political
  purposes as well as the collection of campaign
  contributions from people receiving relief
  payments.

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New Deal or Raw Deal?

• Foes of the New Deal charged the president of
  spending too much money on his programs,
  significantly increasing the national debt by
  1939, the national debt was at 40,440,000,000. 
  Lavish financial aid and relief were undermining
  the old virtue of initiative.
• Private enterprise was being suppressed and
  states' rights were being ignored.  The most
  damning indictment of the New Deal was that it
  did not end the depression it merely
  administered "aspirin, sedatives, and
  Band-Aids."  Not until World War II was the
  unemployment problem solved.

21
FDR's Balance Sheet

• New Deal supporters had pointed out that relief,
  not economy, had been the primary objective of
  their war on the depression.  Roosevelt believed
  that the government was morally bound to prevent
  mass hunger and starvation by "managing" the
  economy.
• FDR was a Hamiltonian in his idea of big
  government, but a Jeffersonian in his concern for
  the "forgotten man."

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New Deal Acronyms

• AAA-Agricultural Adjustment Administration
• CCC-Civilian Conservation Corps
• CWA-Civil Works Administration
• FERA-Federal Emergency Relief Administration
• FHA-Federal Housing Administration
• FSA-Farm Security Administration
• HOLC-Home Owners Loan Corporation
• NRA-National Recovery Administration
• NYA-National Youth Administration
• PWA-Public Works Administration
• REA-Rural Electrification Administration
• SSA-Social Security Administration
• TVA-Tennessee Valley Authority
• WPA-Work Projects (Progress) Administration