CHAPTER 34

THE NEW DEAL

Election of 1932

• GOP re-nominates Hoover… why?• Dems nominate Franklin Roosevelt

– Gov. of New York• Heavy state spending

– Repeal prohibition– Very vague about plans– Young advisors known as the “Brain Trust”

• FDR won big - remained quiet aboutplans

Election of 1932

First 100 Days - Banks

• Needed to stop banks from closing– Declared a “Bank Holiday”– Emergency Banking Act

• (8 hours to pass)• Gave the govt. the power to regulate banking

transactions and reopen “good banks”– Glass-Steagall Banking

Reform Act• Created the FDIC

Unemployment during the Depression

First 100 Days - Jobs

• Civilian Conservation Corps (CCC)– Employed about 3 million young men– Flood control, reforestation, conservation– Were required to send $ home to family

Civilian Conservation Corps

Direct Relief… Finally

• Federal Emergency Relief Act (FERA)– Led by Harry Hopkins

• member of the brain trust– Provided about $3 million for direct relief

and public works projects

Harry Hopkins

Other First 100 Days Legislation

• Agricultural Adjustment Act (AAA)– $ to help farmers pay mortgages

• Homeowner’s Loan Corp. (HOLC)• Civil Works Administration

– Jobs, make work tasks– Helped get through winter of ‘33

• All this was more than any Prez everdreamed of doing - needed more

Critics of the New Deal

• Fr. Charles Coughlin– Priest with a radio show and

lots of listeners• Dr. Frances Townsend

– Wanted $200 a month for those over 60

– On the condition they spend it

“The Kingfish”

• The most powerfulcritic of the NewDeal was LouisianaSenator Huey Long– “Share our Wealth”

program– Guaranteed $5,000

income for everyAmerican family

• Got the money byheavily taxing the rich

FDR’s Response to the Critics

• Works Progress Administration– $ for public building projects– provided 9 million with jobs– jobs for college students, artists,

actors, & musicians• National Recovery Administration (NRA)

– Individual industries were to work out fair competition codes

– Labor unions were formally given the right to organize and bargain collectively

– Later found unconstitutional (Sick Chicken Case)

Public Works Administration

• Originally part of the NRA• Provided about $4 billion for public

works programs– Grand Coulee Dam on the Columbia River

• Paid for by taxes on alcohol– 1933 - 21st Amendment - repealed

prohibition

Farmers During the Depression

• Agricultural Adjustment Adm. (AAA)– Set “parity” prices for certain goods– Paid farmers to actually grow less

• $ came from a tax on processors of farmproducts

– Was passed after lots of crops already hadbeen planted

• Land was plowed up and livestock slaughtered• Very controversial

– Found unconstitutional

Farmers During the Depression

• Soil Conservation & Domestic Allotment Act– Paid farmers to grow soil-conserving crops or

to let land sit for a time period• Second Agricultural Adjustment Act

– Gave farmers parity prices if they did not growover a certain amount of certain crops

• Dust Bowl– Over tilling of land, drought, high winds– Govt. helped by moving farmers and planting

trees to stop the wind

Indian Re-Organization Act

• U.S. govt. policy still shaped by theDawes Act

• This new law encouraged tribes toestablish local self-govt.

• Also encouraged tribes to preserve theirnative crafts & traditions– Some tribes refused to organize under it

Reform - Banking & Business

• Truth in Securities Act– Sound information must be provided about stocks

• Securities & Exchange Commission– Est. to monitor the stock exchange

• Housing construction– Federal Housing Administration

• Small loans to homeowners to improve homesof build new ones

– U.S. Housing Authority• Lent $ to states & communities for low cast

construction (lots of opposition)

Tennessee Valley Authority (1933)

• Govt. built a series of dams along the TennesseeRiver– Partly to see how much it really cost to

produce power (not as much as was thought)• Some viewed govt. ownership of a public utility

like this very socialistic• Very popular for many• Led to cheap power, jobs, improvements in

farming, transformed the area

Tennessee Valley Authority (1933)

Social Security Act (1935)

• Three major parts:– 1) federal/state unemployment insurance– 2) pensions for the elderly

• Paid for by a tax on employees and employers– 3) money for the blind, disabled, children

and other dependents• Met heavy GOP opposition• Needed because of boom & bust cycle

of capitalism

Business Cycle

New Deal & Labor Unions

• NRA did a lot for labor, but declaredunconstitutional

• Wagner Act / National Labor RelationsAct (1935)– Created the National Labor Relations

Board– Reasserted the right of unions to organize

and bargain collectively

New Deal & Labor Unions

• Organization of unskilled labor shot up– Led by John L. Lewis

• Committee for Industrial Organization (CIO)• Split with the AFL, later became Congress of…

– Strikes had not been effective• new tactic - sit down strike• Successful at a GM

plant in Detroit

John L. Lewis

Sit-Down Strike

Fair Labor Standards Act

• Est. a minimum wage and maximum #of hours for industries involved ininterstate commerce– 40¢ / hour…..40 hrs. / week

• Forbade child labor under the age of 16• Overall, labor made huge strides with

the support of FDR

Election of 1936

• Dems were doing well with FDR• GOP nominates Alfred Landon

– moderate Gov. of Kansas who supportedsome New Deal programs

– Said FDR was too radical, experimental, and wasteful

• FDR won big

Election of 1936

FDR & the Supreme Court

• FDR saw his victory as a mandate forhis ideas and programs– He decided to go after the Supreme Court -

had won against him 7 of 9 times– Was very old and conservative

• 6 of 9 justices over 70 years old– FDR thought the public would support him

in an attempt to change the court

FDR & “Court-Packing”

• FDR proposed adding one justice for all thoseover the age of 70 (6 total)

• Congress and the public were both againstthis– the Court was something you don’t mess

with– The Court did start to vote more liberally after this

• Was a major defeat for FDR– He did eventually appoint 8 justices

FDR & “Court-Packing”

“Great! Now,once more all

together!”

Qualifying Test forthe Supreme Court

New Deal… Success???

• As of 1936 unemployment was still aproblem– 1937 - things started to look up

• Government Debt– How is all this being paid for?– John Maynard Keynes

• A British economist who believed deficitspending by the govt. was the only way to get acountry out of a severe depression

• Changed the role of the govt. in the economy

Other New Deal Programs

• Re-Organization Act– Gave the Prez unlimited powers for

administrative reforms– Allowed a sweeping reorganization of the

executive to streamline efficiency• Hatch Act

– A response to $ used in the New Deal and itspotential political effects (campaign $)

– Federal officials can not solicit $ for campaigncontributions (except for certain high rankingofficials)

Effects of the Depression & the New Deal

• New Deal lost momentum as the focus of thepopulation changed to Europe - pending war

• Effects:– Some said no effect at all - WWII ended it– Federal bureaucracy grew– National debt went way up– Some saw the negative effects of direct relief– Change in the theory behind govt’s role

• Actively help unfortunate citizens– Capitalism was saved, worst aspects fixed?