The Great Depression &The New Deal
1933 - 1938
Election of 1932
Republican – Herbert Hoover Democrat – Franklin D. Roosevelt
Deep concern for the plight of the “forgotten man” Eleanor Roosevelt – became the most active First Lady
in history Platform:
Repeal of prohibition & a balanced budget FDR promised to experiment with bold new programs
for economic & social programs
FDR is Elected
Boldly declared a nationwide banking holiday. Why? March 6-10, 1933 Reopen on a sounder basis
Called Congress into an emergency session “Hundred Days” (March 9-June 6, 1933) Introduced his New Deal program
aimed at the 3 R’s: Relief Recovery Reform
FDR Tackles Money & Banking
Emergency Banking Relief Act of 1933 President had power to regulate banking transactions &
foreign exchange & to reopen banks FDR started his “fireside chats” to convince the public to
put their money back in the banks
Glass-Steagall Banking Reform Act created the Federal Deposit
Insurance Corporation (FDIC) Ensured individual deposit up to $5,000
FDR & Money
Ordered all private holdings of gold to be surrendered to the Treasury in exchange for paper currency
Took the nation off of the gold standard He hoped his “managed currency” would cause inflation Feb 1934 – FDR returned the nation to a limited gold
standard for purposes of international trade only
FDR Creating Jobs
Civilians Conservation Corps (CCC) created jobs for young men in gov’t wilderness camps
Federal Emergency Relief Act (FERA) granted about $3 billion for wages on work projects
Works Progress Administration (WPA) spent $11 billion on public housing, bridges, & roads FERA & WPA headed by Harry Hopkins
More of the New Deal
Home Owners’ Loan Corporation (HOLC) Refinance mortgages on nonfarm homes
Civil Works Administration (CWA) Provided purely temporary jobs “boondoggling” tasks
New Deal Critics and Demagogues
Father Charles Coughlin (Michigan) Called for “social justice” for all Americans but became
anti-Semitic & fanatic
Huey Long, Louisiana Senator Proposed a “share our wealth” program
which would make “every man a king”
Francis Townshend Called for every American over 60 years of age receive
$200 a month
New Deal Programs conti
National Recovery Act (NRA) attempted to work out codes of “Fair competition”
between industry & labor / benefited organized labor Shot down in 1935 in Schechter “sick chicken” case
Congress could not delegate legislative powers to the executive
Public Works Administration (PWA) spent $4 billion on long ranged plans –
public buildings, highways, & parkways Headed by Harold Ickes
Social Security created Federal-State Unemployment Insurance & pensions for retired workers
New Deal Amendments
20th Amendment Moved up the presidential inauguration from March 4th
to Jan 20th Got rid of the lame duck session of Congress & shorten
that of the President
21st Amendment Repealed prohibition
FDR & Farmers
Agricultural Adjustment Act (AAA) Millions of dollars to help farmers meet their mortgages Paid farmers not to farm// increased unemployment
Soil Conservation & Domestic Allotment Act (1936) Paid farmers to plant soil-conserving crops or let their
land lie fallow Second Agricultural Act 1938
Continued conservation payments
Dust Bowl & Black Blizzards
1933 – prolonged drought in Great Plains caused severe dust storms Overproduction during WWI contributed Hardest hit: Missouri, TX, KS, AR, OK
Refugees fled to California – “Okies” & “Arkies” John Steinbeck’s The Grapes of Wrath portrayed the
story of these human “tumbleweeds”
Help for Farmers
Frazier-Lemke Farm Bankruptcy Act – 1934 Suspension of mortgage foreclosures for 5 yrs. Voided by Supreme Court
Revised – grace period for 3 years
Resettlement Administration (1935) Removed near-farmless farmers to
better land
CCC planted young trees as
windbreaks
Native Americans
Forced Assimilation Policies were resisted by John Collier – Commissioner of Indian Affairs
Indian Reorganization Act of 1934 “Indian New Deal” Encouraged tribes to establish local self-gov’t & to
preserve their native crafts & traditions Helped stop the loss of Indian lands & revived tribes’
interest in their identity & culture
Battling Bankers & Big Business
“Truth in Securities Act” – Federal Securities Act Required promoters to transmit to the investor sworn
information regarding the soundness of their stocks & bonds
Securities & Exchange Commission (SEC) (1934) Watchdog administrative agency
Public Utility Holding Company Act of 1935 Stop bloated growth
TVA
Tennessee Valley Authority 1933 – most radical provided for government ownership of an electrical
power plant at Muscle Shoals on the TN River Proposed by Senator George W. Norris of Nebraska Used as a “yardstick” to test the fairness of rates charged
by private companies Utility corporations charged that the low cost was
due to dishonest bookkeeping & the absence of taxes
Is this a good program in your opinion?
Housing Reform & Social Security
Federal Housing Administration (FHA) 1934 Provided small loans to householders, both for improving
their homes & for building new ones US Housing Authority (USHA) 1937
Designed to lend money to states or communities for low-cost construction of public housing
Social Security Act of 1935 Provided for federal-state unemployment insurance Pensions for retired workers financed by both employers &
employees Money for handicapped, delinquent children, & other
dependents ALL STILL IN USE TODAY
New Deal for Unskilled Workers
Wagner-National Labor Relations Act 1935 Assisted the right of labor to bargain collectively &
created a National Labor Relation Board which encouraged unskilled workers to organize themselves
Committee for Industrial Organization (CIO) formed within the ranks of the AF of L – 1938 separated from AF of L Organized all workers within an industry Headed by John L. Lewis Used sit-down strike –General Motors at Flint, Michigan 1938 – included blacks
More Help for Labor
Fair Labor Standards Act - 1938 Created a minimum wage of $.40 an hour & a maximum
work week of 40 hours Child labor under 16 forbidden; under 18 if occupation
was dangerous Excluded agriculture, service, & domestic workers
Blacks, Mexican-Americans & women did not benefit
Election of 1936
Democrats – FDR Appealed to the “forgotten man”
Republicans – Alfred M. Landon Wanted more reform but condemned FDR’s reforms
FDR wins & Democrats take Congress again FDR supporters:
Left-wingers * Blacks Southerners * Urbanites Poor * New Immigrants
FDR’s “Court Packing” Scheme
FDR asked Congress for legislation to permit him to add a new justice to the Supreme Court for every justice that was over 70 Maximum membership would be 15
Viewed as a break down of the 3 branches of gov’t Congress would not agree
Justice Owen J. Roberts changed from conservative to more liberal
The Supreme Court
March 1937 – upheld state minimum wage for women
Upheld Wagner Act & Social Security Act FDR voted full pay for justices over 70 who retired
Justice Hugo Black replaced one retiring justice Congress did pass a court reform bill but it only
applied to the lower courts FDR did get to appoint 9 justices
More than anyone since Washington
The Twilight of the New Deal
1937 – economy took a sharp downturn “Roosevelt recession” still 15% unemployed Caused by gov’t policies, with Social
Security taxes biting into payrolls and gov’t
cut back on spending for balanced budget
April 1937 – FDR announced a bold program to stimulate the economy by planned deficit spending “Keynesianism” - after economist John Maynard Keynes Government would have to spend more to stimulate recovery
Hatch Act of 1939
Act barred federal administrative officials, except the highest policy-making officers, from active political campaigning & soliciting
Forbade the use of gov’t funds for political purposes as well as the collection of campaign contributions from people receiving relief payments
Broadened in 1940 Placed limits on campaign contributions
& expenditures Clever ways were found to get around the new rules
Problems with the New Deal
Americans were getting a bad case of the “gimmies”
Failed to cure the depression Not until WWII that unemployment problem was solved Many believed more deficit spending would have helped More farm surpluses under FDR Millions still unemployed in 1939
FDR’s Balance Sheet
New Dealers pointed out that relief was primary objective
Claimed it relieved worst of crisis of 1933 Accepted principal that the gov’t was morally
bound to prevent mass hunger and starvation by “managing” the economy
Purged American capitalism of some of its worst abuses so it could be saved from itself
Jeffersonian or Hamiltonian?
Jeffersonian Bold reform without
bloody revolution Concern for the
“forgotten man”
Hamiltonian Espousal of big
government Took middle road
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