C H A P T E R

Managing the Great Depression, Forging the New Dea

1929-1938

Early Responses to the Depression, 1929-1932 Enter Herbert Hoover

Rising Discontent

The 1932 Election

The New Deal Arrives, 1933-1935 Roosevelt and the First Hundred Days

The New Deal Under Attack

The Second New Deal and the Redefining of Liberalism, 1935-1938 The Welfare State Comes into Being

From Reform to Stalemate

The New Deal and American Society A People's Democracy

Reshaping the Environment

The New Deal and the Arts

The Legacies of the New Deal

EJ3 LEARNING FOCUS

What new roles did the Amer ican government take on dur ing the New Deal, and how did these roles shape the econ­omy and society?

I n his inaugural address in March 1933, President Franklin Delano Roosevelt did not hide

the country's precarious condi t ion. "A host of unemployed citizens face the gr im problem of existence," he said, "and an equally great number toi l w i th little return. Only a foolish opt imist can deny the dark realities of the moment." Roosevelt, his demeanor sin­cere and purposeful, saw both despair and determinat ion in the nation's citizens. "This nation asks for action, and action now." From Congress he would request "broad Executive power to wage a war against the emergency, as great as the power that wou ld be given to me if we were in fact invaded by a foreign foe."With these words, Roosevelt launched a program of federal activism — which he called the New Dea l—tha t wou ld change the nature of American government.

The New Deal represented a new form of liberalism, a fresh Interpretation of the ideology of individual rights that had long shaped the character of American society and politics. Classical nineteenth-century liberals believed that, to protect those rights, government should be small and relatively weak. However, the pro­gressives of the early twent ie th century believed individual freedom and oppor­tun i ty were best safeguarded by strengthening state and federal control over large businesses and monopolies. New Deal activists went much further: their social-welfare liberalism expanded individual rights to include economic secu­rity. Beginning in the 1930s and cont inuing through the 1960s, they increased the responsibility of the national government for the welfare of ordinary citi­zens. Their efforts did not go unchallenged. Conservative critics of the New Deal charged that its "b ig government" programs were paternalistic and dangerous, undermining individual responsibility and constraining personal freedom. This division between the advocates and the critics of the New Deal shaped American politics for the next half century.

Before Roosevelt was elected president, between the onset of the depres­sion in 1929 and November 1932, the "dark realities of the moment " wore down American society. Rising unemployment, shuttered businesses, failing banks, and home foreclosures tore at the nation's social fabric. As crisis piled upon crisis and the federal government's initiatives under President Hoover proved ineffectual, Americans had to reconsider more than the role of government in economic life: they had to rethink many of the principles of individualism and free enterprise that had guided so much of the nation's history.

678

I L L I N I O S |ATIONAL YOUTH ADMINISTRATION

IRLS ' ARE YOU TERESTED IN A JOB?

DOUT WHAT AN OCCUPATION HAS TO OFFER YOU IN EMPWYMENT-SICUIMTY a n d PROMOTION

I N O C C U P A T I O N S The New Deal This Federal Arts Project poster f r o m 1936 cap tu red t h e spir i t o f t h e New Deal under President Franklin Roosevelt. Produced for t h e Il l inois branch o f t he Nat ional Youth Admin i s t r a t i on , one of t he many New Deal agencies of t he decade, t h e poster demonst ra tes the goal of g e t t i n g Amer icans w o r k i n g again. Roosevelt and o ther "New Dealers" h o p e d t o decrease u n e m p l o y m e n t , raise people's spirits, and p o i n t t o a b r igh te r fu tu re in t h e mids t o f t he Great Depression. Library of Congress.

.OSd

CHAPTER CHRONOLOGY

As you read, ask yourself why this chapter begins and ends with these dates and identify the links among related events.

1929 • Stock market crash

1930 • Smoot-Hawley Tariff

1931- • Scottsboro case: trials and appeals 1937

1932 • B o n u s A r m y m a r c h e s o n W a s h i n g t o n . D . C . (May-July) • Franklin Delano Roosevelt e lected pres ident

(November )

1933 • FDR's inaugura l address and first f ireside chats • Emergency Banking Act launches the Hundred Days • FDR takes Un i ted States o f f t he g o l d s tandard • Civil ian Conservat ion Corps (CCC) created • Agr icu l tura l A d j u s t m e n t Act (AAA) • Nat ional industr ia l Recovery Act (NiRA) • Tennessee Valley A u t h o r i t y (TVA) establ ished • Townsend Clubs p r o m o t e Old Age Revolv ing

Pension Plan

1934 • Securities and Exchange Commiss ion (SEC) created • Southern Tenant Farmers Un ion (STFU) f o u n d e d • Indian Reorganizat ion Act • Senator Huey Long p romotes Share Our Wealth Society

1935 • Supreme Cour t vo ids NIRA in Schechter v. United States

• Nat ional Labor Relations (Wagner) Act • Social Security Act creates old-age pens ion system • Works Progress Admin i s t r a t i on (WPA) created • Rural Electr if icat ion Admin i s t r a t i on (REA) established • Supreme Cour t voids Agr icu l tura l Ad ju s tmen t Act • Congress of Industr ia l Organizat ions (CIO) f o rmed

1936 • Landsl ide ree lect ion o f FDR marks peak of New Deal

1937 • FDR's Supreme Court plan fails

1937- • "Roosevelt recession" raises u n e m p l o y m e n t 1938

1938 • Fair Labor Standards Act

|R9I To see a longer excerpt l a l of Roosevelt's inaugural address, mentioned in the chapter introduction, along with other primary sources from this period, see Sources for America's History.

Early Responses to the Depression, 1929^1932 The American economy collapsed between 1929 and 1932, by vir tually any measure­ment. U.S. gross domestic product fell almost by half, f rom $103 bi l l ion to $58 billion. Consumption dropped by 18 percent, construction by 78 percent, and private invest­ment by 88 percent. Nearly 9,000 banks closed their doors, and 100,000 businesses failed. Corporate profits fell f rom $10 bi l l ion to $1 bi l l ion . Unemployment rose to 25 percent. Fifteen m i l l i o n people were out o f work by 1933. "FFoover made a souphound outa me!" sang jobless harvest hands i n the Southwest.

The depression respected no national boundaries. Germany had preceded the United States into economic contraction in 1928, and its economy, burdened by heaw Wor ld War I reparations payments, was brought to its knees by 1929. France, Britain, Argentina, Brazil, Poland, and Canada were hard hi t as well. Recovery proved difficult because the international gold standard constrained economic policymaking. The United States and most European nations had tied the value o f their currencies to the price o f gold, and the amount of gold held i n reserves, since the late nineteenth century. This system had worked fairly well for a few decades, but it was vulnerable during eco­nomic downturns, when large financiers wi thdrew their investments and demanded gold payments. The gold standard rendered the international monetary system inflexi­ble at precisely the moment when max imum flexibility was needed.

Enter Herbert Hoover President Herbert Hoover and Congress responded to the downturn by drawing on two influential American traditions. The first was the belief that economic outcomes were the product o f indiv idual character: people's fate was i n their own hands, and success went to those who deserved i t . The second t radi t ion held that through volun­tary action, the business communi ty could r ight itself and recover from economic downturns wi thou t relying on government assistance or, worse, submitting to gov­ernment regulation. Fol lowing these principles, Hoover asked Americans to tighten their belts and work hard. After the stock market crash, he cut federal taxes in an attempt to boost private spending and corporate investment. "Any lack o f confidence i n the economic future or the strength o f business i n the Uni ted States is foolish,"

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CHAPTER 22 Managing the Great Depression, Forging the New Deal, 1929-1938 681

Hoover assured the country i n iate 1929. Treasury secretary Andrew Mel lon sug­gested that the downturn wou ld help Americans "work harder" and "live a more moral life."

While many factors caused the Great Depression, Hoovers adherence to the gold standard was a major reason for its length and severity i n the United States. Faced w i t h economic catastrophe, hoth Britain and Germany ahandoned the gold standard i n 1931; when they d id so, their economies recovered modestly. But the Hoover adminis­tration feared that such a move would weaken the value o f the dollar, i n reality, an inflexible money supply discouraged investment and therefore prevented growth. The Roosevelt administration would ultimately remove the United States from the burdens of the gold standard i n 1933. By that time, however, the crisis had achieved catastrophic dimensions. Billions had been lost i n business and hank failures, and the economy had stalled completely.

Along wi th adherence to the gold standard, Hoover and many congressional Republicans believed in another piece o f economic orthodoxy that had protected American manufacturing in good economic times hut that proved damaging during the downturn: high tariffs (taxes on imported goods designed to stimulate American manufacturing). I n 1930, Republicans enacted the Smoot-Hawley Tariff. Despite receiving a letter f rom more than a thousand economists urging h i m to veto it , Hoover approved the legislation. What served American interests in earlier eras now under­mined them. Smoot-Hawley triggered retaliatory tariffs i n other countries, which fur­ther hindered global trade and worsened economic contraction throughout the industrialized world .

The president recognized that individual initiative, business voluntarism, and high tariffs might not he enough, given the depth of the crisis, so he proposed government action as well. He called on state and local governments to provide jobs by investing in public projects. A n d in 1931, he secured an unprecedented increase of $700 mi l l ion in federal spending for public works. Hoovers most innovative program was the Reconstruction Finance Corporation (RFC), which provided federal loans to railroads, banks, and other businesses. But the RFC lent money too cautiously, and by the end of 1932 it had loaned out only 20 percent of its $1.5 billion in funds. Like most federal initia­tives under Hoover, the RFC was not nearly aggressive enough given the severity of the depression.

Few chief executives could have survived the downward economic spiral o f 1929-1932, but Hoover s reluctance to break w i t h the ph i ­losophy of l imi ted government and his insis­tence that recovery was just around the corner contributed to his unpopularity. By 1932, Americans perceived Hoover as insensitive to the depth o f economic suffering. The nation had come a long way since the depressions o f the i870s and 1890s, when no one except the most radical figures, such as Jacob Coxey, called for direct federal aid to the unemployed (Chapter 19). Compared wi th previous chief executives — and i n contrast to his popular image as a "do-nothing" president — Hoover had responded to the national emergency w i t h unprecedented government action. But the nations needs were even more unprecedented, and Hoover's programs failed to meet them (Map 22.1).

AP EXAM TIP Eva luate t h e i m p a c t o f Hoover 's e c o n o m i c po l i c ies as c o n t r i b u t i n g f a c to r s t o t h e Great Dep ress ion .

fSSi T u r n t o t h e Glossary of IsS) Academic & Historical Terms i n t h e b a c k o f t h e b o o k f o r d e f i n i t i o n s o f b o l d e d t e r m s .

PRACTICES & SKILLS CONTEXTUALIZATION W h a t e c o n o m i c p r i n c ip l e s g u i d e d Pres ident H o o v e r a n d Congress in t h e i r r esponse t o t h e Great Depress ion?

MONIANA N.DAK. MINN.

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r ~ l 8-15 percent

Over 15 percent 250 500 kilometers

MAP 22,1 The Great Depression: Families on Relief A l t h o u g h t h e Great Depression was a na t i onw ide crisis, some regions were hi t harder than others. Economic hardship was w idespread in the agr icul tura l South, the rural Appalachian states, and the industr ia l states of the Northeast and Midwest . As the depression worsened in 1931 and 1932, iocai and state gove rnments , as wel l as char i table organizat ions, cou ld n o t keep up w i t h t he d e m a n d for relief. Af ter Franklin D. Roosevelt assumed the pres idency in 1933, the nat iona l g o v e r n m e n t began a massive p rogram of aid t h r o u g h the Federal Emergency Relief Admin i s t r a t i on (FERA).

682 PART 7 DOMESTIC AND GLOBAL CHALLENGES, 1890-1945

r

AP EXAM TIP Recognize the Bonus Army as

an expression of popular action in the Great Depression.

Rising Discontent As the depression deepened, the American vocahuiary now included the terms Hoovervilles (shantytowns where people lived in packing crates) and Hoover blankts (newspapers). Bankrupt farmers handed together to resist the hank agents and sheriffs who t r ied to evict them from their land. To protest low prices for their goods, in the spring of 1932 thousands o f midwestern farmers joined the Farmers' Holiday Association, which cut off supplies to urhan areas hy barricading roads and dumping mi lk , vegetables, and other foodstuffs onto the roadways. Agricultural prices were so low that the group advocated a government-supported farm program — drawing on Populist ideas from the 1890s (Chapter 19).

I n the industrial sector, layoffs and wage cuts led to violent strikes. When coai min­ers in Harlan County, Kentucky, went on strike over a 10 percent wage cut in 1931, the mine owners called i n the state's National Guard, which crushed the union. A 1932 confrontation between workers and security forces at the Ford Motor Company's giant River Rouge factory outside Detroit left five workers dead and fifty w i th serious inju­ries. A news photographer had his camera shot f rom his hands, and fifteen policemen were beaten. Whether on farms or in factories, those who produced the nation's food and goods had begun to agitate, protest, and organize i n the face of mounting economic troubles.

Veterans staged the most publicized — and most tragic — protest. I n the summer of 1932, the Bonus Army, a determined group of between fifteen thousand and twenty thousand unemployed Wor ld War I veterans, piled into cars, hitchhiked, and even walked to Washington to demand immediate payment o f pension awards that were due

Hooverville The depress ion cast hundreds o f thousands o f Amer icans o u t o f the i r homes. Most f o u n d shelter with relatives, b u t those w i t h l i t t le choice had t o make do as they cou ld . Encampments such as this one south of downtown Seattle, Wash ing ton — places where t h e homeless craf ted makeshi f t l odg ing o u t of whatever materials were at hand — became k n o w n as Hooverv i l les .The name ref lected Amer i cans 'a t t i tudes t o w a r d President Hoover, whose popu la r i t y p l u m m e t e d as the depress ion deepened , ap Photo,

CHAPTER 22 Managing the Great Depression, Forging the New Deal, 1929-1938 683

to be paid in 1945. "We were heroes i n 1917, hut we're hums now," one veteran com­plained hitteriy. Whi le their leaders unsuccessfully lobbied Congress, the Bonus A r m y set up camps near the Capitol building. Hoover deployed regular army troops under the command of General Douglas MacArthur , who forcefuiiy evicted the marchers and burned their encampment to the ground. When newsreei footage showing the U.S. A r m y attacking and injur ing veterans reached movie theaters across the nation, Hoover's popularity plunged even further. I n another measure o f how the country had changed since the 1890s, what Americans had applauded when done to Coxey i n 1894 was condemned i n 1932.

AP PRACTICES & SKILLS POINT OF VIEW What experiences led groups of farmers, industrial workers, and veterans to protest in the early 1930s?

The 1932 Election Amidst rising discontent as the 1932 election approached, most Americans believed that something altogether new had to be t r ied — whatever that might be. The Republicans, reluctant to dump an incumbent president, unenthusiastically renomi­nated Hoover. The Democrats turned to New York governor Franklin Delano Roosevelt, whose state had initiated innovative relief and unemployment programs.

Roosevelt, bo rn into a wealthy New York family, was a distant cousin to former president Theodore Roosevelt, whose career he emulated. After attending Harvard College and Columbia University, Franklin Roosevelt served as assistant secretary of the navy during Wor ld War I (as Theodore Roosevelt had done before the War of 1898). Then, in 1921, a crippling attack of polio left both of his legs permanently paralyzed. Supported by his wife, Eleanor, he slowly returned to public life and campaigned suc­cessfully for the governorship o f New York in 1928 and again i n 1930. Running for the presidency i n 1932, Roosevelt pledged vigorous action but gave no indication what that action might be, arguing simply that "the country needs and, unless I mistake its tem­per, the country demands bold, persistent experimentation." He won easily, receiving 22.8 million votes to Hoover's 15.7 mi i i i on .

Elected i n November, Roosevelt would not begin his presidency un t i l March 1933. (The Twentieth Amendment, ratified i n 1933, set subsequent inaugurations for January 20.) Meanwhile, Americans suffered through the worst winter o f the depres­sion. Unemployment continued to cl imb nationwide, i n a measure of the depth of woe, in three major industrial cities i n Ohio, the jobless rate shot to staggering levels: 50 percent in Cleveland, 60 percent i n Akron , and 80 percent in Toledo. Private chari­ties and public relief agencies reached only a fraction of the needy. The nation's banking system was so close to collapse that many state governors closed banks temporarily to avoid further withdrawals. Several states were approaching bankruptcy, their tax reve­nues too low to pay for basic services. By March 1933, the nation had hi t rock bot tom.

IN YOUR OWN W O R D S How did Americans, from ordinary citizens to political leaders, respond to the Great Depression?

The New Deal Arrives, 1933-1935 The ideological differences between Herbert Hoover and Franklin Roosevelt were not vast. Both leaders wished to maintain the nation's economic institutions and preserve its social structure, to save capitalism while easing its worst downturns. Both believed in a balanced government budget and extolled the values o f hard work, cooperation, and sacrifice. But Roosevelt's personal charm, polit ical savvy, and willingness to exper­iment made h i m far more effective and popular than Hoover. Most Americans felt a kinship w i t h their new president, calling h i m simply FDR. His New Deal would put people to work and restore hope i n the nation's future.

AP ANALYZING VOICES Ordinary People Respond to the New Deal

Frankl in Roosevelt's f i res ide chats and his rel ief p rog rams p r o m p t e d thousandso o rd ina r y Amer icans t o w r i t e d i rec t l y t o t h e pres ident and his wi fe , Eleanor. Taki toge the r , the i r letters of fer a v i v id po r t r a i t o f depression-era Amer ica that includi p o p u l a r s u p p o r t for, as we l l as o p p o s i t i o n t o , t h e N e w Deal.

M R S . M . H . A .

Mrs. M. H. A. worked in the County Court House in Eureka, California.

S O U R C E : Robert S . M c E l v a i n e , Down & Out in the Great Depression ( C h a p e l H i l l :

U n i v e r s i t y o f N o r t h C a r o l i n a Press, 1983), 54 -55 .

44 June 14, 1934 Dear Mrs. Roosevelt: 1 know you are overburdened w i t h requests for help and i f m y plea cannot be recognized, I ' l l understand it is because you have so many others, ail of them w o r t h y . . . .

M y husband and I are a young couple of very simple, almost poor families. We married eight years ago on the pro­verbial shoe-string but wi th a wealth of love We managed to build our home and furnish it comfortably.. . . Then came the depression. M y work has continued and my salary alone has just been sufficient to make our monthly payments on the house and keep our bills paid But wi th the exception of two and one-half months work wi th the U.S. Coast and Geodetic Survey under the G.W.A. [Givii Works Administration], my husband has not had work since August, 1932.

M y salary could continue to keep us going, but I am to have a b a b y . . . . I can get a leave of absence f rom my job for a year. But can't you, won't you do something so my hus­band can have a job, at least during that year? . . .

As I said before, i f it were only ourselves, or i f there were something we could do about it , we would never ask for help.

We have always stood on our own feet and been proud and happy. But you are a mother and you'll understand this crisis.

Very sincerely yours, Mrs. M . H . A. 99

U N S I G N E D L E T T E R

This unsigned letter came f rom a factory worker in Paris, Texas.

S O U R C E : G e r a l d M a r k o w i t z a n d D a v i d Rosner, eds., "Slaves of the Depression":

Worker's Letters About Life on the lob ( I thaca, N Y : C o r n e l l U n i v e r s i t y Press, 1987), 2 1 .

44 November 23, 1936 Dear President,

[ N ] o w that we have had a land Slide [ in the election of 19 and done just what was best for our c o u n t r y . . . I do believe you W i l l Strain a point to help the ones who helped you mostly & that is the Working Glass of People I am not smart or I would be in a different line of work & better up in ever way yet I w i l l know you are the one & only President that ever helped a Working Class of People . . . .

I am a White Man American age, 47 married wife 2chil-dren i n high School am a Finishing room foreman I mean a Working foreman & am i n a furniture Factory here in Paris Texas where thaire is 175 to 200 Working & when the NRA [National Recovery Administration] came in I was Proud to See my fellow workmen Rec 30 Per hour i n Place of 8 cents to 20 cents Per h o u r . . . .

I can't see for my life President why a man must toil &work j his life out in Such factories 10 long hours ever day except Sunday for a small sum of 15 cents to 35 cents per hour & pay the high cost of honest & deason living expences

please see i f something can be done to help this one Glass of Working People the factories are a man killer not veneiated or kept up just a bunch of Repubiickins Grafters 90/100 of them Please help us some way I Pray to God for relief. I am a Christian . . . and a t ru thfu l man & have not to ld you wrong & am for you to the end.

[not signed] 99

R.A.

R. A. was sixty-nine years o ld and an architect and builder in Lincoln, Nebraska.

S O U R C E : Rober t S . M c E l v a i n e , Down & Out in the Great Depression (Chapel Hill :

U n i v e r s i t y o f N o r t h C a r o l i n a Press, 1983), 97.

44 May 19/34 Dear Mrs Roosevelt: I n the Presidents inaugrai address delivered from the capitol steps the afternoon of his inaugration he made mention of The Forgotten Man, and I w i t h thousands of others am won­dering i f the folk who was horned here in America some 60 or 70 years a go are this Forgotten Man, the President had in mind , i f we are this Forgotten Man then we are still Forgotten.

A P EXAM TIP

Evaluate the impact of mass media on the relationship between citizens

and government in the 1930s.

Roosevelt and the First Hundred Days A wealthy patrician, Roosevelt was an unlikely figure to inspire mil l ions of ordinary Americans. But his close rapport w i t h the American people was critical to his political success. More than 450,000 letters poured into the White House i n the week after his inauguration. The president's masterful use of the new m e d i u m of radio, especially his

6 8 4

We who have tried to be dOigent in our support of this most ivonderfui nation of ours boath social and other wise, we in our younger days tried to do our duty without complaining

And now a great calamity has come upon us and seem­ingly no cause of our own it has swept away what little sav­ings we had accumulated and we are left i n a condition that isimposibie for us to correct, for two very prominent rea­sons if no more.

First we have grown to what is termed O l d Age, this befalls every man.

Second,... we are confronted on every hand w i t h the young generation, taking our places, this of corse is what we have looked forward to in training our children. But w i t h the extra ordinary crisese which left us helpless and placed us i n the position that our fathers d i d not have to contend w i t h

We have been honorable citizens ail along our journey, calamity and old age has forced its self upon us please do not send us to the Poor Farm but instead allow us the small pen­sion of $40.00 per m o n t h . . . .

Mrs. Roosevelt I am asking a personal favor of you as it seems to be the only means through which I may be able to reach the President, some evening very soon, as you and Mr. Roosevelt are having dinner together privately w i l l you ask him to read this. A n d we American citizens w i l l ever remember your kindness.

Yours very truly. R.A. 99

M.A.

M. A. was a woman who held a iow-levei salaried position in a corporation.

SOURCE: Robert S. M c E l v a i n e , Down & Out in the Great Depression ( C h a p e l H i l l :

University o f N o r t h C a r o l i n a Press, 1983), 147.

U Jan. 18, 1937 [Dear Mrs. Roosevelt:] I . . . was simply astounded to th ink that anyone could be nitwit enough to wish to be included i n the so called social security act i f they could possibly avoid it. Call it by any name you wish i t , in my opinion, (and that of many people I bow) [it] is nothing but downright stealing

I am not an economic royalist,' just an ordinary white collar worker at $1600 per [year —about $23,600 i n 2009]. Please show this to the president and ask h i m to remember the wishes of the forgotten man, that is, the one who dared to vote against h i m . We expect to be tramped on but we do wish the stepping would be a little less hard.

Security at the price of freedom is never desired by intel­ligent people.

M . A . 99

M . A . H .

M. A. H. was a widow who ran a small farm in Columbus, Indiana.

S O U R C E : Rober t S . M c E l v a i n e , Down & Out in the Great Depression (Chapel H i l l :

U n i v e r s i t y o f N o r t h C a r o l i n a Press, 1983), 143.

44 December 14, 1937 Mrs. Roosevelt: I suppose f r o m your point of view the work relief, old age pensions, slum clearance and ail the rest seems like a perfect remedy for ail the ills of this country, but I would like for you to see the results, as the other half see them.

We have always had a shiftless, never-do-weii class of people whose one and only aim i n life is to live without work. I have been rubbing elbows w i t h this class for nearly sixty years and have tr ied to help some of the most promis­ing and have seen others t r y to help them, but it can't be done. We cannot help those who w i l l not t ry to help them­selves and i f they do t r y a square deal is ail they n e e d , . . . let each one paddle their own canoe, or sink

I live alone on a farm and have not raised any crops for the last two years as there was no help to be had. I am feed­ing the stock and have been cutting the wood to keep my home fires burning. There are several reliefers around here now who have been kicked off relief but they refuse to work unless they can get relief hours and wages, but they are so worthless no one can afford to hire t h e m . . . . They are just a fair sample of the class of people on w h o m so much of our hard earned tax-money is being squandered and on w h o m so much sympathy is being wasted

You people who have plenty of this worlds goods and whose money comes easy have no idea of the heart-breaking toi l and self-denial which is the lot of the working people who are trying to make an honest l iving, and then to have to shoulder ail these unjust burdens seems like the last s t raw. . . . No one should have the right to vote theirseif a l iving at the expense of the tax payers

M . A. H . 99

Q U E S T I O N S F O R A N A L Y S I S

1. How do you explain the personal, almost intimate, tone of these letters to the Rooseveits?

2. How have specific New Deal programs helped or hurt the authors of these letters?

3. What are the basic values of the authors? Do the values of those who support the New Deal differ from the values of those who oppose it?

evening radio addresses to the American public k n o w n as fireside chats, made h i m an intimate presence i n people's lives. Thousands of citizens felt a personal relationship with FDR, saying, "He gave me a job" or "He saved my home" (AP* Analyzing Voices).

Citing the national economic emergency, Roosevelt further expanded the presiden­tial powers that Theodore Roosevelt and Woodrow Wilson had increased previously.

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6 8 6 PART 7 DOMESTIC A N D GLOBAL CHALLENGES, 1890-1945

A P EXAM TIP

Compare the goals and effectiveness of New Deal programs established

in the first "Hundred Days."

To draft legislation and policy, he relied heavily on financier Bernard Baruch and a "Brains Trust" of professors f r o m Columbia, Harvard, and other leading universities, Roosevelt also turned to his talented cabinet, which included Harold L. Ickes, secretary of the interior; Frances Perkins at the Labor Department; Henry A. Wallace at Agriculture; and Henry Morgenthau Jr., secretary of the treasury. These intellectuals and administrators attracted hundreds of highly qualified recruits to Washington, Inspired by New Deal idealism, many of them w o u l d devote their lives to public sendee and the principles o f social-welfare liberalism.

Roosevelt could have done little, however, wi thout a sympathetic Congress. The 1932 election had swept Democratic majorities into both the House and Senate, giving the new president the lawmaking allies he needed. The first months of FDR's adminis­trat ion produced a w h i r l w i n d of activity on Capitol H i l l . I n a legendary session, known as the Hundred Days, Congress enacted fifteen major bills that focused primarily on four problems: banking failures, agricultural overproduction, the business slump, and soaring unemployment. Derided by some as an "alphabet soup" because of their many abbreviations (CCC, WPA, A A A , etc.), the new policies and agencies represented the emergence of a new American state.

A P EXAM TIP

Explain the expansion of the federal government's regulatory role as a

result of the Great Depression.

Banking Reform The collapsing banking system hobbled the entire economy, cur­tai l ing consumer spending and business investment. Widespread bank failures had reduced the savings of nearly nine m i l l i o n families, and panicked account holders raced to w i t h d r a w their funds. O n March 5, 1933, the day after his inauguration, F D R declared a national "bank holiday" — closing ail the banks — and called Congress into special session. Four days later. Congress passed the Emergency Banking Act, w h i c h permit ted banks to reopen i f a Treasury Department inspection showed they had suf­ficient cash reserves.

I n his first Sunday night fireside chat, to a radio audience of sixty mi l l ion , the pres­ident reassured citizens that their money was safe. W h e n the banks reopened on March 13, calm prevailed and deposits exceeded withdrawals, restoring stability to the nation's basic financial institutions. "Capitalism was saved i n eight days," q u i p p e d Roosevelt's advisor Raymond Moiey. Four thousand banks had failed i n the m o n t h s prior to Roosevelt's inauguration; only sixty-one closed their doors i n ail of 1934 (Table 22.1). A second banking law, the Glass-Steagall Act, further restored publ ic confidence by creating the Federal Deposit Insurance Corporation (FDIC), w h i c h insured deposits up to $2,500 (and now insures them up to $250,000). The act also prohibited banks f r o m making risky, unsecured investments w i t h the deposits of ordi­nary people. A n d i n a profoundly important economic and symbolic gesture, R o o s e v e l t removed the U.S. Treasury f r o m the gold standard i n June 1933, which allowed the

TABLE 22.11 American Banks and Bank Failures, 1920-1940 Year Total N u m b e r of B a n k s Total As se t s ($ bi l l ion) Bank Failures

1920 30,909 53.1 168

1929 25,568 72.3 659

1931 22,242 70.1 2,294

1933 14,771 51.4 4,004

1934 15,913 55.9 61

1940 15,076 79.7 48

S O U R C E : Historical Statistics of the United States: Colonial Times to 1970 ( W a s h i n g t o n , D C : U . S . G o v e r n m e n t Printing O f f i c e , 1 9 7 5 ) , 1 0 1 9 , 1 0 3 8 - 1 0 3 9 .

C H A P T E R 22 Managing the Great Depression, Forging the New Deai, 1929-1938 6 8 7

Federal Reserve to lower interest rates; since 1931, i t had been raising rates, which had only deepened the downturn .

Agriculture and Manufacturing Roosevelt and the New Deai Congress next turned to agriculture and manufacturing. I n those sectors, a seeming paradox was evident: the depression led to overproduction i n agriculture and underproduct ion i n manufac­turing. Reversing both problematic trends was critical. The Agricultural Adjustment Act (AAA) began direct governmental regulation of the farm economy for the first time. T o solve the problem of overproduction, w h i c h lowered prices, the A A A pro­vided cash subsidies to farmers w h o cut product ion of seven major commodities: wheat, cotton, corn, hogs, rice, tobacco, and dairy products. Policymakers hoped that farm prices w o u l d rise as product ion fell.

By dumping cash i n farmers' hands, the A A A briefly stabilized the farm economy. But t h e act's benefits were not evenly distributed. Subsidies went pr imar i ly to the own­ers of large and medium-sized farms, who often cut product ion by reducing the amount o f l a n d they rented to tenants and sharecroppers. I n Mississippi, one plantation owner rece ived $26,000 f r o m the federal government, while thousands of black sharecroppers living i n the same county received only a few dollars i n relief payments.

I n manufacturing, the New Deai attacked declining production w i t h the National Industrial Recovery Act. A new government agency, the National Recovery Admin­istration (NRA), set up separate self-governing private associations i n six hundred indus­tries. Each industry—ranging f r o m large corporations producing coal, cotton textiles, and steel to small businesses making pet food and costume jewelry—regulated itself by agree­ing o n prices and production quotas.

T h e A A A and the N R A were designed to rescue the nation's productive industries and stabilize the economy. The measures had positive effects i n some regions, but most historians agree that, overall, they d i d little to end the depression.

Unemployment Relief The Roosevelt administrat ion next unemployment problem. By 1933, local governments and exhausted their resources and were looking to Washington for assistance. A l t h o u g h Roosevelt wanted to avoid a b u d ­get deficit, he asked Congress to provide relief for mil l ions of unemployed Americans. I n May, Congress established the Federal Emergency Relief Adminis t ra t ion (FERA). Directed by H a r r y Hopkins , a hard-dr iv ing social worker from New York, the FERA provided federal funds for state relief programs.

Roosevelt and Hopkins had strong reservations about the "dole," the nickname for government welfare payments. As Hopkins put i t , " I don't t h i n k anybody can go year after year, month after m o n t h , accepting relief wi thout affecting his character." To support the tradit ional values of i n d i v i d ­ualism, the New Deai put people to work. Early i n 1933, Congress established the Public Works Administration (PWA), a construction program, and several months later, Roosevelt created the Civ i l Works Adminis trat ion (CWA) and named Hopkins its head. A t its peak i n 1934, the C W A provided jobs for 4 m i l l i o n Americans, repairing bridges, building highways, and constructing public buildings. A stopgap measure to get the country through the winter of 1933-1934, the C W A lapsed i n the spring, when Republican opposition compelled New Dealers to abandon it . A longer-term program, the Civilian Conservation Corps (CCC), mobil ized 250,000 young men to do reforestation

addressed the massive private charities had

Sell ing the NRA in Ch inatown To mobiiize support for its program, the Nationai Recovery Administration (NRA) distributed millions of posters to businesses and families, urging them to display its symbol, the Blue Eagle, in shops, factories, and homes. Here Constance King and Mae Chinn of the Chinese YMCA affix a poster (and a Chinese translation) to a shop in San Francisco that is complying with the NRA codes. Bettmann/Getty images.

6 8 8 PART 7 D O M E S T I C A N D G L O B A L C H A L L E N G E S , 1 8 9 0 - 1 9 4 5 S ! . U T C ; A . H D

and conservation work. Over the course of the 1930s, the "CCC boys" buiit thousani of bridges, roads, trails, and other structures i n state and nationai parks, bolstering tk nationai infrastructure (Map 22.2).

Housing Crisis Mi l l io ns of Americans also faced the devastating prospect o f losinj their homes. The economic expansion of the 1920s had produced the largest inflation­ary housing bubble i n American history to that point , a scenario i n which h o m e prices rose rapidly, fueled by widespread borrowing. I n the early 1930s, home prices col­lapsed, banks closed, and the jobless could not afford mortgage payments. M o r e than half a m i l l i o n Americans lost their homes between 1930 and 1932. In response, Congress created the Home Owners Loan Corporat ion ( H O L C ) to refinance home mortgages. I n just two years, the H O L C helped more than a m i l l i o n Americans retain their homes. The Federal Housing Act of 1934 w o u l d extend this program under a new agency, the Federal Housing Administration ( F H A ) . Together, the HOLC, the F H A , and the subsequent Housing Act of 1937 permanently changed the mortgage system and set the foundation for the broad expansion of home ownership i n the p o s t - W o r l d War I I decades (Chapter 24).

W h e n an exhausted Congress recessed i n June 1933, at the end of the Hundred Days, it had enacted Roosevelt's agenda: banking reform, recovery programs f o r agri­culture and industry, public works, and unemployment relief. Few presidents had won the passage of so many measures i n so short a time. The new federal agencies w e r e far

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M A P 22.2 Civilian Conservation Corps Camps The Civilian Conservation Corps (CCC) gave hope to unemployed young men during the Great Depression. The first camp opened in Big Meadows, Virginia, in Juiy 1933, and by the end of the decade CCC camps had appeared across the length of the country, located in rural, mountainous, and forested regions alike. Young men constructed bridges and roads, built hiking trails, erected public campgrounds, and performed other improvements. By the early 1940s, the CCC had planted three biiiion trees, among its many other contributions to the nationai infrastructure.

C H A P T E R 22 M a n a g i n g t h e Great Depress ion, Forg ing the New Deai, 1929-1938 6 8 9

from perfect and had their critics on both the radical left and the conservative right. But

the vigorous actions taken by Roosevelt and Congress had halted the downward eco­

nomic spiral of the Hoover years, stabilized the financial sector, and sent a message of

hope from the nations political leaders. For ail that, however, the New Deai d i d not

break the grip of the depression.

The New Deal Under Attack As New Dealers waited anxiously for the economy to revive, Roosevelt turned his

attention to the reform of Wai l Street, where reckless speculation and overieveraged

buying of stocks had helped trigger the f inancial panic of 1929. I n 1934, Congress

established the Securities and Exchange Commission (SEC) to regulate the stock

market. The commission had broad powers to determine how stocks and bonds were

sold to the public, to set rules for margin (credit) transactions, and to prevent stock

sales by those w i t h inside in format ion about corporate plans. The Banking Act of 1935

AP PRACTICES & SKILLS

CAUSATION

What specific new roies did the American government take up as a result of the legislation passed during the first Hundred Days?

• uiTiorn IV' /, •'aii'-'/.i /vvoq-iiK; :)!!! ;

Seattle's Unemployed Citizen's League, 1930-31

* C A N A D A Sit-down strike at | General Motors, Flint, 1936-37

Sit-down strike at Chrysler, Detroit, 1937

W A S H .

O R E G O N

Communist-led "Ford Hunger March," Dearborn, 1932

M O N T A N A

Bonus Army march begins in Portland, 1932

N O R T H D A K O T A

S O U T H

MINN.

Strike at General Motors, Cleveland, 1936

Milk strikes, Wisconsin, 1933

I D A H O W Y O M I N G

Farmworkers begin organizing, California, 1933

Sioux City farmers' strike, 1932

DAKOTA] Progressive Party launched, Madison, 1934

N E B R A S K A

N E V A D A U T A H C A L I F . C O L O R A D O

I O W A

Strike at Republic Steel, Chicago, 1937

I L L . IND.

i O H I O

/ • ^ R C A strike, Camden, 1936

Cenerai strike, Toledo, 1934 N

San Francisco general strike, 1934

Los Angeles cannery strike (women), 1939

Dr. Francis Townsend proposes an "Old Age Revolving Pension" and organizes Townsend Clubs with the slogan "$200 a month at sixty," 1933-34

KANSAS MO.

Sit-down strike at Cenerai Motors, Kansas City, 1936

Strike at Cenerai Motors, Anderson. 1937

O K L A H O M A Housewives' meat strikes, Los Angeles, 1935. Strikes and demonstrations also in New York, Detroit, Denver, and Miami, 1935

A R I Z O N A N E W M E X I C O

ARK. ' T E N N .

Southern Tenant Farmers' Union leads marching strikes against cotton planters, 1935-36

A L A .

100,000 participate in leftist demon­stration in New York City, 1930

National Negro Congress organizes tobacco strike, Richmond, 1935

Kentucky miners' strike, 1931

Strike at Cenerai Motors, Atlanta, 1936

MISS. J Alabama Sharecroppers Union I organized, 1931

PACIFIC

OCEAN

Upton Sinclair, leader of End Poverty in California, wins Democratic primary for governor but loses election, 1934

I L C W U garment workers strike in San Antonio (women), 1937

LA. F L A .

Huey Long, governor of Louisiana 1928-32, United States senator, 1932-35, launches national Share Our Wealth Society, 1934

ATLANTIC

OCEAN

i strike, demonstration, or protest

I I Political action

M E X I C O

Gulf of Mexico

250 500 miles — I

250 500 kilometers

MAP 2 2 . 3 Popular Protest in the Great Depression, 1933-1939 The depression forced Americans to lookdosely at their society, and many of them did not like what they saw. Some citizens expressed their discontent through popular movements, and this map suggests the geography of discontent. The industrial Midwest witnessed union movements, strikes, and "Radio Priest" Charles Coughlin's demands for social reform. Simultaneously, farmers'movements — tenants in the South, smallholders in the agricultural Midwest — engaged in strikes and dumping campaigns and rallied behind the ideas of progressives in Wisconsin and Huey Long in the South. Protests took diverse forms in California, which was home to strikes by farmworkers, women, and —in San Francisco — ail wageworkers. The West was also the seedbed of two important reform proposals: Upton Sinclair's End Poverty in California (EPIC) movement and Francis Townsend's Old Age Revolving Pension clubs. •W1C i i t i -