NEW DEAL

1932 – 1941

Election of 1928

• Herbert Hoover (CA) defeats Al Smith (NY)

• Hoover

Causes of the Depression

1. Stock Buying Spree– Faith in the “Bull” market (stock

market is going up)– People buying stock on margin

Causes of the Depression

2. Business– Overproduction of consumer goods– Profits went into market instead of

wages

3. Gap between rich & poor– Shrinking middle class

Causes of the Depression

4. Weak Banking System– Banks invested depositor’s funds into

risky stocks– Bank runs (panics where investors

withdraw all their money)

5. Risky European Loans– Some $10 billion loaned to European

nations during WWI and years after to help in the rebuilding

Causes of the Depression

6. Farmers– Overproduction due to drop in world

demand– With WWI over, no need to feed the

world population anymore

Hoover’s Response

• Hawley – Smoot Tariff– Very high tariff that seals off American

markets from other nations

• Made 1.5 million in loans to businesses to keep them running

• Bonus Army– Group of unemployed, U.S. WWI war

veterans who set up camp in D.C.– Hoover orders the army in to break

them up

Election of 1932• By 1932, Hoover’s popularity is at an

all-time low• “Hoovervilles”• “Hoover Blanket” – hobo blankets• “Hoover Flag” – no money

FDR & The New Deal

1. In the election of 1932, Hoover gets killed

2. FDR believed government should help people overcome economic hardship, unlike Hoover who believed everyone who benefit if business did.

FDR & The New Deal

3. Roosevelt was inclined to help people directly by giving them government jobs

– Federal money would give people hope– Would also put money into the economy

New Deal4. All FDR’s programs together are called the NEW DEAL

– Promises action with strong emergency powers of the President

– Gives fireside chats with radio audience to calm people down

FDR’S NEW DEAL PROGRAMS

Federal Emergency Relief Administration

• 1933• Poor & unemployed• $ for emergencies & disasters

Glass Steagall Banking Act

• 1933• Banks• Closed banks for 4 days to

reorganize

FDIC (Federal Deposit Insurance

Corporation)• 1933• Banks & investors• Banks insured investors money up to

$5,000; (today your deposits are insured up to $250,000)

Tennessee Valley Authoriy (TVA)

• 1933• Residents & businesses in the

Tennessee Valley• The GOV’T Provided cheap

electricity, navigation, and flood control to people living & working in the Tennessee Valley

http://www.tvakids.com/whatistva/index.htm

Public Works Administration (PWA)

• 1933• Construction workers• $6 billion that went into the

construction of such things as airports, dams, aircraft carriers, and hospitals

Agricultural Adjustment Act (AAA)

• 1933 &1938• Farmers• Government regulated crop production &

slaughtering (paid farmers NOT to grow crops)

Prices would go up!!

Civilian Conservation Corps (CCC)

• 1933• Single men 18 – 25 years• Planted trees, cleared trails, cleaned

forests• Known as the “Tree Army”

"The main slogan of the Civilian Conservation Corps is 'We can take it!' Building strong bodies is a major CCC objective. More than half the enrollees who entered CCC the last year were seventeen years of age. Work, calisthenics, marching drills, good food, and medical care were features of the CCC health program."

Works Projects Administration (WPA)

• 1933• Unemployed (with special skills)• Created as many jobs as possible

from musicians, to artists

Wagner Act

• 1935• Laborers• Guaranteed workers the right to unionize

and join labor unions

Social Security Act

• 1935• Retired, disabled, dependent mothers• Gave a pension for retired workers and

their spouses and aided people with disabilities

National Recovery Act (NRA)

• 1935• Consumers• Established fair codes of business

practices• Gave workers minimum wages and

maximum hours• Part of this act was declared

unconstitutional

Securities and Exchange Commission (SEC)

• 1935• Investors• Supervised the stock market and

eliminated dishonest practices

Home Owners Loan Corporation (HOLC)

• 1935• Home owners• Loaned $ @ low interest rates to home

owners who could not meet mortgage payments

Rural Electric Administration (REA)

• 1935• Farmers• Free electricity for farmers

End of the New Deal

FDR & the Supreme Court– By 1936 the court ruled many New Deal

programs unconstitutional

AAA – U.S. v. Butler – Government couldn’t tell you how much

to grow or how many livestock to kill

NRA – U.S. v. Schecter (aka Sick Chicken Case)– A Brooklyn company was accused of selling

sick chickens to a butcher which in turn sold them to people who got sick. Federal government stepped in under the National Recovery Act (NRA) even though Schecter did NO out of state business. The company sued & won.

– Only states have the right to control businesses that conduct business within a state

FDR & Supreme Court

• Trying to avoid Supreme Court rulings against New Deal policies, FDR proposes a bill

• Whenever a Supreme Court Justice reached 70 without retiring, the President could add a new justice (only up to 15)

• Congress says NO!• FDR’s attempt to “Pack the Court” failed

Impact of the New Deal

• Increase of Presidential power• Increase in the power of the federal

government• Federal social programs – welfare• Deficit spending starts – spending

$ you don’t have• Greater concern for workers (social

security, Wagner Act, minimum wage)

• Renewal in faith for democracy