The Great Depression& the New Deal

1933-1938

Essential Questions

Chapter 33The American Pageant, 13th edition

Election of FDR Easily won the election over Hoover who was

unfairly blamed by many for the “Hoover depression” (Anyone but Hoover!)

Both parties talked of repealing Prohibition FDR promised to end national debt Upbeat, cheerful personality vs. grimfaced Hoover 5th cousin to Teddy Roosevelt African-Americans voted heavily Democrats for

first time; they were among those hardest & earliest hit by Depression

Eleanor Roosevelt Eleanor was a distant cousin of FDR, & niece

of TR Great influence on her husband towards more

liberal views Also influenced the population with her

speeches & newspaper column, even long after FDR’s death

Later involved in establishing the United Nations

FDR Quotes

“I pledge you, I pledge myself to a new deal for the American people.”

“Let me assert my firm belief that the only thing we have to fear is fear itself.”

First “Hundred Days” (March 9-June 16)

During the first “Hundred Days”, Democrat-dominated Congress pushed thru unprecedented number of new laws to deal with emergency

Some of the ideas came from earlier Progressive Movement

President was given unusual powers to legislate by Congress

20th Amendment Moved start of new president’s term to

January 20, from March Also started new Congress on January 3rd

Clarified presidential and vice-presidential succession

Key principles Unemployment insurance Old-age insurance (Social Security) Minimum-wage regulations Conservation & development of natural

resources Restrictions on child labor RELIEF, RECOVERY, REFORM

Banking Reforms Emergency Banking Relief Act

gave president power to regulate banking transactions & foreign exchange; also to reopen solvent banks

“fireside chats” reassured Americans that banks were safe again

Glass-Steagall Banking Reform Act created the Federal Deposit Insurance Corporation to

insure deposits (starting with $5000 and later increased) Separated commercial and investment bank functions ended widespread bank failures that had occurred ever

since Andrew Jackson’s days

Gold standard

to stop hoarding of gold, FDR ordered that all private gold holdings be turned into the govt in exchange for paper currency

then took the country off the gold standard

Managed currency

FDR believed that buying up the gold would increase inflation which would reduce private debt & stimulate new production

Treasury bought up gold at increasing prices (from $21 to $35 an ounce)—did increase the dollars in circulation

ended the gold buying scheme in Feb. 1934 FDR then brought back the gold standard but for intl trade

only criticized by “sound money” critics

Making Jobs, Providing Relief Civilian Conservation Corps (CCC)

for conservation and development of natural resources

put 3 million young men to work (had to send most of pay home to their parents)

Federal Emergency Relief Act created the Federal Emergency Relief Administration (FERA) ultimately gave out $3 billion to states for direct

dole or—even better—wages on work projects

Agricultural Assessment Act (AAA)

gave millions for farmers’ mortgages

Home Owners Loan Corporation (HOLC) to help refinance nonfarm homes helped about a million families & strengthened

middle class loyalty to Democrats

Civil Works Administration (CWA)

under the FERA, provided temporary, emergency “make-work” jobs such as leaf-raking!

especially helpful to desperate Americans during the winter of 1933-34

Works Progress Administration (WPA)

spent $11 billion & employed nearly 9 million people

from public buildings, bridges & roads, to monkey cages & tap dancing; also art murals on post office walls

white collar workers and artists like John Steinbeck were given work to do & money to earn

In the State Museum of Pennsylvania, in Harrisburg

The Daily Mail, 1937, by Olive NuhferPost Office in Westerville, Ohio

Scenes from History of San Francisco, mural series by Anton Refregier, 1943,

at the Rincon Annex Post Office

Reactions Early acts heartened Americans, did not

fundamentally improve economy Critics included

Father Charles Coughlin (“Social Justice”) Louisiana Sen. Huey Long (“Share Our Wealth”) Dr. Francis E. Townsend (help the aged)

National Industrial Recovery Act (NIRA)

Established National Recovery Administration (NRA) Short-lived, very complicated attempt to help industry,

labor, unemployed thru relief and long term recovery 200 industries would be held to codes of “fair

competition” to reduce hours & provide employment to more people; set a maximum number of hours and a minimum wage

Labor got right to organize & bargain collectively with representatives of their own choosing

Anti-union contracts were forbidden & child labor was restricted

More NIRA NIRA ultimately failed

too much self-sacrifice expected of labor & industry dishonest “chiselers” took advantage

Schechter decision (1935) ended NRA Court case of local chicken business in NY Supreme Court ended NRA for 2 reasons

federal govt could not control local businesses thru interstate commerce controls

denied Congress’ right to give legislative powers to president

Public Works Administration (PWA)

For industrial recovery and employment $4 billion spent on 34,000 projects,

including public buildings, highways, parkways Grand Coulee Dam on Columbia River produced

electrical power and irrigation

Did not reach full potential of job making out of fear of waste

Grand Coulee Dam, Columbia River, Washington State (photo from Library of Congress)

End of Prohibition Begins with early Congressional approval

of FDR’s suggested 3.2% alcohol allowance (light wine and beer)

Completely ended with 21st Amendment in 1933

Agricultural Adjustment Administration (AAA)

First AAA declared unconstitutional set “parity prices” (based on 1909-1914 value) price-depressing surpluses to be stopped by

reducing crop acreage started off badly by destroying crops and

livestock when too many people were hungry Supreme Court killed it in 1936: regulatory

taxations were unconstitutional

2nd AAA more successful

emphasized more conservationist methods of limiting production, thus gaining Court approval

if farmers followed restrictions for specific crops they would be compensated with parity payments

insured farmers of fairer prices & share of national income.

Dust Bowl Tragically worsened impact of Great Depression

on midwestern farmers Dry-farming techniques & drought caused

immense dust storms & destruction of 1000s of farms

350,000 from Arkansas and Oklahoma moved to California (Grapes of Wrath)

Frazer-Lemke Act (1934) suspended foreclosures 1935 Resettlement Administration set up to help CCC planted windbreaks

Indian Reorganization Act (1934) Attempt to reverse Dawes Severalty Act Helped tribes to establish local self-

government & preserve native culture Intended to stop loss of Indian lands Not all tribes accepted it (“back to the

blanket”)

Federal Securities Act Required banks & businesses to provide

accurate info to investors Led to creation watchdog committee: SEC

(Securities and Exchange Commission)

Tennessee Valley Authority (TVA) Series of dams built on Tennessee River Provided jobs & electricity to one of poorest

regions of country (Appalachia) Used to determine real costs of producing energy

& thus to check fairness of utility rates Critics questioned government’s conclusions or

feared socialism More results: low-cost housing, restored eroded

lands, nitrates for fertilizers, reforestation, flood control, irrigation

Federal Housing Authority (FHA) Established in 1934 to provide small loans for

building & improving housing To stimulate building industry Very popular (cont. after New Deal)

Congress expanded FHA with USHA U.S. Housing Authority To lend money to states for low-cost construction Reduced slums Resisted by real estate promoters, builders, landlords

Social Security Act, 1935 Created federal-state unemployment

insurance Created Social Security payments

Regular payments to aged, handicapped, etc. Started at $10-$85 per month

Paid for with payroll tax on employers & employees

Inspired by similar programs in Europe To compensate for social changes from

urbanization (fewer family safety nets)

Labor Issues Wagner Act aka National Labor Relations Act, 1935

Created National Labor Relations Board (NLRB) Replaced function of NRA

Affirmed labor’s right to organize & bargain collectively with own representatives

Committee for Industrial Organization Created for unskilled workers; started w/in AF of L Founded by John Lewis & supported by NLRB Successfully used sit-down strike at GM Later renamed Congress of Industrial Organizations

More Labor More support from Congress with Fair Labor

Standards Act, 1938 Minimum wages & maximum hours were to be set by

industries involved in interstate commerce Goal was 40 cents/hour & 40 hours/week (!) Only applied to industrial workers

farm & domestic workers excluded, mostly women & minorities

Ongoing conflicts with AF of L Overall, tremendous expansion of labor

movement, & greater public & govt. support

The Supreme Court FDR’s frustration with a conservative Supreme

Court’s decisions against his programs led to his “Court-packing” scheme Proposed that for every judge over 70, an additional judge

could be added up to total of 15 Claimed judges behind on cases—backfired ‘cause not true FDR’s proposal soundly rejected

Results Existing Court actually became less conservative With judges’ retirements over time FDR appointed 9 judges FDR got less support from Congress after furor over scheme

Roosevelt Recession, 1937 Unemployment improved but still at 15% in 1936 Sharp economic decline in 1937 caused by

Impact of Social Security taxes Reduced govt spending to limit deficit

FDR’s reaction was to embrace Keynesian economics of “planned deficit spending” to stimulate economy John Maynard Keynes, British economist Up till now deficits had been small

Did It Work? Much disagreement…

Did not end Depression, though economy did improve despite 1937 dip

Dramatically increased power & scope of federal govt, while reducing relative influence of states

Conservatives saw New Deal as socialism, but socialists thought it too conservative!

Did it work… Perhaps saved American people from

complete destitution & widespread starvation

Perhaps kept US democracy & free enterprise alive while other countries were falling to fascism & communism

Economy finally recovered with massive deficit spending during WW2 (from $40 billion in 1939 to $258 billion in 1945)