THE NEW DEAL: 1933-1941

• The Hundred Days– by the date of Roosevelt’s inauguration, the

disintegration of the banking system convinced conservatives and radicals alike of the necessity for government intervention

– during the first “hundred days” of Roosevelt’s presidency, Congress passed an impressive body of legislation

– on March 5, 1933, the president declared a

“bank holiday”

– legislation of the Hundred Days created the

Federal Deposit Insurance Corporation (FDIC),

forced the separation of investment and

commercial banking, extended the power of the

Federal Reserve Board, established the Home

Owners Loan Corporation (HOLC), and

regulated the securities exchange

– Roosevelt had no comprehensive plan of

action; rather he employed an ad hoc approach,

which sometimes resulted in contradictory

policies

– although most measures of the Hundred Days

were designed to stimulate the economy, the

Economy Act reduced salaries of federal

employees and cut veterans’ benefits

• The National Recovery Administration (NRA)– the problems of unemployment and industrial

stagnation received high priority during the Hundred Days

– Congress appropriated $500 million for aid to the needy

– the newly created Civilian Conservation Corp (CCC) employed tens of thousands of young men

– the National Industrial Recovery Act (NIRA), a controversial piece of legislation, created the Public Works Administration (PWA), allowed manufacturers to establish price and production limits, established a minimum wage and maximum hours, and guaranteed labor the right to bargain collectively

– a variant on the idea of the corporate state, the NIRA envisaged a system of industrywide organizations of capitalists and workers (supervised by government) that would resolve conflicts internally

– the National Recovery Administration (NRA),

created by the NIRA, oversaw the drafting and

operation of business codes

– the NIRA failed to end the depression

– dominant producers in each industry supervised

the drafting and operation of the codes

– they used their power to raise prices and limit

production rather than to hire more workers and

increase output

– even though the NIRA provided protection for

collective bargaining, the conservative and

craft-oriented AFL displayed little enthusiasm

for enrolling unskilled workers on an industry-

wide basis

– John Lewis and other labor leaders created an

alternative to the AFL by establishing the

Congress of Industrial Organizations, formed to

organize workers on an industry-wide basis

without regard to craft

• The Agricultural Adjustment Administration (AAA)– the Agricultural Adjustment Act of 1933

combined compulsory production limitations with government subsidization of staple farm commodities

– in effect, the AAA paid farmers to produce less

– while some farmers benefited, others, particularly sharecroppers and tenant farmers, did not

• The Tennessee Valley Authority (TVA)– the Tennessee Valley Authority (TVA) Act of

1933 created a board authorized to construct dams, power plants, and transmission lines, as well as to market electrical power to individuals and communities

– the TVA also provided a “yardstick” for evaluating the rates and efficiency of private power companies

– in addition, the TVA engaged in flood control, soil conservation, and reforestation projects

– the TVA never became the comprehensive

regional planning organization some of its

sponsors intended; it did improve the standard

of living for many in the valley

• The New Deal Spirit– Roosevelt infused his administration with a

much needed wave of optimism– Roosevelt’s receptiveness to new ideas and the

increased New Deal bureaucracies drew academics and professionals into government service

– the New Deal was never a clearly stated ideological movement

– it drew heavily on populism, Theodore Roosevelt’s New Nationalism, and the Wilsonian tradition

– Washington became a battleground for special

interests

– William Leuchtenberg described the New Deal

as “interest-group democracy”

– the New Deal gave interest groups other than

big business a voice in Washington

– on the other hand, it slighted the unorganized

majority

• The Unemployed– in 1934, at least 9 million Americans were still

unemployed, hundreds of thousands of whom were in desperate need

– nevertheless, the Democrats increased their majorities in Congress

– Roosevelt’s unemployment policies accounted, at least in part, for Democratic successes at the polls

– Roosevelt appointed Harry L. Hopkins to head the Federal Emergency Relief Administration (FERA) in 1933

– Hopkins insisted that the unemployed needed jobs, not handouts

– in November 1933, he persuaded Roosevelt to create the Civil Works Administration (CWA)

– the CWA employed millions on public works projects

– the cost of the CWA frightened Roosevelt, who soon abolished it

– in 1935, Roosevelt put Hopkins in charge of the new Works Progress Administration (WPA)

– in spite of these efforts, at no time during the

depression did unemployment fall below 10

percent of the total work force

– Roosevelt’s fear of deficit spending meant that

many New Deal measures did not provide

sufficient stimulus to the economy

• Literature in the Depression– John Dos Passos published his harshly

anticapitalist and deeply pessimistic trilogy, U.S.A., between 1930 and 1936

– John Steinbeck’s The Grapes of Wrath (1939) perhaps best portrayed the desperate plight of America’s poor

– Thomas Wolfe’s autobiographical novels such as Look Homeward Angel (1929) and You Can’t Go Home Again (1940) offered a stark and vivid view of the confusion of urban life and the impact of hard times

– William Faulkner wrote vividly of southern

poverty, pride, and racial problems in his

novels

– between 1929 and 1932, he published The

Sound and the Fury, Light in August, As I Lay

Dying, and Sanctuary

• The Extremists: Long, Coughlin, Townsend– Roosevelt’s moderation provoked extremists on

both the left and right– the most formidable was the “Kingfish,” Huey

Long, a senator from Louisiana– although he never challenged white supremacy,

the plight of all poor people concerned him– after initially supporting Roosevelt, Long split

from the administration and introduced his “Share Our Wealth” plan, intended to redistribute the nation’s wealth

– less powerful than Long but more widely

influential was Father Charles E. Coughlin, the

“Radio Priest”

– Coughlin urged currency inflation and attacked

the alleged sympathy for communists and Jews

within Roosevelt’s administration

– Coughlin’s program resembled fascism more

than anything else

– Dr. Francis E. Townsend proposed “old-age

revolving pensions,” which would give $200

per month to the nation’s elderly on the

conditions that they not hold jobs and that they

spend the money within thirty days

– the collective threat of these radical reformers

forced FDR to adopt a bolder approach toward

solving the problems of the depression

• The Second New Deal

– despite Roosevelt’s efforts, the depression

continued unabated

– in the spring of 1935, he launched the Second

New Deal

– the Wagner Act (1935) ensured the right of

labor to collective bargaining and prohibited

employers from interfering with union

organizational activities

– the Social Security Act (1935) established a federal system of old-age pensions and unemployment insurance

– the Rural Electric Administration (REA) brought electric power to rural areas

– the Wealth Tax (1935) raised taxes on large incomes, estates, and gifts

– critics worried that the New Deal restricted liberty

– the cost also alarmed them

– by 1936, some members of the administration

had fallen under the influence of John Maynard

Keynes, who advocated deficit spending to

stimulate consumption

– Roosevelt never accepted Keynes’s theories,

but the imperatives of the depression forced

him to increase spending beyond the

government’s income

• The Election of 1936– the election of 1936 matched Governor Alfred

M. Landon of Kansas and Roosevelt– although Landon represented moderate wing of

Republican party, his campaign was hampered by reactionary views of some of his supporters

– Congressman William Lemke of North Dakota ran on the Union party ticket, a coalition of extremist groups. Roosevelt won easily, carrying every state except Maine and Vermont

– Democrats also made large gains in city and state elections

• Roosevelt Tries to Undermine the Supreme Court – the conservative majority in the Supreme Court

declared several major New Deal programs unconstitutional

– by 1937, all of the major measures of the Second New Deal appeared doomed

– Roosevelt responded by announcing a proposal to increase the number of sitting justices, a thinly disguised attempt to stack the Court with his own appointees

– Roosevelt severely misjudged the opposition to the plan

– Congress and public strenuously objected to his tampering with system of checks and balances

– the president eventually yielded to pressure and withdrew his plan

– alarmed by the attack on the Court, two justices changed their positions and voted to uphold New Deal legislation

– moreover, death and retirement created enough vacancies on the Court to allow Roosevelt to appoint a large pro-New Deal majority

– nevertheless, Roosevelt’s personal and political prestige suffered from the affair

• The New Deal Winds Down– the Court battle marked the beginning of the

end of the New Deal– a series of bitter strikes, starting in 1937,

alarmed the public– in June 1937, FDR responded to a moderate

increase in economic conditions by curtailing government expenditures

– the resulting “Roosevelt Recession” included a downturn in the stock market, rising unemployment, and declining industrial output

– in response, Roosevelt finally committed himself to heavy deficit spending, beginning in April 1938

– at his urging, Congress passed a $3.75 billion public works bill, new AAA programs, and the Fair Labor Standards Act

– these measures did little to ease the recession and alienated conservatives

– particularly after the elections in 1938, a coalition of Republicans and conservative Democrats gained enough power to halt expansion of New Deal reforms

• Significance of the New Deal– the outbreak of World War II ended the

depression– the New Deal ameliorated suffering but failed

to revive the economy– Roosevelt’s willingness to try different

approaches made sense because no one knew what to do

– however, his vacillating policies and his desire to maintain a balanced budget often proved counterproductive

– as a result of the New Deal, the nation began to look to the government as the guarantor of its public welfare

– Roosevelt expanded the federal bureaucracy and increased the power of the presidency

– federal bureaucracies now regulated formerly private sectors

– if the New Deal failed to end the depression, the changes it effected altered American life and society

• Women as New Dealers: The Network

– largely because of the influence of Eleanor

Roosevelt and Molly Dewson, head of the

Women’s Division of the Democratic National

Committee, the Roosevelt administration

employed more women in positions of

importance than earlier administrations

– Secretary of Labor Frances Perkins became the

first woman to hold a cabinet post

– Molly Dewson and Eleanor Roosevelt headed

an informal, yet effective, “network” of

influential women whose goal was the

placement of reform-minded women in

government

– Eleanor Roosevelt exerted significant influence,

particularly in behalf of civil rights

• Blacks During the New Deal– while minimal in 1932, the shift of black voters

from the Republican to the Democratic party became overwhelming by 1936

– however, Roosevelt remained unwilling to alienate southern members of Congress and deferred to them on racial matters

– new Deal programs often treated blacks as second-class citizens

– in 1939, black unemployment was twice that of whites, and wages paid to whites were double those received by blacks

– despite this situation, an informal “Black Cabinet,” including Mary McLeod Bethune and Charles Forman, lobbied the federal government in behalf of better opportunities for blacks

– in the labor movement, the new CIO recruited black members

– thus, while black Americans suffered during the depression, the New Deal brought some relief and a measure of hope

• A New Deal for Indians– the New Deal built on earlier policies toward

Native Americans– while retaining many paternalistic and

ethnocentric attitudes, government policies improved after the appointment of John Collier as Commissioner of Indian Affairs in 1933

– under Collier, the government expressed a willingness to preserve traditional Indian cultures

– at the same time, it attempted to improve economic and living conditions

– the Indian Reorganization Act of 1934 allowed a degree of autonomy by attempting to reestablish tribal governments and tribal ownership of Indian lands

– some critics, including many Indians, charged Collier with trying to turn back the clock

– others attacked him as a segregationist– not all Indians, moreover, particularly those

who owned profitable allotments, were willing to yield their privately held land to a tribal corporation

• The Role of Roosevelt– how much credit for New Deal policies belongs

to Roosevelt is debatable

– Roosevelt left most details and some broad principles to his subordinates

– his knowledge of economics was skimpy, and his understanding of many social problems remained superficial

– nevertheless, Roosevelt’s personality marked

every aspect of the New Deal

– his ability to build and manipulate coalitions

made the program possible

– he personified the government and made

citizens believe that the president cared about

the condition of ordinary Americans

• The Triumph of Isolationism– although an internationalist at heart, Roosevelt,

like other world leaders, placed the economic recovery of his own nation ahead of global recovery

– isolationist sentiment in America intensified during the 1930s

– Senator Gerald P. Nye headed an investigation (1934-1936), the findings of which convinced millions of Americans that financiers and munitions makers had been responsible for America’s entry into World War I

– Congress passed a series of neutrality acts,

which severely restricted the options available

to the White House and State Department

– in part because of domestic problems and in

part because of his own vacillation, Roosevelt

seemed to lose control over foreign policy

• War Again in Europe– the aggression of Japan, Italy, and Germany

convinced Roosevelt of the need to resist aggression

– fear of isolationist sentiment, however, led Roosevelt to move cautiously and to be less than candid in his public statements

– the invasion of Poland and subsequent declarations of war by Great Britain and France budged Congress to adopt cash and carry legislation

– in the fall of 1939, Roosevelt sold arms to Britain and France, although he lacked legal authority to do so

– Roosevelt also approved a secret program to build an atomic bomb

– when Britain ran out of money in 1940, Roosevelt swapped destroyers for British naval bases

– in September 1940, Congress established the nation's first peacetime draft

• A Third Term for FDR

– Roosevelt ran for an unprecedented third term

in the presidential election of 1940

– partisan politics and his belief that only he

could control the isolationists undoubtedly

played a role in Roosevelt’s decision to seek

reelection

– Wendell L. Willkie, a moderate from Indiana,

headed the Republican ticket

– since he supported the basic structure of the

New Deal, Willkie focused on opposing the

trend of Roosevelt’s foreign policies

– while rejecting isolationism, Willkie accused

Roosevelt of intending to take the United States

to war

– Roosevelt won the election handily

• The Undeclared War

– Roosevelt’s victory encouraged him to expand

aid to Great Britain

– in March 1941, Congress approved the Lend-

Lease Act

– the American navy began to patrol the North

Atlantic and to pass intelligence data to the

British navy

– in April 1941, the United States occupied

Greenland; in July it occupied Iceland

– after the Greer incident and the sinking of the

Reuben James, the United States had, for all

practical purposes, although not officially, gone

to war