Chapter 26FRANKLIN D. ROOSEVELT &

THE NEW DEAL

America Past and Present

The Great Depression

• 1920s optimism drove increase in expectations of continual improvement

• Stock market collapsed, factories closed, unemployment went up, optimism shattered

p.750

The Great Crash• Productive capacity of the automobile & appliance

industries grew faster than the demand– Each yr after 1924, the rate of sales of cars, refrigerators,

ranges, etc. slowed

• If corporate leaders had understood the warning signs, they would have raised wages & lowered prices, both effective ways to stimulate purchasing power

• Those w/ excess cash began investing heavily in the stock market, betting prices would bring them windfall profits

• The basic explanation for the Great Depression lies in the fact that US factories produced more goods than the American people could afford to consume

p.750-752

The Great Crash

• Factory productivity had increased 43%, but wages had gone up only 11%. If the $Bs that went into stock market speculation had been used instead to increase consumer purchasing power; production & consumption could have been brought into balance– The law of supply & “affordable” demand

• Layoffs lowered purchasing power even further

p.752

Unemployment ~ 1929–1942

p.751

Effects of the Depression• Difficult to measure the human cost• People lived in lean-tos made of scrap

wood & metal ~ families went without meat & fresh vegetables for months, existing on diets of soup & beans

• Crops rotted in the fields because prices were too low to make harvesting worthwhile

• Af Ams who left the South for factory jobs in the North were among the first to be laid off

• Missouri Pacific RR reported 200k vagrants riding the rails in 1931

p.752-754

Fighting the Depression

• The Great Depression presented an enormous challenge

• The inability of the Republicans to overcome the economic catastrophe provided the Democrats w/ the chance to regain power

• Although they failed to achieve full recovery before the out break of WWII, the Democrats did succeed in alleviating some of the suffering & establishing political dominance

p.754

Hoover & Voluntarism

• HH was the Great Depression’s most prominent scapegoat

• He rejected proposals for bold action & relied instead on voluntary cooperation within businesses that said “yes” & then reneged

• HH believed that unemployment relief should come from private charities & local govt

• By 1932, after some too little, too late govt programs, his efforts had clearly failed

p.754

Hoover & Voluntarism

• HH’s public image suffered its sharpest blow when he ordered Gen Douglas MacArthur to clear out the Bonus Army, a group of 22k WWI vets who marched on Washington to pressure the Senate to pay them a bonus that was due them in 1945

• After the Senate turned them down, some of the vets stayed in DC, living in ramshackle huts along the Potomac River ~ 1932

p.754

Hoover & Voluntarism• Mounted troops drove the vets out of

the capital, blinding them w/ tear gas & burning their shacks

p.754

Bank Failures ~ 1929–1933

p.754

The Emergence of Roosevelt

• Franklin D. Roosevelt– Born to wealth & privilege– 1921 ~ Crippled by polio– 1928 ~ Elected governor of New York– Talented & persuasive politician

• 1932 ~ Defeated Hoover– Farmers & workers, immigrants & native

born, Protestants & Catholics rallied behind the new leader who promised to restore prosperity

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p.755

p.755

The Hundred Days

• When FDR was inaugurated, unemployment stood at 25%

• Speaking on the steps of the Capitol, he declared “First of all, let me assert my firm belief that the only thing we have to fear is fear itself”

• He called Cong into special session & requested “broad executive power to wage war against the emergency”

• New govt supervision & aid to banks prevented impending collapse

p.755-757

The Hundred Days• FDR sent 15 requests to Cong & received 15

pieces of legislation

• The creation of the Tennessee Valley Authority (TVA) was one of the most ambitious of the New Deal measures– Called for a program to build a series of dams in 7

states to control floods, ease navigation, & produce electricity

– Brought modernization & jobs to desolate areas of the upper rural south

p.755-757

The Tennessee Valley Authority

p.757

Roosevelt & Recovery

• National Recovery Administration (NRA)– Aimed at achieving economic advance thru

experimentation w/ planning & cooperation among govt, biz, & labor

– Companies asked to cooperate in writing codes of fair competition, production limits, price guidelines, & protection of labor (max hrs/min wages)

– Rules too complicated to easily enforce, big biz took advantage ~ didn’t really work

– 1935 ~ SC ruled NRA unconstitutionalp.757-759

Roosevelt & Recovery• Agricultural Adjustment Act (AAA)

– Farmers paid to reduce their production– Prices increased, mainly because of govt

payments, but Dust Bowl helped by cutting supply– Farm income rose for the first time since WWI– Measures most beneficial to larger farms– Sharecroppers, tenant farmers did not fare as well

• Received very little of the govt payments & had their land taken out of production

• 3M people left farms & crowded into the cities where they swelled the relief rolls

p.757-759

Roosevelt & Relief

• 1933 ~ Reconstruction Finance Corporation (RFC) estab’d to provide direct relief ($500M)– Enabled many to avoid starvation & stay out of

breadlines

• 1933 ~ Civilian Conservation Corps (CCC) provided employment to young males from city families on relief– Clear land, plant trees,

pave roads, build bridgesp.759

Roosevelt & Relief

• 1935 ~ Works Progress Administration (WPA) placed unemployed on fed payroll– Similar to CCC in that it did construction

projects, etc.; it also tried to preserve the skills of American artists, actors, & writers by producing plays, circuses, etc.

p.759-760

Roosevelt & Relief

• 1935 ~ Works Progress Administration (WPA) placed unemployed on fed payroll

p.759-760

Roosevelt & Reform

• 1935 ~ Focus shifted from relief to reform

• Early New Deal programs tried to assist bankers, & industrialists, large farmers, & members of of the labor unions, but it did little to help unskilled workers & sharecroppers

• The continuing depression & high unemployment began to build pressure for more sweeping changes

p.760-762

Social Security• Democrats (FDRs Party) made significant

gains in the 1934 Congressional mid-term elections– They were ready to enact virtually any proposal FDR made

• At that time, the US, alone among the modern industrial nations, had never developed a welfare system to aid the aged, disabled, & unemployed

• 1935 ~ Social Security Act passed– Established pattern of govt aid to aged, unemployed,

handicapped, needy elderly, & dependent children– Old age pensions scheduled to begin in 1942 were paltry:

$10 to $85 per month– Farmers, domestic servants not covered p.762-764

Labor Legislation• 1935 ~ National Labor Relations (Wagner) Act

– Compelled companies to allow workers to organize & bargain collectively

– Outlawed union busting tactics

• 1938 ~ Fair Labor Standards Act – Estab’d maximum hrs/minimum wage

• 40 hrs/wk & $0.40/hr

• Rural Electrification Administration brought electricity to 90% of farmers who did not have it in 1930

p.764-765

Impact of the New Deal

• There was a broad influence on the quality of life in the US in the 1930s– Many programs brought long-overdue

improvements

• Most important advances came with the growth of labor unions

• Conditions for working women & minorities in non-union industries showed no comparable advance

p.765

Rise of Organized Labor

• Trade unions were weak at the onset of the Great Depression– <3M belonged, mostly to the AFL which

organized craft (skilled) workers

• Congress of Industrial Organization (CIO) formed by John L. Lewis to organize the steel & auto industries

• 1940 ~ CIO membership hit 5M– Still, only 28% of labor force unionized

p.765-766

The New Deal Record on Help to Minorities

• AAA crop reduction program led to eviction of 1000s of black tenants & sharecroppers– Relief employment programs helped a little

• Despite the bleak record, Af Ams rallied behind FDR & began a change from the Republican to the Democratic party

• Overall, relatively little federal assistance for Mexican Americans

• 1934 ~ Indian Reorg Act attempted to help– Native Ams remained the most impoverished

p.766-768

Women at Work

• Position of women deteriorated in ‘30s– Jobs lost at a faster rate than men– Few New Deal programs help women

• Progress in government– Frances Perkins, Secretary of Labor, the first

woman cabinet member• Women appointed to several other posts

– Eleanor Roosevelt a model for activism• Marion Anderson

p.768

End of the New Deal

• 1936 ~ New Deal reached its high point when Roosevelt was overwhelmingly re-elected & Demo party strengthened its hold on Congress

• In spite of his past success, FDR met with resistance in Congress after 1936

p.769

The Election of 1936

• FDR’s campaign– Opposed wealthy industrialists who formed the

Liberty League & saw the New Deal as an attack on property rights

– Promised further reforms

• Reps nominated governor Alfred Landon of Kansas, a moderate, colorless figure– He refused to campaign against the New Deal

programs

• FDR appealed to the “common man”

p.769

The Election of 1936

p.769

The Supreme Court Fight

• During FDR’s first term, the SC ruled several New Deal programs unconstitutional (e.g., NRA & AAA)

• FDR thought the SC was too old & to conservative, so he asked Congress to replace each member >age of 70– Called a “Court Packing Scheme”– Cong did not go along

• Surprisingly, after the scheme failed, the SC issued rulings approving several New Deal programs

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p.773

The New Deal in Decline

• Aside from the minimum wage & maximum hour law passed in 1938, Cong did not extend the New Deal into any new areas

• The slow improvement in the economy suddenly gave way to a 1937 recession

• The political result was a strong upsurge for the Republicans in the 1938 mid-term elections– Resulted in the formation of a new bipartisan

Congressional conservative coalition that would prevail for a quarter century

p.774-775

The New Deal & American Life• New Deal lasted only five years

– Impact on American life enduring• Roosevelt’s success at relieving human suffering

must be balanced w/ his failure to achieve complete economic recovery during the 30s

• With adoption of Social Security, the govt acknowledged for the first time its responsibility to provide for those who could not care for themselves

• The Wagner Act enabled the labor unions to balance their power against the industrial corporations & the min wage law provided a base for many workers

• FDR was the leader America needed in the 30s

p.775-776

Chapter 26FRANKLIN D. ROOSEVELT &

THE NEW DEAL

America Past & Present

End