FDR and the New Deal

The Depression

• Collapse of US economy between 1929 and 1932

1929 GNP=103.9 B, Exports 7.1 B

1933GNP= 56.0 B, Exports 2.4 B

1932, 25% unemployment

• Dust Bowl compounded economic collapse and unemployment

• Hoover’s Rugged Individualism and Welfare Capitalism limited government role in fighting depression

• Hoovervilles

FDR Takes Office

• FDR Took office in March 1933

• Known as a domestic president; concerned with the lower and middle classes rather than with foreign policy

• Democratically controlled Congress passed his bills

• Labeled his philosophy towards change as The New Deal

• 100 Days: flurry of legislation to combat Depression

3 R’s

• FDR had no set policy when he started his term: experimentation

• “Relief, Recovery, Reform”• Relief: immediate remedy

to the human suffering, in handouts, make-work projects

• Recovery: longer-lasting remedies to get people back on their feet and return economy to prosperity

• Reform: government regulation and programs to prevent a similar depression from recuring

FDR’s First Actions

• By executive order, closed all banks immediately.

• Emergency Banking Act: supported and re-organized banks

• Economy Act: slashed 500 million from government spending (later, economists would criticize this policy)

• Beer Act: ended prohibition by legalizing beer and wine, provided revenue through taxes

100 Days: Alphabet Soup

• CCC (Civilian Conservation Corps): forestry, parks, wildlife

• AAA (Agriculture Adjustment Admin): quotas, planning (later declared unconstitutional)

• FERA (Federal Emergency Relief Act): money to states

• TVA (Tennessee Valley Authority): development of Tenn. area, anti-flood, hydroelectric

• HOLC (Homeowner's Loan Corporation) and FCA (Farm Credit Admin): refinance home and farm mortgages

• PWA (Public Works Admin): public building programs

Later in the 1930s

• WPA (Works Progress Administration): make-work projects

• “Wagner Act”: create National Labor Relations Board to help labor and management negotiate; replaced idea of National Recovery Act

• Securities Exchange Commission to regulate stock market and investigate fraud

• Social Security Act: pensions– Tax populace today– Pay pensions at retirement– Unintended effect: “Roosevelt

Recession” of 1937 because of money removed from economy

Results of New Deal

• Tremendous popular support for FDR; a president who understood the common man.

• Public sense that the government was trying to end the depression.

• Significant, but not dramatic, drop in unemployment; true recovery came due to WW2

• Unemployment1933 12,830,000 24.9%1934 11,340,000 21.7%1935 10,610,000 20.1%1936 9,030,000 16.9%

Results of the New Deal• Increase in federal gov’t spending

(but total fed, state, local fell)Federal Taxes, Expenses, Balance1929 3.9 billion 3.1 billion +.81933 2.0 billion 4.6 billion -2.61939 6.3 billion 9.1 billion -2.8

• FDR accused of dictatorial and socialist methods

• Federal government became competitor in economy

• Several bills declared unconstitutional

• Accused of trying to stack supreme court

• FDR used expanded presidential powers to influence society directly

• New governmental programs became permanent as gov’t increased role in the national economy

Debate over FDR’s New Deal Legacy

• Proponents praise FDR for his courage and flexibility in combating the Great Depression, his sympathy for the working man, and attempt to safeguard common man against unchecked capitalism.

• Opponents of FDR claim he operated beyond the limits of the constitution, unfairly erected barriers to free-market capitalism, and created an overly large federal government whose continually rising expenses have seriously threatened the contemporary economic health of the nation.