The Great Depression and the

New DealAP U.S. History

Chapter 34

FDR: Politician in a Wheelchair

• New York• Polio• governor of NY• Eleanor Roosevelt

– "conscience of the New Deal"

– Most active first lady

Effects of the Great Depression by 1932

• 25%-33% unemployment • 25% banks

• 25% farmers

• businesses failed

• Loss of self-worth

The 3 R’s: Relief, Recovery, and Reform

• “The only thing we have to fear is fear itself."

• "Brain Trust“• Short-range goals: relief & immediate

recovery• Long-range goals were permanent

recovery and reform of current abuses

CCC, WPA, CCC, WPA, PWA, FERA, PWA, FERA,

NYANYA

NNRRAA

AAAAAA

SSA, FDIC, Wagner Act, SSA, FDIC, Wagner Act, TVA, FHA, SEC, REA, Fair TVA, FHA, SEC, REA, Fair

Labor Standards Act, Labor Standards Act, Indian Reorganization ActIndian Reorganization Act

RReliefelief

(short term)

RRecoveryecovery

(medium term)

RReformeform

(Long term)

EEBBRRAA

Think of Reliefas a “food bowl” that provides

temporary relief to people

out of work.

The “Three R’s” of the New DealThe “Three R’s” of the New Deal

FDR’s “twin pillars of

Recovery”: NRA & AAA

Reform is the foundation that plays a permanent

role in the U.S. economy

First "Hundred Days" (March 9-June16, 1933)

• Experiment, find what worked • Overlapped, contradicted

• Fireside chats• Unprecedented passage of

legislation• Blank-check powers

The Banking Crisis • 1933 - 10,951

• "banking holiday" - March 6-10

• Sound banks could reopen (majority did) - restore faith in banking

• Off gold standard

• Emergency Banking Relief Act of 1933 (March 9, 1933) – open sound banks, merge or liquidate unsound

ones.

– additional funds for banks from the RFC

(Who??) and the Federal Reserve (Who??)

• March 12, "Fireside Chats. – safer to keep money in the reopened banks than “under

the mattress.”– Confidence restored; deposits outpaced withdrawals.

• Home Owner's Loan Corporation (HOLC) -- June 13, 1933 - Refinanced mortgages

• Glass-Steagall Banking Reform Act - Created

the Federal Deposit Insurance Corporation (FDIC) - Individual deposits of up to $5,000 insured – TODAY???

Stock Market• Federal Securities Act -- May, 1933

– sound information regarding stocks and bonds.

• Securities and Exchange Commission (SEC) -- June 6, 1934 – protect the public against fraud, deception, and

inside manipulation of the stock market

Relief and Unemployment programs • Civilian Conservation Corps (CCC) -- March

31, 1933 - Most popular of New Deal programs – Employed of 2.75 million young men (18-24)– Reforestation, firefighting, flood control, swamp

drainage, and further developing national parks.

• Federal Emergency Relief Administration (FERA) - Gave $3 billion to states for direct payments or preferably for wages on work projects.

• Civil Works Administration (CWA) (branch of the FERA), Nov. 1933 – 4 million unemployed received jobs in mostly

make-work tasks -- raking leaves, sweeping streets and digging ditches.

– terminated in April 1934

• Public Works Administration (PWA) -- Created by NIRA in 1933 – $4 billion to state and local governments to

provide jobs on 34,000 public projects: building schools and dams, refurbishing gov't buildings, sewage systems, improving highways

• Works Progress Administration (WPA), May, 1935 – Employed nearly 9 million people on

public projects - buildings, bridges, and

hard-surfaced roads, airports, schools, hospitals

• National Youth Administration (NYA) -- June, 1935 – Provided part-time jobs for high school and

college students to help them to stay in school, and to help young adults not in school to find jobs

A Day for Every Demagogue

• Father Charles Coughlin

• Senator Huey P. ("Kingfish") Long

• "Share Our Wealth" - each family with $5,000 at the expense of the prosperous.

• Dr. Francis Townsend - Advocated giving each senior citizen $200 per month

Helping Industry and Labor

• National Industrial Recovery Administration (NIRA) -- June 16, 1933)

• designed to prevent extreme competition, labor-management disputes, & over- production – Minimum prices set (to avoid cutthroat competition) – Production limits & quotas instituted (to keep prices

higher)

• Workers formally guaranteed the right to union.• “yellow dog“ forbidden.

• National Recovery Administration (NRA) enforce the law

Paying Farmers Not to Farm

• Agricultural Adjustment Administration (AAA), May 12, 1933

• Attempted to eliminate price-depressing surpluses by paying growers to reduce their crop acreage

• Several million pigs were purchased and slaughtered – Criticized for destruction of food at a time when

thousands were hungry

• Eventually killed in Butler vs. U.S.

Farm foreclosure sale in Iowa

• Soil Conservation and Domestic Allotment Act – pay farmers to produce soil-conserving crops (soybean)

• Second AAA – payments for observing acreage restrictions on specific commodities

Dust Bowls and Black Blizzards

• Late 1933, drought struck states in the trans-Mississippi Great Plains – Millions of tons of top soil were blown as far as Boston – 350,000 Oklahomans and Arkansans migrated to southern

California

• Grapes of Wrath by John Steinbeck educated many on the crisis

• Resettlement Administration (RA) May 1935 – Relocated destitute families to new rural homestead

communities or suburbs.

The TVA Harnesses the Tennessee

• Tennessee Valley Authority (TVA) -- May, 1933 building hydroelectric power plants in the TN Valley while employing thousands.

• 20 dams built to stop flooding and soil erosion, improve navigation, and generate hydroelectric power

• Huge success: provided full employment in the region, cheap electric power, low-cost housing, abundant cheap nitrates, restoration of eroded soil, reforestation, improved navigation, and flood control.

             

              

Housing and Social Security

• Federal Housing Administration (FHA) -- 1934 (still in operation today)– Stimulated building industry with small loans to

homeowners to improve their homes or build new ones.

• United States Housing Authority (USHA) -- 1937 – Lent money to states or communities for low-cost construction

• Social Security Act of 1935 (August, 1935) • By 1939, over 45 million Americans were

eligible • First benefits, ranging from $10 to $85 per

month, were paid in 1942 • Provided for federal-state unemployment

insurance • Provided for old-age pensions for retired

workers • Financed by a payroll tax on both

employers and employees

A New Deal for Labor

• Wagner Act (National Labor Relations Act of 1935) - Perhaps most important piece of labor legislation in U.S. history

• Reasserted the right of labor to engage in self-organization and to bargain collectively through representatives of its own choice

• Encouraged the creation of the CIO (Congress of Industrial Organizations) started by John L. Lewis for unskilled labor.

• Fair Labor Standards Act (Wages and Hours Bill), 1938

• Minimum-wage and 40-hour week

• Prohibited child labor under age 16

• Labor became a staunch ally of FDR and the Democratic party

• CIO became independent of the AFL in 1938

Indian Reorganization Act of 1934

• Repeal the Dawes Severalty Act of 1887 and restored tribal ownership of lands, recognized tribal constitutions and government, and provided loans to tribes for economic development.

• Indian CCC for projects on the reservations

Election of 1936

• Republican – Alfred M. Landon

• FDR wins BIG – 523 – 8 in electoral votes!

Nine Old Men on the Bench

• Schechter vs. US (1935) - Court ruled the NRA as unconstitutional

• Butler vs. US (1935) - Court ruled regulatory taxation provisions of the AAA as unconstitutional

• FDR's New Deal was defeated in seven of nine Supreme Court decisions

• Judiciary Reorganization Bill -- 1937 - Attempt by FDR to remove old conservative justices by imposing a retirement requirement for justices 70 years or older; six justices were over age 70 at the time.

• Critics accused FDR of being a "dictator" and trying to pack the court

• Bill was not passed • Interestingly, the court began siding with FDR on

later court decisions. • Ironically, FDR made 9 appointments to the Court

due to resignations or deaths

Twilight of the New Deal

• By 1938, the country had slipped into a deep recession, wiping out most of the gains since 1933.

• Economic theory of John Maynard Keynes - Government should spend money from deficit spending in order to "prime the pump" of the economy.

• Government would make up the money when the economy improved through increased tax revenue

New Deal or Raw Deal?

• unemployment rate never went below 16%

• Bureaucracy mushroomed - hundreds of thousands of employees

• States power faded further

• National debt doubled from 1932 to 1939 (20 billion to 40 billion)