The Great Depression and the New Deal

The Great Depression and the New Deal 1933-1939

I. FDR: Politician in a Wheelchair • 1932 – Republicans re-nominate Hoover and the Democrats nominated an up and coming NY governor Franklin D. Roosevelt • Roosevelt from a wealthy NY family, distant cousin of TR • Suffered from paralysis caused by polio that made him tolerant, patient and able to “feel the pain” of the common man • One of his major assets was his wife, Eleanor • She campaigned for her husbands policies, the oppressed and the poor • Was one of the most active first ladies

I. FDR: Politician in a Wheelchair • Political appeal was that he was a great speaker and uplifting confidence • As governor of NY he used the state to relieve the suffering caused by the depression • To dispel doubts about health he vigorously campaigned • Promised to balance budget and sweeping social and economic reforms, although the specifics were vague • Preached a New Deal for the “forgotten man”’ • Won the election easily • Election of 1932 was the first that African Americans voted heavily Democratic • Election was as much anti-Hoover as pro-Roosevelt • During Hoover’s lame duck months Roosevelt did little to help out until he took office

III. FDR and the Three R’s • Winter after election saw the hard times getting worse, over 80% of banks were closed • During inauguration speech he reassured the American people and said the government must wage a war to end the depression • “New Deal”, federal gov’t takes more active role in promoting recovery, provides direct relief to individuals • Promoted three R’s –relief, reform and recovery • Relief to help immediately • Reform- pass legislation so depression would not occur again • Recovery- short and long term goals to improve economy • The First New Deal (1933-1935) was characterized by relief of the immediate problems of unemployment • Roosevelt was a pragmatist rather than an ideologue and he was open to using many different approached to problems • Acted decisively from the beginning, known as “First 100 days” • Roosevelt relied on a select group of advisers to known as the “Brain Trust”, a group of young reform minded intellectuals that helped author New Deal legislation

III. FDR and the Three R’s • First 100 days (March 9-June 16, 1933) cranked out legislation that set Roosevelt’s New Deal in motion, many ideas had progressive roots • Roosevelt introduced idea of president as legislative leader • Insurance for elderly, disabled, unemployed, restriction on child labor and concern for the environment • Congress gave Roosevelt broad powers to fight Depression, any action at all was important to the public confidence • Favored work relief over direct aid • First act was to close the banks for four days, declared nationwide bank holiday

IV. Roosevelt Manages the Money • 1933 –Emergency Banking Relief Act- banks called for immediate action, closed for 4 days • Good, solvent banks allowed to reopen, reorganized banks to put financial system on sound footing • Banks put under the control of the Treasury Department • Roosevelt gave fist “fireside chat” to reassure public, optimistic speeches help keep Americans calm during Depression • FDR close relationship with press assured positive response for projects • Used mass media as tool to promote programs • June, Congress created the FDIC, which guaranteed bank deposits of up to $5,000 • At about the same time, the Federal Securities Act was passed to help strengthen confidence in the stock market--the SEC also created to regulate the stock and bond markets • Roosevelt pushed for managed currency to cause inflation and relieve debt burdens • FDR also officially abandoned the gold standard to help raise stock and commodity prices • To increase government revenue the first steps at repealing prohibition happened

V. Creating Jobs for the Jobless • Another urgent priority n 1933 was creating immediate relief for widespread unemployment • Roosevelt used government and Congress to create a number of programs aimed at relief • Used federal money to “prime the pump of the economy • March, CCC created to provide useful jobs for young men aged 18-25 • 3 million men took to woods and fields in national forests, parks, and recreation areas, and to help with soil conservation projects • Pay $30/month,($25 went home) but that was more than many people got at the time • Directed by army officers and foresters, men worked under a semi-military atmosphere--discipline and living in a camp • May, Federal Emergency Relief Administration (FERA) passed, headed by Harry L. Hopkins (who became the second most powerful person in administration) • Hopkins spent $5 million within 2 hours of taking office • FERA aimed at working through states • $500 million in FERA funds supported state construction projects--over 5,000 public buildings and 7,000 bridges, organized adult literacy programs, financed college education for poor students, and set up day-care centers for low-income families • Congress passed laws to help ease the acute debt problem for farmers and homeowners--the Farm Credit Administration and the Home Owner's Loan Act--which gave low-interest rates on refinancing mortgages

V. Creating Jobs for the Jobless • 1933Civil Works Administration established • Provided “make work” projects for many unemployed Americans • Improving infrastructure, providing teachers for schools • Program became too expensive and was abandoned after 4 months • 1935- Replaced by Works Progress Administration (WPA) headed by Hopkins • Built nations roads, dredged rivers, municipal buildings • $5b program • Federal Art Project, Federal Writers Project, Federal Music Project- artists, writers program, set precedent of federal funding for arts • Program ended, accused artists of spreading radical beliefs • Ended in 1943 provided work for over 9 million

VI. A Day for Every Demagogue • Conservatives- New Deal made government too powerful (conservatives/ for limited gov’t) • Undermined individualism, free enterprise • Socialists- New Deal did not do enough • Only concern was for banks, business Socialism: If you own two cows you give one to your neighbor. Communism: You give both cows to the government and the government gives you back some milk. Fascism: You keep both cows, but the government takes your milk, and sells some of it back to you. New Deal: You shoot both cows and milk the government. Republican joke of the 1930s

VI. A Day for Every Demagogue • Populist movement seen as voice for poor, challenge power of elite, capitalized on discontent of Americans • Father Charles Coughlin • Catholic priest with radio program broadcast out of Detroit, large following • after turning against Roosevelt, Coughlin tells his listeners that capitalism is dying, and that a new system based on "social justice" should be created (not always clear on what "social justice" exactly means) • Coughlin forms the National Union of Social Justice in Nov. 1934 • He argues that nation's problems were caused by bankers--and that the banks should be controlled by the national government • Arguments against banks took a steadily increasing anti-Semitic tone as time goes on • Coughlin's support wanes by mid-1935, and he is censured for his political activities by Catholic church

VI. A Day for Every Demagogue • Huey Long ("Kingfish") • Governor of Louisiana (then U.S. Senator)--very ambitious, calls for redistribution of American wealth • Starts a Share Our Wealth program in Jan. 1934 • Long proposed to: • liquidate all personal fortunes above a certain amount • give every family enough money to buy a home, an automobile, and a radio • elderly would receive pensions • worthy boys would be sent to college • would establish a minimum wage, shortened work week, a balanced farm program, and immediate payment of soldiers' bonuses • Long's program drew immense following nationwide--claimed more than 27,000 Share Our Wealth clubs and 7.5 million followers • Long assassinated in 1935--Share Our Wealth continues but declines swiftly

VII. Helping Industry and Labor • June 1933 Congress enacted National Industrial Recovery Act • Most far reaching and complex New Deal Act, designed to help industry, labor, unemployed • Two parts- economic recovery and public works projects • Most controversial part was the NRA (National Recovery Administration) • It tried to insure minimum wage, maximum hours (more money to spend, spread out more jobs) • Tried to regulate competition and set industry wide codes that business had to follow, set standard wages and prices, production quotas (rule for “fair competition) • Labor guaranteed to have power to collectively bargain, form unions and organize into unions without interference (did not create adequate enforcement standards) • NRA also launched huge publicity program (Blue Eagle), urging consumers to buy only from companies that adhered to the NRA's codes of conduct • Public Works Administration (PWA), part of the NIRA also approved $3.3 billion dollars for a public-works program to create work for the jobless, pumping money back into the economy • PWA spent $4 billion (in all) on nearly 35,000 projects--constructing dams, bridges, and public buildings (post offices in particular)

VII. Helping Industry and Labor • Worked for a time because it was viewed as doing something • When economy began to improve many businesses began to criticize codes, too many competing interests to succeed • Many criticized that large companies had more power than smaller ones (concentration of industry Roosevelt saw a good thing), robbed small companies of a chance to compete • Limiting industrial production discouraged investment • Shot down by Supreme Court in the Schechter Poultry Corp. v. United States, that stated the federal government had no right to regulate commerce in the states • Paved way for National Labor Relations Act (Wagner Act), 1935 • Stimulates union growth , requires employers to recognize and bargain with their employees' unions • Establishes the National Labor Relations Board to act as a watchdog in labor-management relations • 1938- Fair Labor Standards Act- set up minimum wage, maximum hours • Wage codes excluded agricultural workers, service workers and domestic workers (jobs held by women and minorities) • Positive legacy- 40 hour workweek, minimum wage, abolition of child labor, spurred growth of unions, helped stabilize business

VII. Regional Planning • New Deal reformers set out to regulate the huge electric power industry • Public utility affected lives of most Americans • Often accused of excessive rates • Tennessee Valley region one of the poorest regions, rural and without electricity in many homes was a perfect place for the New Dealers to experiment • Idea was to develop hydroelectric power • 1933-Tennessee Valley Authority (TVA) established to build 6 dams, bring jobs, help with river navigation, help with environmental conservation, improves industry, schools and mostly to send cheap, government supplied power through the remote valleys • Helped regulate utility rates across country, paved way for electrification of rural America over the next decade • Criticized by some for government entering into private enterprise

VIII. Three R’s for Farmers • Low prices because of overproduction made farming situation desperate • 1933Agricultural Adjustment Administration (AAA) enacted to help farmers • Goal to raise prices through artificial scarcity • Eliminate surplus by giving farmers money to reduce crop acreage, money raised through tax on processors of farm products • Farmers had to plow under crops and destroy livestock (destruction of food when country was hungry) • Brought up commodity prices over the next two years over 50%

VIII. Three R’s for Farmers • Paying farmers did actually increase unemployment • Supreme Court killed program in 1935 declaring taxation provisions unconstitutional • 1936 Congress reorganized relief for farmers with Soil Conservation and Domestic Allotment Act omitted processing taxes, provided benefit payments for soil conservation (emphasis on conservation) • 1938 Second AAA same as earlier program but left out processing taxes, combination of conservation and not farming

IX. Dust Bowl • Southern Plains experienced a decade long drought during 1930’s • Dried soil and wind created huge dust storms that made life miserable • Human development made situation worse • High grain prices pushed farmers into marginal lands • Planted vast acreage with mechanical plows, and farmed too intensively • Disrupted ecology of plains and loosened soil that blew away during drought • Many families left region • Refugees known as Okies, no matter where they were from • Most headed out west- CA, OR, WA-lured by promise of jobs, did not find them (competition for seasonal work with Latinos, Asians) • Rural states lost population • Large farmers bought up cheap abandoned land at cheap prices, expanded operations

X. Opposition from the Court • Court killed many New Deal programs • Killed NIRA, AAA • Court thought New Deal was upsetting the balance between the three branches of government • FDR reaction add six new justices to court • Critics call plan “court packing”, accused of upsetting balance of power • 1937 for various reasons Supreme Court begins to rule in favor of New Deal programs • Many older justices begin to retire • Replaced with judges more friendly to Roosevelt • Court more willing to expand role of gov’t for years to come • Weakened FDR politically, seen as trying to make pres. too powerful

XI. 2ND New Deal • Despite the challenges from the left and right, FDR remains popular with most Americans and easily wins reelection in 1936 • Reason for FDR's continued popularity comes from a shift in New Deal policy--what is called the Second New Deal • By the middle of 1935, FDR is fed up with his critics in business and industry--refuses to try and please everyone • FDR argues that Second New Deal saves the capitalist system by "reforming its excesses and addressing its less desirable social consequences” • 2nd New Deal focuses on needs of urban and rural poor and the workers, aimed at long term reform and recovery • These new programs greatly expand federal relief efforts to American workers and pump money into economy • Driving idea behind many of Second New Deal programs is deficit spending • Proposed by British economist John Maynard Keynes • Federal Deficit 1932- $460 m, 1936 $4.4b • Some thought spending was wasteful • Roosevelt following Keynesian Economic Theory • Government deficit spending/ intervention necessary when economy is bad • Put money in hands of consumers (work, public projects) so they have money to spend (pump priming)

XII. 2nd New Deal Legislation • Improved labor relations through National Labor Relations Act, Fair Labor Standards Act • 1935 Social Security Act- pension system for elderly, unemployment insurance, insurance for work related accidents, • Helped poverty stricken families and disabled, did not cover all equally (widows, farm workers) • Possibly greatest legacy of New Deal • Program paid for by tax on earnings (regressive tax because it took money from pockets of all at fixed rate) • Decreased money supply, money was needed to bring us out of Depression • Did not cover domestic workers, self employed, farm workers • 1935 Revenue Act - raised tax rates on incomes over $50,000,created federal estate and gift taxes, established federal tax on corporations • Resettlement Administration (1935) • Loans money to small farmers, tenants, and sharecroppers so they can acquire their own farms on productive land • Replaced in 1937 by the Farm Security Administration to make loans to prevent marginal farmers from sinking further. • Rural Electrification Administration (REA)--provides power to rural America

XIV. Twilight of the New Deal • During first Roosevelt term economy showed signs of recovery • By 1937 economy was slipping again because of Social Security tax and pullback in massive government spending because of concern for balanced budget • This is when Roosevelt really adopted Keynesian economic spending and pushed for massive spending to prevent another depression • 1936- Coalition of conservative southern Democrats and Republicans blocks further reform and attacks some of New Deal agencies • 1939- FDR and Congress begin to turn attention to foreign affairs--WWII--no new domestic reforms attempted • Revival of economy begins but it did not fully recover until WWII

XV. Women and Minorities • Women began to carve a niche for themselves • First woman cabinet Secretary Frances Perkins (Sec. of Labor) • African American woman, Mary McLeod Bethune, was director of National Youth Administration • Minorities did not fare well under the New Deal, Roosevelt failed to address racism and segregation for fear of alienating Southern Democrats, was not a high priority • Many New Deal programs favored whites or were for whites only (Federal Housing Administration, CCC,TVA all practiced racial segregation) • Minority unemployment as around 50% • Many small and tenant farmers were driven off land by AAA because marginal lands were the first to be cut out of production, also eliminated jobs for migrant workers

XV. Women and Minorities • Mexican Americans could not receive benefits of federal relief because of inability to produce proof of citizenship • Many left and went back to Mexico • Native Americans did see some benefits, tried to reinvigorate tribal lands and autonomy (Indian New Deal) • NAACP did gain some ground in the fight for racial justice • Racial prejudice gained momentum in Scottsboro case in 1931 where nine black youths were accused of raping a white woman in Alabama and the men were denied equal protection under the law (because of all white juries) and received inadequate defense

XVI. Effects of the New Deal • Relieved the worst of the financial crisis • Changed role between government and citizens, assure minimum level of well being • Gov’t assumed responsibility for caring for sick, poor, elderly, disabled, unemployed • Established principle that gov’t responsible for welfare of Americans • Safety net for needy Americans • Critics said expansion limited freedoms for Americans • Prevented collapse of economic system, allowed people to gain self respect • Purged capitalism of excesses and abuse by few, prevented a more radical swing to the left • First New Deal experimented with managed economy, Second New Deal enforced competition using government to prime the economy with spending • Changed nature of presidency • Executive branch created new federal agencies, large bureaucracy with little supervision from Congress • FDR used presidency to set social, economic agenda • FDR used relationship with press assured positive response for projects, tool to promote programs

XVI. Effects of the New Deal Expanded role of the federal government • Increased size and scope of government • Increased regulatory functions • New things- taxes taken directly from checks • Created foundation for post-war growth • Gov’t accepted responsibility for economic growth • Restored confidence to financial system • Labor laws protected workers, increased economic power • Life improved for rural Americans (REA,TVA) Created a new political coalition • Democratic Party gains power • Brought together southern whites, northern blue collar workers, Midwestern farmers, African Americans • African Americans begin to vote Democratic during 1930’s • Democrats majority in both houses of Congress (controlled Congress all but four years 32-95) • Social/ethnic tensions decreased, minorities, immigrants felt part of mainstream culture • Work programs brought diverse groups together

XVII. Culture of the 1930’s • Mass entertainment (movies, radio) allowed Americans to escape worries of Depression • By the end of the 1930’s most homes had a radio • National radio networks broadcast comedians (Bob Hope, Jack Benny), soap operas, series • Daily news and commentary • People listen each week for their favorite shows • FDR used fireside chats to explain ideas promote New Deal • Movies- triumph of the common man, gangster films show declining faith in government, comedies (Marx Brothers especially) tried to laugh people out of the depression • Movies provided means of escape from everyday worries (Wizard of Oz in 1939) • Comic book heroes become popular (Superman, Dick Tracy, Flash Gordon), showed ordinary people could defeat evil

The Great Depression and the New Deal