Ch 34 The Great Depression and the New Deal. Election of 1932. Republican Hoover. Democrat Roosevelt (FDR) Eleanor Roosevelt Liberal Shift African Americans Had been loyal to the Republicans (Lincoln). FDR and the Three R’s. Banking Holiday March 6-10 First Hundred Days
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Election of 1932 • Republican • Hoover • Democrat • Roosevelt (FDR) • Eleanor Roosevelt • Liberal • Shift • African Americans • Had been loyal to the Republicans (Lincoln)
FDR and the Three R’s • Banking Holiday • March 6-10 • First Hundred Days • March 9-June 13, 1933 • Three R’s • Relief • Short term goal (2 years) of immediate assistance to those in dire need • Recovery • Long-term goals that were aimed at restoring the economy to health • Reform • Long-term goals aimed to prevent a similar disastrous depression “let me assert my firm belief that the only thing we have to fear is fear itself.”
FDR gained tremendous power and influence over Congress during this time. • New Deal = Progressive ideas • Unemployment insurance • Old age insurance (retirement) • Minimum wage regulations • Conservation and development of natural resources • Restrictions on child labor
Quiz • FDR’s ____________ contributed the most to his development of compassion and strength of will. • Education • Domestic conflicts with Eleanor Roosevelt • Family ties with T.R. • Affliction with infantile paralysis • Service in WWI
In 1932 FDR campaigned on the promise that as president he would attack the Great Depression by • Nationalizing all banks • Mobilizing America's youth as in wartime • Returning to traditional policies of laissez-faire • Continuing Hoover’s policies • Experimenting with bold new programs for economic and social reform
The most pressing problem facing FDR when he became president was • A chaotic banking situation • The national debt • The need to silence demagogic rabble-rousers such as Huey Long • Unemployment • The farm crisis
Senator Huey Long of Louisiana gained national popularity by • Advocating social justice for all • Blaming Jews for the depression • Making Louisiana a model for ordinary citizens • Supporting a $200 a month old age pension • Promising to give every family $5000
All of the following contributed to the Dust Bowl of the 1930s except • Dry farming techniques • Drought • Farmers’ failure to use steam tractors and other modern equipment • Wind • Soil erosion
Banking & Money • “Bank Holiday” • Emergency Banking Relief Act (1933) • Gave gov’t power to regulate banking transactions; would reopen only solvent banks • Glass-Steagall Banking Reform Act (1933) • Creates FDIC • Promotes inflation: takes the US off the gold standard, ups price (to $35/oz. by 1934) to encourage gold sales to US treasury • Federal Securities Act (1933) • Creates the Securities and Exchange Commission (SEC) • Watchdog agency
Employment & Aid • 25% unemployment by 1933 – higher among blacks. • Civilian Conservation Corps (CCC) • Dispatches young men (3 million) to gov’t camps doing useful work: • reforestation, flood control, swamp drainage, creation of recreation areas • Required to send payments to parents
Federal Emergency Relief Act (FERA) • Harry L. Hopkins • Disperses payments to the states for dole or wages on work projects • Civilian Works Administration (CWA) • Created to ease suffering during the winter of 1933-34 • A make-work program
Agricultural Adjustment Act (AAA) • Provided monies to farmers to help meet mortgage payments • Home Owner’s Loan Corporation (HOLC) • Refinances mortgages on non-farm homes; bails out middle class homeowners
Tennessee Valley Authority (TVA) – 1933 • Sought to build hydroelectric power plants on the Tennessee River • Provides low cost power to an impoverished region • Works projects = jobs • Low cost housing • Restoration of soil, reforestation, improved navigation, flood control • Eventually more than 20 dams constructed
Works Progress Administration (WPA) – 1935 • $11 billion for construction of public buildings, bridges, and hard-surface roads
National Recovery Administration (NRA) - 1933 • Created by the National Industrial Recovery Act (1933) • Reduction of hours = more employed • Minimum wages set • Restricts use of child labor • Guaranteed collective organization of labor • Blue Eagle insignia: “We Do Our Part” • Schechter v. United States (1935) • Shot down the NRA, • Supreme Court ruled that Congress didn’t have authority under the interstate commerce clause to regulate local businesses • Schechter Poultry Corp., in Brooklyn, NY
Public Works Administration (PWA) – 1933 • Harold Ickes • Goal includes unemployment relief and industrial recovery through large scale works projects
Repeal of Prohibition • Beer and Wine (3.2% alcohol) Act • Legalizes production; goal is work and tax revenue • 21st Amendment (Dec 1933) • Repeals Prohibition • 20th Amendment (Jan 1933) • Changes inauguration date from March 4 to Jan 20
The New Deal and Farmers • The plight of farmers • Dust bowl conditions in Great Plains (1933-38) • Prolonged drought in Great Plains: MO, TX, KS, Ark, OK • Dust Bowl Migrants • 350,000 “Okies” & “Arkies” pack up an relocate, primarily to California over 5 years. • John Steinbeck The Grapes of Wrath (1939)
New Deal responses • Agricultural Adjustment Administration (1933) – The Plow-Under Program • Artificial scarcity through price parity payments • Fed. Gov’t pays farmers market price not to reduce acreage • Controversial • Destruction of food at a time when 1000s were hungry • Struck down by the Supreme Court in 1936
Soil Conservation and Domestic Allotment Act (1936) • Achieves withdrawal of acreage by making payments to farmers to plant soil conserving plants such as soybeans on a % of acres, or allowing fields to lie fallow. • The Second AAA (1938) • A more comprehensive approach; continues parity payments for wheat, cotton, and conservation payments
Frasier-Lemke Farm Banking Act (1934) • Halts farm foreclosures for 5 years • Struck down by SC, revised to 3 and upheld • Resettlement Administration (1935) • Relocates farmers to better land
The New Deal and Labor • Labor sees the NRA’s protections of unions as a call to form unions: “Roosevelt wants you to join a union” • After the NRA is struck down, congress passes the Wagner Act (akaNational Labor Relations Act) in 1935 • Forms the National Labor Relations Board • Results in a rise of unskilled labor unions
Committee for Industrial Organization (CIO) • Founded in 1935 by John Lewis • As a committee within the American Federation of Labor • forms unskilled labor unions • 1936-37 GM sit-down strike; • begins in Fischer Body Plant in Cleveland in December 1936 • CIO wins recognition by GM
CIO • CIO Splits with the AF of L in 1938: form the • Congress of Industrial Organizations • Unskilled Labor
Fair Labor Standards Act (1938) • Establishes minimum wage and maximum hours • Labor by children under 16 forbidden/under 18 in dangerous occupations • Excluded agriculture, service, and domestic workers
Indian Reorganization Act (1934) • “The Indian New Deal” • John Collier, Commissioner of Indian Affairs • Encouraged tribes to establish local self-govt, and to preserve native crafts and traditions • Put a stop to loss of tribal lands
Critics • Critics: Left and Right • Father Coughlin • The radio priest • Union for Social Justice • Anti-New Deal criticisms • Anti-foreign, anti-Semitic radio diatribes (forceful verbal attack) • Huey P. Long • “Share Our Wealth” program: • 100% tax on all incomes over 1 million, every family gets $5000 • assassinated in 1935 • Dr. Charles Townshend • Called for a plan in which each citizen would get $200 per month, but it had to be spent within the month.
Upton Sinclair • 1934, receives Democratic nomination for Gov. of California • promotes End Poverty in California (EPIC) campaign, which would put unemployed workers to useful work in agriculture in exchange for goods and services (not wages). • Galvanizes conservatives in a vicious campaign
Roosevelt’s Response • 1935 Social Security Act • Provides for unemployment insurance • also creates an old-age pension for retirees
The Campaign of 1936 • Candidates • FDR • Democrats: “Remember Hoover!” • Alfred Landon (GOP) • Republican platform decries Franklin “Deficit” Roosevelt and the radicalism, experimentation, and confusion of the New Deal • Promised new deal-type relief benefits AND a balanced budget
Results • LANDSLIDE!!!! Landon carries only Maine and Vermont • Vote count: FDR to Landon • Popular vote: 27,752,869 to 16,674,665 • Electoral vote: 532 to 8 • In Congress, Dems gain 2/3 majority in both houses
The Court-Packing Controversy • The Conservative Court • None of the members of the Supreme Court had been appointed by FDR • 6 of the 9 were over 70 years old. • 7 of 9 major decisions on New Deal legislation struck down New Deal programs as unconstitutional • NRA, AAA, etc. had all been dismantled
FDR’s Court Packing Plan • FDR asks Congress to pass reform to “help the court catch up with its work” • Proposal would allow the president to appoint a new member to the court for every member over 70 who would not retire.
Public Reaction = a black eye for Roosevelt • Outcry at the attempt to dominate the legislative branch • FDR’s honesty questioned… • Accusations of FDR preparing to become a dictator emerge • Court’s Reaction = a step to the left • Begins upholding liberal legislation: Wagner Act and Social Security Act • Congress voted full pay to retired judges, prompting the immediate retiring of 1 of the 9. • Through death and resignation, FDR eventually gets to appoint 9 judges (more than any other president)
The Roosevelt Recession of 1937 • 1933-37: New Deal programs relieve unemployment (down from 25% to 15%), but don’t seem to solve the problem • billions of dollars of “pump priming” seemed to not be resulting in much recovery • 1937 downturn • Partly caused by FDR policies • Social Security taxes bite into payrolls • Administration cuts in spending in order to try to balance the budget • A severe increase in unemployment • Causes FDR to embrace Keynesian economic policies • John Maynard Keynes: British political economist • Calls for deficit spending in order to stimulate the economy • April 1937, FDR announces plan for deficit spend
The Twilight of the New Deal • 1938 Elections • Republicans cut into Democratic majorities – first gains since 1932 • Conflict in Europe 1938-39 • Attention shifts from domestic to international issues • Dr. New Deal gives way to Dr. Win-the-War • Final reforms • Hatch Act 1939 (revised 1940) • Barred administration officials from active campaigning • Outlawed campaign contributions from recipients of gov’t relief • Reorganization Act 1939 • Creates the Executive Office in the White House • Initially defeated in the wake of the Court Packing debacle, but passed in 1939 • Greatly increases the efficiency and power of the Executive branch: staff, etc.
Criticisms • Charges of corruption • Critics point to graft in administrations, “buying votes”, etc. • Al Smith: derides the “alphabet soup” of New Deal agencies • Charges of communism: • Anger at employment of leftists • William Randolph Hearst • Charges the New Deal sought to turn America into a communist state
Bloating of the Fed Gov’t • Bureaucracy booms: 100,000s of employees • Fed gov’t = the largest employer in the US • Marks a shift in power from states to federal govt. • Ballooning of the National Debt • 1932: $19.4 billion; 1939: $40.4 billion • But spending ends the depression: • 1945: debt is $258 billion!
Creeping socialism: planned economy is ruining private initiative • FDR = a dictator • Court packing plan • Attempts to purge troublesome members in election of 1938 • Failure of New Deal to cure the Depression • $20 billion spent in six years without closing the gap between consumption and production • unemployment still high
Proponents • New Deal programs provided relief to needy • Waste and graft may have existed, but were insignificant compared to the immense sums dispersed and the need for haste • “Nobody is going to starve” - FDR • New Deal averted the collapse of the economic system and “saved capitalism” • FDR’s problem was not with capitalism but capitalists! • Headed off a more dangerous swing to the left by adopting some reform measures • Head of the American Socialist Party felt the New Deal killed the socialist momentum of the 1930s.
New Deal provided bold reform without bloody revolution • Continued democracy when other nations were turning to dictators • Many outsiders were predicting an American collapse into communism or fascism • Roosevelt the Moderate: • Criticized by conservatives for going too far and by leftists for not going far enough