The Great Depression and the New Deal

1. The Great Depression and the New Deal

2. Introduction • As the presidential election neared in 1932 there were 11 million people still unemployed and their families sank ever deeper into the pit of poverty. Hoover was renominated, but not a lot of enthusiasm surrounded him. While a rising star of the democrats was Franklin Delano Roosevelt. • Roosevelt was born from a wealthy family and the 5th cousin of TR. He graduated from Harvard and was elected into the New York legislature and served as a governor. FDR was suave and disarming- qualities that were needed because the people had been so traumatized by this crisis in American history.

3. FDR: Politician in a Wheelchair • Roosevelt in 1921 was struck with a dreaded disease (polio), and at the time he was 6 feet 2 inches tall, athletic, and handsome. Suffering from this disease was very humbling, and he schooled himself in patience, tolerance, compassion, and strength of will. • Another part of his life was his wife Eleanor. She was Franklin’s distant cousin, and was the niece of TR. She was tall, ungainly, and toothy, and a champion of FDR! They shared in the political arena and traveled many countless miles with him on his behalf. She also did things on her own, for example she joined the Women’s Trade Union League and the League of Women Voters. She was a very active first lady.

4. FDR: Politician in a Wheelchair • Eleanor Roosevelt was a force to be reckoned with. She spent countless hours working for the impoverished and the oppressed, her personal relationship was rocky with her husband because of his infidelities. Condemned by the conservatives and loved by the liberals she was one of the most controversial persons in the 20th century. • FDR’s had amazing political appeal. He was an amazing speaker and could charm in private conversations as well. He believed that money, rather than humanity was expendable, and he always remembered the forgotten man.

5. Presidential Hopefuls of 1932 • Roosevelt consistently preached a New Deal for the forgotten man, and sometimes he was vague and contradictory. Many of his speeches were written by the Brain Trusts. These Brain Trusts were a small group of reform-minded intellectuals. Their age was college age, and would later authorize the New Deal. • Democrats were happy again, and Herbert Hoover was still in the White House dealing with the depression over long hours and short lunches. And with the campaign going badly he was persuaded to make speeches reaffirming America’s free enterprise.

6. Hoover’s Humiliation in 1932 • Hoover was swept into office by the rising of prosperity and Hoover was now going to be sent out of office by the tide of the depression. He lost the electoral vote of 472 to 59. • One of the striking differences was the fact that African Americans were now shifting from Republican to becoming a Democrat. In the election of 1932, the African American community became the great urban centers of the North and the element that was vital for the Democratic Party. • Many democrats were searching for answers and basically wanting a new deal that was proposed by Roosevelt. But Hoover was still the president for four long months and Washington was deadlocked on what to do. In the meantime, banks were closing down their doors all over that nation and many started to stuff money into their mattresses. • Many have said that Roosevelt let the depression get worse before it got better so that he could emerge more spectacularly as a savior.

7. FDR and the Three R’s: Relief, Recovery , Reform • On March 4, 1933, Roosevelt and his vibrant voice came and provided the American people with new inspirational and waged war on the great depression. He asserted: “Let me assert my firm belief that the only thing we have to fear is fear itself”. • He boldly declared a nationwide bank holiday from March 6-10, and would open the bank on a much more solid footing. Afterward he had Congress come into a special session to cope with this national emergency. For the first 100 days Congress cranked out a large amount of legislation. • His legislation aimed for three goals and they were: Relief, Recovery and Reform. There were more short range goals needed and they were relief and immediate recovery especially in the first two years. Some long range goals were permanent recovery and reform.

8. FDR and the Three R’s: Relief, Recovery , Reform • Amid the chaos, the program began to go forth, and President Roosevelt cracking the whip. Because Congress was in a panicky way, they let measures or bill pass with ease, and gave Roosevelt blank check powers. Some have even said that if Roosevelt had told them to commit suicide, they would do it. • Roosevelt was also portrayed as a quarterback. He did not precisely know what he was doing or where he was going, but he was going off the cuff. The 100 days of Congress passed many essentials of the New Deal and more long range reforms were passed later. Many of these types of bills were much needed in this postwar progressive movement.

9. Roosevelt Manages the Money • The banking crisis required for immediate action from Congress. They passed the Emergency Banking Act of 1933 which allowed the president to regulate banking transactions and foreign exchange and to reopen solvent banks. • Roosevelt then turned to the radio to give many Americans comfort as he gave assurances that their money would be safe in the banks. Confidence returned with a gush, and the banks began to unlock their doors.

10. Roosevelt Manages the Money • Roosevelt moved very quickly on the financial front, and wanted to protect the gold reserves. He ordered that the private holding of gold were to be surrendered to the Treasury in exchange for the paper currency. Congress responded to this by canceling the gold payment clause in all contracts and authorizing a re-payment in the paper money. • The goal of this currency was to relieve debtor’s burdens and stimulate new production. Roosevelt now wanted to encourage gold buying, and instructed the treasury to do so. This process did not work in the end, because Roosevelt returned the nation to a limited gold standard for purposes of international trade. The United States would now pay of any foreign bill with gold and domestic circulation of gold continued to be prohibited and the gold coins became collector items.

11. Creating Jobs for the Jobless • There was overwhelming unemployment rate and it prompted immediate action. When FDR came into office he had the highest rate of unemployment in United States history. • Congress responded by creating the Civilian Conservations Corps (CCC) which provided employment in government camps for about 3 million uniformed young men. Their work consisted of reforestation, firefighting, flood control, and swamp drainage. • One of the first major efforts was the Federal Emergency Relief Act and the Relief Administration. Hopkins who ran the agency granted in all about 3 billion to states to work on projects. Also the AAA was created which was the Agricultural Adjustment Act which made available millions of dollars to help farmers meet their mortgages. Another was the HOLC was to help refinance mortgages on nonfarm homes and tens of thousands of jobless were employed doing menial tasks such as raking leaves and shoveling snow.

12. A Day for every Demagogue • Many came out in disagreement with what FDR’s new deal: especially Father Charles Coughlin, Dr. Francis Townsend, and Senator Huey Long of Louisiana. Father Coughlin would take to the radio waves and his anti-new deal raids would rake in 40 million fans that finally became so anti-Semitic, fascistic, and demagogic, that his superiors finally silenced in 1942. • Francis Townsend and Huey Long were those that would capitalize on popular discontent by making promises. These promises consisted of money. Long and Coughlin frightened many Americans because they raised troubling question of fascism and economic crisis. Some were worried that FDR would turn into a dictator. • To quiet this political explosion Congress passed the WPA, which was the Works Progress Administration in which the agency will spend 11 billion on thousands of public buildings, bridges, and hard surfaced roads. Critics were not very pleased, but the fact is that at the end of this that after 8 years, nearly 9 million people were given jobs, not handouts.

13. Helping Industry and Labor • Emergency congress also authorized the National Recovery Administration and was designed to assist industry, labor and the underemployed. Labor under this administration was granted the right to organize and bargain collectively through representation of their choice. The hated antiunion contract which was expressly forbidden and certain safeguards were put into place because of the use of child labor. • The same Congress also developed the Public Works Program which was intended for industrial relief and for unemployment relief as well. The long range of this program was the 4 billion that was spend building highways, parkways, public buildings, which in all were 34 thousand projects. One of these projects was the Grand Coulee Dam on the Columbian River which supplied water to many acres of farmland. • The special congress as well allowed the legalization of wine and beer with certain rates of alcohol content which could not exceed 3.2 percent and a tax of 5 dollars on every barrel. Many began to bootleg and prohibition was officially repealed by the 21st Amendment late in 1933 and the saloon doors swung open.

14. Paying Farmers Not to Farm • During the depression the conditions for farmers became worse. Many mortgages were foreclosed, and corn was burned for fuel and not shipped to oversupplied markets. • A new radical approach to farm recovery was the AAA- the Agricultural Adjustment Administration which will set prices for basic commodities, and with the price set it will help in the value in purchasing power. The AAA would eliminate price depressing surpluses by paying growers to reduce their crop acreage. The AAA did get off on a wobbly start, many of the crops and animals that were used were not sometimes distributed to people in need, but it was used for fertilizer. At the time it was a waste of food and it left a lot of people still hungry.

15. Paying Farmers not to Farm…. • When the Supreme Court finally killed the bill declaring it unconstitutional, because in actuality it was paying farmers not to farm and those who were opposed to this bill were rejoicing loudly. • The New Deal Congress passed the Soil Conservation and Domestic Allotment Act of 1936. This act declared that now they were going to pay farmers to plant soil-conserving crops, like soybeans to help preserve the land. The second part of this act would ask growers to plant cotton and wheat on certain amounts of acreage. Other portions of this act were to give farmers a fairer price but to give them a share of the national income, which will help.

16. Dust Bowls and Black Blizzards • Late in 1933 a prolonged drought hit the trans-Mississippi Great Plains. Many rainless weeks followed by huge winds, while the sun was darkened by millions of tons of powdery topsoil from the different homesteads in that area. This area stretched from eastern Colorado to western Missouri and it was known as the dust bowl. Many wore protective masks as many victims thought that it was the end of the world and the coming of Christ. • Many burned and blown out refugees made the trip to southern California. The transition was cruel: food, shelter and clothing were scare, many migrants during the winter months were without work and heat. • Many New Dealers were sympathetic towards relieving their burdens and passed in 1934 a Farm Bankruptcy act which made possible a suspension of mortgage foreclosures for five years. Supreme Court eventually revised that law and made it possible for three years instead. In 1935 the president set up the task of removing nearly farm less farmers to better land and planted more than 200 trees as barriers by the CCC.

17. Battling Bankers and Big Businesses • Within the first 100 days congress passed the Federal Securities act which required promoters to transmit to investor’s information regarding the soundness of their stocks and bonds. • In 1934 congress took more steps and created the SEC which was designed as a watchdog on the stock market and the market became more as trading marts and not the casinos.

18. The TVA Harnesses the Tennessee • The Tennessee River was draining badly and its tributaries were eroding the area. This area contained about 2.5 million of the most poverty stricken people in the United States. An act creating the Tennessee Valley Authority planned a mighty damn. Through much complaint the project was done and it brought to the area full employment and the blessings of cheap electric power, but low cost housing, and the restoration of the top soil. This became one of the most flourishing regions in the United States.

19. Housing and Social Security • The New Deal meanwhile is framing new policies for housing construction. Roosevelt set up the Federal Housing Administration to stimulate small loans to householders, both for old and new developments. • Congress in 1937 also made the USHA, United States Housing Authority which was designed to lend money to states or communities for low-cost construction. New Deal efforts to expand hit a brick wall when slumlords attacked what they considered down the rat hole spending. As a result for the first time in history the slum areas in America didn’t grow and shrank.

20. Housing and Social Security • The greatest victory was the Social Security Act of 1935-one of the most complicated and far reaching laws to pass Congress. This passage was to provide security for old age; specified categories of retired workers were to receive regular payments from Washington. These payments were arranged by the payroll tax on both employers and employees.

21. A New Deal for Labor • The Wagner Act was created in 1935 which created a new National Labor Relations Board for administrative purposes and reasserted the right of labor to engage in self organization and to bargain collectively through representatives of its own choice. With the labor board in place, workers began to organize themselves into effective groups. • One example of this is a miner John Lewis worked his way up to the presidency of the United Mine Workers of America. He then founded the Committee of Industrial Organization and later reconstituted as the Congress of Industrial Organizations in the mid 1930’s to unite all industrial workers in a powerful bloc of big labor and to stand up to big business. • Eventually a better deal for labor continued when Congress passed the Fair Labor Standards Act. The industries involved in interstate commerce were to set up minimum wage and maximum hour levels. Hours were set up for 40 hours a week and 40 cents an hour. Labor by children under 16 was forbidden.

22. A New Deal for Labor • Those who were excluded were the agricultural, service, and domestic workers which meant that blacks, Mexican Americans, and women did not benefit from this act. • In later days Roosevelt wanted everyone to join a union. One mill remarked that the only many in the White House who knows that my boss is a SOB is Roosevelt. By 1940 the CIO- Congress of Industrial Organization could claim about 4 million members in unions, including 200,000 blacks.

23. Presidential Election of 1936 • Republicans chose Alfred Landon. Democrats were with Roosevelt. Roosevelt won by a landslide. Landon only carried two states and the electoral count was 538 to 8. FDR won primarily because he appealed to the forgotten man whom he never forgot. As one person put it “No one shoots at Santa Claus”. • Roosevelt took the oath on January 20, 1937 and it meant for him to continue the New Deal Schemes. At the time the court was ultraconservative, many of them were over 70 years old. Roosevelt asked Congress for him to permit a new justice to the Supreme Court for every member over 70 who would not retire. He did not realize at the time that the Supreme Court had become sacred.

24. The Court Changes Course • Congress and the nation were appalled by the Court packing plan to expand the Supreme Court. He was accused of being a dictator trying to beat out the judiciary. • Meanwhile the court and those who were regarded as conservatives began to vote on the side of liberals which were a switch in time saves nine. Now that the court was stacked, Roosevelt had a court more sympathetic to the New Deal. • Congress though will undermine the courts when they vote for justices to receive full pay for those who are over 70 years old. Which led to one of the oldest justices retired and Hugo Black became a justice that fully supported the New Deals. • Roosevelt won this campaign and the courts became friendlier to the new deal reforms, and with more deaths and resignations it causes him to get nine new justices. In a sense FDR lost the court battle and the war. He will lose much of the political goodwill that had carried him to such a resounding victory in the 1936 election.

25. Twilight of the New Deal • Roosevelt’s first term from 1933 to 1937 did not banish the depression from the land. Unemployment stubbornly persisted in 1936 at about 15 percent, down from a 25 percent in 1933. The recovery was modest, though the country seemed to be inching its way back to economic health. • Keynesianism which was named after John Maynard Keynes came up with the deal to use government spending and fiscal policy to prime the pump of the economy and encourage consumer spending-became the new economic way and remained so for decades.

26. Twilight of the New Deal • Roosevelt by 1937 seemed to be pushing the rest of his reforms and urged Congress a sweeping reorganization. Two years later Congress partially relented and gave him limited powers for administrative reforms, including the key new Executive Office in the White House. • By 1938 the New Deal had clearly lost most of its early momentum. In the congressional elections of 1938, the Republicans cut heavily into the New Deal majorities in Congress, though failing to gain control of either house. Roosevelt did this by shifting public attention away from domestic reform.

27. FDR’s Balance Sheet • The New Deal had relieved the worst of the crisis in 1933. It promoted the policy of balancing the budget and that the government was morally bound to prevent mass hunger and starvation by managing the economy. The national debt was only 40 billion in 1939 but 258 billion in 1945. • Roosevelt demonstrated a new value of powerful presidential leadership; he exercised that power to relieve the erosion of the nation’s greatest physical resource-its people. • He helped preserve democracy in America in a time when democracies were disappearing and dictatorship took its place. He fixed the nation for its part and the titanic of war loomed on the horizon- a war in which democracy the world over would be at stake.