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Notes 3: FDR and the New Deal. Unit 2: The Great Depression March 8-10, 201 1.
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Notes 3:FDR and the New Deal Unit 2: The Great Depression March8-10, 2011
The 1932 elections showed that Americans were ready for a change. In an attempt to regain hope and possibly end the Depression, incumbent president Hooverwas beaten by Democratic candidate Franklin Delano Roosevelt, known as FDR. FDR was the governor of New York and a distant cousin of former president Teddy Roosevelt.
Four months would pass between FDR’s election and his inauguration (it wasn’t until 1933 that the 20th amendment which moved presidential inaugurations to January took effect and it did not cover the 1932 election).
During that time, FDR gathered with a carefully picked group of advisors and formulated a plan to alleviate the problems of the Depression. This plan became known as The New Deal. New Deal policies would focus on three main goals: • Relieffor the needy • Economic recovery • Financialreform
The Hundred Days – Saving the Banks • Upon entering office, FDR immediately jumped into intense activity to initiate new programs. This became known as the Hundred Days and lasted from March 9 to June 16, 1933. During this time Congress passed more than 15 major pieces of New Deal legislation that greatly increased the federal government’s role in the national economy.
The Hundred Days – Saving the Banks • One day after taking office, FDR declared a bank holiday and closed all of the banks to prevent further withdrawals and to end the increasing rate of bank failures. He convinced Congress to pass the Emergency Banking Relief Act which authorized the Treasury Department to inspect banks around the country.
The Hundred Days – Saving the Banks • Those that were stable could reopen and those that were unable to pay their debts would remain closed. Banks that needed help would receive loans. This caused the public to trust banks again since those that were open were in good shape.
The Hundred Days – Saving the Banks • Congress also establishes the Federal Deposit Insurance Corporation (FDIC). This insured individual accounts and allowed people to have faithin their deposits. The Federal Securities Act also required corporations to provide complete information on their stock offerings and made them liable for misrepresentations. The Securities and Exchange Commission (SEC) was created to regulate stock market activity. All of these actions strengthened banks and businesses and allowed people to invest with confidence.
Fireside Chats • On March 12, the day before the first banks would reopen, Roosevelt gave the first of his many radio talks about issues of public concern. He explained in clear and simple language the policies of his New Deal Program. These radio speeches would become known as “fireside chats.”
Fireside Chats • In the first speech he explained the new banking programs and that the nation’s recovery depended on people not demanding all of their savings from banks at once – as this led to the downfall of many banks. Over the next few weeks, many Americans returned their savings to the banks; FDR’s fireside chat had returned their faith in the banks.
The 21st Amendment • Roosevelt persuaded Congress to approve a bill allowing the manufacture and sale of some alcohol. His intent was to increase government revenue by taxing alcohol. The 21st amendment quickly followed by the end of 1933 and repealed Prohibition altogether.
Helping the American PeopleRural Assistance • The Agricultural Adjustment Act (AAA) tried to raise farm prices by lowering production (and therefore supply) of farm goods. The government did this by paying farmers to leave a certain amount of every acre unseeded.
Helping the American PeopleRural Assistance • Some crops were too far along for the “no seeding” policy to work. In these cases, the government paid cotton growers $200 million to plow under 10 million acres of cotton. Hog farmers were paid to slaughter 6 million pigs. The destruction of so much food during a time of hunger shocked many Americans, but it did help raise farm prices and put money into farmers’ pockets.
Helping the American PeopleRural Assistance • One of the most ambitious programs was the Tennessee Valley Authority (TVA). This removed old dams from the Tennessee River and built 20 new ones. This created thousands of jobs, established flood control, and provided electricity to an extremely poor region.
Work Projects • The Civilian Conservation Corps (CCC) put young men between the ages of 18-25 to work building roads, creating parks, planting trees, and controlling soil-erosion and flooding. By the end of the program in 1942, 3 million young men had been employed by it.
Work Projects • Workers received $30 a month, $25 of which was automatically sent home to their family. Free food, uniforms, and lodging were supplied in the work camps. 200 million trees were planted in the Great Plains by CCC workers – this project was to control erosion and prevent another Dust Bowl. The CCC also built Timberline Lodge on Mt. Hood!
Work Projects • The Public Works Administration (PWA) provided money to states to create jobs in the construction of schools and community buildings. This program was not terribly successful and changed to the Civil Works Administration in November of 1933. This provided 4 million jobs over the winter. The CWA also built 40,000 schools, paid the salaries of 50,000 schoolteachers in rural schools, and built more than half a million miles of roads.
Promoting Fair Practices • The National Recovery Administration (NRA) was created to interrupt wage cuts, falling prices, and layoffs. The NRA drafted codes of “fair practice” which limited production and established prices. Workers were also guaranteed the right to unionize.
Basic Needs • The Home Owners Loan Corporation (HOLC) provided government loans to home owners who faced foreclosure. The Federal Emergency Relief Administration (FERA) used $500 million to provide direct relief for the needy. Some paid for work relief programs and the rest provided food and clothing to those in need through state grants.
Basic Needs • The idea behind the work relief program was that people were getting the money they needed for necessary goods, but also gained the confidence and self-respect that came with having a job and not just taking a handout.
Attacks on the New Deal • Many people came out to criticize the New Deal. Liberals felt that it was not doing enough to help the poor and reform America’s economic system. Conservatives felt that the New Deal policy of deficit spending went too far and that the government now had too much control over the economy. • ***deficit spending: When a government spends more money than it receives in revenue. This is often done during times of economic depression to stimulate the economy by putting money into the hands of the average person.
The Supreme Court • The Court struck down the National Industrial Recovery Act (NIRA), the group that sponsored the CWA and NRA, as unconstitutional. Then the Supreme Court stuck down the AAA on the grounds that agriculture is a local matter and should be regulated by the states and not the federal government.
The Supreme Court • Realizing that the Court could quickly dismantle his New Deal program, Roosevelt asked Congress to pass a court-reform bill that would allow FDR to appoint 6 additional Supreme Court justices. This “Court-packing bill” created a huge storm of opposition stating that FDR was violating the separation of powers. This bill did not pass, but since many Supreme Court justices retired at this time, FDR was able to appoint 7 new justices anyway.
Three Strong Critics • Three men arose out of this time period to criticize FDR’s policies not for going too far, but for not going far enough to help the poor.
Three Strong Critics • Father Charles Coughlin, a priest from Detroit, broadcast radio sermons every Sunday that combined economic, political, and religious ideas. He wanted a guaranteed income and the nationalization of banks. Increasing anti-Semitic statements lost Coughlin a large part of his following.
Three Strong Critics • Dr. Francis Townsend, a physician from Long Beach, CA, believed that FDR should do more to help the poor and elderly. He devised a pension plan that would provide money to the elderly and would require them to spend it. This would feed more cash into the economy.
Three Strong Critics • Senator Huey Long of Louisiana was FDR’s largest challenger. This self-proclaimed “kingfish” of Louisiana created a social program called “Share Our Wealth.” Under the Share Our Wealth program, people could have a maximum of a certain amount of wealth and anything above that would be split among the people. Long’s ideas became popular even though he never instituted much social reform in his own state of Louisiana. Long was running for President in the 1936 elections against FDR, but was assassinated by a lone gunman in 1935.
Roosevelt looked past these critics and at the successes of some of his programs. Determined to continue to make a difference, Roosevelt created more ways to help America.
