The New Deal

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					              The New Deal
• The administration of Franklin D. Roosevelt did
  more to reshape the political and social
  landscape of America than any other in our
• Roosevelt’s administration, which came to be
  called the “New Deal” did not end the
  Depression, World War II did that, but in the
  name of recovery, it created a number of
  organizations and programs that are still with us
                The New Deal
• When Roosevelt took office, he realized that his first job
  was to eliminate panic in the country’s financial system
• Roosevelt achieved a measure of early success through
  the strength of his own personality
• He was the first president to make extensive use of the
  radio as a way to communicate with the people
• He conducted a series of “Fireside Chats’ in which he
  spoke to the people over the radio in simple terms that
  everyone could understand. In these conversations he
  explained how he planned to deal with the nation’s
  problems. They served to instill a sense of confidence in
  both the president and his administration
                The New Deal
• But Roosevelt was smart enough to know that he
  couldn’t solve serious problems simply by being himself
• He needed specific programs and so, on March 6, 1933,
  two days after taking office, Roosevelt closed all the
  banks in the country for a period of four days. No one
  could put money in a bank and, more importantly, no one
  could take money out
• He wanted to give himself and Congress enough time to
  pass legislation that would begin to alleviate problems in
  the banking system
• This “bank holiday” as it was called, did much to calm
  public fears and give people hope that things could get
              The New Deal
• Roosevelt then sent the “Emergency Banking
  Act” to Congress. This was an effort to assist
  the larger banks in the country and ensure they
  would not be ruined by the problems of the
  smaller banks – many of which had already
  gone out of business because of loans in default
• Among other things the bill required that federal
  examiners inspect banks before they be allowed
  to reopen after the “holiday”
• The bill passed the same day it got to Congress
             The New Deal
• The same day the Emergency Banking Act was
  passed by Congress, Roosevelt sent the
  “Economy Act” to Congress
• This legislation was designed to instill
  confidence in the fact government was in the
  hands of competent people who knew how to
  deal with the nation’s problems
• It mandated cuts in the federal budget to be
  accomplished by reducing the salaries of
  government employees and the pensions of
  military veterans
• As before, this bill passed the same day
              The New Deal
• A few weeks later, Congress also passed the
  “Glass-Steagall Act,” which gave the federal
  government authority to restrict irresponsible
  speculation by the banks
• In other words they could no longer make risky
  investments with their depositors money
• It also established the Federal Deposit
  Insurance Corporation (FDIC), which
  guaranteed all bank deposits up to $2,500.
• So even if a bank should fail, small depositors
  would be protected. The FDIC is alive and well
  today and insures accounts to $100,000
              The New Deal
• In an effort to restore confidence in the stock
  market, Congress passed the “Truth in
  Securities Act” also in 1933
• This legislation required any company, issuing
  new securities (stock) to provide adequate
  information to the public as to the risks
  associated with investing in the stock – still a
  requirement today
• Another measure passed that year, established
  the Securities and Exchange Commission (SEC)
  whose job it is to police the stock markets
          Help for Agriculture
• Next came the Agriculture Adjustment Act which
  allowed those farmers producing major crops
  (corn, wheat, cotton, etc) to decide how much of
  those crops should be grown in any one year
• The government would then provide subsidies to
  all farmers producing those crops to leave some
  of their land idle thus ensuring the total amount
  grown would not exceed the limits established
• As the Depression went on, after 1933, this
  measure allowed for an increase in price for the
  basic agricultural commodities covered by the
              Help for Industry
• Since the final months of the Hoover administration,
  industry groups (such as the United States Chamber of
  Commerce), had been pushing for a relaxation of rules
  that would permit prices to stabilize in a number of
  different industries
• The conservative Hoover administration had refused to
  permit this, however, President Roosevelt would prove
  more receptive to the idea
• However, the quid pro quo for industry was that they
  would have to permit workers to bargain collectively
  through unions; allow workers pay to increase along with
  prices; and create more jobs to help the unemployed
            Help for Industry
• The result of this effort was the National
  Industrial Recovery Act (NRA) which became
  law in the spring of 1933
• Everything did not go smoothly, however, in the
  implementation of NRA. For example, while the
  NRA guaranteed workers the right to form
  unions and bargain for a better deal on the job,
  there was no enforcement language in the
  legislation to ensure that happened and take
  action against industries that refused to comply
          Regional Planning
• Efforts such as the NRA were evidence of the
  desire of New Deal officials to do economic
  planning. But they wanted private interests
  (farmers and businessmen) to control the
  planning process
• However, there were others who felt the
  government should have control over planning
• Their greatest success came with the creation of
  the Tennessee Valley Authority (TVA).
            Regional Planning
• Progressives had argued for some time that the nation
  should develop its water resources as a way to provide
  low cost electric power
• However, the utility companies were not in favor of this
• The progressives had taken a special interest in
  completion of a dam at Muscle Shoals on the Tennessee
  River in Alabama. This project had been started during
  WWI but then never completed once the war ended
• Finally, in 1932, the progressives won out, the
  Tennessee Valley Authority was created and the Muscle
  Shoals Dam, and others, were completed
           Regional Planning
• It was hoped that completion of these projects
  would not only provide low cost electricity but
  also provide opportunities for other industries to
  the grow in the area of the dams
• Not all the goals of the TVA were met, but it did
  improve water transportation and nearly
  eliminated annual flooding on the rivers in the
  affected area
• It also provided cheap electric power to millions
  of people who had never had it before. The TVA
  was not, however, able to rid the region of the
  poverty that had gripped it for generations
                 Federal Relief
• While the Roosevelt administration did not believe their
  first responsibility was to provide relief to the
  unemployed, they did recognize the need to assist the
• Roosevelt’s first effort in this regard with the Federal
  Emergency Relief Administration (FERA) whose job it
  was to funnel federal dollars to state-level relief agencies
• To run the new agency Roosevelt selected Harry
  Hopkins, who had been in charge of the New York State
  relief agency
• Neither Hopkins nor the President were excited about a
  federal program which would simply hand money to
  people, they both favored a work relief program that
  would provide meaningful jobs to the unemployed
                 Federal Relief
• When it became clear that FERA was not enough, the
  administration created the Civil Work Administration
  (CWA) that put people to work on short term, public
  works projects such as building roads and schools
• This had the effect of putting money into the economy
  and also providing assistance to people who needed it
  very badly
• Roosevelt’s favorite work relief project, however, was the
  Civilian Conservation Corps or CCC. This program
  established military-style camps in national parks and
  forests and put young, unemployed men from the cities
  to work planting trees, building dams, and improving
  parks and irrigation systems for agriculture
                 Federal Relief
• Millions of farmers and homeowners were in need of
  mortgage relief.
• To deal with this problem, the Farm Credit Administration
  was created. This new agency was able to refinance
  nearly 1/5 of all farm mortgages in the first two years of
  its existence
• Despite efforts such as this, fully 25% of farmers had lost
  their land by 1934
• To help homeowners the Homeowner’s Loan
  Corporation was created to provide refinancing to people
  in danger of losing their homes. In 1937, Congress
  established the Federal Housing Administration (FHA) to
  ensure loans for new homes as well as repairs to
  existing ones. The FHA is still with us today
         Critics of the New Deal
• Unlike Hoover, who was willing to let the Depression run
  its course, Roosevelt moved aggressively to deal with
  the nation’s problems
• As you might suspect his actions were not received with
  universal approval
• Conservative Republicans went so far as to form the
  American Liberty League which was designed to inflame
  public opinion against what it perceived as the dictatorial
  polices of the administration
• On the left, radicals such as the Communist and
  Socialist Parties also tried to stir public opposition but,
  like the conservatives, they had very limited success
• For the most part Americans liked what was being done
  by the administration
       Critics of the New Deal
• Of greater concern to the administration were
  groups formed largely by individuals which
  defied easy ideological classification
• One such group, founded by Dr. Francis
  Townsend, an elderly California doctor,
  proposed giving each American, over the age of
  60 and retired, a payment of $200 per month.
  The condition being that all the money would
  have to spent each month, thus putting money
  back into the economy
        Critics of the New Deal
• Another proposal, put forth by Father Charles Coughlin
  of Detroit, wanted the banking system nationalized
• Finally, and of most concern to the administration, was
  the growing popularity of Senator Huey Long of
• Long was the former governor of the state who voiced
  strong opposition to big oil companies, utilities, and
  banks. Because of this, and his larger than life
  personality, he was tremendously popular with his
• Long had supported Roosevelt in the election of 1932,
  but soon soured on the new President and turned
  against him
       Critics of the New Deal
• Long’s alternative to the New Deal called for a
  major redistribution of wealth within the country
• He felt the government could use the tax system
  to seize the financial assets of the wealthiest
  Americans and then distribute that money to the
  poorest Americans
• As opposition leaders such as Long and
  Coughlin grew in popularity, members of the
  administration warned the president that he
  would have to do something drastic in order to
  divert public attention from his critics
       The “Second New Deal”
• In early 1935, Roosevelt launched the “Second New
  Deal” in response to growing criticism and in an effort to
  spur recovery in the face of the continuing Depression
• For the first time Roosevelt signaled a willingness to
  attack big business. He proposed legislation that would
  have broken up the large utility companies. Though the
  bill pass Congress, lobbying effort by the companies
  mitigated the most severe changes
• Of concern to the wealthiest Americans were changes in
  the tax code that would create the highest peace-time
  tax rates in our history
       The “Second New Deal”
• When the Supreme Court struck down the National
  Industrial Recovery Act (NRA), it eliminated the provision
  of the Act that had guaranteed workers the right to
  bargain with management
• Roosevelt knew that workers would play a large role in
  his future success, so he signed legislation (written in
  response to the Supreme Court’s decision) that created
  the National Labor Relations Board (NLRB) which had
  the power to compel employers to recognize the
  bargaining rights of legitimate unions. The NLRB is still
  with us today – as is the case with a number of the
  organizations and policies established under the
  Roosevelt administration
                 Labor Unrest
• During the Depression the nation saw the rise of
  powerful trade unions, largely due to government efforts
  to enhance the power of the unions
• Another factor in the rise of these unions, was big
  businesses inability to control government policy under
  the Roosevelt administration as they had been able to do
  under the presidency of Herbert Hoover
• The AFL still advocated for craft unions organized
  around people with the same skills. However, this
  approach didn’t work for the majority of Americans
  workers who lacked a specific skill. A new trend in
  unions called for organizing all workers in a particular
  industry regardless of the tasks they performed
                 Labor Unrest
• A leading proponent of the new approach was John L.
  Lewis, the powerful head of the United Mine Workers
• At the 1935 AFL convention, Lewis argued with the
  heads of various craft unions at the assembly and he
  eventually walked out.
• A short time later Lewis led the founding of the
  Congress of Industrial Organizations (CIO)
• The CIO was more militant than the AFL and more
  receptive to women and blacks. That was because they
  organized workers in industries such as textiles, which
  the AFL had never shown an interest in, and which
  tended to employ large numbers of women and African
  Americans who had difficulty getting jobs in other
  industries such as automobiles
               Social Security
• Every since Franklin Roosevelt had taken office,
  members of his administration had been arguing for a
  form of federally sponsored social insurance for the
  elderly and unemployed
• In response to this Congress passed, and the President
  signed, the Social Security Act in 1935
• Those who were without any source of income at the
  time the bill was signed, would received $15 per month.
• Those who were working would contribute to the system
  through a payroll tax and would be eligible for future
• For the oldest contributors, who would retire soon,
  benefits could begin as early as 1942
                 Social Security
• Initial benefits for older workers would only amount to
  $10 to $85 per month, but the Social Security Act was a
  vital first step in the nation’s efforts to provide a financial
  safety net for its citizens
• The Social Security Act also established a system of
  unemployment insurance, a system for federal aid to
  people with disabilities, and a program of aid to the
  dependent children of the nation’s poor and
• Social Security was intended as a form of insurance not
  welfare. But some of the programs under the act were
  intended to help those who could not help themselves.
  In time these programs would expand to a level not
  foreseen by the framers of the Social Security Act
           New Forms of Relief
• Social Security was designed to provide future benefits
  to Americans, however, the country was filled with
  millions of people who needed help immediately
• To move in this direction, the Roosevelt administration
  established the Works Progress Administration (WPA)
• This organization, under Harry Hopkins, was responsible
  for building or renovating over 100,000 public buildings,
  and for construction of nearly 600 small airports, 500,000
  miles of new roads, and 100,000 bridges
• To do this the WPA employed more than 2.1 million
  people. Their salaries were enormously important to the
  economy of the nation
           New Forms of Relief
• The WPA “umbrella” also had a positive effect on other
  groups of unemployed or underemployed citizens
• The Federal Writers Project, Federal Artists Project,
  Federal Music Project, and Federal Theater Project,
  gave people in these fields an opportunity to create and
  perform to the benefit of the public, while being paid for
  their efforts by the government
• At the same time the National Youth Administration
  provided work and scholarship assistance to high school
  and college age men and women
• The Emergency Housing Division of the Public Works
  Administration began federal sponsorship of public
         New Forms of Relief
• Government efforts to aid men and women took
  different approaches
• Men were provided with jobs while women,
  particularly women with children, were more
  likely to be given cash assistance
• This approach revealed the nation’s bias in
  thinking that men should carry the load of having
  a job while women stayed home and took care
  of their families
         The 1936 Referendum
• As 1936 began there were clear signs that the economy
  was making a comeback and little doubt Roosevelt
  would be easily re-elected
• The Republicans nominated Alf Landon, governor of
  Kansas to run against Roosevelt
• Opposition leaders, including Townsend and Coughlin,
  formed a third party (Huey Long had been assassinated
  the previous year)
• The result was the largest landslide in American history.
  Democrats also increased their already sizable lead in
  the House and Senate
• Democrats now controlled the majority of the electorate
  and it wouldn’t be until the 1950s that the Republicans
  would be able to regain power
     Trouble for the New Deal
• Franklin Roosevelt won such an overwhelming
  victory in 1936, that he believed it gave him the
  power he needed to address the “Supreme
  Court problem”
• The majority of Supreme Court members at the
  time were conservative appointed by previous
  Republican presidents. They had little use for
  many of the liberal reform measures and
  government agencies Roosevelt had created to
  deal with the Depression
      Trouble for the New Deal
• In early 1937, Roosevelt sent legislation to
  Congress which proposed a major overhaul to
  the nation’s judicial system
• Buried in the many provisions of this bill was a
  measure that would add six new members to the
  Supreme Court
• The president contended that the court was
  overworked and needed additional help to carry
  the burden
• What he really wanted to do was appoint a
  number of liberal justices to the court in order to
  level the playing field for his legislative proposals
      Trouble for the New Deal
• Conservatives were outraged and even many Roosevelt
  supporters were concerned over this obvious play for
  power by “packing the court”
• Despite this the president might have prevailed had not
  the court intervened
• In 1937, in a series of surprise votes, the court
  overturned previous decisions in which they had shown
  their opposition to a minimum wage law and the
  legislation passed by Congress that established the
  National Labor Relations Board. They also validated the
  Social Security Act
• This change of heart on the part of several justices on
  the court, made it unnecessary for the president to try
  and “pack the court”
• When the economy showed surprising strength in 1937,
  Roosevelt seized the opportunity to push for a balanced
• He eliminated over 1.5 million of the relief jobs his
  programs had created five years earlier
• Unfortunately the economy was still too fragile to
  withstand that kind of jolt. Millions more workers lost
  their jobs and the nation slipped back into the king of
  bleak economic condition it had experienced in the dark
  days of 1932-33
• Many people blamed the recession on Roosevelt so in
  early 1938, the president asked Congress for $5 billion in
  new relief spending and the nation soon appeared
  headed for another recovery
• At the same time, the president became concerned with
  the failure of existing anti-trust laws to address the
  problems created by monopolistic industries
• Congress responded with several pieces of legislation,
  including one which was called the Fair Labor Standards
• Among other things this bill established a national
  minimum wage, a forty-hour work week, and placed
  limits on child labor
• Despite this, by the end of 1938, the New Deal was
  pretty much over. Congress was less inclined to give the
  president everything he wanted and Roosevelt was more
  concerned about how to prepare the nation for the war
  he believed was coming
   African Americans and the New
• The New Deal did relatively little to assist African
• This was not because the Roosevelt administration was
  unsympathetic to the plight of blacks in the nation
• On the contrary, Eleanor Roosevelt and several high
  ranking aides in the administration pressured the
  president into doing more to help African Americans
• In response President Roosevelt appointed a number of
  blacks to significant, second-level positions creating
  what came to be known as the “Black Cabinet”
• These efforts had the effect of moving black voters from
  supporting the Republicans in 1932, to giving 90% of
  their votes to the Democrats by 1936
   African Americans and the New
• Blacks supported Roosevelt but had no illusions that his
  administration would make significant inroads into
  curbing racism and segregation
• Roosevelt was afraid of alienating southern Democrats.
  He never made lynching a federal crime, nor did he
  outlaw the poll tax which was the primary tool used by
  southern whites to keep blacks from voting
• Roosevelt such as the CCC continued the practice of
  segregation by setting up separate camps for blacks.
  When the president cut funding to relief programs
  in1937, in an effort to balance the budget, jobs held by
  women and blacks were the first to be eliminated
      Indians and the New Deal
• The New Deal did have a fairly positive effect on
  American Indians
• The enlightened Commissioner of Indian Affairs, John
  Collier, believed in the notion that cultures should be
  respected and, therefore he opposed the assimilation of
  Indian tribes into American culture
• The Indian Reorganization Act of 1934, made it possible
  once again for Indian tribes to own land collectively and
  to elect their own tribal governments
• Despite this, Indian tribes continued to occupy only those
  lands whites did not want and Indians remained by far
  the poorest segment of American society
     Women and the New Deal
• The New Deal marked a break through in the role of
  women in government as president Roosevelt appointed
  the first women to the cabinet – France Perkins as
  Secretary of Labor
• He also appointed a significant number of other women
  to lesser, but still important, positions in his
• The New Deal was not altogether pro-women, however.
  It was still a generally accepted fact that during difficult
  economic times women should withdraw from the work
  place thus leaving more jobs for men
• Even Roosevelt’s Labor Secretary argued against
  women trying to earn extra money for the family during
  times of economic trouble
    Women and the New Deal
• Even the Social Security program excluded jobs
  such as domestic servants, waitresses, and
  other occupations normally held by women
• The New Deal was certainly not hostile to the
  plight of women, but neither did it do much to
  change public opinion regarding the role of
  women in society
• It would take pressure from women themselves
  before future administrations would be motivated
  to do something about the role of women
   The New Deal and the West
• The western United States received more relief funding
  then any other region of the country
• The largest public works projects were in the west
• The Grand Coulee Dam on the Columbia River was the
  largest such project ever undertaken and it provided a
  large amount of cheap electricity to northwestern states
• Without the massive amount of relief money devoted to
  the western states, that part of the nation would have
  struggled to grow in the years immediately after World
  War II. Instead the West became a vibrant and
  successful region after the war
• While the New Deal did much to help the nation
  make it through the 1930s, it failed to take full
  advantage of the power of government spending
• It also failed to dramatically alter the distribution
  of power in the country or the fact that enormous
  wealth was concentrated in the hands of a
  relatively few people
• However, the New Deal did have a positive
  effect in some respects. For example, it helped
  previously powerless groups such as workers
  and farmers to gain some measure of influence
  in deciding their own destinies
• It increased the governments power to regulate business
  thus stabilizing previously troubled areas of the
  economy, such as the stock market and banking system
• The New Deal also laid the foundation for what would
  become the “welfare state” through government relief
  programs and, most especially through Social Security
• While flawed in many ways (lack of substantive help for
  women and minorities), the social programs of the
  Roosevelt administration broke what had been
  government’s traditional disdain for any kind of relief
  effort to help the nation’s neediest citizens
• It also turned the Democratic Party into the primary
  political force in the nation for over thirty years

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