02 New Deal

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					               Franklin D. Roosevelt, distant cousin of Theodore Roosevelt, gained
               popularity as Governor of New York by helping people economically.

      Ch. 10. Roosevelt and the
      New Deal (1933-1939).

► FDR only president to serve more than 2 terms (re-elected 4x, 1933-45).
► The 22 Amendment, passed in 1947, limits president to 2 terms.
                                                             ITO Miyoji

 Adolf Hitler appointed Chancellor in 1933; Japan withdraws from
   League of Nations in 1933; Spanish Civil War in 1936; Hitler
   annexes Austria in 1938.
 Before FDR’s inauguration, unemployment still rose, bank runs
   increased, Governors declared “bank holidays” before bank runs put
   them out of business; only 1 in 4 workers was employed.
Total employment in US, in millions, excluding farms and WPA.
      I.     The First New Deal.

During inauguration address:
“…let me assert my firm
belief that the only thing we
have to fear is fear itself...”
                 -- FDR

 Franklin Delano Roosevelt (FDR) elected President in 1932 in a
   landslide against Hoover.
 In FDR’s nomination acceptance speech, he pledged “to a new deal
   for the American People.”
                                         The New Deal was the title
                                         President Franklin D. Roosevelt
                                         (FDR) gave to a sequence of
                                         programs and promises he initiated
                                         between 1933 - 1938 with the goal
                                         of giving reform to the people and
                                         economy of the U.S. during the
                                         Great Depression.

                                           To fight the Depression, FDR
                                          believed the first thing to do was
                                           to restore peoples confidence
                                                     In the banks.

 Had polio, but had great attitude and said “If you had spent two years
   in bed, trying to wiggle your big toe, after that anything else would
   seem easy.”
 Not an intellectual or strong ideology, but practical, sought range of
   advice, chose advisers that disagreed with him and each other,
   wanted to hear different opinions, but always made final decision.
     A. “Hundred Days” – Congress passed
       15 major bills to meet economic crisis.

 Set pace for legislation that’s never been equaled.
 Together, the 15 acts known as the First New Deal.
     B. Fixing the Banks and Stock Market.
        1. Emergency Banking Relief Act –
           Required federal examiners to survey
           the nation’s banks and issue licenses
           to those financially sound.

 Let Americans know what he was trying to do’ Assured people the
   banks were safer than putting money under their mattress.
 Next day, deposits outweighed withdrawals; the banking crisis was over.
a)   Fireside Chat – FDR’s direct
     talks over the radio w/
       2. Regulating Brokers.
          a) Securities and Exchange
              Commission (SEC) – Regulate
              the stock market and prevent
              fraud/another crash (1934).

 Supported the Securities Act of 1933 – required companies that sold
  stocks to provide complete and truthful information to investors.
             b)        Federal Deposit Insurance
                       Corporation (FDIC) – Gov’t
                       insurance for bank deposits.
          FDR signs the
          Banking Act of
         1933, a part of
            The FDIC.
          Sen. Glass of
           VA on the left
        and Rep. Steagall
        of AL on the right.
          June 16, 1933
 Insured up to certain amounts; Increased public’s confidence in banking.
 Created by the Banking Act, aka the Glass-Steagall Act.
   C. Managing Farms and Industry.
      1. Agricultural Adjustment Administration
         (AAA) – Gov’t paid farmers not to
         grow certain livestock and crops.
                             The Agricultural
                            Adjustment Admin.
                           is considered the 1st
                           modern U.S. farm bill.

 Such as hogs, cotton, corn, wheat, and tobacco.
 Mostly successful, but criticized for raising prices during Depression
   and not all farmers benefited like poor tenant farmers, many African
   Americans, who became homeless and unemployed when landlords
   chose their fields to be taken out of production.
                     The National Industrial Recovery
                       Act (NIRA) created the NRA.

2. National Recovery Administration
   (NRA) – codes of fair competition for
   each industry.

                  Eleanor Roosevelt hanging an
                   NRA sign: "We Do Our Part"
Schechter v. the United States ruled
the NRA as being unconstitutional.

    Schechter Poultry Corporation
Petitioner's Claim
    That the code of fair business practice established under the National
    Industrial Recovery Act of 1933 could not affect its business because
    the code did not have the force of law.
Date of Decision
    27 May 1935
    That the federal legislation establishing the National Recovery
    Administration was unconstitutional in that it delegated too much law-
    making power to non-governmental individuals.
    The decision overturned the major effort of the first administration of
    Franklin Roosevelt (1933-1937) to regulate and control the economy
    during the Great Depression.
D. Providing Debt Relief.
   1. Home Owners’ Loan Corporation
      (HOLC) – Helped homeowners pay
      their mortgages.
   2. Farm Credit Administration (FCA) –
      Helped farmers refinance mortgages.
    E. Spending and Relief Programs.
       1. Civilian Conservation Corps (CCC) –
          Men 18-24 to work outdoors.

                                                          CCC workers on
                                                          road construction,
                                                          Camp Euclid,
                                                          Ohio in 1936.

 Most highly praised of new programs.
 Under national Forestry Service, planting trees, fighting forest fires,
      construction, and building water reservoirs.
 Return home after 6 months; program ended in 1942 after putting
      almost 3 million people to work.
       2. The Civil Works Administration
          (CWA) – Hired 4 million people to get
          through the winter of 1933/34).

   The CWA created construction
     jobs, mainly improving or
 constructing buildings & bridges.
 It ended on March 31, 1934 after
   costing $200 million a month.

 Included 300,000 women; Build or improved 1,000 airports, 500,000
       miles of roads, 40,000 schools, and 3,500 playgrounds, parks,
       and playing fields; Lasted only 5 months (winter of 1933/34).
           3. Federal Emergency Relief
              Administration (FERA) – $ ½ Billion
              to state & local agencies for relief

                               FERA training camp
                          for unemployed women,
                              Pennsylvania, 1934.

► Authorized a couple weeks after the CCC.
► From May 1933 - December 1935, it gave states and localities $3.1 billion
       to operate local work projects and transient programs.
► FERA provided work for over 20 million people and developed facilities
       on public lands across the country.
The Tennessee Valley Authority (TVA)
                                                    RED = Reservoirs
is a federally owned corporation in the U.S.
                                                    YELLOW = Fossil plants
created in May 1933 to provide navigation,
                                                    PURPLE = Nuclear plants
flood control, electricity generation, fertilizer
manufacturing, and economic development
in the Tenn Valley, a region particularly
impacted by the Great Depression.

   The New Deal produced visible effects in the Tenn Valley Authority (TVA)
     dam-building project, which created flood control, conserved forestlands,
     and brought electricity to rural America.
   20 dams, employed 40,000 workers, reforested millions of acres, build
     power plants, strung thousands of miles of electric wires.
   Many business groups opposed the TVA in the 1930’s on the grounds that it
     unfairly competed with private power companies.
   Today, provides power for almost 8 million people, and recreation for
     millions of others.
                                        The "alphabet soup" agencies of
      FDR addressing Congress           the New Deal included the TVA,
                                        CCC, WPA, FDIC, SEC and IRA.
 By end of first year in office, he convinced Congress to pass many
   various policies.
 Did not restore prosperity, but reflected FDR’s zeal for action,
   willingness to try, and brought a new sense of hope and optimism
   in their nation, restoring faith in America.
   II. The Second New Deal (1935).

                                    The first New Deal
                                   was only in effect for
                                   2 years and created
                                   2 million new jobs,
                                   But 10 million were
                                     still unemployed.

 With improvement to the economy slower than expected, FDR faced
       opposition from several different people and groups.
 1935, FDR began the Second New Deal, including the Works
       Progress Administration (WPA) and several other programs.
      A.        Challenges to the New Deal.

          Left-wing                                    Right-wing
           Liberal                  Moderate,         Conservative
      (Democratic party)         or in the middle   (Republican party)

            (for civil rights,                          (Lower taxes,
            working class)                            less immigration)

 With improvement to the economy slower than expected, FDR faced
   opposition from several different people and groups.
 The Right wing (conservative Republicans and southern Dems) opposed
   New Deal from the start, imposed too many regulations on business &
   expanded the federal gov’ts power at states rights expense.
        1. American Liberty League – Anti-New
           Deal politicians from both parties
           joined together.
              Coughlin                                              “Share
              (liberal).                                            Our
           Heavy taxes                                              Wealth”
               on rich,                                             (liberal)
            nationalize                                             clubs.
 Purpose was to organize opposition to the New Deal.
 The Right (conservatives) believed programs hurt business; The Left
       said it didn’t go far enough to intervene in the economy and shift
       wealth fro the rich to the middle and lower classes.
 Challenges to FDR came from Huey Long and Father Coughlin.
                           To pay for New Deal programs, Roosevelt abandoned
                           a balanced budget and began using deficit spending.

          2. Deficit Spending – FDR began
             borrowing money to pay for programs.

 The Depression was an emergency
   the scale of which could only be
 matched by a war. To combat this,
 FDR resorted to deficit spending in
 order to bring relief to the economy.

 FDR abandoned a balanced budget
      to spend money on relief and
      employment programs.
 A 1936 cartoon
shows the GOP
   building its
platform from the
  abandoned by
 the Democrats.
 The U.S. is spending in excess of current receipts (income from taxes)
      by $1 billion per day (2007).
    B.      Launching the Second New Deal.

The "First New Deal" (1933)
 had something for almost
   every group, and the
    "Second New Deal"
     (1935–36), which
 introduced class conflict,
    especially between
   business and unions.

                                 FDR at a Civilian Conservation
                                         Corps camp.

 A second round of programs and reforms to speed economic recovery
       and security for every American.
                                  Similar to the ‘Public Works Administration’
                                  (PWA) in 1933 which hired contractors to
                                   build projects; required to hire people of
                                    color and helped break racial barriers.

        1. Works Progress Administration
           (WPA) – 1935, Federal $ for work
           relief & increase employment by
           building useful projects.
                            Michigan artist Alfred
                            Castagne sketching WPA
                            construction workers.
                            (May 19, 1939)

 Over next several years, hired 8.5 million workers and spent $11 billion
      to build 650,000 miles of highways, roads, and streets, 125,000
      public buildings, over 8,000 parks; Built or improved 124,000
      bridges and 853 airports.
The WPA employed
   2 to 3 million
  unemployed for
  unskilled labor.

                     WPA summarized its achievements.
       The federal government commissioned a series of
        public murals from the artists it employed under the
         WPA. William Gropper's "Construction of a Dam"
         (1939), is characteristic of much of the art of the
        1930s, with workers seen in heroic poses, laboring
            in unison to complete a great public project.

 Most controversial part of program – Hired artists, musicians, and theatre
      people to create thousands of murals, sculptural works, and to
      beautify public walls and halls.
 FDR said the artists “have to eat just like other people.”
    C. Rise of Industrial Unions.
      1. The Wagner Act created the National
         Labor Relations Board (NLRB) –
         Workers allowed to organize unions
         w/out interference from employers &
         to bargain collectively.
  The National Labor Relations Act,
  also known as the Wagner Act, is
often referred to as the Magna Carta
     of organized labor because it
 dramatically strengthened the ability
of labor unions to represent workers.
       2. Binding Arbitration – A neutral party
          listens to both sides to decide on

 Binding Arbitration benefited dissatisfied unions.
        3. Sit-down strikes – Workers stopped
           working & sat down.

                                                    Sit-down strike
                                                    by United Auto
                                                    Workers (UAW)
                                                    at a GM plant in
                                                    Flint, Michigan,
 Interrupted the work flow and prevented the employers from bringing
        in replacement workers.
 Aided by the Wagner Act (National Labor Relations Act), workers used
        sit-down strikes to protect their rights to organize, and union
        membership increased rapidly.
  4.   Fair Labor Standard Act (1938) –
            established a national
minimum               wage & a 40-hour
workweek;             abolished child

     The Equal Pay Act of 1963 amended Fair Labor Standards Act
   and made it illegal to pay workers lower wages on the basis on their
 sex. It is often summed up with the phrase “Equal pay for equal work.”
  This was a major step towards closing the wage gap in women’s pay.
    D.     The Social Security Act –
           1935, gov’t guaranteed insurance
           benefits for elderly & unemployed.


 One of most important pieces of legislation in U.S. history !!!
 Included two insurance programs: A federal program provided
       retirement insurance (monthly payment at age 65).
 States administer the unemployment compensation using federal $.

 The Payroll contributions (tax):
 “give the contributors a legal, moral,
 and political right to collect their
 pensions and unemployment benefits”
                                -- F.D.R.

 Social Security also provides modest welfare payments to other needy
   people, including people with disabilities and poor families with young
   dependant children.
 FDR did not count on Congress borrowing money from Social Security
   to pay for other programs while failing to raise payroll deductions
   enough to pay for benefits.
      III. New Deal Coalition.
        A.     FDR’s Second Term.

 FDR won reelection in 1936 (one of largest landslide victories in history;
      60% of vote and carries all but 2 states (Maine & Vermont),
          The diagram shows the historic
          political realignment of African
          Americans and other minorities
            triggered by the New Deal.

 Democratic Party now was a coalition of (fewer) southerners, farmers,
     laborers, African Americans, new immigrants, ethnic minorities,
     women, progressives, and intellectuals.
          1. Frances Perkins – FDR appointed the
             first woman to a cabinet post (Secty
             of Labor).

 Perkins also headed team that designed the Social Security program.
                           Eleanor on
                          Olvera Street
                          (LA) in 1932.

 Eleanor Roosevelt played a big part in bringing about the African-
   American and women vote (made modest gains under the New Deal).
 She showed strong sympathies for diverse groups as she toured the
       B. The Court-Packing Plan.
          1. Court-Packing – Increase size of
             Supreme Court w/ like-minded
                                                        The Supreme Court
                                                         overturned FDR’s
                                                          NRA and AAA

 The Court disagreed w/ the New Deal and declared some unconstitutional.
 Saying the court was overworked, if any justice served over 10 years and
        did not retire in 6 months after reaching 70 years old, the president
        could appoint an additional justice to the court.
 First political mistake; appeared to be power hungry; Southerners feared
        FDR would appoint anti-segregationists, African Americans feared
        future president would appoint anti-civil rights justices.
The Supreme Court would over-rule
several measures of the New Deal,
which led FDR to propose some
changes to the structure of the Court.

This proposal created a threat to
the checks and balances of our
system and resulted in some of
the harshest criticism FDR would
experience as President.

  FDR faced controversies over the plan to increase the size of the
    Supreme Court and over a recession caused by his desire to stop
    deficit spending.
Keynes ideas, called Keynesian economics,
had a major impact on modern economic and
political theory as well as on many gov’ts'
fiscal policies. He advocated interventionist
gov’t policy, by which the gov’t would use fiscal
and monetary measures to mitigate the adverse
effects of economic recessions, depressions and
booms. He is one of the fathers of modern
theoretical macroeconomics.

                Keynes appeared on Dec 31,
               1965 edition of TIME magazine.

 Keynes argued that the solution to depression was to stimulate the economy
 ("inducement to invest") through some combination of two approaches :
  A reduction in interest rates.
  Government investment in infrastructure.

 John Maynard Keynes – British economist favored the heavy gov’t
   spending during a recession, even running a deficit, to jumpstart the
   economy (Keynesian economics).
After almost a
decade of the
New Deal
(and 1937
many were
that the New
Deal did not
live up to its
        C. The Legacy of the New Deal.

   There are several New Deal programs still
    in operation; the largest such programs
  today are Social Security, the FDIC, CCC, &
Securities and Exchange Commission (SEC) - the
 primary regulator of publicly traded U.S. firms.

   The New Deal increased gov’t control over         FDR and Eleanor at
  the economy and money supply, intervention        Warm Springs, Georgia,
   to control prices and agricultural production,          1939.
  the beginning of the federal welfare state, and
          the promotion of trade unions.

  New Deal expanded the federal gov’ts role in society and the economy
        by providing a safety net for people.
  The economy would not fully recover until WWII, but the New Deal gave
        many Americans a sense of security and stability.
            1. Broker State – Working out conflicts
               among different interests.
            2. Safety net – Safeguards &
               relief programs that protect
               against economic disaster.
   Franklin D. Roosevelt primarily blamed the excesses of big business for causing an
    unstable bubble-like economy. Democrats believed the problem was that business
 had too much power, and the New Deal was intended as a remedy, by empowering labor
unions and farmers and by raising taxes on corporate profits. Some New Deal regulations
  (the NRA and AAA) were declared unconstitutional by the U.S. Supreme Court. Most
     New Deal regulations were abolished or scaled back in the 1970s and 1980s in a
  bipartisan wave of deregulation. However the Securities and Exchange Commission,
              Federal Reserve, and Social Security won widespread support.
                                           The New Deal was the inspiration for
                                      President Lyndon B. Johnson's Great Society
                                       in 1960s. Johnson (on right) was elected to
                                              Congress from Texas in 1938.

   During Roosevelt's 12 years in office, there was a dramatic
    increase in the power of the federal government as a whole.
   FDR’s large array of agencies (New Deal liberalism) protected
    various groups of citizens—workers, farmers, and others—
    who suffered from the crisis, and enabled them to challenge
    the powers of the corporations.
   The wartime Fair Employment Practices Commission (FEPC)
    executive orders that forbade job discrimination against
    African Americans, women and ethnic groups was a major
    breakthrough that brought better jobs and pay to millions of
    minority Americans.
In groups of 2-3, discuss:

  ► What values and policies do you
     associate with today’s political

  ► What political party would you
     join? (Democratic, Republican,
       Green, Libertarian, Independent?)
Cab Calloway and
The Cotton Club
Orchestra, 1934
photo of His High-
de-Highness of
Ho-de-Ho and the

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