The New Deal
Background Information
• FDR was from a wealthy family; privileged
upbringing.
• He graduated from Harvard & studied law but soon
turned to politics.
• FDR good-looking, charming, & charismatic; many
thought he was more style than substance.
• He was a skilled public speaker who had
tremendous energy despite his handicap.
• 1921: FDR contracted polio which left him
paralyzed.
– He recovered from the disease but could walk only with
the help of metal braces & 2 canes.
– More often he used a wheelchair.
****FDR was a clever politico though: he was rarely
photographed in a wheelchair. He thought that
would portray him as weak.
• He was elected governor of New York before
entering national politics.
•His wife, Eleanor, was his eyes, ears, & legs,
going out to meet with people & return with
info to help him make decisions. (She was
probably his biggest asset.)
•FDR was able to cheer & encourage the
millions of people left broken & weary from the
Great Depression.
•In his inaugural address, FDR gave people
hope; his famous phrase, “…the only we have to
fear, is fear itself.”
•His theme was “Action, and action now.”
Results of Election of 1932
• 472 electoral votes to 59
• Democrats won majorities in both houses
• Mandate-the people approve of the program &
ideas of the candidate.
• The top priority of FDR’s administration was to put
people back to work.
• Brain Trust: FDR’s talented group of advisors who
created the New Deal programs.
The First 100 Days
• FDR’s program was called the New Deal & it is
divided up into 2 distinct times:
– 1st New Deal: 1933-34
– 2nd New Deal:1935-36
• The first thing that FDR did was to call an
emergency session of Congress that met from
March 9th to June 16th, 1933.
• It was not planned to last 100 days exactly; it just
worked out that way.
• During the first 100 days Congress passed many
new laws that were part of the ND.
• The New Deal had 3 general aims: RELIEF,
RECOVERY, & REFORM.
– Relief: help for people who were in economic distress.
– Recovery: get businesses going & put people back to
work.
– Reform: government regulation to prevent another
severe depression.
• The first 100 days convinced many people that
change would bring back national prosperity.
• The New Deal programs are sometimes referred to
as “alphabet soup.”
• The New Deal changed the relationship between
the citizen & the government.
– The federal government has a responsibility to the
citizens.
– Expand the role of government regulation in economic
sector.
• The “Bank Holiday” declared by FDR helped protect
the savings of the public.
– The objective was to stop people from withdrawing their
savings which was the main cause of bank failures.
– Congress created the FDIC.
• FDIC: Federal Deposit Insurance Corp. (created by
the Glass-Steagall Act.)
– Insured deposits/savings up to $5,000
– This calmed the fears of the public & runs on banks
stopped.
– This one policy did more to restore public confidence
than all the other New Deal programs.
– Still around today insuring deposits up to $250,000.
1st New Deal Programs
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National Recovery Act
Agricultural Adjustment Act
Public Works Administration (PWA)
Tennessee Valley Authority
Civilian Conservation Corps.
Federal Emergency Relief Act
Federal Deposit Insurance Corp. (FDIC)
Emergency Banking Act & Glass-Steagal Act
Repeal of Prohibition
National Recovery Act
• Set codes of fair competition
• Established minimum wages
• Limited factories to 2 shifts per day (help spread out
production)
• Shortened workers hours
• Guaranteed workers the right unionize
• Eventually found unconstitutional by the Supreme
Court (1935).
• Symbol was the blue eagle
Agricultural Adjustment Act
• AAA pushed prices up by reducing farm production.
• Government rented some of the land normally used
to plant crops.
• No crops could be planted on land rented by the
government
• There were 2 benefits to farmers:
– Rent money from the government
– Higher prices
• Processing taxes paid for the government’s rent to
the farmers.
• Taxes paid by the processors at mills & plants.
Public Works Administration
• Construction projects to improve infrastructure of
the country.
• Improve highways, dams, sewer systems,
waterworks, schools, & other public facilities.
• Put unemployed construction workers back to work
• Awarded government contracts that were required
to employ a certain amount of black workers.
Tennessee Valley Authority
• This program had no direct relation to the Great
Depression.
• It provided low cost electricity to a 7-state area.
• It also served as a “yardstick” for measuring the fair
price of electricity in other areas.
• Dam construction & other projects provided jobs,
flood control, parks, & lakes for recreation.
• It also helped develop one of the poorest regions in
the U.S.
Civilian Conservation Corps.
• The CCC put young men to work.
• They lived in camps run by the army.
• They were paid a certain amount; they kept some &
the rest was sent home to their families.
• Work included clearing brush, planting trees,
building small dams, & other useful tasks.
• This also kept the threat of rebellion & radicalism
low; angry young men with no jobs are a major
threat to stability.
FERA
• To help states cope with the huge numbers of poor
people, FDR created the Federal Emergency Relief
Agency (FERA)
– $500 million in grants to states to help care for
the poor.
– First welfare program created by the federal
government
• Other programs included
– Federal Securities Act which regulated the way
companies could issue & sell stock.
– Home Owner’s Loan Corp. which helped people
pay their mortgages so they could keep their
homes.
• FDR rejected his predecessor’s ideas about what the
federal gov’t. could & could not do about
unemployment & poverty
– Somebody was doing something.
– There was a sense of hope in the country.
• For all the gov’t. programs created, the GD
continued with many people becoming homeless &
still more losing their jobs.
• 1936 PRESIDENTIAL ELECTION
– FDR beat Alfred Landon (R) in a landslide for the
Demos.
– FDR won every state except for Maine & Vermont
• Unemployment was down from 22% (in
1932) to 9.9%
The 2nd New Deal
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Social Security
Works Progress Administration (WPA)
Rural Electrification Administration (REA)
Wagner Act
Federal Project #1
Social Security Act
• Old age insurance/pension
– Paid by workers & employers
– 65+
– Pension based on the number of years worker
had paid into the system.
– Also provided unemployment benefits to those
who had lost their jobs.
• The Social Security Administration is one of
the few ND programs still in existence.
Works Progress Administration
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Similar to the PWA in the First New Deal
Much broader in scope
Doesn’t employ just construction workers
Works in conjunction with Federal Project #1
Rural Electrification Administration
• Brought electricity to the rural areas of the country.
• Responsible for helping all people have electricity
no matter how far into the rural areas they lived.
Wagner Labor Relations Act
– Labor unions have the right to organize & bargain
collectively.
– Created the National Labor Relations Board
• National Labor Relations Board
– Run union elections & settle disputes
– When workers voted to join a union in NLRB
elections, the union represented ALL workers, not
just the members.
Federal Project No. 1
• Employed out of work artisans
– artists
– musicians
– writers
– actors/actresses
– historians
The Court-Packing Plan (1937)
• This was probably FDR’s biggest mistake
during the Depression years.
• The Supreme Court had ruled against many of
the New Deal programs (9 out of 11 were
ruled unconstitutional.)
• FDR’s administration proposed legislation that
would give the president authority to name
new federal judges.
– The legislation would allow the president add no
more than 6 additional justices to the Supreme
Court
– 44 to the lower courts
• The president would be able to do this when
an incumbent failed to retire or resign 6
months after his 70th birthday.
• FYI, the Constitution doesn’t say how many
justices should sit on the SC.
• The court packing plan is a threat to the SC to
approve New Deal legislation.
• FDR won this battle, but conservative
Republicans & southern Democrats would join
forces to bring the New Deal to a halt in 1937.
• However, they were unsuccessful in stopping
many of the New Deal programs.
Criticism of the New Deal
• The New Deal gave the federal gov’t. power to
make the day-to-day decisions for running the
programs.
• Many business leaders found this alarming.
– Restrictions on how they could do business.
– ND would destroy the free enterprise system.
– These business leaders brought lawsuits that
challenged the constitutionality of the ND
programs.
• 1934: the New Deal stalls
• 1935: Court challenges are reviewed by the
Supreme Court
• The Supreme Court ruled that the NIRA/NRA & the
AAA were unconstitutional.
• Some critics said that FDR & the feds were doing
too much & some said they were doing too little.
• The 3 biggest critics of FDR & the ND were Huey
Long, Fr. Charles Coughlin, & Dr. Francis Townsend.
Huey Long
• Governor & Senator from LA (AKA the “Kingfish”)
• Supported FDR & the New Deal, but soon turned
critic.
• He believed that FDR had become a tool of Wall
Street investors
• Long came up with his own plan which rivaled FDR’s
New Deal.
• Long’s plan was “Share Our Wealth.”
• “Share Our Wealth”
– Tax all incomes over $1 million.
– Money would be given out to achieve a more
equitable distribution of wealth.
– Long promised poor people a house, car, radio &
anything else they needed to live decently
• Long’s plan gave FDR’s New Deal some tough
competition.
• FDR called Long “the most dangerous man in
America.”
• Long wanted to run for president in 1936 he was
assassinated in Sept. 1935.
Fr. Charles Coughlin
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Roman Catholic priest —radio show host
Inflate currency by making it silver based
System of “social justice” rather than capitalism
He crossed the line when he made anti-Semitic
remarks (anti-Jewish.)
• He was censured by the Church & taken off the air
not long afterwards.
Dr. Francis Townsend
• California doctor
• Old Age Revolving Pensions (similar to Social
Security)
• Proposed $200 per month for people over 60.
Evaluating the New Deal
Negatives
1. ND did not end the Great Depression.
2. 1939 = 10 million unemployed (total workforce of
40 million)
3. Farmers continued to suffer from overproduction.
4. Dow Jones was still below 100.
5. National debt increased to $51 billion.
6. Many people still earned less than 40 cents an
hour.
Positives
1. Organized labor had the backing of the federal
government.
2. Unemployment insurance
3. Social Security
4. Rural electrification (TVA & REA)
5. Financial reforms (banking & stock market)
6. Better working conditions.
7. Minimum wage
8. It kept the depression from getting worse.
9. The New Deal reached out in small ways to women,
ethnic groups, & minorities.
Black Cabinet: Leaders from the black community
who advised FDR on how best to help blacks
recover from the effects of the Great Depression.
10. The New Deal had shown the importance of a
responsive, humane, moderate, & active federal
government.
****Remember, the ND changed the relationship
between the government & the citizens.