The Great
Depression and the
New Deal
AP U.S. History
Chapter 34
FDR:
Politician in a
Wheelchair
•
•
•
•
New York
Polio
governor of NY
Eleanor Roosevelt
– "conscience of the New Deal"
– Most active first lady
Effects of the Great
Depression by 1932
• 25%-33% unemployment
•
•
•
•
25% banks
25% farmers
businesses failed
Loss of self-worth
The 3 R’s: Relief,
Recovery, and Reform
• “The only thing we have to
fear is fear itself."
• "Brain Trust“
• Short-range goals: relief & immediate
recovery
• Long-range goals were permanent
recovery and reform of current abuses
The “Three R’s” of the New Deal
Relief
(short term)
Recovery
(medium term)
Reform
(Long term)
CCC, WPA,
PWA, FERA,
NYA
N
R
A
E
B
R
A
A
A
A
SSA, FDIC, Wagner Act,
TVA, FHA, SEC, REA, Fair
Labor Standards Act,
Indian Reorganization Act
Think of Relief
as a “food
bowl” that
provides
temporary
relief to people
out of work.
FDR’s “twin
pillars of
Recovery”:
NRA & AAA
Reform is the
foundation
that plays a
permanent
role in the U.S.
economy
First "Hundred Days" (March
9-June16, 1933)
• Experiment, find what
worked
• Overlapped, contradicted
• Fireside
chats
• Unprecedented passage of
legislation
• Blank-check powers
The Banking Crisis
• 1933 - 10,951
• "banking holiday" - March
6-10
• Sound banks could reopen
(majority did) - restore faith in banking
• Off gold standard
• Emergency Banking Relief Act
of 1933 (March 9, 1933)
– open sound banks, merge or liquidate unsound
ones.
– additional funds for banks from the RFC
(Who??) and the Federal
(Who??)
Reserve
• March 12, "Fireside Chats.
– safer to keep money in the reopened banks than “under
the mattress.”
– Confidence restored; deposits outpaced withdrawals.
• Home Owner's Loan Corporation (HOLC) -June 13, 1933 - Refinanced mortgages
• Glass-Steagall Banking Reform Act - Created
the Federal
Deposit Insurance
Corporation (FDIC) - Individual deposits
of up to $5,000 insured
– TODAY???
Stock Market
• Federal Securities Act -- May, 1933
– sound information regarding stocks and bonds.
• Securities and Exchange Commission
(SEC) -- June 6, 1934
– protect the public against fraud, deception, and
inside manipulation of the stock market
Relief and
Unemployment programs
• Civilian Conservation Corps (CCC) -- March
31, 1933 - Most popular of New Deal programs
– Employed of 2.75 million young men (18-24)
– Reforestation, firefighting, flood control, swamp
drainage, and further developing national parks.
• Federal Emergency Relief Administration
(FERA) - Gave $3 billion to states for direct
payments or preferably for wages on work
projects.
• Civil Works Administration (CWA)
(branch of the FERA), Nov. 1933
– 4 million unemployed received jobs in mostly
make-work tasks -- raking leaves, sweeping
streets and digging ditches.
– terminated in April 1934
• Public Works Administration (PWA) -Created by NIRA in 1933
– $4 billion to state and local governments to
provide jobs on 34,000 public projects: building
schools and dams, refurbishing gov't buildings,
sewage systems, improving highways
• Works Progress Administration (WPA),
May, 1935
– Employed nearly 9 million people on
public projects - buildings, bridges, and
hard-surfaced roads, airports, schools, hospitals
• National Youth Administration (NYA) -June, 1935
– Provided part-time jobs for high school and
college students to help them to stay in school,
and to help young adults not in school to find
jobs
A Day for Every Demagogue
• Father Charles Coughlin
• Senator Huey P. ("Kingfish") Long
• "Share Our Wealth" - each family with
$5,000 at the expense of the prosperous.
• Dr. Francis Townsend - Advocated giving
each senior citizen $200 per month
Helping Industry and Labor
• National Industrial Recovery Administration
(NIRA) -- June 16, 1933)
• designed to prevent extreme competition, labormanagement disputes, & over- production
– Minimum prices set (to avoid cutthroat competition)
– Production limits & quotas instituted (to keep prices
higher)
• Workers formally guaranteed the right to union.
• “yellow dog“ forbidden.
• National Recovery Administration (NRA)
enforce the law
Paying Farmers Not to Farm
• Agricultural Adjustment Administration
(AAA), May 12, 1933
• Attempted to eliminate price-depressing surpluses
by paying growers to reduce their crop acreage
• Several million pigs were purchased and
slaughtered
– Criticized for destruction of food at a time when
thousands were hungry
• Eventually killed in Butler vs. U.S.
Farm foreclosure sale in Iowa
• Soil Conservation and Domestic Allotment
Act – pay farmers to produce soilconserving crops (soybean)
• Second AAA – payments for observing
acreage restrictions on specific commodities
Dust Bowls and Black Blizzards
• Late 1933, drought struck states in the transMississippi Great Plains
– Millions of tons of top soil were blown as far as Boston
– 350,000 Oklahomans and Arkansans migrated to
southern California
• Grapes of Wrath by John Steinbeck educated
many on the crisis
• Resettlement Administration (RA) May 1935
– Relocated destitute families to new rural homestead
communities or suburbs.
The TVA Harnesses the
Tennessee
• Tennessee Valley Authority (TVA) -- May, 1933
building hydroelectric power plants in the TN
Valley while employing thousands.
• 20 dams built to stop flooding and soil erosion,
improve navigation, and generate hydroelectric
power
• Huge success: provided full employment in the
region, cheap electric power, low-cost housing,
abundant cheap nitrates, restoration of eroded soil,
reforestation, improved navigation, and flood
control.
Housing and Social Security
• Federal Housing Administration (FHA) -- 1934
(still in operation today)
– Stimulated building industry with small loans to
homeowners to improve their homes or build new ones.
• United States Housing Authority (USHA) -1937
– Lent money to states or
communities for low-cost construction
• Social Security Act of 1935 (August, 1935)
• By 1939, over 45 million Americans were
eligible
• First benefits, ranging from $10 to $85 per
month, were paid in 1942
• Provided for federal-state unemployment
insurance
• Provided for old-age pensions for retired
workers
• Financed by a payroll tax on both
employers and employees
A New Deal for Labor
• Wagner Act (National Labor Relations Act of
1935) - Perhaps most important piece of labor
legislation in U.S. history
• Reasserted the right of labor to engage in selforganization and to bargain collectively through
representatives of its own choice
• Encouraged the creation of the CIO (Congress of
Industrial Organizations) started by John L.
Lewis for unskilled labor.
• Fair Labor Standards Act (Wages and
Hours Bill), 1938
• Minimum-wage and 40-hour week
• Prohibited child labor under age 16
• Labor became a staunch ally of FDR and
the Democratic party
• CIO became independent of the AFL in
1938
Indian Reorganization Act of
1934
• Repeal the Dawes Severalty Act of 1887
and restored tribal ownership of lands,
recognized tribal constitutions and
government, and provided loans to tribes for
economic development.
• Indian CCC for projects on the reservations
Election of 1936
• Republican – Alfred M. Landon
• FDR wins BIG – 523 – 8 in electoral votes!
Nine Old Men on the Bench
• Schechter vs. US (1935) - Court ruled the
NRA as unconstitutional
• Butler vs. US (1935) - Court ruled
regulatory taxation provisions of the AAA
as unconstitutional
• FDR's New Deal was defeated in seven of
nine Supreme Court decisions
• Judiciary Reorganization Bill -- 1937 - Attempt
by FDR to remove old conservative justices by
imposing a retirement requirement for justices 70
years or older; six justices were over age 70 at the
time.
• Critics accused FDR of being a "dictator" and
trying to pack the court
• Bill was not passed
• Interestingly, the court began siding with FDR on
later court decisions.
• Ironically, FDR made 9 appointments to the Court
due to resignations or deaths
Twilight of the New Deal
• By 1938, the country had slipped into a deep
recession, wiping out most of the gains since
1933.
• Economic theory of John Maynard Keynes Government should spend money from deficit
spending in order to "prime the pump" of the
economy.
• Government would make up the money when the
economy improved through increased tax revenue
New Deal or Raw Deal?
• unemployment rate never went below 16%
• Bureaucracy mushroomed - hundreds of
thousands of employees
• States power faded further
• National debt doubled from 1932 to 1939
(20 billion to 40 billion)