1302 Topic Ten: The New Deal
Overview
In 1932, Franklin Delano Roosevelt was elected president of the United States in a landslide victory
over Herbert Hoover. In the days before television, FDR, as he was known, could never have won his
party's nomination for president, much less the presidency. Although he came from a politically
prominent family and one of New York's wealthiest families, in 1921, Roosevelt was stricken with
adult polio. Very few adults survived the disease, and those who did were invalids for life. The
disease left Roosevelt paralyzed from the waist down and confined to a wheelchair. In the age of TV
and internet, his disability would have been a huge liability. In the '20's and especially the 30's, the
media were especially careful to show respect for Roosevelt. There was a special podium built with
leg braces so that the president could be locked into a standing position, with hand grips for him to
hold. In this manner, FDR could give speeches to the public. While he was maneuvered from his
wheelchair to the podium, the press corps, in respect, turned their backs so as not to embarrass the
president. It was the same when the president entered or exited an automobile. How times have
changed.
Roosevelt's policy for fixing the American economy was called the New Deal, after the speech he
gave when he accepted the Democratic nomination for president in 1932. It is not an exaggeration
to say that the New Deal altered the United States in fundamental ways. It created new political
coalitions. It changed the federal government's relationship with all sectors of society: economic,
cultural, urban and rural, the elderly, the young, labor, industry and agriculture. The New Deal saw an
enormous expansion of federal power (a trend that had already started during the Progressive Era).
The Great Depression had exposed the myth of Americans as rugged individualists; the New Deal
changed the mindset of Americans, who for the first time accepted the federal government as the
guarantor of the "life, liberty and the pursuit of happiness". The New Deal created the United States
that we Americans inhabit today.
When Roosevelt was inaugurated on 4 March, the nation was in dire straits. Unemployment was
hovering at 25%. Twenty-five million people were in danger of defaulting on their mortgages, or had
already done so. Over one million people were homeless. Roosevelt immediately got to work. He
called a special session of Congress, and in what became known as the Hundred Days, a huge
amount of legislation was passed. Part of Roosevelt's success was his charisma and his ability to
connect with the American public. He initiated frequent radio broadcasts known as the fireside chats
(because most radios were located on the fireplace mantle) to explain to the American people steps
he and Congress were taking to deal with the crisis. He famously said that "the only thing to fear was
fear itself".
The New Deal can be divided into two parts: the First New Deal concerned itself with relief efforts,
while the Second New Deal attempted to reform the system. The programs of the New Deal are also
sometimes known as the alphabet soup of policies, for reasons you'll see below.
First New Deal 1933-1935
Emergency Banking Act (9 March – 13 March 1933), 4 day bank holiday to stop the run on banks
and in order for the Treasury Dept. to inspect banks and loan money to those with assets. Saves the
banking system from collapse and signals that FDR a moderate.
Civilian Conservation Corps (CCC) – nature conservation jobs to young men. Run by the army. Hire
300K workers ages 18 to 25 years. Paid $30/month and had to send $22 back to their families.
Was a way to get disaffected young men out of the cities where they could make trouble.
Federal Emergency Relief Administration (FERA) – directed by Harry Hopkins, gave $500 million to
the states to assist in relief efforts.
Civil Works Administration (CWA) - Employed 4 million people to do jobs like build airports, vaccinate
children, pick up trash, etc. It had a budget of 1 billion dollars but was dismantled after one year
because FDR was concerned about the cost.
Securities and Exchange Commission – polices the stock market
Glass-Steagall Act – creates the Federal Deposit Insurance Corporation (FDIC) and mandates that
holding banks must be separate from investment banks (repealed in 1999).
National Industrial Recovery Act (NIRA) – two parts
Public Works Administration (PWA) – 3.3 billion dollars awarded so that public works Jobs
could be created. Work was done by private companies, not by the government. One
construction project built by the PWA is the Golden Gate Bridge in San Francisco.
National Recovery Act (NRA) – Industrial leaders would write price and wage codes to
stabilize the industrial sector. This didn’t work because it led to wage and price fixing (“negro
robbed again”). Also, the government couldn't enforce the codes.
Agricultural Adjustment Act (AAA) – Limits would be set on the yields of the seven basic agricultural
products (corn, dairy, tobacco, wheat, rice, pigs, and cotton) and the government would pay farmers
subsidies to let land sit “idle”. Ruled unconstitutional in 1936, replaced by Soil Conservation Act.
Rural Electrification Administration (REA) – Government provides and subsidizes electricity to rural
areas. Still in effect today.
Federal Housing Administration (FHA) – created to help homeowners who were being foreclosed
upon. Increased mortgage terms from 10 to 30 years and uniform bldg. codes. Still in existence
today.
Tennessee Valley Authority (TVA) – collapse of private utility companies allows for the government to
create regional power supply. The TVA built dams along the Tennessee River, which created jobs,
stopped flooding, provided irrigation and brought electricity to rural areas. It is the largest electrical
provider in the nation and is still in existence today.
Works Progress Administration (WPA) – employs 8.5 million Americans, largest employer in America.
Ran from 1935-1939. Started Jan of 1935, replaced the CWA, and gave Americans a security wage.
Did all sorts of jobs, from cleaning roads and highways to arts and cultural programs.
Second New Deal 1935-1938
Social Security – provided a pension for the elderly, the disabled, the unemployed and dependent
mothers and children.
Wealth Tax Act – raised taxes on the wealthy, corporations, inheritances, stock profits and gifts.
Wagner Act – Legislation that protected workers and labor unions from employers and big business.
Fair Labor Standards Act – established minimum hourly wage (40 cents) and maximum working
hours per week (40 hours), and made illegal child labor.
U.S. Housing Authority - money to the states to build low cost housing for poor and homeless people.
Still in existence today as the Federal Public Housing Authority.
Additional Measures
Other measures taken by Roosevelt included taking the country off the Gold Standard, providing
children with school lunches, lowering the tariff and negotiating reciprocal trade policies with other
nations, and trying to resettle tenant farmers and sharecroppers on better land in order that they
may own land.
Critics of the New Deal
Sen. Huey Long of LA (D) thought the New Deal was too conservative. While governor of LA, Long had
developed the infrastructure of his state, building schools (including LSU), bridges, highways and
hospitals. Long intended to challenge Roosevelt for the Democratic nomination for president.
Therefore he started the “Share the Wealth” movement. His idea was to take from the rich and give
to the poor. Under Long’s plan, all Americans would be guaranteed an income of $2500 a month,
everyone would own a home (with a homestead credit of $2500), and college education would be
free. And how would this be paid for? All inheritances over $5 million would be confiscated. In
addition, there would be a 100% income tax on all incomes over $1 million. Of course the very
wealthy Long never wanted to implement such a plan, but he did get the attention of voters. Share
the Wealth clubs sprang up all over the country and were especially popular in rural and low income
families. Share the Wealth became a moot point however, because in 1935 Huey Long was
assassinated by the son-in-law of a political opponent that Long had ruined.
Election of 1936
The presidential election of 1936 saw the greatest electoral shift in American history. For the first
time, African-American abandoned the party of Lincoln and voted Democrat, a trend that continues
to this day. In addition, women, Jews, Catholics, farmers, urban workers, intellectuals and minorities
formed a coalition that voted Democrat. In the 1932 election the Republicans won 10 out the 12
largest urban cities. In 1936, the Democrats won all 12.
This shift took place even though women and African-Americans didn’t fare well under the New Deal.
When you study New Deal legislation, there were no Civil Rights laws passed. Women were often
fired from jobs, and no laws were passed preventing gender discrimination. On the other hand, both
women and African-Americans could get government jobs under the New Deal, and the New Deal
provided relief from poverty under the new programs. In addition, FDR appointed both women and
African-Americans to high government positions in his administration.
By 1938, Republicans were beginning to pick up a few seats in Congress and the parties were
beginning to take on the characteristics of our modern day Democratic/Republican parties.
Furthermore, the U.S. started to pay attention to what was happening overseas in Europe, especially
in Germany.