The New Deal
U.S. 2 - Honors
I. Restoring Confidence
A. Franklin Delano Roosevelt soundly defeated Herbert
Hoover in the election of 1932. He promised “Action
& Action Now” to the American people. In his
inaugural speech he said “the only thing we have to
fear is fear itself”. He gave Americans hope for the
first time in four years.
1) During the first 100 days in office, FDR sent 15 messages
to congress and all 15 became law. FDR’s program of
RELIEF, RECOVERY & REFORM became known as the NEW
DEAL. (the 3 Rs of the new deal)
2) March 6, two days after taking office, FDR issued a
proclamation closing all American banks for 4 days until
congress could meet in special session to consider
banking reform legislation.
Hoover & FDR on their way to
the Capitol for the Inauguration
“the ONLY thing we have to
Fear is Fear itself.”
a) Emergency Banking Act – March 9, 1933 – all banks will
remain closed until they could prove they were sound to
conduct business.
i.
b)
90% of all banks that reopened under the provisions of this
act did NOT fail for the rest of the depression
The Federal Deposit Insurance Corporation (FDIC), June
1933 – insured each bank deposit up to $2, 500.00
(still in existence insures up to $100,000)
c) Farm Credit Administration, March 1933 – provided low
interest long term loans to farmers (these loans were to
enable farmers to pay back mortgages, loans, taxes &
buy back lost farms).
d) Home Owners Loan Corporation (HOLC), April, 1933 –
allowed people to borrow money at low interest rates for
a longer period of time. (Over 1 million American families
were saved from homelessness as a result of the HOLC)
WITH BANKS CLOSED PEOPLE
BARTERED FOR WHAT THEY
NEEDED.
RUN ON THE BANK
B. In addition to helping the banks, FDR knew that something
needed to be done for the 1 in 3 Americans out of work. He
had Congress authorize a number of large scale programs
of Direct and Work Relief for the 13 million unemployed.
1. Federal Emergency Relief Administration (FERA),
May 1933 – provided for ½ Billion dollars to go
directly to the states & local agencies for the people.
a) By 1935 $3 Billion was spent on direct relief & 8
million families were surviving on public assistance.
2. Civil Works Administration (CWA), Headed by HARRY
L. HOPKINS. A “temporary” organization under FERA
to provide jobs for unemployed workers (make work).
Civil Works Administration workers repaving road in front of the Philadelphia Zoo's
administration building, Philadelphia, PA, June, 1934.
Credit: Courtesy of Temple University,
Urban Archives, Philadelphia, Pa
When Mayor J. Hampton
Moore refused federal
assistance, WPA state
administrator Edward Jones
moved 12,000 Philadelphia
WPA employees to the
suburbs. After S. Davis
Wilson became mayor in
1937, federal relief poured
into the city; the WPA alone
employed more than 47,000
people. Moore's opposition,
however, had cost the city
millions of dollars in relief
and lost it construction
projects that benefited other
municipalities throughout the
state.
3. Civilian Conservation Corps (CCC), 1933 – provided jobs for
unmarried men between the ages of 18 & 25, part of their
salaries were sent home to help their mothers with younger
brothers and sisters.
a)
b)
At its’ peak it had between 300,000 & 500,000 members.
Men worked at jobs to save the countries’ natural resources &
were given 3 meals a day, clothes & lived in army type camps.
i.
Built fire trails
ii. Cleared swamps
iii. Built small dams for flood control
iv. Built parks
v. Planted trees
4. National Youth Administration (NYA), 1935 – provided jobs for
boys & girls who were still in school. Students worked in &
around their school making a minimum wage.
a)
Had 400,000 members in its 1st year alone. (today would be
similar to the Work-Study Program)
A. The initial actions of FDR were largely stopgaps, to
buy time for more comprehensive programs. FDR
began with the Farmers who had been suffering
since the end of World War I.
1. AGRIUCLTURAL ADJUSTMENT ACT, May 1933 - the
purpose was to pay farmers to reduce their output of
products & increase their income. This act established
the AGRIUCLUTRAL ADJUSTMENT ADMINISTRATION
(AAA) whose purpose was to enforce the act.
a) Farmers who agreed not to plant ¼ to ½ of their land would
receive gov’t. Subsidies.
i.
Subsidies – benefit payments raised by putting taxes on food
processors & given to farmers not to plant.
The New Deal's Needy Family Program
distributed farm produce to poor families
(Source: Wikimedia Commons--public domain)
B. New Dealers felt that the farm program was a
success because farmers’ income did go up &
they were spending their new found wealth on
industrial products.
1) Severe criticism of the AAA also existed b/c the food
processors that were taxed to pay for the subsidies
passed that payment onto consumers.
a)
This means that the working men were paying more for food
while farmers were being paid to work less)
2) UNITED STATES V. BUTLER, 1936 – Supreme Court
found the AAA unconstitutional
a)
Ruling stated that congress did not have the right to regulate
agriculture ONLY the states had that right.
3) SOUTHERN TENANT FARMERS UNION, 1934 –
formed by the poorest white & black sharecroppers in
Arkansas. It became a lobby group that asked the
gov’t to stop tenant evictions & to force landowners to
share payments w/ the farmers who rented land.
Texas tenant famer on the way to
California, 1937
Ex-Tenant farmer on relief, 1937
A. Since 1931 businesses approached
government to develop an “anti-deflation”
scheme that would permit trade associations
to cooperate in stabilizing prices within their
industries. Existing antitrust laws clearly
forbade such practices.
B. FDR and the New Dealers were willing to try
this scheme as long as it included rights for
the workingmen to form unions and be
guaranteed a minimum wage.
1.
NATIONAL INDUSTRIAL RECOVERY ACT (NIRA), 1933 was designed to
stimulate industrial & business activity & reduce unemployment by
stabilizing prices, raising wages, limiting workers’ hours & providing
jobs. It established the NATIONAL RECOVERY ADMINISTRATION (NRA)
whose purpose was to write “fair practice codes” for all industry. NRA
was headed by General Hugh S. Johnson who got 95% of all US
industry to adopt the fair practices codes. According to these codes:
a)
b)
c)
d)
e)
2.
3.
LIMIT PRODUCTION BY SETTING QUOTA’S
PROVIDE FOR COMMON CONTROL OF PRICES & SALES
OUTLAWED CHILD LABOR
ESTABLISHED A 40 HOUR WORK WEEK FOR ADULTS
EST. A MINIMUM WAGE ($12 TO $15 PER WEEK)
The NIRA included Section 7a which guaranteed workers the right to
bargain collectively.
SCHECHTER V. UNTIED STATES, 1935 – Supreme Court ruled that the
NIRA was unconstitutional. According to the ruling:
a)
b)
c)
d)
The constitution did NOT give the Federal Gov’t. the authority to regulate
every aspect of business.
Congress had given too much of its authority to the President
The President did NOT have the authority to approve or disapprove of industry
codes.
Fair Practice codes were NOT legally BINDING.
Hugh S. Johnson on the cover of TIME
C. In addition to the NIRA/NRA the New Dealers
continued to work on ideas that would take
Americans back to work.
1. PUBLIC WORKS ADMINISTRATION (PWA), 1933 –
HAROLD ICKES, Sec. of the Interior was chosen to
head up the PWA, its purpose was to contract with
private firms for the construction of public works.
a) Among the public works projects completed were:
i.
ii.
iii.
iv.
70 municipal power plants
Several hundred schools & hospitals
1500 water works
Numerous federal, state, county & municipal buildings.
2. RECONSTRUCTION FINANCE CORPORATION (RFC),
stated under Hoover’s administration & continued
under FDR’s – it’s purpose was to give huge loans to
railroads & other companies so they could get back
on track & begin hiring workers again.
A. Most New Dealers believed that the gov’t needed economic
planning but that private interests needed to dominate the
planning process. One of the most successful
accomplishments of the New Deal was a plan where the
government itself was the chief planning agent in the economy.
1.
TENNESSEE VALLEY AUTHORITY (see map on page 696), May 1933
– transformed the economic and social life of the Tennessee Valley
region by taking over where private utility companies failed
a) The TVA was authorized to finish the dams at Muscle
Shoals & build others in the region.
b) To generate & sell electricity from these dams to the public
at reasonable rates,
c) To provide for a comprehensive redevelopment plan for the
entire region.
i.
ii.
iii.
38 dams were build w/ power stations
Flooding in the region came to an end
Malaria, illiteracy & soil erosion were improved as well as the
regions standard of living.
I. Critics of the New Deal
A. Some critics accused the New Deal of pushing
government power too far, while others wanted to
expand it further. After the Congressional
elections of 1934 FDR continued to provide
Relief, pursue Recovery & increasing emphasize
Reform.
 (Read about the critics & their causes on pages 699700)
1. Works Progress Administration (WPA) – April,
1935 --- headed by HARRY HOPKINS it replaced
the CWA. Its’ purpose was to “make work” for
the millions still unemployed. Congress allotted
$5 Billion for the WPA to create jobs. Among the
work done by the WPA was:
a)
b)
c)
d)
6,000 new schools were built (including GRENLOCK in WT)
Sewage treatment plants were build in 5,000 communities
128,000 miles of secondary roads were built
Unemployed actors, musicians & writers were put to work
performing free concerts & plays for the public & painted
murals, writing guidebooks, etc.
2. Social Security Act – August, 1935 – Money for
Social Security come s from payroll taxes on
employers & employees. It’s purposed was to
provide:
a) Old age pensions
b) Supplemental income for handicapped & dependent
children
c) Unemployment insurance
3. Rural Electrification Administration (REA) May,
1935 –provided electricity to rural areas
lacking public utilities.
4. Public Utility Holding Co. Act, 1935 (aka: The
Wheeler-Rayburn Act) – its’ purpose was to regulate
public utility companies by delegating its authority to
already formed governmental commissions.
a) FEDERAL POWER COMMISSION (FPC) – HAD THE
authority to regulate the interstate production,
transmission & sale of electricity.
b) FEDERAL TRADE COMMISSION (FTC) – HAD THE
authority to regulate the interstate production,
transmission & sale of gas.
c) SECURITY & EXCHANGE COMMISSION (SEC) – regulates
the finances & financial practices of public utility
holding companies.
d) DEATH SENTENCE CLAUSE – gave public utility
companies 5 years to re-adjust their financial affairs. At
the end of 5 years, if they could not prove they were
distributing gas or electricity in a given area, they would
be dissolved.
5. The Revenue Act of 1935, aka – THE
WEALTH TAX ACT - its purpose was to
increase taxes on the nation’s richest people
& tax corporations if they made an annual
profit greater than 10%. The money was then
used for public works projects & other relief
measures.
A. After the Supreme Court declared the NIRA
unconstitutional a group of Progressive lawmakers
led by NY Senator ROBERT E. WAGNER pushed
though congress a new law to help workers & FDR
signed it because the working men & women had
themselves become a large force in politics.
1. NATIONAL LABOR RELATIONS ACT (aka: THE
WAGNER ACT) – This act guaranteed labor:
a) The right to organize unions
b) The right to bargain collectively for better wages &
working conditions
c) Condemned as unfair to labor discrimination against a
worker because he/she was a union member.
i.
The Wagner Act helped labor organize rapidly & promoted
industrial recovery by giving workers higher wages so they could
buy more products. This act was strongly supported by
FRANCES PERKINS, the Secretary of Labor & the first woman on
a President’s cabinet.
2.
With the rise in union memberships came the rise of a new industrial union & a
new way of striking.
a) The American Federation of Labor continued to organize workers by their
craft (skilled workers). However during the 1930’s more workers were not
skilled and needed a different kind of union.
b) JOHN L. LEWIS – leader of the United Mine Workers left the AFL and
formed the CONGRESS OF INDUSTRIAL WORKERS (CIO) IN 1936.
i.
ii.
iii.
c)
d)
The CIO organized workers by industry NO matter what job they did in that
industry.
CIO organized blacks & women along with white workers.
CIO was much more militant that the AFL
SIT DOWN STRIKE – was first used in 1936 when GM workers &
members of the UAW refused to leave the factories until management met
their demands. After 6 weeks GM gave in & the UAW was allowed to
organize GM workers throughout the country.
STEEL WORKERS --- In March, 1937 United States Steel Corporation
recognized the Steel Workers’ Organizing Committee (SWOC) later to
become United Steel Workers. The smaller steel companies refused to follow
suit
i.
ii.
THE MEMORIAL DAY MASSACARE – a group of striking steel workers
were legally marching toward the Republic Steel Plant when Chicago police
opened fire on the group killing 10 & wounding 90. This brutality caused the
1937 strike to fail.
However, by 1941 there were more than 10 million members of the steel workers
union. & they were recognized by Little Steel as well as US steel.
Ten demonstrators were killed by police bullets during the "Little Steel Strike" of 1937
B. In addition to all of the work helping labor, the
New Deal also continued to help the farmers.
After the AAA of 1933 was found unconstitutional
the New Deal came up with a new program.
1. THE AGRIUCLUTRAL ADJUSTMENT ACT OF 1938 –
provided that:
a)
b)
c)
Farmers got paid to withdraw land from production to
practice conservation.
Dept. of Agricultural set limits on the amount of specific
crops that could be brought to market each year
Gov’t. bought up any surpluses until prices rose; farmers
could get government loans based on the value of their
stored crops.
2. FARM SECURITY ADMINISTRATION (FSA), 1937 – was
created by Congress to make low-interest long term
loans to tenant farmers & sharecroppers so they
could buy their own farms.
a)
FSA also established camps were migrant farm workers
could find shelter & medical care.
A. FDR decided that no program of reform could long survive
the conservative justices who had already struck down the
NRA & the AAA of 1933. So Roosevelt proposed what his
critics called “The Court Packing Scheme”
1. According to the “scheme” for each justice on the Supreme Court
over the age of 70, the President would be able to appoint another
justice.
2. The justices themselves began to validate some of the progressive
reforms
a. Chief Justice Charles Evans Hughes & Associate Justice Owen J. Roberts
began to side with the progressives on the court and voted to uphold a
state minimum wage law, the Social Security act & the Wagner Act.
b. Congress overwhelming disapproved of the court packing idea and FDR
lost votes in Congress from Southern Democrats & other conservatives
who had voted for reform in the past.
c. By 1945, through death & retirement, 8 of the 9 justices on the Supreme
Court had been appointed by FDR.
B. After the congressional elections of 1938 and
the failure of his court packing scheme, FDR
decided not to propose any new reforms in
1939 marking an end to the New Deal era.
1. The threat of world crisis hung heavy in the air and
FDR was gradually growing more concerned w/
persuading a reluctant nation to prepare for war
than with pursuing new avenues of reform.
2. World War II broke out in Europe in September of
1939 and the American economy picked up by
selling weapons & other armaments to the Allied
Nations in Europe.
TO END THE CHAPTER READ ON YOUR ON PAGES
708 TO 715