Chapter Twenty-Four:
The New Deal
Harry Sternberg, "Chicago: Epoch of a Great City,” WPA Mural, 1937, located
in the Lakeview Post Office, Chicago, Illinois.
Chapter Twenty-Four:
The New Deal

Launching the New Deal
– Restoring Confidence
 Roosevelt’s Personality: Roosevelt’s assuring and optimistic
personality comforted people, especially through his “fireside
chats” on the radio, which began only days after his March
1933 inauguration (he had used radio in a similar way as
governor of New York). His first addressed the banking crisis.
 “Bank Holiday” Declared: On March 6, 1933—two days after
taking office—FDR proclaimed a euphemistically phrased
“bank holiday” to stop the chain reaction of bank failures and
allow Congress to meet in a special session to consider
emergency banking legislation.
2
Chapter Twenty-Four:
The New Deal

Launching the New Deal
– Restoring Confidence
 Emergency Banking Act: On March 9, FDR sent this act to
Congress, where it passed within hours. It made sure bigger banks
would not be dragged down by the failure of smaller ones,
provided for Treasury Department inspection of banks before they
could reopen, gave federal assistance to troubled banks, and
reorganized those on the brink of failure. The law restored
confidence in the banking system, and $1 billion in withdrawn
currency was returned into the banks.
 Economy Act: This law cut salaries of federal employees and
reduced veteran’s pension payments by as much as 15 percent, all
to keep the federal budget balanced. FDR wanted to appear
responsible.
3
Chapter Twenty-Four:
The New Deal

Launching the New Deal
– Restoring Confidence
Sen. Carter Glass (D - Va.) and
Rep. Henry B. Steagall (D – Ga.)
 Glass-Steagall Act of 1933: This important act, signed into law by FDR in
June 1933, established the following:
• “Firewall”: It created a firewall between commercial and investment banks, not
allowing one company to do both (this provision was eliminated by act of Congress
in 1999, because it was thought it made U.S. banks less competitive, but also
created the conditions for the 2007 economic collapse).
• Limits on “Speculation”: It limited “speculative” uses of bank credit.
• Federal Deposit Insurance Corporation (FDIC): It created this agency, which
insured deposits up to $2,500 (now it’s $250,000) in case of bank failure.
 Securities and Exchange Commission (SEC): An act creating this
commission to police the stock market was passed in June 1934.
 Prohibition Repeal: FDR allowed for the brewing of 3.2 percent alcoholic
beer while pushing for the passage of the Twenty-First Amendment, which
was ratified on December 5, 1933.
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Chapter Twenty-Four:
The New Deal

Launching the New Deal
– Agricultural Adjustment
5
 Agricultural Adjustment Act: Passed in May 1933,
this act set up the Agricultural Adjustment
Administration (AAA), which allowed producers to
set production limits and paid them for leaving some
of their land idle, funding payments through a tax on
food processing. The act did succeed in increasing prices.
 Large Farmers Favored: The AAA paid landholders, who were not always
those who worked the land. It thus provided incentive for owners to evict
sharecroppers and fire field hands, sometimes creating even worse poverty.
 Farm Security Administration (FSA): The Resettlement Administration,
which became the FSA in 1937, provided loans to poor farmers on bad soil so
they could move to better locations, but this program had marginal success,
only moving a few thousand farmers.
 Rural Electrification Administration: Created in 1935, this effective agency
worked to provide electricity to rural areas through utility cooperatives.
Chapter Twenty-Four:
The New Deal

Hugh S.
Johnson
Launching the New Deal
– Industrial Recovery
 National Recovery Administration Established: Under Hoover, business
leaders wanted the president to agree to loosen the anti-trust laws so that
trade associates could cooperate in stabilizing prices. Hoover refused, but
FDR’s administration was amenable. But New Dealers wanted some things in
exchange: recognition of the workers’ right to bargain collectively through
unions so that workers would share some of the profits as prices rose. This
impulse led Congress to create the National Recovery Administration (NRA)
in June 1933.
 Brigadier General Hugh S. “Iron Pants” Johnson: This new agency was
headed by Hugh Johnson, a former general who headed up supply efforts
during World War I. He led the “Blue Eagle” campaign that created
temporary “industrial codes” securing a minimum wage of 30-to-40 cents an
hour, a maximum workweek of 35-40 hours, the abolition of child labor, and
more specific codes for specific industries. The codes sought to eliminate
destructive competition and maintain employment and production levels.
6
Chapter Twenty-Four:
The New Deal

Harold L.
Ickes
Launching the New Deal
– Industrial Recovery
 Problems with Codes: The codes for the most part were written poorly and in
a way that were favorable to the producers, sometimes actually raising prices
beyond what the market would bear, rather than just creating a price floor.
 Section 7(a): This section guaranteed workers the right to organize unions
and negotiate collectively, but the act had no enforcement mechanism.
 Public Works Administration (PWA): This agency, called the Federal
Emergency Administration of Public Works until 1939, was created by the
NRA law to fund large-scale public works projects. It was headed by Harold
L. Ickes (1874-1952), who was also Secretary of the Interior. The PWA
provided funds to private builders to construct airports, large electricitygenerating dams, bridges, new schools, and highways. Some of its most
famous projects were the Lincoln Tunnel, Triborough Bridge, and the Grand
Coulee Dam. It definitely created new jobs, but many critics viewed it was
too slow and inefficient to be an effective instrument of recovery.
7
Chapter Twenty-Four:
The New Deal

Launching the New Deal
– Industrial Recovery
8
 Failure of the NRA: Industrial production actually declined under the
NRA, and indication that it was not effective. Under considerable
pressure, FDR forced the flamboyant and heavy-drinking Hugh Johnson
to resign in Fall 1934. Johnson may have also been a bit too enthusiastic
about Mussolini’s “corporatist” regime for FDR’s taste.
 Schechter Poultry Corp. v. United States: Known as the “sick chicken”
case, this Supreme Court decision struck at the heart of the NRA. A
Brooklyn poultry producer operating in the Brownsville and East
Flatbush neighborhoods was charged with numerous violations of the
“Live Poultry” code. The Supreme Court ruled that since the firm did not
engage in interstate commerce, the federal government did not have a
right to regulate their business, and that Congress had unconstitutionally
given the president the Congressional power to regulate commerce by
allowing the administration to write the code. Roosevelt called this a
“horse and buggy” interpretation of interstate commerce.
Chapter Twenty-Four:
The New Deal

Launching the New Deal
– Regional Planning
 Private vs. Public Debate: The AAA and the NRA largely reflected the
many New Dealers’ belief in economic planning dominated by private
interests; other New Dealers thought that government should take the
lead role in economic planning. The TVA was the latter’s biggest success.
 Tennessee Valley Authority: In 1932, the private utilities empire of
Samuel Insull (1859-1938) collapsed, with exposing extensive corruption
and mistreatment of consumers. This generated considerable anger
toward private utility companies and led to the creation of the Tennessee
Valley Authority, a government authority mandated to build dams and
generate hydroelectric power for consumers at reasonable rates, and
oversee the economic redevelopment of the region.
 Benefits of the TVA: It improved water transportation, eliminated most
flooding in the region, provided electricity to thousands who had never
had it, and helped lowered rates across the country.
9
Chapter Twenty-Four:
The New Deal
The Tennessee Valley Authority
10
Chapter Twenty-Four:
The New Deal
The Norris Dam, the first
constructed by the Tennessee
Valley Authority; construction
started in 1933 and was
completed in 1936 (image is
from 1941)
11
Chapter Twenty-Four:
The New Deal

Harry L. Hopkins
Launching the New Deal
– The Growth of Federal Relief
 Federal Emergency Relief Administration (FERA): In May 1933, this
agency replaced the smaller-scale Emergency Relief Administration
(ERA) founded under Hoover in 1932; it provided loans to state
governments so that they could operate bankrupted relief agencies.
FDR selected the head of the New York State relief agency, social
reformer Harry L. Hopkins (1890-1946), to lead FERA.
 Civil Works Administration (CWA): In November 1933, FDR’s
administration established this agency under Hopkins to create jobs
for unskilled laborers. FDR preferred that the unemployed work for
assistance rather than just receive handouts. While the agency was
often criticized for making busy work, it did build some infrastructure
of lasting value: roads, schools, sewers, etc.
12
Chapter Twenty-Four:
The New Deal

Launching the New Deal
– The Growth of Federal Relief
 Civilian Conservation Corps (CCC): One
of Roosevelt’s favorite programs, it was created in April 1933
by executive order. Young men were paid $30 a month to work
in national parks and other federally-owned wilderness areas to
create camp grounds, build trails, and plant trees, all in a semimilitary environment, with their food and shelter provided.
 Home Owner’s Loan Corporation: This agency, established in
June 1933, helped troubled homeowners refinance their
mortgages. It helped 1 million people do so by 1936.
13
Chapter Twenty-Four:
The New Deal
“Ring Around a
Roosevelt—pockets full of
dough”
Political cartoon by
Clifford K. Berryman
published on May 26,
1938, probably in the
Washington Star [D.C.]
14
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– Critics of the New Deal
 Second New Deal: Roosevelt and New Deal programs enjoyed
widespread popularity in the first two years, but formidable criticisms
of the policies began to emerge by 1935; in response, Roosevelt
launched an aggressive wave of new legislation that has sometimes
been referred to as the “Second New Deal.”
 American Liberty League Established: In August 1934, wealthy
members of the wealthy Du Pont chemical manufacturing family
created this organization to protest what they viewed as the tyrannical
nature of the New Deal and its attacks on “free enterprise.” It mostly
attracted northern industrialist, like the chairman of General Motors,
Alfred P. Sloan. It never attained widespread popularity, and faltered
after FDR’s 1936 landslide.
15
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– Critics of the New Deal
16
 Dr. Francis Townsend (1867-1960): This physician organized a movement of 5
million elderly demanding the creation a federal pension system for anyone over
60 who retired. Each would receive $200 a month from the government for
opening up a new job. This plan influenced Roosevelt’s Social Security Act.
 Father Charles Coughlin (1891-1979): This Catholic priest gained popularity for
his weekly nationally broadcast radio sermons. He at first supported Roosevelt,
but by 1934 began criticizing him for failing to deal with the “money powers.”
He wanted remonetization of silver, issuance of greenbacks, and nationalization
of the banking system. By 1936, he saw international capitalism and
Communism as twin evils, backed by a Jewish conspiracy. He began to publicly
sympathized with fascists in Europe.
 Senator Huey P. Long (1893-1945): This senator and former governor of
Louisiana split with FDR in 1933 and had a sizeable national following. Long’s
broke with Roosevelt in 1933, developing an alternative to the New Deal: his
Share-Our-Wealth Plan would tax the wealthy heavily and provide every family
with an initial sum of $5,000 followed by a $2,500 annual salary.
Chapter Twenty-Four:
The New Deal
Father Charles Coughlin
broadcasting on March 11, 1935
17
Huey P. Long broadcasting his “Share Our Wealth”
program in 1935 while serving as senator.
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– The “Second New Deal”
18
 New Militancy: When the FDR administration launched a new array of
legislation in the spring of 1935, it was the first time its officials openly
uttered anti-corporate sentiments publicly for the first time.
 Holding Company Act of 1935: This law was designed to break up the
great utility holding companies, although lobbyists diluted it.
 Tax Reform: Wealthy individuals were alarmed by a new tax law that
imposed the highest and most progressive peacetime tax rates ever.
 National Labor Relations Board: In 1935, the Supreme Court struck
down Article 7(a) of the National Recovery Act, which guaranteed the
right to collective bargaining for workers. In response, progressive
senators led Robert Wagner of New York passed the National Labor
Relations Act, which created a board that could compel employers to
recognize and bargain with legitimate unions. FDR realized industrial
workers were a key base of support for his administration.
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– Labor Militancy
19
 Militancy Increased: In the 1920s, U.S. workers had not been militant, but by
the 1930s, many obstacles to militancy had been removed. Business leaders
temporarily lost the ability to be dominant shapers of government policy.
 CIO Founded: More militant labor organizations emerged as well, most
notable the Congress of Industrial Organizations (CIO) in 1935. The
American Federation of Labor (AFL) only accepted skilled workers, having
little interest in the unskilled, who were now the majority of the industrial
workforce. Some activists began to argue for a new type of industrial
unionism in which all workers in a particular industry would be members of
one union, regardless of skill level.
 John L. Lewis (1880-1869) of the United Mine Workers wanted to promote
industrial unionism. Because of an argument on the issue with AFL leaders at
the 1935 convention, he and his followers broke away to form the CIO,
which was more militant and open to the membership of women and
minorities. It started organizing in many previously unorganized industries.
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– Organizing Battles
20
 Sit-Down Strike: United Auto Workers saw little progress in organizing until
it developed the “sit-down strike” in 1936, which shut down the factory but
also prevented scabs from being used. This method spread and by 1937 most
automakers had been forced to recognize the union.
 “Memorial Day Massacre”: The steel industry was harder to unionize. In
1936, the Steel Workers Organizing Committee (SWOC) started a campaign
of bitter and prolonged strikes. Surprisingly, U.S. Steel—the biggest
company—recognized the union to avoid a costly strike. But the “Little
Steel” companies fought hard against it. On Memorial Day 1937, ten strikers
against Republic Steel in Chicago were shot and killed by police during a
peaceful march, and the brutal tactics worked in crushing the strike.
 Rapid Union Growth: The resistance of Little Steel was an outlier. By the end
of 1937, 8 million workers were in unions officially recognized as bargaining
units, compared to 3 million in 1932. Little Steel finally recognized SWOC in
1941.
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– Social Security
 A New Deal Goal: Many New Dealers had
long been demanding social insurance for
the elderly and unemployed.
 Social Security Act of 1935: This law
created an immediate $15 a month federal
payment for the destitute, and a pension
system for retirees between $10 and $85 a
month depending on contributions through
a payroll tax, starting in 1942.
Social Security Poster,
1935 (Library of
Congress)
 Social Security Act of 1935: The law provided for those who were
deemed truly dependent: elderly poor, people with disabilities, and
women with dependent children; everyone else paid into “insurance.”
21
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– New Directions in Relief
 Short-Term Needs: Social Security addressed long term needs; but New
Dealers felt the federal government needed to help to help the currently
unemployed. The administration thus created the Works Progress
Administration (WPA) in 1935 to build and renovate public buildings,
airports, roads, and bridges. It employed 2.1 million, and pumped an
enormous money into economy.
 Bigger Scale: The WPA replaced the smaller Civil Works Administration
(CWA) in the fall of 1934: it had a $5 billion budget compared to the
CWA’s $1 billion; it employed at total of 8.5 million over its lifespan.
 WPA’s Flexibility: The WPA provided funds for the Federal Writers
Project, the Federal Music Project, the Federal Theatre Project, and the
Federal Art Project, all of which provided salaries for unemployed
writers, artists, and musicians.
22
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– New Directions in Relief
 Harry Hopkins (1890-1946): Chosen to head the WPA in 1934,
Hopkins was a classic progressive reformer, having even worked
in a settlement house. He served as Secretary of Commerce while
simultaneously heading up the WPA. Hopkins had run New York
State’s chief relief organization, Temporary Emergency Relief
Administration, and came to FDR’s attention that way.
 Women and Men and Relief: Women and men were treated very
different under New Deal programs: for men, efforts focused on
work relief (CCC. CWA, and WPA); but for women, it was mostly
cash assistance, largely in the form of the Aid to Dependent
Children program of the Social Security Act.
23
Chapter Twenty-Four:
The New Deal

The New Deal in Transition
– The 1936 “Referendum”
 Alf M. Landon (1887-1987): With the economy seeming to improve,
the Republicans knew they would lose, so they ran a moderate Kansas
governor who led a half-hearted campaign.
 Roosevelt’s Rivals in Disarray: With the assassination of Huey Long
in September 1935, one of FDR’s main threats was gone. Long’s
forces aligned with those of Dr. Townsend and Father Coughlin to
create the Union Party, but it failed to get many votes.
 Electoral Realignment: FDR received 61 percent of the popular vote
compared to 36 percent for Landon. Only Maine and Vermont did not
go for FDR. The Democrats also won larger majorities in the House
and Senate. The Democrats had built a wide coalition: western and
southern farmers, urban working classes, the poor and unemployed,
the black population in northern cities, progressives, and liberals.
24
Chapter Twenty-Four:
The New Deal

The New Deal in Disarray
– The Court Fight
 Mandate Squandered: Despite winning big, FDR would find his programs in
disarray only a few months of being reelected.
 Supreme Court Problems: The Supreme Court had a habit of striking down
the constitutionality of components of many key New Deal programs (like
the NRA and AAA), so FDR chose to use his mandate to fix that problem.
 “Court-Packing Plan”: In Feb. 1937, Roosevelt proposed overhaul of court
system to Congress, including adding six new justices to Supreme Court, so
that he could appoint liberals and change ideological balance. He claimed
that the members of the court were “overwhelmed” and that the court needed
new blood. Conservatives were outraged.
 Failure of “Court-Packing”: The Judicial Procedures Reform Bill of 1937
eventually failed to pass, but by end of March, the court started ruling more
favorably toward key New Deal-related cases. Nonetheless, the
administration suffered considerable political damage from this episode.
25
Chapter Twenty-Four:
The New Deal
26
“Step by Step” by Billy Warren,
Feb. 1937, Buffalo News
“Hear Ye! Hear Ye! Hear Ye!” by John Hudson,
Feb. 1937, Columbus Citizen
Chapter Twenty-Four:
The New Deal

The New Deal in Disarray
– Retrenchment and Recession
 Premature Budget-Balancing: Indicators looked as if the economy was improving:
the national income had risen to $72 billion, up from $40 billion in 1932 (but still
below the 1929 figure of $82 billion). Roosevelt saw this as an opportunity to cut
back on the federal budget, cutting the WPA in half and laying off 1.5 million
workers.
 The “Roosevelt Recession”: A few weeks later the fragile recovery collapsed and
four million additional workers lost their jobs. Economic conditions nearly
returned to their 1932 levels. Many blamed the recession on the premature budgetcutting. In April 1938, Roosevelt asked for $5 billion emergency appropriation to
start up public works programs again, and this started a tentative recovery again.
Roosevelt also asked for more stringent labor legislation, which led to the passage
of Fair Labor Standards Act. This law established a national minimum wage, a 40
hour work week, and strict limits on child labor.
 End of the New Deal: The political will to pass further major legislation did not
exist as the world was gearing up for a major war.
27
Chapter Twenty-Four:
The New Deal

Mary McLeod Bethune
(1875-1955)
Limits and Legacies of the New Deal
– African Americans and the New Deal
 The “Black Cabinet”: Roosevelt appointment many African
Americans to second-level positions within his administration, such
as Mary McLeod Bethune, who was head of Negro Affairs in the
National Youth Administration.
 Discrimination Reinforced: New Deal organizations were federally
funded, but locally administered. For example, the CCC was
segregated, and the administration tolerated lower wages for blacks
and Latinos since it did not want to alienate white southern
Democrats, who were key to FDR’s support. Nonetheless, blacks
shifted by huge numbers to the Democratic Party from the Republican
Party between 1932 and 1936. Beforehand, they had mostly voted for
Republicans since the Civil War.
28
Chapter Twenty-Four:
The New Deal

John
Collier
Limits and Legacies of the
New Deal
– The New Deal and the “Indian Problem”
 Assimilation Policy: Since the late nineteenth century, the federal
government had sought to eliminate the Indian problem by assimilating
them and decreasing the number who identified as members of tribe.
 John Collier (1884-1968): This innovative Commissioner of Indian
Affairs was a proponent of cultural relativism, not viewing EuroAmerican culture as “superior.” He therefore supported legislation to
reverse pressures to assimilate and instead be given right to live
traditionally.
 Indian Reorganization Act: This 1934 legislation, promoted by Collier,
increased tribal land by 4 million acres by 1947 (most of it of poor
quality). Yet Indians still remained among the poorest people in the U.S.
29
Chapter Twenty-Four:
The New Deal

Limits and Legacies of the
New Deal
– Women and the New Deal
Frances Perkins and FDR
 Symbolic Gains: FDR named Frances Perkins as the first female cabinet
member, as Secretary of Labor. FDR also appointed about 100 women to
lower levels of the federal bureaucracy.
 Frances Perkins (1880-1965): Perkins had worked as a leading consumer
and labor advocate, having worked as a sociology professor and as New
York State Secretary of Labor before coming to D.C. One of the key
moments in her life was witnessing the Triangle Shirtwaist Fire.
 Prevailing Gender Norms Accepted: While the New Deal was not openly
hostile to the feminist agenda, it reinforced existing gender norms. It
provided few jobs for women, and Perkins actively spoke out against
married women occupying jobs that could be taken by a man.
30
Chapter Twenty-Four:
The New Deal

Limits and Legacies of the New Deal
– The New Deal and the West
 Special Attention: The West as a region did receive special attention
from the New Deal agencies and receive more funds per capita than
other regions.
 Public Works: Excepting the TVA, the largest public works
programs—dams and power stations—were located in the West not
only because the topography was most suitable, but also because
there was great need for power and water control. The Grand Coulee
dam on the Columbia River in Washington State was the largest
public works project ever in U.S. history to that point, and provided
much needed power to the Northwest.
 Potential Unleashed: Without this investment in the West, the region’s
economic development would have been much slower, and its
contributions to the WWII war effort much less.
31
Chapter Twenty-Four:
The New Deal
The
completed
Grand
Coulee Dam
in 1942
32
Chapter Twenty-Four:
The New Deal

Limits and Legacies of the New Deal
– The New Deal, the Economy, and Politics
 Critiques: The most common critique of the New Deal is that it
failed to revive the American economy, and that it was World War
Two that ultimately did so. The New Deal also did not
fundamentally challenge the power structure of American
capitalism.
 The New Deal’s Economic Legacy: The New Deal did give
certain groups—like workers and farmers—more leverage in their
struggles with American corporations. It increased federal
regulation of formerly troubled areas of the American economy,
like the stock market and banking system. And it gave the federal
government more tools to promote and regulate economic growth.
33
Chapter Twenty-Four:
The New Deal

Limits and Legacies of the New Deal
– The New Deal, the Economy, and Politics
 American Welfare State Established: While meager compared to
other countries’ social welfare states, the New Deal did establish
relief programs and the Social Security system. These provided
limited welfare protections, marking a significant break from past
reluctance to provide any relief for the neediest on the federal
level.
 Politics Changed: The weak and divided Democratic Party of the
1920s became a power electoral coalition over the next thirty
years. Many voters turned away from cultural issues that
concerned them earlier to vote in their best economic interest.
34