Louis Pisha
AP US History
Chapter 27: The New Deal
Franklin D. Roosevelt
His Background
His Ideas
The Hundred Days
The Inauguration
Planning for Agriculture
Planning for Industry
The End of the Hundred Days
The Struggle for Recovery
The Conquest of Fear
Critics, Right and Left
Stalemate in 1935
New Directions in Policy
The Philosophy of the New Deal
The 1936 Election
The Estrangement of Business
The 1936 Campaign
The Supreme Court Fight
The Court versus the New Deal
“Packing” the Supreme Court
Social and Economic Crises
The Rise of the CIO
The Recession of 1937-1938
1938 and the Purge
The American People in the Depression
The Trauma of Depression
The Social Revolution
The Ethnic Revolution
The New Pattern of American Society
Was the Roosevelt Way Possible?
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▪ Between Roosevelt’s election and inauguration, Hoover tried to get Roosevelt to
ratify the Rep Administration, and Roosevelt naturally rejected it rather
than capitulate
▪ More people converted savings to cash, so runs on banks and lines of
depositors—states all over proclaiming bank holidays (temporary
closings)
Franklin D. Roosevelt
His Background
▪ Patrician, yet disdain for just-money-makers
▪ Parallels to Teddy in career
▪ Got polio and lost use of his legs, yet stayed in politics and fought—became
seasoned politician (governor of NY, navy in WWI, candidate for VP)
▪ Complex personality—his ends were steady and great, but means not always that
great—but the former allowed him to command the confidence of
Americans
His Ideas
▪ Inspired by Progressivism—no laissez-faire—focus on social not economic but
not reluctant to use government to help eco
▪ Two main ideas: action and planning
▪ Berle, Means said trend toward eco concentration irreversible, and market
regulated by big biz not supply and demand—Tugwell said private
control of economy had caused depression, so needed organized public
planning
▪ They were at head of Roosevelt’s brain trust—joined with wartime regulators,
like Baruch, Johnson, Peek
▪ Brandeis and Frankfurter rejected this belief and advocated more competition
▪ Also influenced him were inflationists, sound-money, laissez-faire
▪ Cabinet-ed: Hull, Wallace, Ickes, Perkins (woman), other Democrats
The Hundred Days
The Inauguration
▪ Blamed biz leaders for depression, told the nation he would ask Congress for
special powers to “wage a war against the emergency”
▪ Roosevelt called bank holiday and called special Congress—in less than 8 hours
got emergency bank legislation allowing assets converted into cash and
putting insolvent ones under federal control
▪ Also passed bill reducing government expenses like vets’ pensions, amendment
of Volstead Act to allow light wines and beers—restored nation’s
confidence in government
Planning for Agriculture
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▪ Farm prices fell faster than industrial ones—mortgage payments and other fixed
costs took greater toll—only way for farmer to increase profits was
produce more—overproduction lowered prices even more
▪ Plan to offer payments to farmers who agreed to regulate production according to
government’s rules—referendum—administration in hands of farmers—
parity = purchasing power in 1909-1914
▪ Agricultural-adjustment bill also included: price controls through loans on
nonperishable crops, withdraw land from cultivation by leasing, regulate
release of commodities, mortgage relief, prez power to issue greenbacks,
remonetize silver, alter gold content of dollar
▪ Mob marched on a judge in Iowa against foreclosures, Farmers’ Holiday
Association threat of farm strike, Iowa governor called martial law and
National Guard
▪ Ag Adjustment Act established Ag Adj Admin to cut down production in areas
overwhelmed by surpluses—paid farmers to plow under crop
▪ Yet it worked—prices rose—parity rose—chief beneficiaries large farmers, also
family farmers, though not tenant or sharecroppers
Planning for Industry
▪ As biz laid off workers, their collective purchasing power decreased so biz lost
even more $
▪ Administration believed had to joint plan b/w government and biz—came up with
National Industrial Recovery Act—included codes of fair competition,
recognize labor unions (7a), PWA
▪ Set up National Recovery Admin under Johnson and Public Works Admin under
Ickes—latter did little but former came up with “blanket code” = Blue
Eagle, set of standards on wages, hours 2 mil employers agreed upon
▪ Codes kept biz from cutting prices and wages, but also kept up marginal firms
and decreased probability of capital investment—yet also tried to bring
about permanent reemployment, no child labor, improved working
conditions, better working conditions, labor org, and fair trade
▪ Soon overextended efforts—set codes for local and service trades, which
involved it in petty enforcement probs—as eco improved, more
employers tried to beat the codes
▪ Pressure to use codes to raise/fix prices—some said that would turn it into a
monopoly like Sherman Antitrust Act prohibited
▪ Sec 7a gave stimulus to labor union orgs
The End of the Hundred Days
▪ Conservatives opposed inflation—S and W wanted greenbacks, monetization of
silver—Congress abandoned gold standard
-3-
▪ Prez got power through AAA act so refused to peg US dollar at fixed
international rate—got Treasury to buy a bunch of gold to keep prices up,
which didn’t really work but abated inflationist sentiment—then
stabilized dollar and got Gold Act to give treasury more power
▪ Treasury’s policy of cheap money (low interest rates) made private borrowing
feasible but government still hesitant to incur deficits
▪ Amendment to Federal Reserve Act of 1913 says authority over banking system
in hands of Board of Governors in Washington, not private
▪ Securities Act required info about securities
▪ Glass-Steagall Act separated commercial and investment banking to limit
speculation
▪ Amendment to Securities Act made Securities and Exchange Commission to
punish biz fraud
▪ Home Owners’ Loan Act refinanced mortgages—also Farm Credit Admin
▪ FDIC for insuring savings
▪ Federal Emergency Relief Act established fed relief under Hopkins—work relief
rather than handouts
▪ CCC recruited young men to conservation in the countryside, mainly to help from
Dust Bowl
▪ Tennessee Valley had very poor people but great hydroelectric sites—got TN
Valley Auth to build powerhouses, replenish soil and trees, electricity to
poor
The Struggle for Recovery
The Conquest of Fear
▪ New Deal revived America’s confidence—FDR’s fireside chats
▪ As economy improved, got critics from both sides now—at first made little dent
in his reputation
Critics, Right and Left
▪ American Liberty League on right
▪ Long on left—ruled Louisiana and made “Share Our Wealth” movement (rich
taxation and poor handouts) which reminded people of social justice but
really just going for presidency
▪ Townsend proposed pension for over 60, spend it then, and put it back into
economy
▪ Coughlin, “radio priest,” first advocated Roosevelt but organized National Union
for Social Justice and wanted nationalization of banks
▪ All these three drawing on lower-middle class seeking protection and displaced
rural Ams
Stalemate in 1935
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▪ Hundred Days had ended despair but not recovered—Roosevelt needed new
thrust of policy to keep nation moving forward (and himself out of
political trouble)
▪ Supreme Court beginning to declare New Deal unconstitutional—farm-mortgagerelief act, NIRA, federal pension for RR employees
▪ Showed court considered mining, manufacturing, and construction as “essentially
local” activities so Congress couldn’t regulate them
New Directions in Policy
▪ Now Roosevelt turned to policy of weeding out overprivileged and lifting up
underprivileged through progressive rev leg
▪ $4.8 billion for Hopkins establishing Works Progress Admin—jobs for
unemployed improving/producing roads, schools, parks, concerts, maps
▪ Meanwhile Ickes’s PWA focused on heavier projects (dams, bridges)
▪ Wagner Labor Relations Act replaced 7a—outlawed unfair labor practices,
established National Labor Relations Board—also Public Contracts Act,
Guffey Coal Act
▪ Also AAA act needed improvement—tenant farmers moving off their land, to
cities or W and stayed poor—R established Resettlement Admin to
rehabilitate tenants and small farmers
▪ Prez’s Committee on Farm Tenancy revealed how bad conditions, so Congress
reorganized it as Farm Security Admin which helped a bit
▪ Congress passed Social Security Act, including old-age, survivors’ insurance,
unemployment compensation—political alliance between New Deal and
organized labor
▪ Roosevelt influenced by Brandeis-Frankfurter group: Public Utilities Holding
Company Act limited each holding company to single utility
▪ Tax acts of 1935, 1936, 1937 anti-rich and pro-small biz and poor
▪ Had little help since did not yield potential revenue or effect social objectives, but
had greater impact after depression over
The Philosophy of the New Deal
▪ Strove for economic recovery and social reform
▪ Desperation of ‘33 demanded sweeping economic measures—‘35 decreased
political unity or desire for centralized eco control, abandoned inflation,
stressing more competitive market, egalitarian distribution of wealth,
more radical
▪ New theory (Eccles) said that government should increase public spending and
get deficit—New Dealers doing this because of conditions, not theories
▪ Keynes supported this in book
The 1936 Election
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The Estrangement of Business
▪ Biz resented government taxation, support of labor, control, so believed New
Deal step towards totalitarianism—R’s emphasis on social probs and
jilting of biz was essential to preserving democracy
▪ Court went back on an Anti-New-Deal rampage, and deepened feeling gulf
between reform and individualism—many believed New Deal was
communism
The 1936 Campaign
▪ Roosevelt’s policies split Republicans—nominated Landon and Knox—Dems
renominated Roosevelt and Garner—Union party (made by the three
critics) nominated Lemke
▪ At first Landon took moderate line, but faded into Hoover’s line
▪ Roosevelt, on the other hand, proud of biz’s hatred for him
▪ Landslide for Roosevelt, dramatically increased turnout, and Union party
vanished
▪ Coalition of farmers, W, S, city machines, workers, blacks, intellectuals
The Supreme Court Fight
The Court versus the New Deal
▪ By end of 1936, Court had found 7/9 New Deal cases unconstitutional, and said
neither fed government or states had power to regulate wages
▪ Minority, on the other hand, affirmed belief in constitutionality and were more
distinguished
▪ Roosevelt began to believe could get nothing done, but didn’t think it was a
problem with the Court per se, but its members
“Packing” the Supreme Court
▪ Roosevelt called for appointment of another judge for each one over 70 because
inefficient administration
▪ Court protested because they were efficient—protest mounted
▪ Many shocked by his attempt to “pack” the Court, and Dems began to attack
Roosevelt
▪ Then Court suddenly changed its attitude toward New Deal legislation, and
reversed some decisions, so issue was dropped
Social and Economic Crises
The Rise of the CIO
▪ AFL dominated by craft unions, not industries—fight—expulsion of Lewis—they
formed CIO, which also appealed to women, blacks, Hispanics
▪ Used sit-down strike which employers feared even more
▪ Violence but a couple big companies recognized labor unions
▪ Romance in labor struggles
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The Recession of 1937-1938
▪ 1935-6 had been eco growth
▪ Fed Reserve Board tried to put on brakes for inflation by raising interest rates—
also fed government decline in contributions to eco
▪ Collapse now worse than in the beginning
▪ Opposing POVs: balance budget quick OR resume public spending quick
(Keynes)—R ended up favoring second group
▪ Spending prog helped some, and most Congress would allow, but not really
enough
▪ Persuaded Roosevelt to resume antimonopoly, which happened, and redistribute
income, which didn’t
1938 and the Purge
▪ Most of Roosevelt’s policies widened gap b/w liberal (N) and conservative (S)
wings of Dems
▪ S objected to minimum wage and no child labor
▪ Conservatives from both parties became a major obstacle
▪ Roosevelt intervened in other Dem proceedings to make it more liberal and not
just free ride on pop of New Deal—unpopular “purge”
▪ 1938, forward movement had stopped and more focusing on war in Europe
The American People in the Depression
The Trauma of Depression
▪ Down: marriage and birth rates, immigration, population growth
▪ Some abandoned democracy, others flocked to “saviors”
▪ American Fascists had little impact—more Socialists, and a group of
Communists exactly conforming to Moscow with little influence in
America
The Social Revolution
▪ Biz leaders looked down upon now
▪ Profound social changes for underprivileged, and supported by intellectuals
▪ Enhanced rural quality of life, especially Rural Electrification Administration
The Ethnic Revolution
▪ Immigration mostly stopped—newest wave, which had been discriminated
against, now getting opportunities
▪ Roosevelt never racist—more effective accumulation of minorities into Am life
▪ Roosevelt not anti-black either—New Deal did less than they wanted, but still
something more than before
▪ Hispanics benefited from Tugwell
▪ Indians under Collier who began to get government to recognize their rights,
remove from state jurisdiction, didn’t last beyond New Deal
-7-
▪ Also ameliorated sexist discrimination—at first, tended to be fired first, but New
Deal set wages for them too, created some jobs, and CIO recruited them
▪ New Deal got woman voters
▪ America went from exhausted to purposeful
▪ Historians began to read purpose and dignity back into American history—
including celebration of America in culture and geography
▪ WPA sponsored plays, concerts
▪ Literature social commentary
The New Pattern of American Society
▪ New Deal countering both laissez-faire and Marxism—faith in intelligent
experiment
▪ State had abandoned direct control of biz, but ground rules of min standards of
life and labor, and would intervene to maintain competition
▪ Some areas required more government control like banking, transportation,
utilities, agriculture, oil, but “built-in stabilizers” against another crash
Was the Roosevelt Way Possible?
▪ Question whether government could have enough power to ensure security but
not dictatorship
▪ New Deal assisted middle class—yet did not achieve recovery, redistribute
wealth, help blacks or women enough, kill conservatism, or permanently
insulate regulators from those going to regulate
▪ Critics of capitalism and conservatives both said no middle ground—but New
Dealers disagreed and Roosevelt did it—kept democracy alive
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