Guide to Lecture 14 (The New Deal)
The First New Deal
First New Deal or Hundred Days (March to June 1933)—one of most
frenzied periods of reform in American history
Bank Holiday—all banks shut down on 05 March—look at each
bank’s finances and fitness
Most banks sound, opened by March 13
Some needed additional time and RFC funds
A few (5%) shut down permanently
Clear messages
President would take action—flexibility, experimental
New Deal would operate within capitalist bounds—did not
nationalize banks, just regulate them
National Industrial Recovery Act (NIRA)—anti-trust laws set aside—
corporate meetings to agree upon codes of fair competition. Codes
typically contained:
Production quotas
Fixed prices
Minimum wages
Maximum hours
Ban of child labor
Guarantee of the right to unionize
Planned economy, like Germany and Japan today—cooperation
among big business, big government and big labor
Agricultural Adjustment Act (AAA)—farmers would take acres out of
production
Problems with this approach:
Food prices go up for urban consumers
Farmers had already planted 1933 crops—had to be plowed under,
livestock slaughtered and buried—amongst starvation
Sharecroppers and tenants forced off the land due to reduced
acreage—join ranks of urban poor
Civilian Conservation Corps (CCC)—public works project—young men
(18-25) work in national forests. One of most popular reform programs
$30/monthj ($25 sent home)
Restoration by nature
Military training—uniforms, barracks
Tennessee Valley Authority (TVA)—one of most socialistic of FDR’s
programs. Primary purpose to build dams to generate cheap electric
power. Private firms not interested—impoverished area—provided jobs
and flood control—very successful program.
Twenty-First Amendment—March 13, repealed Prohibition—revive a key
industry, raise morale—ratified by the states in December 1933.
The Second New Deal
1935—why a second New Deal?
Depression not over, though some recovery
1934—Democrats made clear gains in Congressional elections—
popular mandate for further efforts
“Thunder on the Left”—radical criticism that hadn’t gone far
enough—large followings—FDR needed to pay political heed to them
Dr. Francis Townsend (California)—Old Age Revolving
Pensions (OARP)—pay every American over 60 $200/month—
spend all before next check
Kingfish Huey Long (Messiah of the Rednecks)—most important
and colorful of radicals—elected governor of Louisiana in 1928—
“have-not” farmers vs. conservative elite.
Education—free textbooks—LSU became a respectable college
Public works—roads and bridges, new state capitol
Taxes—financed increased services through extraction tax
($.05 per barrel) on oil industry. Standard Oil primary enemy
Highly corrupt, dictatorial tactics—political machine financed
through state employee salary deductions
To the Senate in 1932—critic of FDR—own plan to end the
Depression—Share our Wealth—redistribution of wealth and
income—limit wealth to $3 million—guaranteed annual income
of $2,000 per family, homestead allowance of $5,000.
Assassinated by Dr. Carl Weiss September 8, 1935—seen as
potentially Mussolini or Hitler
“Thunder on the Right”—conservatives slammed New Deal for going
too far—Liberty League (founded in 1934)—destroying free enterprise,
bringing socialism to US—funds from wealthy backers to pour into
Republican coffers to defeat FDR in 1936.
Lightning from the Supreme Court—1935 invalidated NIRA and
AAA on constitutional grounds—needed legislation to replace them
Second New Deal saw welfare state for first time in US—minimal “safety
net” for US citizens
Social Security Act of 1935—old-age pensions for those over 65.
Matching federal funds to states for programs of assistance:
handicapped, unemployed, indigent elderly, mothers with dependent
children
Works Progress Administration (WPA)—most massive public works
effort of the period—8 million employed from 1935 to 1941—headed by
Harry Hopkins—mostly construction work
San Antonio river walk, parts of zoo
San Jacinto Monument
UT Tower or Main Building
National Labor Relations Act (Wagner Act or NLRA)—restored
collective bargaining rights of NIRA. Union membership tripled in 30s—
major part of Democratic coalition. CIO arises at this time—steel, autos,
rubber, etc.
No Third New Deal?
FDR re-elected in 1936\
Court-packing plan—derailed FDR—Feb, 1937, asked Congress to
put up to 6 new justices on court—“lighten the court’s workload”—stack
with liberals—FDR lost in this effort—cost valuable political momentum
Roosevelt Recession of 1937—slammed on brakes, cut government
spending—economy recessed—he was blamed—Republicans and
conservative Democrats—Conservative Coalition against New Deal
efforts
World War II approaching—distracted by foreign affairs
Fair Labor Standards Act—last major piece of New Deal legislation:
Set maximum hours at 40 per week
Set minimum wage at $0.40 per hour
Permanently outlawed child labor (15 year olds can work with some
restriction)
Evaluation of the New Deal
Revolutionary in context of American system—unions encouraged and
welfare state set up. Idea discredited that we are at the mercy of the
business cycle All politicians see need to:
Take steps to prevent downturns
Soften effects once they take place
Saved the capitalist system—economy remained in private hands—just a
re-shuffle with government support rather than radical change in nature.