PROSPERITY AND DEPRESSION III
UNIT 12
ROOSEVELT AND THE NEW DEAL: ENLARGING THE PUBLIC SECTOR
With the failure of nearly 4,000 banks across the nations and a quarter of Americans out of work, Republican incumbent
(currently holding office) Herbert Hoover and his “trickle-down” economic policies failed to win reelection against the
governor of New York, Democrat Franklin Delano Roosevelt, in the election of 1932.
- Roosevelt won the electoral vote in a landslide with 472 to Hoover’s 59 (23 million to 16 million)
- Roosevelt rallied a nation in his inaugural address  “The only thing we have to fear is, fear itself” – “this
nation asks for action and action now!”
A “NEW DEAL” FOR THE AMERICAN PEOPLE
While accepting the Democratic nomination for president, FDR promised change saying “I pledge you, I pledge myself,
to a new deal for the American people”. The press used that phrase “New Deal” to name his new polices and programs
that would change the role of the government to a more active participant in solving problems in American lives
First Hundred Days – in a monumental 100 days, Congress passed 15 major acts as part of the Roosevelt’s New Deal to
battle the economic crisis (unprecedented action by Congress that hasn’t happened since)
- FDR’s first task was to stabilize the banking system that was collapsing at an accelerated rate
bank holiday – FDR called for a bank holiday (closed banks) to stop bank closures and restore public
confidence
Emergency Banking Relief Act (Mar 9th 1933) – passed 5 days after FDR took office that required the
Treasury Department to examine banks to be financially sound before they were allowed to reopen
fire-side chats – FDR made the first of many radio addresses on March 12th, 1933 in which he urged 60 million
listeners that the banks were safe and they needed to put their money back into the banks  these radio
address would become weekly addresses to keep the people informed of his plans
- the next day deposits outnumbered withdraws with $1billion in hoarded currency returning to the banks
 the banking crisis was over
Off the Gold Standard (June 5th 1933) – Roosevelt orders large amounts of gold to be returned to the
Treasury Department and takes the United States off the gold standard (one of the last major powers to
do so) in order to create a “fiat currency” that could be more easily controlled by the government
Over the course of the next 100 days, Roosevelt and Congress enacted numerous government agencies known as
“alphabet agencies” due to the acronyms that represented them fulfilling the New Deal’s “3-R” goals: Relief, Recovery,
and Reform
Civilian Conservation Corp (CCC) (Mar. 1933) – offered young men between ages 18 to 25 work planting trees,
fighting fires, building reservoirs, and landscaping provided jobs for 3 million Americans (helped landscape the
Blue Ridge Parkway)
Tennessee Valley Authority (TVA) (May 1933) – agency created to provide cheap electricity, recreational areas, and
flood control by building dams in the Tennessee Valley (one of the worst hit regions of the Great Depression)
Agricultural Adjustment Administration (AAA) (May 1933) – government agency paid farmers to reduce crop
production, kill animals, and plow under crops to help increase their income  less supply leads to higher
demand and prices
Securities Act (May 1933) – required companies that sold stock to give full and truthful information
Securities and Exchange Commission (SEC) (Jun. 1934) – set up to supervise and police the stock market
Glass-Steagall Act (Jun 1933) – separated commercial banking from investment banking and established the FDIC
Federal Deposit Insurance Corporation (FDIC) (Jun. 1933) – formed to correct unsound banking/investment
and increase confidence in the banking system by insuring deposits up to $2500 (now $250,000)
National Industrial Recovery Act (NIRA) (Jun. 1933) – suspended anti-trust laws to promote economic recovery for
business leaders in exchange for recognition of workers rights (unionize, collective bargaining, work hours) and
minimum wages
National Recovery Administration (NRA) – agency that attempted to enforce the NIRA by encouraging
business to accept the regulations as “patriotic” urging the public to only buy from business that did
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- those that did, received the “blue eagle” so as to let the public know of their commitment
Public Works Administration (PWA) (Jun. 1933) – agency created to distribute fund in construction jobs and
public works
21st Amendment (Dec 1933) – the 18th Amendment and Prohibition is repealed by state convention (the only amendment
to be ratified by state convention rather than state legislature) providing additional resources in added alcohol taxes
CRITICS OF ROOSEVELT AND THE NEW DEAL
Some people believed the New Deal programs provided worthless jobs or hadn’t gone far enough to help Americans
recover from the Depression while other believed it had went to far giving the federal government an excess amount of
power in the public sector and adding to the national debt.
deficit spending – spending more than you make  buying on credit and creating debt
- FDR used this policy of government spending to fund the massive New Deal programs with large amounts
of money alarming many people as America was creating a national debt
Charles Townsend – called for federal retirement pensions ($200) for the elderly to be spend each month (a precursor
to Social Security)
Father Coughlin – a Detroit Catholic priest with a popular radio show that criticized FDR’s New Deal for not doing
enough wanting to raise massive taxes on the wealthy to redistribute wealth
Huey Long – a popular governor from Louisiana who became popular with his Share Our Wealth Program that promised
homes, food, clothes and education for ALL (assassinated in 1935 during his bid for the presidency)
Supreme Court Challenges – in 1935, the Supreme Court began to review the constitutionality of many New Deal
programs finding some unconstitutional including the AAA (government has no authority to limit farm
production), NRA (Congress unconstitutionally gave the president legislative powers to make NRA codes)
SECOND NEW DEAL
As the election of 1936 neared and the Depression better but not over, Roosevelt began work on his Second New Deal
with new programs in an effort to speed up the recovery process and end the Depression.
Works Progress Administration (WPA) (Apr. 1935) – offered further work in construction and also provided federal
jobs to artists, musicians, writers, and theatre actors
National Labor Relations Act/Wagoner Act (Jul. 1935) – protected workers right to unionize and defined unfair labor
practices business (a reversal of the government’s position in late 1800s that had favor employers over employees)
Social Security Act (Aug. 1935) – offered the elderly and disabled a federal pension when they retired as a way to
insure their wellbeing in their old age but also offering a system of temporary unemployment insurance
Frances Perkins – FDR’s Labor Secretary who had a big influence on drafting the Social Security Act was also
the first women cabinet member
Court Packing (1937) – before FDR won reelection to a second term, the Supreme Court had overturned a few New
Deal programs saying they exceeded the power of the federal government
- Roosevelt tried to “pack the court” to protect the constitutionality of the rest of the New Deal by trying to
add 6 more members to the Supreme Court for a total of 15 which required Congress’s approval
- after the Supreme Court upheld minimum wage laws and the Social Security Act, Congress felt “courtpacking” unnecessary and vote against it which hurts FDR’s reputation
Attempting to avoid inflation, FDR cut government spending just prior to a economic down turn producing what critics
called the Roosevelt Recession, leading him and other to believe he acted too quickly. In response, he asked Congress for
more aid ($5billion) which flooded in recovering the economy in a few months.
Fair Labor Standards Act (1938) – act to establish fair labor practices between employees and employers abolishing
child labor, setting a national minimum wage ($0.25 an hour) and set maximum work hours (40 hours)
By the end of the 1930’s, FDR’s New Deal programs were loosing steam. As FDR had enhanced the power of the
federal government into the public sector in his attempts to end the Great Depression, he had only made partial success in
bringing America relief, recovery and reform. However, as the nation was pulling out of its worst national crisis, it
would find itself on the verge of the world’s worst crisis. Could FDR pull the nation out of not one put two crises?
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