Franklin D. Roosevelt and the New Deal
Franklin Roosevelt was nominated as the Governor of New York to run as the Democratic candidate for
the Presidency in 1932. He promised Americans a New Deal to put them back to work. Voters were
angry about Hoover’s lack of aid that they elected Roosevelt in a landslide. The New Deal was a major
turning point in American History. The New Deal marked an end to the view that government and the
economy should be completely separate. The New Deal permanently increased the size and power of
the Federal government.
Roosevelt assembled a group of talented people known as the Brain Trust to help him develop new
programs and strategies to deal with the Great Depression. He used radio to address the nation on a
weekly basis in what he called a fireside chat. He attempted to restore public confidence and optimism
for the future. He wife, Eleanor Roosevelt, traveled throughout the nation as a political activist who
spoke strongly for women’s rights, the cause of peace, and the poor. Another prominent woman
reformer was Frances Perkins, who became the first female member of the US Cabinet as Secretary of
Labor in 1933. She oversaw the Civil Conservation Corps, the Public Works Administration, and assisted
with the Fair Labor Standards Act, the National Labor Relations Act, and the Social Security Act.
As soon as Roosevelt took office he called a special session of Congress and pushed through legislation
that would change America forever. These important bills were submitted in the First Hundred Days
and were enacted by Congress and came to be known as the three R’s—Relief, Recovery, and Reform.
Relief measures were short-term actions designed to help people until the economy was recovered.
They were very important for the first few years of the New Deal. To deal with the Banking Crisis as
people continued to attempt to withdraw their money causing widespread bank failures, Roosevelt
declared a Bank Holiday, closing all the nation’s banks. Each bank was permitted to reopen only after
government inspectors found the bank to be financially sound. He also attempted to bring relief to
Homeowners and Farm owners. Many people were unable to make payments on the mortgages
(money owed to the bank). Banks would respond by taking their homes and farms from them. The
government passed legislation making emergency loans available. Finally, he attempted to bring relief
to the unemployed as over ¼ of the workforce was unemployed. The government provided emergency
public jobs with the Federal Emergency Relief Act (1933), Civilian Conservation Corps (1933), Public
Works Administration (1933), and the Works Progress Administration (1935).
Roosevelt believed that the key to recovery was to stimulate demand. He wanted to restore the
economy by increasing incentives to produce and by rebuilding people’s purchasing power. He wanted
to “Prime the Pump” by getting government money into people’s hands to spend hoping this would
spur business to hire more workers. The National Recovery Administration asked companies to
voluntarily follow codes that set standard prices, production limits, and minimum wages. The
Agricultural Adjustment Acts paid farmers to plant less in the hope of increasing crop prices. However,
in 1935, the Supreme Court ruled the NRA and AAA were unconstitutional as the Federal government
had no power to interfere with business activities conducted within a state in the court case Schecter
Poultry vs U.S. Even in a national crisis, the Congress could not give the President more powers than
those granted by the Constitution. Roosevelt responded by attempting a “Court-Packing Scheme” in
1937. He wanted the power to appoint six new Justices to the Supreme Court so he could control the
court. He failed as the public and Congress rejected this idea.
Reform measures were to ensure that such a severe Depression would never strike again. Roosevelt
believed that the government should protect individuals against risks they could not handle on their
own. The Federal Deposit Insurance Corporation insured bank deposits so people would not lose their
savings in the event of a bank failure. The Securities and Exchange Commission was created to watch
over the stock market and prevent fraud. The Social Security Act provided workers with unemployment
insurance, old age pensions, and insurance if they died early. The National Labor Relations Act (Wagner
Act) gave workers the right to form unions, to collective bargaining, and to submit grievances to a
National Labor Relations Board. Finally, the Tennessee Valley Authority built 21 government owned
dams along the Tennessee River controlling floods and producing electricity for the area.
Roosevelt also created a new monetary policy to control how much money is in the economy—the
nation’s money supply. When there is an economic recession, the Federal Reserve increased the
amount of money in circulation so interest rates will fall and banks will lend more money. Greater
borrowing leads to more spending and greater production and employment. When the economy is
prospering prices rise as demand is greater than supply. This is known as inflation. To reduce inflation,
the Federal Reserve reduces the amount of money in circulation so interest rates will go up. This can
slow the economy and weaken inflation. Roosevelt wanted people to rely on paper money (fiat money)
to expand the money supply and stimulate economic activity. This eventually led to an end of the gold
standard.
The greatest growth of unions in America took place in the 1930s as a result of the New Deal The
Norris-LaGuardia Act prohibited the use of injunctions against peaceful strikes (judges could not arrest
people for going on strike). The National Industrial Recovery Act guaranteed workers the right to
form unions. It was declared unconstitutional, but replaced by the Wagner Act in 1935. The Wagner Act
stimulated unions by protecting the rights of labor to bargain collectively with their employers.
Some people disagreed with Roosevelt and the New Deal. Conservatives formed the Liberty League and
charged Roosevelt with being a “traitor to his class,” and attempting to establish a dictatorship. Some
didn’t believe Roosevelt went far enough, and Dr. Francis Townshend wanted to give all citizens over
65, a pension of $200 a month to be spent every month to stimulate the economy. Huey Long promised
to give every American family an income of $5,000 a year by taxing the rich. He was going to run for
President, but was assassinated before he could do so. Father Coughlin gave radio addresses calling for
the nationalization of banks and all utilities. He was violently anti-Semitic (prejudiced against Jewish
people). He found an audience among nativists and those who distrusted Wall Street Bankers.
Eventually the Catholic Church ordered an end to Father Coughlin’s broadcasts.