Chapter 21
• Prior to FDR’s inauguration,
hundreds of banks were forced to
close
• “Bank Holiday” – bank shutdown by
government decree
• 21st Amendment – repealed
prohibition
• Partisanship was subordinated to
the needs of the nation
• First programs enacted to fight the
depression
• Economy Act – reduced salaries of
government employees and cut
veterans’ benefits
• National Bank Holiday
• Prohibition of exportation of gold
• Fireside chats – president speaking
to the public
• Banks reopened under Treasury
Department license
• US taken off the gold standard –
hoped prices would rise
• Established the FDIC (Federal
Deposit Insurance Corporation) –
protected bank deposits
• Established the Home Owners
Loan Corporation (HOLC) –
refinanced mortgages and
prevented foreclosures
• Federal Securities Act – regulated
stock transactions
• Created the Civilian Conservation
Corps (CCC) – provided jobs to
men 18-25 in reforestation and
conservation
• Congress passed National
Industrial Recovery Act (NIRA)
 Established to stimulate industry
 Established Public Works
Administration (PWA) – allowed
some monopolistic practices but
also gave union rights
 NIRA a variant of the corporate
state similar to experiments
carried out by fascist Germany
and Italy
 Created the National Recovery
Administration (NRA) –
supervised drafting and
operation of business codes.
Participating industries received
the Blue Eagle symbol.
 Did not significantly impact the
depression – businesses did not
increase labor force and unions
increased membership
 John L. Lewis formed the
Committee for Industrial
Organization (CIO) – organized
workers without regard for craft
lines
 American Federation of Labor
(AFL) expelled these unions and
CIO became Congress of
Industrial Organizations (a union
rival to AFL)
• FDR concerned that farmers getting
short shrift in comparison to
industry
• Combined restrictions on
production with subsidies – goal
was to raise agricultural prices
• 1933 crops already planted when
law went into effect – government
paid farmers to destroy crops and
kill livestock (6 million baby pigs
and 200,000 pregnant cows killed)
• After 1933, acreage limitations
proved sufficient to raise prices
• Dairy farmers, cattlemen, and
railroads hurt by new laws as were
consumers
• AAA also hurt tenant farmers and
sharecroppers (land taken out of
cultivation was often their land)
• Reliance on machinery also hurt as
land could be cultivated more
cheaply than the sharecropper /
tenant farmer
• 1933 law creating a board that
authorized the building of dams,
power plants, transmission lines,
and to sell fertilizer and electricity to
individuals and communities
• Improved the standard of living of
valley inhabitants and provided a
“yardstick” for pricing for private
power companies
• Despite continued unemployment, Democrats swept the elections
• 1933 Federal Relief Administration (FERA) created
 Headed by Harry Hopkins
 Established the Civil Works Administration (CWA) to create jobs building
and repairing government roads and buildings, teaching, and painting
murals
 Cost frightened FDR ($5 billion in <5 months) so CWA abolished
• 1935 Hopkins put in charge of
Works Progress
Administration (WPA)
 Helped American culture by
hiring artists, writers, actors, etc.
 Federal Writer’s Project
produced guidebooks and
collected local lore
 Unemployment still remained at
high levels – FDR afraid of
unbalancing budget
• Many Depression authors critical of
American life
• Many intellectuals enamored with
communism
• John Dos Passos- wrote anticapitalist description of life in
America in USA
• John Steinbeck- depicted
desperate plight of an American
family in the Depression in The
Grapes of Wrath
Huey Long
Father Coughlin
Dr. Townsend
Who?
Who?
Who?
Goals?
Goals?
Goals?
Accomplishments?
Accomplishments?
Accomplishments?
Impact?
Impact?
Impact?
• The Depression was still bad, conservatives were
denouncing Roosevelt, extremists were luring away
supporters, and the Supreme Court was knocking down
many key New Deal reforms
• Schecter v. United States – Supreme Court ruled NIRA
unconstitutional
• FDR launched the Second New Deal
• National Labor Relations Act (aka
Wagner Act) gave unions more
rights
• National Labor Relations Board
(NLRB) established to supervise
plant elections and act to influence
big business in labor matters
• Social Security Act - set up old-age
pensions and unemployment
insurance
• Rural Electrification Administration – lent money to
companies and cooperatives to bring electricity to rural
areas
• Wealth Tax Act - raised taxes on wealthy and included gift
and estate taxes
• Roosevelt never accepted Keynesian economics (John
Maynard Keynes)- spending out of Depression
• Republican opponent- Alf
Landon (governor of
Kansas)
• Third Party- The Union Party
supported by Coughlin and
Townsend nominated
Congressman William
Lemke
• FDR carried all but Maine
and Vermont
• Democrats again dominated
both houses of Congress
• A majority of the nine members of
the Supreme Court were anti- New
Deal
• Many New Deal laws overturned or
in danger as was Second New Deal
legislation
• FDR asked Congress to increase
number of justices
• Congress and others denounced
FDR’s request – “court-packing”
dangerous
• FDR was forced to back down
• Second New Deal legislation
was allowed to stand as some
judges voted against
conservatives
• FDR was able to appoint new
judges upon the retirement of
oldest
• FDR’s prestige suffered
permanent blow
• New Deal had brought power
to labor unions
• 1937 – series of sit-down
strikes
• Tolerant attitude of FDR
caused auto manufacturers to
meet most labor demands
• Union tactics caused many
average Americans to end
support
• 1937 – improving economic
conditions caused FDR to cut back
on programs causing a recession
• FDR’s popularity plummeted
especially due to Hoover-like
attitude
• Conflict erupted in the
administration between Keynesian
spenders and conservatives
• The Depression ended as Europe went to war and
ordered goods from America
• FDR given credit for ending Depression but not true
• He vacillated over policy and vastly increased the federal
bureaucracy
• More aspects of American life came under federal
regulation
• The New Deal did help
labor and farmers
• The TVA and Rural
Electrification program
changed the lives of
millions of Americans
• Government projects
like the Grand Coulee
Dam helped develop
America
Women
Blacks
Indians
Problems Faced
Problems Faced
Problems Faced
Impact of New Deal
Impact of New Deal
Impact of New Deal
Key Figures
Key Figures
Key Figures
• FDR an
internationalist but
protective of US
economy
• Took US off of gold
standard – move
denounced by Europe
(fiat money)
• Forms of embargoes
considered in light of
increased belligerency
overseas
• Danger of new world war mounted
as Fascist Germany, Italy, and
Japan became increasingly
belligerent
• Congress responded with Neutrality
Act of 1935 – prohibited sale of
munitions to all belligerents when
president proclaimed state of war
existed
• FDR did not want the legislation but
could not stand up to isolationists
• October 1935 – Italy invaded
Ethiopia
• Second Neutrality Act passed
forbidding all loans to belligerents
• 1936 Spanish Civil War began –
clash between fascism and
democracy
• Congress passed another neutrality
act broadening arms embargo to
civil wars
• April 1937 – Congress passed another neutrality act – continued
arms embargo, forbade loans, forbade travel on ships belonging
to belligerents, and placed sale of goods to belligerents on cash
and carry basis
• 1938 – Congress narrowly defeated the Ludlow Amendment that
would have prohibited Congress from declaring war without vote
by nation
• Neutrality laws aided fascist powers and hurt democratic powers
• Japan’s increasing aggression
worried FDR – “quarantine
speech” met with isolationist
backlash
• Hitler’s demands on Poland
caused FDR to urge Congress
to repeal the Neutrality Act so
the US could sell arms to
Britain and France
• Congress refused
• Hitler’s invasion of Poland in 1939
caused WWII
• Again FDR asked for the Neutrality
Act to be repealed
• Congress allowed sales of arms on
a cash and carry basis and shortterm loans
• Reacting to the Fall of Europe to
Hitler and warnings by Einstein,
FDR committed to the Manhattan
Project
• FDR illegally sold surplus
government weapons to
Britain and France
• Fall of France caused FDR to
ask Congress for $4 billion for
defense
• Britain asked the US for 50
destroyers – the sale or loan
of the vessels would violate
US and international law
• Delay would might mean defeat for
Britain so FDR “traded” the
destroyers for six British naval
bases in the Caribbean
• The deal helped Britain and was
approved by the public as the
bases for 50 ships was a “good
deal”
• In 1940 Congress approved the first
peacetime draft bringing in 1.2
million men for 1 year’s service and
calling to active duty 800,000
reservists
• Election of 1940 pit FDR
against Republican
Wendell Willkie
• Reviving economy and the
fact that much of FDR’s
policies he agreed with
made his campaign difficult
• He made war the issue –
said FDR would have US in
war by April 1941
• FDR assured US American
boys would not be sent to
war
• The cash and carry system was
draining Britain and FDR was resolved
to help
• Created the Lend-Lease Program
• Pushed his ideas to public through
fireside chats – public approved
• Asked Congress for $7 Billion for war
materiel he could lend, lease, sell,
exchange, or transfer to any country
he deemed vital to the US defense
• According to FDR the war was
being fought for the “Four
Freedoms” – speech, religion, want,
and fear
• US began shadowing German UBoats
• April 1941 – US occupied
Greenland
• US helped USSR after German
invasion
• July 1941 – US occupied Iceland
• September 1941 – U-Boat
attacked USS Greer
• FDR ordered navy to shoot
on sight any submarines in
waters west of Iceland
• USS Reuben James sunk by
U-Boat
• October 1941 – Congress
authorizes arming of US
cargo ships and permit them
to travel to Allied ports
• For all intents and purposes –
US at war