The Great Depression and the New Deal
Chapter 33
Hoover blamed for
Depression
• Did not believe government should
get involved
• Private organizations should help
people out
• If people worked hard enough,
they would succeed
FDR and election of 1932
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Background
– Governor of NY, former Assistant Secretary of Navy
– Wealthy
– related to Teddy Roosevelt
– married Eleanor Roosevelt
• Was a major advisor, campaigner and worker for
FDR. Advocate for poor, women and blacks
– had polio and was in a wheelchair
– Excellent speaker, and conveyed empathy for
“forgotten man” – the hard working poor
Hoover insisted depression would have been worse
without his policies and FDR’s would lengthen depression
Election of 1932
– FDR wins in dramatic landslide
– FDRs reform policies begin to encourage blacks to
shift from Republican to Democrat party
– Between November election and March inauguration
very little happened to change the political or
economic situation
First Inaugural Address
• I am certain that my fellow Americans expect that on
my induction into the Presidency I will address them
with a candor and a decision which the present
situation of our people impel. This is preeminently the
time to speak the truth, the whole truth, frankly and
boldly. Nor need we shrink from honestly facing
conditions in our country today. This great Nation will
endure as it has endured, will revive and will prosper.
So, first of all, let me assert my firm belief that the only
thing we have to fear is fear itself—nameless,
unreasoning, unjustified terror which paralyzes
needed efforts to convert retreat into advance. In
every dark hour of our national life a leadership of
frankness and vigor has met with that understanding
and support of the people themselves which is
essential to victory. I am convinced that you will again
give that support to leadership in these critical days
FDR and the Three R’s: Relief, Recovery,
Reform
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People take money out of banks causing the banks to go
out of business
– FDR declares 4 day bank holiday (March 6-10) to stop
the withdrawals
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First Hundred Days
– Beginning of FDR’s administration where many
programs were implemented
– Relief, Recovery and Reform (see page 774, 777)
• “Alphabet soup” of programs – CCC, AAA, TVA,
NWA, PWA, FDIC, NRA, Glass Stegall Act, etc.))
– Relief (Meet needs of hungry and jobless); Recovery
(Help agriculture and industry); Reforms (Change the
American Economy)
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Congress rubber stamped many FDR initiatives
– Nation supported ANY change, as long as it appeared
government was doing something
– Many programs had foundations in Progressivism
Roosevelt Manages the Money
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Emergency Banking Relief Act (1933)
– Gave president power to regulate banking and foreign
exchange
– Fireside Chats
• FDR used radio broadcasts to build support for his
policies, reassure the public and pressure Congress
into action
Glass-Stegall Banking Reform Act
– Created the FDIC (Federal Deposit Insurance
Corporation) which insured individual deposits in banks
– Tighter regulation and prohibit banks from selling
securities (stocks/bonds)
• Created separation between commercial and
investment banks
• Gramm-Leach-Bilely Act of 1999 repealed bans on
commercial/investment firm affiliations – eliminated
most Glass-Stegall barriers between types of
banking
Managed Currency
– FDR ordered all gold to be surrendered to Treasury
– Wanted to stimulate inflation by buying gold at high
prices
Roosevelt Manages the Money
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Civilian Conservation Corps (CCC)
– Provided 3 million jobs working in national forests,
flood control, swamp drainage
– Required to send majority of wages to their families
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Federal Emergency Relief Act (FERA)
– Aim was immediate relief
– Harry Hopkins ran FERA, gave $3 billion in direct
payments
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Agricultural Adjustment Act (AAA)
– Made money available for farmers to pay mortgages
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Home Owners Loan Corporation (HOLC)
– Helped Americans refinance home mortgages so that
they would keep their house
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Civil Works Administration (CWA)
– Part of FERA
– Gave temporary jobs such as raking leaves
Opponents to FDR
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Father Charles Coughlin
– “Social Justice” – argued in favor of radical monetary
reforms;
– advocated for poor and against businesses;
– over 30 million people listened to him on radios;
– eventually accused of being anti-Semitic and was forced to
stop giving speeches by the Catholic Church
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Huey “Kingfish” Long
– Governor of Louisiana
• Opposed FDR and New Deal
– Share Our Wealth
• Guaranteed Family Income; Money to buy a home; Free
Education; Cheap food; Paid with tax on wealthy
– 4.5 million people joined Long; but was assassinated in
1935
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Dr. Francis Townsend
– Argued for guaranteed income for senior citizens to be
funded by sales tax
– Social Security Act was proposed partially to stop support
for Townsend
WPA created to quiet critics
– Provided jobs for unemployed
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Liberty League
• Opposed New Deal
– Did not want large government created by New
Deal
– Believed New Deal threatened free enterprise
– Did not want to have to pay for New Deal
programs
– Feared Huey Long’s proposals
– Only wealthy supported league
New Visibility for Women
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Eleanor Roosevelt
– Took a lead in advocating for women’s and minority
rights
Frances Perkins
– First female member of cabinet as Secretary of Labor
– Helped write Social Security Act and Fair Labor
Standards Act
• Mary McLeod Bethune
– Director of Office of Minority Affairs – highest ranked
African American
• Advances in science and literature
Frances Perkins
– Ruth Benedict, Margaret Mead and Pearl Buck
Industry, Labor and Farmers
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National Recovery Administration (NRA)
– 200 industries worked out “fair competition” guidelines
– Hours reduced to increase number of jobs available
– “Yellow Dog” contracts prohibited
– Both management and labor had to give up
independence to benefit from program
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Schechter v US (1935)
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– Ruled Congress could not delegate legislative power to
executive. Ruled against the NRA
Public Works Administration (PWA)
– Led by Harold Ickes – made large public works projects
like the Grand Coulee Dam
Prohibition repealed by 21st Amendment (1933)
Agricultural Adjustment Administration (AAA)
– Paid farmers not to farm to induce scarcity thereby
driving up prices
– Created unemployment, was ruled unconstitutional in
1936
Soil Conservation and Domestic Allotment Act (1936)
– Paid farmers to leave land fallow to conserve land
– Since it was conservation; Supreme Court allowed it
Dust Bowl
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Dust Bowl originated from droughts through mid 1930s that
destroyed 50 million acres of land
Created by combination of over farming and lack of
rainwater
– Dry farming and mechanized farming weakened topsoil
and sped the process
Okies and Arkies
– Bankrupt farmers fled midwest in hopes of better life in
California
– Shown in Grapes of Wrath by John Steinbeck
Frazier Lemke Farm Bankruptcy Act
– Early attempt to stop farm bankruptcies but it was ruled
unconstitutional
Resettlement Administration
– Attempted to relocate farmers to better land
Indian Reorganization Act
– Led by John Collier; allowed for reversal of Dawes Act
– Ended forced assimilation of Indians and allowed for
traditional (i.e. non farming) ways of life
– Established new tribal governments
TVA, Social Security and Housing
Tennessee Valley Authority (TVA)
•Electricity developed into a big business
•Federal government owned land in Tennessee Valley and
around Muscle Shoals in Alabama
• Also was one of the poorest areas of US – it provided
work, electricity, housing and clean water
• Intent was to establish a “fair price” for private
companies to charge
•Plan was copied in rivers throughout Rocky Mountains
•Social Security and Housing
•FHA (Federal Housing Administration) (1934)
• Provided loans to build and improve people’s homes
•USHA (United States Housing Authority) (1937)
• Designed to promote low income housing; met with
mixed results
•Social Security Act (1935)
• Provided old age insurance and unemployment
insurance to mitigate influence of future depressions
• Paid for with payroll tax on employers and employees
• Not as generous as European pension schemes
Second New Deal
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Wagner Act – (National Labor Relations Act) (1935)
– Passed in response to the unconstitutionality of NRA
– Protected unions and establish a board to mediate disputes between
labor and management; created principle of collective bargaining
– Encouraged the creation of unions like United Mine Workers led by John
L. Lewis
CIO (Committee of Industrial Organization)
– Sub group of American Federation of Labor (AFL) to protect unskilled
workers
– Eventually splits with AFL in 1938, led by John Lewis – becomes changes
“C” to Congress
Fair Labor and Standards Act (Wages and Hours Bill)
– Passed in response to bloody suppression of CIO strikes steel industries
– Established minimum wage, maximum hours limits and ended child labor
under 16
WPA – Works Progress Administration
– Large scale national works program to create jobs
– Built schools, bridges, public buildings etc
Election of 1936 and Court
Packing Scandal
Election of 1936
•Republicans argued FDR’s growing government threatened
freedom
– Picked Al Landon to run against FDR
•FDR argued that too many people are “ill housed, ill clad, ill
nourished”
•FDR won in landslide
– Established loyalty between Democratic Party and
unions, city voters, Catholic, Jewish and black voters
Court Challenges New Deal
•Supreme Court rejects FDR’s New Deal programs
– Said would give federal government too much power
– FDR’s programs violated the policies of checks and
balances
Court Packing Scandal
•FDR tries to increase size of Supreme Court from 9 to 15
unless Justices over 70 retired
– Would allow FDR to pick 6 justices
•Plan rejected because it gave President too much power
•Justice Roberts began voting liberal, which protected some
New Deal programs
Twilight of New Deal
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FDR’s attack on Court ended Congress’ unquestioned support of New Deal
programs
Economic recovery slow despite “pump priming”
“Roosevelt Recession” 1937 resulted from increased taxes and spending
Hatch Act (1939) passed to ban administrative officials from soliciting
campaign money or using government funds for campaigning
Critics of New Deal
– Argued it led to waste, corruption, bloated government, communistic
ideas and policies that were implemented before thought through.
National debt doubled in 7 years. Philosophy of handouts undermined
virtues of thrift and initiative.
– Business and conservatives accused FDR of class warfare and socialism
– New Deal did not end depression, economists believed greater deficit
spending was needed
– WWII ended depression but also created modern debt (from $40 to $258
billlion)