 From
1929 to 1933, manufacturing
output decreased by 1/3. Prices
fell by 20% causing deflation which
made the repayments of debt
much harder. Unemployment in
the U.S. increased from 4% to 25% .
About 1/3 of all employed persons
were downgraded to working parttime. Almost 50% of the nation’s
human work power was going
unused.
 Before
the New Deal, there was no
insurance on deposits at banks;
when thousands of banks faced
bankruptcy, many people lost
everything! No public
unemployment, no social security.
Relief for the poor had been the
responsibility of families, private
charities, and local governments.
However, as conditions worsened
year by year, their combined
resources fell far short of demand.
 Upon
accepting
the 1932
Democratic
nomination for
president, Franklin
Roosevelt
promised “a new
deal for the
American
people”
 “Throughout
the nation men and
women, forgotten in the political
philosophy of the government,
look to us here for guidance and
for more equitable opportunity to
share in the distribution of national
wealth . . . I pledge myself to a
new deal for the American
people. This is more than a
political campaign. It is a call to
arms.”
 With
a nation desperate for relief,
reform, relief, and recovery were
Franklin D. Roosevelt’s goals when
he took over as president. At his
side was a Democratic Congress,
the majority of whom were
prepared to enact measures
carved out by a group of
Roosevelt’s closest advisors (the
“Brain Trust”). Recurring theme –
help the “forgotten man at the
bottom of the economic pyramid”
 not
supported by many of the
prominent Republicans and violently
opposed by others;
 some Republicans went so far as to
endorse Roosevelt;
 blamed for the Great Depression
(for more than two years, Hoover
had been restricting trade and
increasing taxes);
 outrage of the deaths of veterans in
the Bonus Army
 His
attempts to campaign were
disastrous; he often had objects
(rotten fruits and vegetables) thrown
at him or his vehicle. He viciously
attacked Roosevelt’s plan, saying
that it would make the depression
worse. This only decreased his own
popularity.
 The
“First New Deal” (1933-1934)
and the “Second New Deal”
(1935-1938) are distinguished from
one another. The first dealt with
diverse groups, from banking and
railroads to industry and farming.
The Second New Deal was more
liberal and controversial.
 called
a special session of Congress
on March 9th; immediately, he
began to submit reform and
recovery measures for
Congressional validation. Almost all
of these bills were enacted by
Congress; the 99-day (March 9th June 16th ) session has come to be
known as the Hundred Days.
 On
March 12th 1933, Roosevelt
broadcast his first “fireside chat” to the
American people; there would be 29
subsequent chats. The opening topic
was the Bank Crisis. He spoke on a
variety of topics to inform Americans
and convince them to support his
domestic agenda, and later, the war
effort. During Roosevelt’s first year as
president, Congress passed laws to
protect the stock market and bond
investors.
› Emergency Banking Act – provided
the president with the means to
reopen viable banks and regulate
banking
› Economy Act – cut federal costs
through reorganization of and cuts
in salaries and pensions
› Beer-Wine Revenue Act – legalized
and taxed beer and wine
› Civilian Conservation Corps Act –
established the Civilian Conservation Corps;
three million young men, 18-25, found work –
building roads, forestry labor, flood control
› Federal Emergency Relief Act – established
the Federal Emergency Relief Administration;
distributed $500 million to states and
localities for relief – pay out eventually
became about 3 billion
› Agricultural Adjustment Act – established the
Agricultural Adjustment Administration;
decreased crop surpluses by subsidizing
farmers who voluntarily cut production
› Thomas Amendment – permitted the
president to inflate the currency
› Tennessee Valley Authority Act –
allowed the federal government to
build dams and power plants in the
Tennessee Valley, along with
agricultural and industrial planning,
to generate and sell the power, and
to engage in area developments
› Federal Securities Act –stiffening
regulation of the securities business
 In
the spring of 1935, responding
to setbacks in the Court,
growing skepticism in Congress
and popular call for more
drastic action, the
Administration proposed several
new initiatives

Social Security – Before 1935, only a few
states had old age insurance laws and
most programs were seriously
underfunded. The US was the only modern
industrialized country where people faced
the Depression without any national
system of social security. The Social
Security Act, drafted by Francis Perkins, is
often viewed as the most important part of
the New Deal. It established a permanent
system of universal retirement pensions,
unemployment insurance, and welfare
benefits for the handicapped and needy
children.
› Gold standard abandoned
› National Employment Systems
Act
› Home Owners Refinancing Act –
established the Home Owners
Loan Corporation
› Glass-Steagall Banking Act –
banking reforms, established the
Federal Bank Deposit Insurance
Corporation
› Farm Credit Act – refinancing for
farms
› Emergency Railroad
Transportation Act – increase
federal regulation of railroads
› National Industrial Recovery Act
– established the National
Recovery Administration and the
Public Works Administration
 Spending
in 1916 was about 690
million; in 1936, it was 9 billion. The
government modified taxes to tap
wealthy people the most; the deficit
was made up in part by raising taxes
and borrowing money through the
sale of government bonds.
Meanwhile, national debt climbed to
unprecedented heights.
 When
Roosevelt took office, the 5
justices (of 9) of the Supreme Court
were appointed by the Republican
Party. 4 were very conservative and
convinced a 5th to vote down
progressive legislation. Roosevelt
tried to get Congress to pass the
Judiciary Reorganization Bill; this
would allow the president to appoint
a new justice after an existing justice
reached 70 and failed to retire
within 6 months.
 While
the proposal failed, the
justice, many believe due to
Roosevelt’s court-packing
attempt, began to vote more
liberally. He upheld the collective
bargaining rights under the
Wagner Act and the Social
Security Act.
 By
1934, the New Deal was
encountering opposition from both
ends of the spectrum. All around the
country, brazen unions (many Marxistinfluenced) sparked job actions,
including city-wide strikes. Liberals
argued that Roosevelt had not done
enough; conservatives argued that he
had done too much! Many were
dismayed by the national budget
deficits.
 The
US Supreme Court had been
nullifying crucial New Deal
legislation but the President was
reelected in 1936. He carried
every state except Maine; wanting
to capitalize on this, he introduced
legislation to expand the federal
courts. (another attempt at
“packing”)
 As
the free world began to fight the Axis
Powers, Roosevelt began to turn his
attention away from domestic policy to
helping the Allies while still maintaining
a somewhat isolationist position towards
actually entering the war. America’s
eventual entry into the war would
continue to improve the economy.
Large-scale production of military
equipment and the draft turned
Americans toward a beast in Europe
and away from the poverty of the
Great Depression.