America in the 1930s
FDR and the New Deal
A depressed nation
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The Crash surprised / ruined many lives
No leader could offer effective solutions
By 1932 hope & optimism were gone
Winter of 1932/33 one of desperation & anger for
many
• Hoover and government short on energy & ideas –
little power to change situation
• Roosevelt refused to work with Hoover
Winter 1932/33
• Winter of stagnation for:
1) The unemployed
2) The homeless/those threatened with eviction
3) Banks unable to keep reserves as depositors
withdrew savings.
4) Manufacturers who couldn’t see where new
markets would come from
5) Farmers whose incomes had decreased due to
low prices for their produce.
Franklin Delano Roosevelt
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Born to a wealthy family in New York state in 1882
Trained as a lawyer before entering politics
Assistant Secretary to the Navy during WWI
Married Eleanor Roosevelt (Theodore Roosevelt’s
niece) in 1905
• Contracted polio in 1921, left him permanently
disabled.
• Surprised many by his determination to lead a
normal life.
The Inauguration of FDR
• Did not seem like a strong candidate – seemed
sensible/decent but indecisive and lacked clear
policies.
• His warm character in total contrast to Hoover’s
reserved/defeatist manner
• Gathered around him many economic advisors
(‘The Brain Trust’) to form policies to solve the
growing crisis
• FDR won a landslide victory in 1932
• Congress completely dominated by Democrats
and Progressive Republicans
Over to you…
• Make a list of the major factors that FDR’s administration had
to solve.
1) Overproduction
2) Under consumption
3) Bank failures
4) Corruption in major corporations and financial system
5) Unequal distribution of wealth
6) Farm incomes fallen from $22 billion (1919) to $8 billion
(1928)
7) High tariffs on exports to the USA
8) 25% unemployment
9) Despair among American people, sense of pessimism.
The First New Deal, 1933-34
Key question:
Did it provide relief and start recovery?
The Hundred Days
• From 9th March-16th June 1933.
• An exceptional 15 bills passed, setting direction of
the first New Deal.
• Symbol of FDR’s energy, commitment & flexibility.
• 19th April Roosevelt abandoned the Gold
Standard, forcing decline in value of the dollar and
increase in price of goods/stocks to stimulate
consumerism/investment.
…one major problem!
• People did not spend!
• Effects of the Crash had discouraged
investors and savers from taking risks.
• Government had to not only create more
money but make sure it was being spent.
What were the New Deal
programmes?
• Aims of 1st New Deal:
1) To relieve human suffering
2) To promote economic recovery
Aims to be achieved by…
1) Correcting the financial crisis
2) Offering short-term relief to the unemployed
3) Promoting industrial recovery by increased
government spending and agreements between
government, industry and unions.
4) Raising prices of farm produce to reduce production
and to reduce supply making goods more valuable.
5) Last ‘unwritten’ aim was to restore hope and energy
to Americans as individuals.
Major legislation of the first New
Deal, 1933-34
• Agricultural Adjustment Act (AAA) - Used farm
subsides to regulate farm production.
• Civilian Conservation Corps (CCC) – Provided work
for young men 18-25. Organised like army, men
worked on regional environmental projects. Most of
salary sent back to families.
• Tennessee Valley Authority (TVA) – Regional planning
of deprived areas, inc. hydroelectricity, flood control,
education/health projects in Virginia, N. Carolina,
Tennessee, Georgia, Alabama, Mississippi and
Kentucky.
Major legislation of the first New
Deal, 1933-34
• Public Works Administration (PWA) – financed 34,000 federal,
state and local projects costing $6 billion – a large source of
employment.
• National Recovery Administration (NRA) – Established
national economic planning. Controlled production, prices,
labour relations and trading practices.
• Banking Act (Glass-Seagall Act) – Prohibited commercial
banks from selling stock or financing corporations (created
separate commercial/investment banks). Federal Deposit
Insurance Corporation guaranteed savings deposits up to
$2500, protecting depositors’ savings.
Why were the Hundred Days
important?
Invented new
institutions to
restructure the
economy
Initiated the biggest
public works
programme in
American
Halted banking
panic
The TVA created a
unique experiment in
regional
development
The
hundred
Days
Gave hope and
optimism in place of
despair
Set aside billions
of dollars for
federal relief to the
unemployed
Demonstrated the
energy and
commitment of
Roosevelt to the
nations recovery
The second New Deal, 1935-38
Key question:
Did it complete recovery and start reform?
FDR re-elected in 1936
• The first New Deal had raised expectations
(on the left) and anger (on the right)
• So, Roosevelt chose to focus on more social
and economic reform.
• Another landslide victory in 1936.
• Recognised remaining problems in inaugural
“In spite of our efforts and in spite of all our talk, we have
address.
not weeded out the over-privileged, and we have not
effectively lifted up the under-privileged. We do not destroy
ambition, no do we seek to divide our wealth into equal
shares – we do assert that the ambition of the individual to
obtain for him and his a proper life is an ambition to be
preferred to the appetite for great wealth and great
power.”
FDR’s new focus
• Less on business needs, more on
reforming areas that affected ordinary
people
1) Unions able to fight for workers’ needs
2) Financial security in old age
3) Cheap electricity
4) Continued fight against high
unemployment
Major legislation of the second New
Deal, 1935-38
• National Labor Relations Act (the Wagner
Act) – Strengthened the power of labour
unions by allowing collective bargaining.
Resulted in peaceful resolution of labour
disputes.
• Works Progress Administration (WPA) –
Established work relief programmes, inc.
Federal Art Project. Employed 8.5 million.
Major legislation of the second New
Deal, 1935-38
• The big one…
• Social Security Act (SSA) – created guaranteed
retirement payments for over-65s.
• Federal insurance for the unemployed.
• Assistance for the disabled, for public health and
for dependent women and children.
• Farm Security Administration (FSA), 1937 –
Guaranteed loans to farmers to buy farms and
rehabilitate farms.
Major legislation of the second New
Deal, 1935-38
• Fair Labor Standards Act, 1938 – set a
minimum wage and maximum working
hours. Raised the wages of 12 million
workers by 1940.
• National Housing Act, 1938 – Established
the United States Housing Authority,
setting up housing projects for low income
families.
Why had the depression not ended
by 1939?
Unemployment
• 1933: 13 million
• 1937: 7.7 million
• 1939: 10 million
• 1929:……….1 MILLION!!!!
• So…… had the New Deal failed?
YES
NO
MAYBE
Conclusion: America in the 1930s –
Did the New Deal end the
Depression?
1. FDR continued the expansion of presidential
power started by T. Roosevelt/Wilson, centralised
decisions in the White House
2. New Deal wide-ranging in its provisions of direct
relief for 1/3 of population from 1933-39
3. Federal government would now intervene in the
national economy if the private sector could not
guarantee economic security
4. Regulation of stock markets and financial power
now centered in Washington
Conclusion: America in the 1930s –
Did the New Deal end the
Depression?
5. The New Deal continued Progressive ideals of order
and regularity for the good of the majority.
6. Laid foundations for post-war welfare state
7. Regognition that poverty was a structural economic
problem, not the fault of the individual.
8. The Democrat Party changed its popular base to
include organised labour, black Americans, women,
unemployed, immigrants, middle-class property
owners. It became a broad coalition of different group
interests.
Conclusion: America in the 1930s –
Did the New Deal end the
Depression?
9. The New Deal promoted union membership while
allowing the development of large corporations.
10. There is a continuing argument as to whether the
New Deal was conservative or radical, but it was
definitely pragmatic and practical.
11. The New Deal was proactive in meeting the
problems of 1933. It was reactive to problems that
followed.
12. Only the coming of world war ended the problem
of unemployment.