Dealing with the Great
Depression and the New Deal
U.S. History
New Deal Homework Quiz Answer
• Let’s see how we did!!
What was the purpose of the Bank
Holiday?
• March 6, 1922: Bank Holiday –
proclamation closing every bank in the
nation for a few days
• Designed to stop massive withdrawals
• Save the banks!
What actions did Pres. Roosevelt
take to improve Banking?
• Examined banks for financial soundness,
encouraged people to deposit money,
created FDIC
What actions did Pres. Roosevelt
take to improve Industry?
• Passed NIRA to stabilize prices and
contract with business for public projects
What actions did Pres. Roosevelt
take to improve Agriculture?
• Passed AAA to limit production and raise
prices
Who was John Maynard Keynes
and what impact did he have on the
Great Depression?
• John Maynard Keynes – the Government
needs to spend money to encourage
investment and consumption.
• This is what Roosevelt did to fight the
Depression he put money into the
economy through federal loans and
government spending
A $100 Dollar Bill
A packet of one hundred $100 bills is less
than 1/2" thick and contains $10,000. Fits in
your pocket easily
Believe it or not, this next little pile is $1
million dollars (100 packets of
$10,000). You could stuff that into a
grocery bag and walk around with it.
While a measly $1 million looked a little
unimpressive, $100 million is a little
more respectable. It fits neatly on a
standard pallet...
And $1 BILLION dollars... now we're
really getting somewhere...
Next we'll look at ONE TRILLION dollars. This is that number we've
been hearing so much about. What is a trillion dollars? Well, it's a
million million. It's a thousand billion. It's a one followed by 12 zeros.
(And notice those pallets are double stacked.)
“I do not believe that the power and
duty of the [federal] Government
ought to be extended to the relief of
individual suffering…The lesson
should be constantly enforced that
though the people support the
Government, the Government
should not support the people.”
Herbert Hoover
Hoover’s Philosophy
• He characterized the depression as a
“temporary halt in the prosperity of a great
people.”
• He agreed with what the NY Times advised that
“the fundamental prescriptions for recovery [are]
such homely [simple] things as savings…and
hopeful waiting for the turn.”
• Hoover thought “the way to economic recovery
was through individual effort and not from
government assistance.
Opposing Direct Relief
• Americans demand relief for the needy (food,
clothing, shelter, money)
• “Why are we reduced to poverty and starving
and anxiety and sorrow so quickly under your
administration as Chief Executor. Can you not
find a quicker way of executing us than to starve
us to death?”
• Hoover continued to reject the idea of
government aid.
Why?
Direct federal relief would:
• create a large bureaucracy in government
• Inflate the federal budget
• Reduce the self-respect of people
receiving aid
Hoover’s advice: Lift yourself up through
hard work and strength of character –
rugged individualism.
Rugged Individualism
• Success comes through individual effort
and private enterprise
• Private charities and local communities,
not the federal government, could best
provide for those in need
• “A voluntary deed,” is infinitely more
precious to our national ideas and spirit
than a thousandfold poured from the
Treasury.”
What Hoover Does
• 1930, Hoover creates the President’s
Committee for Unemployment Relief
(PCUR)[ Community Chest, Red Cross,
Salvation Army, YMCA]
• It collected information about relief
agencies and distributed it to Americans
interested in aiding the unemployed
• It did very little beyond urging Americans
to contribute more to charity
Boosting the Economy
• Presidential Advice from Secretary of
Treasury: Andrew Mellon
“Government should keep its hands off the
economy. American businesses need to
deal with the crisis on their own.” –
Laissez-faire Approach
Hoover says something has to be
done!!
• Within weeks of the stock market crash
(Oct. 1929), Hoover calls a White House
conference of top business, labor, and
political leaders to discuss solutions to the
economic crisis.
• Hoover urged these leaders to voluntarily
maintain predepression levels of
production, employment, and wages.
Hoover and the Great Depression
Effort
Description
Effectiveness
Public-works
Programs
Poured money into public
construction projects such as the
Boulder Dam
Failed to affect the
entrenched depression
Agricultural
efforts
Created the Federal Farm Board;
made loans, established
cooperatives, and bought surplus
goods
Helped some farmers
take advantage of
cooperatives and avoid
foreclosure, but failed to
end the farm crisis
Reconstruction
Finance
Corporation
(RFC)
Loaned taxpayer money to
stabilize industries
Helped some companies
avoid bankruptcy; used
money for businesses,
not people
Impact
• Hoover’s policies fail to end the Great
Depression
• However, his policies did represent a
major shift in government policy. The
President and Congress accepted the idea
that the federal government can and
should do something to boost the
economy in times of crisis
Impact
• 1932 – President Hoover was perhaps the
most hated man in America. His
appearance in movie newsreels provoked
boos and catcalls from audiences.
• “In Hoover we trusted and now we are
busted.”
The 1932nd Psalm
E. J. Sullivan wrote the following satire in 1932.
“Hoover is my shepherd, I am in want,
He maketh me to lie down on park benches,
He leadeth me by still factories,
He restoreth my doubt in the
Republican Party.
He guided me in the path of the
Unemployed for his party’sake,
Yea, though I walk through the alley of the soup kitchens,
I am hungry.
I do not fear evil, for thou art against me;
Thy Cabinet and thy Senate, they do discomfort me;
Thou didst prepare a reduction in my wages;
In the presence of my creditors thou anointed my income with taxes,
So my expense overruneth my income.
Surely proverty and hard times will follow me
All the days of the Republican administration.
And I shall dwell in a rented house forever.
Amen.”
Source: McElvaine, Robert. The Depression and New Deal: A History in Documents, page 28.
Election of 1932
• Republicans reluctantly renominate
Herbert Hoover (no one else wanted the
nomination)
• Democrats nominate N.Y. Governor
Franklin D. Roosevelt (FDR)
FDR
•
•
•
•
•
Distant cousin of Theodore Roosevelt
Married to TR’s niece Eleanor Roosevelt
Believed in progressive and social reform
Vice Presidential Candidate in 1920
1921: Polio paralyzes him from the waist
down
• 1928: Governor of N.Y. overcomes
physical challenges
FDR
As Governor of N.Y.:
• Relief programs
• Instituted unemployment benefits
• Supported failing industries
FDR for President
“Republican leaders not only have failed in
material things, they have failed in national
vision, because in disaster they have held
out no hope…I pledge you, I pledge
myself, to a new deal for the American
people.”
Franklin D. Roosevelt
The Election of 1932
Candidate
(Party)
Electora
l Vote
Popular Vote
Roosevelt
(Democratic)
472
(88.9%)
22,809,638 (59.1%)
Hoover
(Republican)
59
(11.1%)
15,758,901 (40.5%)
FDR Wins!!
• Roosevelt: 42 states, 23 million popular
votes, 472 electoral votes
• Hoover: 16 million popular votes, 59
electoral votes
• Additionally, the Democrats win majorities
in both houses of Congress
President Franklin D. Roosevelt
“The whole country is with him, just so he
does something. If he burned down the
Capitol, we would cheer and say, “Well,
we at least got a fire started anyhow.”
Will Rogers
First Inaugural Address
“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….”
The people of the U.S. have not failed. In their need
they have registered a mandate that they want direct,
vigorous action. They have asked for discipline and
direction under leadership. They have made me the
present instrument of their wishes. In the spirit of the gift
I take it.”
Question
What words or phrases does Roosevelt use
to inspire confidence?
That New Deal
Roosevelt Confronts Emergency
• 1932, while campaigning for the
Presidency, Roosevelt formed an advisory
group known as the Brain Trust.
• They develop the “New Deal”
• 15 relief and recovery programs
Inaugural Address
• Roosevelt told the nation that a “temporary
departure” from the “normal balance of
executive and legislative authority” might be
necessary. If needed the President would ask
Congress for “broad executive power to wage a
war against the emergency.”
• March 15, 1933 Roosevelt calls a special
session of Congress in which all 15 programs of
the New Deal are passed – in 100 days.
Banking Reform
• March 6, 1922: Bank Holiday –
proclamation closing every bank in the
nation for a few days
• Designed to stop massive withdrawals
• March 9, 1933: Emergency Banking Act –
authorized the federal government to
examine all banks and allow those that
were financially sound to reopen
Fireside Chats
• March 12, 1933, President Roosevelt
addresses the nation on the radio on the
first of many “fireside chats”
• Roosevelt asks the people to reinvest in
banks, explaining how the people’s money
is now safe in the bank
• It worked! By the end of 1 Month $1 Billion
is back into banks – consumer confidence
is restored!
More Banking Reform
• Federal Deposit Insurance Corporation
(FDIC) – June 1933
• Insured each bank deposit up to $5,000
[up to $100,000 today]
Home Owners Loan Corporation
HOLC formed to assist home owners who
could not meet their mortgage payments.
June 1936, HOLC had saved the homes of 1
million American Families with low –
interest, long term mortgage loans
Helping the Farmers
• 1933, Executive Order from the President
– creates the Farm Credit Administration
(FCA)
• Provided low-interest, long-term loans to
farmers
• Allowed farmers to pay off mortgages and
back taxes, buy back farms, purchase
seed and farm equipment
Relief for the Needy – Help!
How to help 13 million unemployed?
• May 1933, Federal Emergency Relief
Administration (FERA)
• Created to distribute $500 million in relief
aid to state and local agencies – at least
half of FERA’s money went to states for
direct distribution to needy families
• 8 million American families receive public
assistance
But…People don’t just want a
handout – they want jobs!
• Civil Works Administration (CWA)
• Created federal, state, and local “makework” projects (raking leaves, picking up
park litter, etc.)
• 1933-34, CWA paid more than $740
million in wages to 4 million men &
women.
Unemployed Young men 18-25
Civilian Conservation Corps (CCC), 1933
• 250,000 young men left their homes for
army camps for CCC training
• They planed trees, created park trails,
developed campgrounds
• $30/month – money sent back mostly to
their families
Question
• In what ways did FERA, the CWA, and the
CCC, provide different types of relief?
Helping the Nation Recover
• Economic Relief = short-term remedy
• Economic Recovery = long-term goal
• How? Reform business practices!
Business Reform
Federal Securities Act – created the
Securities and Exchange Commission
(SEC)
• Regulates companies that sell stocks and
bonds.
“Priming the Pump”
• Put money into the economy through
federal loans and government spending
• Idea from John Maynard Keynes – the
Government needs to spend money to
encourage investment and consumption.
How?
National Industrial Recovery Act (NIRA),
1933
• Stimulates industrial and business activity
and reduces unemployment
• Stabilizes prices, raising wages, limiting
work hours, providing jobs
NIRA creates to do this:
Public Works Administration (PWA)
• Uses federal funds to contract businesses to
build roads, public buildings, and other public
works projects
National Recovery Administration (NRA)
• Encourages businesses to draw up “codes of fair
competition.” Under these codes, businesses
agreed to work together to set hours, prices,
production levels, and wages.
NIRA conti.
• To help protect labor, the NIRA also
guarantees workers the “right to organize
and bargain collectively through
representatives of their own choosing”
• Problems: NIRA not popular since many
companies ignored the codes, it kept
workers pay down, and prices up
• 1935, Supreme Court declared it
unconstitutional
Agricultural Recovery
To help farming, Roosevelt asked farmers to
cut production – believing that this would
cause the price of agricultural goods and
farmers purchasing power to rise
Legislation
Agricultural Adjustment Administration
(AAA), May 1933
• Paid farmers to reduce their output of
corn, cotton, dairy products, hogs, rice,
tobacco, wheat, etc.
• This increased the income of farmers,
decreased the amount of agricultural
goods, but also increased prices for
consumers
Supreme Court Again
• 1936, the Supreme Court strikes down the
AAA, reflecting the courts attitude against
New Deal Legislation
Revitalizing a Region
Largest New Deal Program was the
Tennessee Valley Authority (TVA)
program, May 1933.
• Purpose to aid a rural 7 state region that
was scarred by deforestation and flooding.
Disease, illiteracy, malnutrition, and
poverty affected 2 million people
TVA Goals for the Tennessee River
Valley
•
•
•
•
•
•
•
Provide Electricity
Combat malaria
Combat illiteracy
Provide flood control
Provide recreational facilities
Improve standard of living
Combat soil erosion
Problems Continue
“President Roosevelt was elected on
November 8, 1932…This is January 1935.
We are in our third year of the Roosevelt
depression, with the conditions growing
worse…We must become awakened! We
must know the truth and speak the truth.
There is no use to wait three more years.
It is not Roosevelt or ruin; it is Roosevelt’s
ruin.”
Criticism of the New Deal from the
Left
• Father Coughlin – wanted the government
to nationalize banks and return to the
silver standard
• Francis Townsend – wanted the
government to grant a pension of $200 a
month to Americans over 60 years old
• Huey Long – wanted the Share Our
Wealth program
Criticism of the New Deal from the
Right
• American Liberty League/ Al Smith –
claimed New Deal measures were
destroying the Constitution and free
enterprise; accused New Deal supporters
of “irresponsible ravings against
millionaires and big business.”
The Second New Deal
• Increased emphasis on long-term reform
• Roosevelt continues strong with more
seats in Congress for the Democratic
Party
• More reforms!
Works Progress Administration
(WPA)
•
•
•
•
Designed to help Americans find work
$5 billion for WPA jobs
8.5 million employed
Built or rebuilt 350 airports, 100,000 public
buildings, 78,000 bridges, and 500,000
miles of roads.
National Youth Administration
(NYA)
• Provided high school and college age
Americans with part-time jobs that allowed
them to stay in school
Social Security – Social Security
Act, Aug. 1935
3 provisions:
• Provided unemployment insurance to
workers who lost jobs
• Provided pensions to retired workers older
than 65
• Provided payments to people with
disabilities, the elderly, and wives and
children of male workers who died
Rural Electrification Administration
(REA)
• Provided electricity to isolated rural areas
Revenue Act of 1935 – Wealth Tax
Act
• Raised taxes for the nation’s richest
people
Election of 1935
Franklin D. Roosevelt vs. Alfred M. Landon
• Roosevelt: 28 million popular votes and
every state but Maine and Vermont
• Landon: 17 million popular votes
• Roosevelt Wins!!
Evaluating the New Deal
Read pp.485-486
• How did critics and supporters evaluate
the New Deal?
• How did New Deal programs address both
physical and psychological needs of
Americans?
• What do you think? Was the New Deal
successful? Explain your answer.
How did critics and supporters
evaluate the New Deal?
• Critics said the New Deal created a
welfare state, but supporters argued that
the programs were necessary to help
Americans survive the Depression.
How did New Deal programs
address both physical and
psychological needs of Americans?
• The programs provided money and food
but also allowed people to work for these
benefits, thus giving the recipients a sense
of meaning and accomplishment.
The National Labor Relations Act (NLRA) guaranteed workers the right to join unions
without fear of management reprisal. It created the National Labor Relations Board
(NLRB) to enforce this right and prohibited employers from committing unfair labor
practices that might discourage organizing or prevent workers from negotiating a union
contract.
Key Provisions
Section 7
Employees shall have the right to self-organization, to form, join, or assist labor
organizations, to bargain collectively through representatives of their own choosing, and
to engage in other concerted activities for the purpose of collective bargaining or other
mutual aid and protection. It protects employees who take part in grievances, on-the-job
protests, picketing, and strikes.
Section 8
Five types of conduct are made illegal:
Employer interference, restraint, or coercion directed against union or collective activity
Employer domination of unions
Employer discrimination against employees who take part in union or collective activities
Employer retaliation for filing unfair-labor-practice charges or cooperating with the NLRB
Employer refusal to bargain in good faith with union representatives
Impact of the Wagner Act
Source 1:
9
8
7
6
Union Members
(in millions)
5
4
3
2
1
19
30
1
9
3
2
1
9
3
4
19
36
19
38
19
40
Fireside Chat
President Roosevelt’s Fireside Chat, March 9, 1937
“What is my proposal? It is simply this: Whenever a judge or justice
of any Federal court has reached the age of 70 and does not avail
himself of the opportunity to retire on a pension, a new member
shall be appointed by the President then in office, with the approval,
as required by the Constitution of the Senate of the United States.”
“The number of judges to be appointed would depend wholly on the
decision of present judges now over 70 or those who would
subsequently reach the age of 70.”
“ If, for instance, any one of the six justices of the Supreme Court
now over the age of 70 should retire as provided under the plan, no
additional place would be created.….”
Source: Franklin D. Roosevelt Presidential Library and Museum, http://www.fdrlibrary.marist.edu/firesi90.html