Chapter 34: The Great Depression and the New Deal (1933-1939)

FDR: Politician in a Wheelchair Recovering from infantile paralysis built FDR's character His wife Eleanor Roosevelt was the most active and influential First Lady, traveling, giving speeches, and fighting for the underdogs; however, was infidelitous Roosevelt was a superb orator Favored frugality, but was willing to spend in order to relieve suffering June 1932 the Democrats nominated FDR for presidential candidate; platform called for repeal of prohibition, end of Hoover depression, a balanced budget, and great social and economic reforms Roosevelt campaigned for a New Deal vaguely and contradictorily, often through speeches ghostwritten by the Brain Trust, a group of reform-minded intellectuals Hoover was the Republican presidential candidate; platform called for free enterprise, individual initiative, and repeal of the Hawley-Smoot Tariff

Presidential Hopefuls of 1932

Hoover's Humiliation The Republicans only carried six states in 1932 Black votes shifted from Lincoln's party to the Democratic Party, since they were the worst affected by the Depression Roosevelt won because the people wanted change of any sort Hoover's lame duck period, lasting until March 1933, was spent in deadlock with Roosevelt With deadlock came a worsening of the Depression In his inaugural speech, said that the government must wage war on the depression and FDR and the Three that the only thing we have to fear is fear itself R's: Relief , Recovery, March 6 to 10 declared a national banking holiday in order to open them more soundly Reform March to June 1933 in the Hundred Days, Congress produced scores of remedial laws The New Deal's goals were three R's: short-term relief and recovery and long-term recovery and reform The panicky Congress readily approved of bills drafted by White House advisors (must legislation) and gave Roosevelt great blank-check powers Roosevelt liked to do things by intuition, and the people liked his activeness Much of the reforms enacted under Roosevelt were overdue from the pre-WWI Progressive movement, ex. unemployment insurance, old-age insurance, minimum-wage regulations, conservation and development of natural resources, and restrictions on child labor Roosevelt Tackles Money and Banking 1933 Congress passed the Emergency Banking Relief Act that gave the president the power to regulate banking transactions and foreign exchange and to reopen solvent banks Roosevelt gave fireside chats over the radio to boost the public's confidence The Glass-Steagall Banking Reform Act made the Federal Deposit Insurance Corporation the insured bank deposits for up to $5000 In order to protect the federal gold reserve and prevent hoarding, Roosevelt took the US off the gold standard and ordered all private gold to be exchanged for paper money; was

the beginning of managed currency Roosevelt wanted to cause inflation to relieve debtors and stimulate production, so had the Treasury buy gold at higher prices; angered sound-moneyers February 1934 Roosevelt returned the US to the gold standard for the purpose of international trade only Creating Jobs for the Jobless At FDR's inauguration, the unemployment rate was at 25%, the highest in American history Roosevelt wanted to spend money towards assisting the unemployed (priming the pump) Congress created the Civilian Conservation Corps (CCC) that provided outdoor work for millions of young men, keeping them off the streets and providing paychecks to their families; faced some opposition for militarizing the youth The Federal Emergency Relief Act created the Federal Emergency Relief Administration (FERA) under Harry L. Hopkins that gave billions to states for immediate relief of low wages The Agricultural Adjustment Act gave millions to help farmers meet mortgages The Home Owners' Loan Corporation (HOLC) refinanced mortgages on non-farm homes Late 1933 FDR established the Civil Works Administration (CWA) as a branch of FERA that provided temporary jobs; was criticized for its make-work tasks (boondoggling) Catholic Father Charles Coughlin the microphone messiah gained a following of millions with with his anti-New Deal, anti-Semitic, fascistic, and demagogic radio speeches Louisiana Senator Huey P. Long promised to make Every Man a King; was assassinated for fear of becoming a fascist dictator Retired physician Dr. Francis E. Townsend promised all senior citizens a monthly pension 1935 Congress authorized the Works Progress Administration (WPA) that gave people jobs building public works, nourished talent, preserved self-respect The Emergency Congress authorized the National Recovery Administration (NRA) that assisted industry, labor, and the unemployed in both the short- and long-terms: Set limits for maximum work hours and minimum wage Guaranteed workers the rights to organize and to bargain collectively through a representative of their own choosing, and prohibited yellow-dog contracts There was a period of much enthusiasm for the NRA, ex. the founding of the Philadelphia Eagles, and there was an upswing in business But the NRA's success was shortlived because too much self-sacrifice was required of labor, industry, and the public Chiselers were businesspeople who publicly supported NRA codes but secretly violated them 1935 in the Schechter case, the Supreme Court decided that Congress could not delegate legislative powers to the executive, and that local businesses, such as the fowl business of the Schechter brothers, were exempt from congressional control of interstate commerce

A Day for Every Demagogue

A Helping Hand for Industry and Labor

 Congress created the Public Works Administration (PWA) under secretary of the interior Harold L. Ickes that funded public works projects for long-term recovery, ex. the Grand Coulee Dam on the Columbia River Congress allowed and taxed the sale light (less than 3.2% alcohol) wine and beer, and prohibition would be completely repealed by the 1933 Twenty-first Amendment Paying Farmers Not to Farmers were suffering from gross overproduction and price deflation Farm The Agricultural Adjustment Administration (AAA) paid farmers to grow less crops, but faced opposition because caused the destruction of produce while people went hungry and caused an increase in unemployment; 1936 was declared unconstitutional by the Supreme Court because of its taxation provisions The 1936 Soil Conservation and Domestic Allotment Act paid farmers to plant soilconserving plants or let land lie fallow The 1938 Second Agricultural Adjustment Act paid farmers to follow restrictions on acreage and succeeded in increasing crop prices and farmers' income Dust Bowls and Black Blizzards 1933 dust storms afflicted the trans-Mississippi Great Plains because of drought, wind, overfarming, and damaging farming techniques So tens of thousands of Orkies and Arkies were displaced to Southern California John Steinbeck's 1939 The Grapes of Wrath portrayed these refugees 1934 the Frazier-Lemke Farm Bankruptcy Act allowed mortgage foreclosures to be suspended for five years, but was voided by the Supreme Court, so the time was reduced to three years 1935 the Resettlement Administration moved affected farmers to better land 1934 under Commissioner of Indian Affairs John Collier the Indian Reorganization Act (the Indian New Deal) encouraged tribes to establish local self-government; some tribes opposed because thought it was a back-to-the-blanket measure The Federal Securities Act (Truth in Securities Act) required sellers of stocks to prove to investors that their stocks were worth what they said they were worth 1934 the Securities and Exchange Commission (SEC) was established as a watchdog administrative agency 1935 the Public Utility Holding Company Act prohibited unnecessarily huge corporations New Dealers opposed the excessive rates from the meteoric rise of the electric-power industry So 1933 Congress created the Tennessee Valley Authority (TVA) under Senator George W. Norris that was in charge of damming the Tennessee River in order to make jobs and see how much it actually cost to generate and distribute electricity Electric companies opposed, calling it creeping socialism in concrete The TVA succeeded in creating jobs, generating cheap electricity, reversing erosion, causing low-cost housing, reforestation, improved navigation, and flood control Starting 1934 the Federal Housing Administration (FHA) gave out small loans to homeowners for improving their property and building new houses; was extremely

Battling Bankers and Big Business

The TVA Harnesses the Tennessee River

Housing Reform

popular Starting 1937 The United States Housing Authority (USHA) lent money to states and communities for low-cost construction, ex. low-cost housing; was not very successful, but succeeded in shrinking slums Social Security 1935 the Social Security Act provided for federal-state unemployment insurance Republicans opposed because thought people would become dependent Unlike in Europe, where benefits were universal, American workers had to be employed to qualify for coverage With falling unemployment because of the NRA, workers became more assertive 1935 Congress replaced the NRA with the Wagner Act (National Labor Relations Act) that created the National Labor Relations Board that reasserted labor's rights to selforganize and bargain collectively through representatives of their own choosing 1935 John L. Lewis, head of the United Mine Workers, formed the Committee for Industrial Organization (CIO) that organized skilled members of the AFL, but the CIO was unsympathetic to unskilled labor, so was stifled by the AFL But still the CIO was victorious in the 1936 General Motors strike in which workers used the revolutionary sit-down strike method to prevent importation of strikebreakers Unskilled labor won a victory when the United States Steel Company granted them the right to unionize in order to avoid a costly strike; but still faced violence, ex. the 1937 massacre at the Republic Steel Company 1938 the Fair Labor Standards Act (Wages and Hours Bill) required industries involved in interstate commerce to set minimum-wage and maximum-hour levels and prohibited child labor, but excluded agricultural, service, and domestic workers 1938 the CIO broke off from the AFL and became the Congress of Industrial Organizations, still under Lewis But the CIO and AFL would continue to have civil conflict The Democrats renominated Roosevelt for presidential candidate; platform supported the New Deal The Republicans nominated moderate Kansas governor Alfred M. Lander; platform opposed the New Deal for its deficits, radicalism, and experimentation Organized 1934, the American Liberty League was composed of wealthy conservatives who opposed the socialistic New Deal Roosevelt won in a landslide, carrying all but two states, and the Democrats won a 2/3rds majority in Congress Roosevelt won because had the support of blacks, laborers, urbanites, the poor, and New Immigrants (mostly Catholics and Jews) The 1933 Twentieth Amendment, shortening the length of the lame duck period, had gone into effect The Supreme Court justices were old, ultraconservative, and obstructionist, and were mostly not of FDR's choosing Roosevelt wanted to get the Supreme Court in line with public opinion

A New Deal for Unskilled Labor

Landon Challenges the champ in 1936

Nine Old Men on the Supreme Bench

 So early 1937 proposed that he be allowed to add a new justice for every justice over 70 who would not retire; Congress and the public were shocked by and opposed to the idea The Court Changes Course Both Republicans and Democrats opposed Roosevelt's justice proposal because felt it was dictatorial The Supreme Court, in response, became more liberal, esp. Justice Owen J. Roberts One old justice retired and was replaced by New Dealer Justice Hugo Black Congress only passed a watered-down court reform bill that applied to the lower courts Effects of Roosevelt's justice proposal: Was Roosevelt's first major legislative defeat The Court became more liberal, and a series of deaths and resignations allowed Roosevelt to appoint 9 justices, more than any other president since Washington Ruined Roosevelt's reputation of political goodwill 1933 to 1937 unemployment decreased moderately to 15% 1937 the economy downturned again (the Roosevelt Recession) because of the new government policies So April 1937, following the recommendation of British economist John Maynard Keynes, Roosevelt declared the start of planned deficit spending to stimulate the economy; Keynesianism would become the economic norm for the next decades 1939 the Reorganization Act gave Roosevelt limited powers for administrative reforms, esp. the Executive Office in the White House 1939 the Hatch Act prohibited all but the highest-ranking federal administrative officials from active political campaigning, use of government funds for political purposes, and collection of campaign contributions from people on welfare and limited campaign contributions and expenditures; but was full of loopholes By 1938, the New Deal was losing steam, ex. Republicans reduced the Democrats majority in Congress Critics of the New Deal said it was incompetent, confusing, contradictory, corrupt, radical, Communist, and favoring Jews Business disliked Roosevelts improvisational policies, government intervention in the economy, and government favoring of workers Many opposed the growth of bureaucracy into the largest single organization in the country Many pointed out Roosevelts broken promise to balance the budget Many feared that hard-pressed workers were becoming dependent on the government instead of being self-reliant Roosevelt was disliked for aggressively trying to get fellow New Dealers into the Supreme Court and Congress The most solid criticism was that the New Deal failed to cure the Depression; surpluses, unemployment, and recession would not go away until WWII and increased deficit spending New Dealers defended that the New Deal was intended to provide relief, not improve the economy, as was the governments duty FDR may have saved the system of free enterprise from the abuses of capitalism with a mild dose of socialism

The Twilight of the New Deal

New Deal or Raw Deal?

FDR's Balance Sheet

 FDR accomplished bold reform and avoided revolution through moderateness