Notes: Chapter 33, The Great Depression and the New Deal

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Title
Angry voters in 1932 vengefully voted for FDR
against Hoover. FDR was the perfect candidate for
the time.
Hoovers campaign praised Republican anti-
depression policies, unenthusiastically promising
the end of prohibition.
FDR:
Politician in a
Wheelchair
FDR was humble. Eleanor became conscience of
the New Deal.
Eleanor joined Womens Trade Union League and
League of Women Voters.
Presidential
Hopefuls of
1932
FDR was vague and contradictory in his idea of a
New Deal for the forgotten man. Hoover blamed
FDR on making him do badly in his last months of
office. Hoover took defensive, allowing FDR to win.
Brain Trust wrote FDRs speeches and much of the
New Deal legislation. FDR promised a balanced
budget and berated Hoovers deficits. FDR was
very experimental.
Hoovers
Humiliation
in 1932
23 FDR-16 Hoover. Blacks became, especially in
northern cities, Democratic voters. FDR was
accused of making the Depression worse leading
up to his presidency to make himself look better.
FDR was uncooperative with Hoover during lame-
duck period. Hoover tried to bind FDR to an anti-
inflationary policy making New Deal impossible,
but FDR refused.
FDR and the
3 Rs: Relief,
Recovery,
Reform
Money changers denounced for bringing on the
depression. Relief and recovery now, reform and
stable recovery over time. Reform to fix the boom-
or-bust policies that bred the depression. FDR was
very improvisational. Unemployment insurance,
old-age insurance, minimum wage, conservation,
and child labor laws.
Banking holiday March 6-10, reopening when
more stable. In the Hundred Days, FDR cranked
out a bunch of remedial legislation. The 3 Rs were
bulky but effective. FDR was given almost
complete control. TVA created. Soon Europeans
would come to America excited to see the rising
economy of reform.
Roosevelt
Manages the
Money
Banking needed immediate action. 8 hours and
Emergency Banking Relief Act of 1933 was passed.
It gave FDR power to regulate banking transactions
and foreign exchange and to reopen solvent banks.
FDR protected gold reserves and prevented
panicky hoarding. Private gold holdings went to
Treasury to be exchanged for paper and the nation
was taken off the gold standard. Payment now had
to be in paper. Managed currency was on its way.
Feb 1934 FDR returned US to limited gold std. for
intl purposes.
30 fireside chats. Confidence in banks returned.
Hundred Days or Emergency Congress made
Glass-Steagall Banking Reform Act, providing for
the Federal Deposit Insurance Corporation,
insuring individual deposits up to $5,000,
effectively stabilizing banks to todays standard.
Managed currency purposefully caused inflation,
relieving debtors burdens and stimulating new
production. FDR made Treasury buy a lot of gold,
and the price for gold almost doubled.
Creating Jobs
for the
Jobless
Unemployment the biggest issue: 25%. FDR used
federal money to assist unemployed and pump-
prime industrial recovery. Federal Emergency
Relief Act gave immediate relief. FERA was given to
Harry Hopkins, a NY social worker who became one
of FDRs most influential advisors. $3 billion was
granted to the states for direct payments or wages
on work projects. Civil Works Administration
branch of FERA under Hopkins, made by FDR
himself. It gave 10,000s temporary jobs in winter.
Emergency Congress made Civilian Conservation
Corps (CCC), most popular of New Deal agencies.
3 million men restored the environment, fought
fires, controlled floods, and drained swamps.
Agricultural Adjustment Act AAA gave millions of
dollars to help farmers meet mortgages. Home
Owners Loan Corporation HOLC refinanced
mortgages on nonfarm homes, assisting a million
homes. Middle-class homeowners now fiercely
Democratic, and also bankers were given relief.
A Day for
Every
Demagogue
Direct relief from DC pulled nation through worst
winter, 1933-34. Emergency relief had to be
continued and supplemented. Dr. Francis E.
Townsend, a retired CA doctor, promised to make
everyone over 60 $200 a month, and Senator Huey
P. Long of LA, who publicized his share our
wealth program, promising to give every family
$5,000 at the expense of the rich. His lieutenant
Demagogues appeared giving relief, like Father
Charles Coughlin, a MI Catholic Priest, who
preached anti-New Deal-ism and prejudice. He
was silenced by the church later. Fascism was
seen as a link to economic crisis. Authoritarian
rule was rising in Japan and Germany, and some
even feared that FDR would become a dictator.
Congress passed Works Progress Admin WPA
Gerald L. K. Smith was especially slick. Best-known
WPA program: Federal Art project, hiring artists to
create posters and murals on post office walls. 9
million were given jobs over 8 years. WPA
nourished talent, preserved self-respect, and
fostered creation of millions of pieces of art.
1935 to spend $11 billion on thousands of public
buildings, bridges, and hard-surfaced roads. Some
were useless, like cricket control and monkey
pens.
New Visibility
for Women
US women become more important. Eleanor
Roosevelt, SOL Frances Perkins first woman cabinet
member, Mary McLeod Bethune director of Office
of Minority Affairs in national Youth
Administration. Pearl S. Buck, novelist, was raised
in China by Presbyterian missionary parents and
introduced American readers to Chinese peasant
society. The Good Earth earned her the Nobel Prize
for literature in 1938, making her the 3
rd
American
to receive the honor. She was a humanitarian.
Anthropology owned by women. Ruth Benedict
carried on work of her mentor, Franz Boas, by
developing culture and personality movement of
30s and 40s. Her landmark work, Patters of
Culture, made study of cultures as collective
personality patterns. Her student Margaret Mead
drew from her study of adolescence among Pacific
islanders advancing new ideas of sexuality, gender
roles, and relationships. She popularized
anthropology.
Helping
Industry and
Labor
Attempt to stimulate a nationwide comeback
started with National Recovery Admin (NRA).
Most complicated combination of immediate relief
and long-range recovery and reform. It assisted
industry, labor, and unemployed. Too much self-
sacrifice was expected of labor, industry, and the
public for the NRA to work. 1935 Supreme Court
shut down blue eagle NRA in Schechter decision.
Congress was not allowed to delegate legislative
powers to the president. More electrical power
was made than by the TVA in a place where there
was little need for power. With outbreak of WWII,
the dam would soon prove to be useful. Repeal of
prohibition21 amendment 1933gave
opportunity to raise federal revenue and provide
jobs.
200+ industries were to work out fair competition
codes, where employment hours were reduced to
accommodate more workers. Max hours
restricted, wages regulated. Workers could now
organize as they pleased. Child labor restricted.
Recovery through fair competition painful.
Patriotic meetings and parades. Brief business
prosperity reigned. Public Works Admin (PWA)
intended for industrial recovery and
unemployment relief, headed by SOI Harold Ickes.
It was about long-range recovery, and over time
$4 billion was spent on 34,000 projects like
buildings, highways, and parkways. Grand Coulee
Dam on Columbia River. It irrigated millions of
new acres of farmland but at the time the
government was trying to reduce farm surpluses.
Paying
Farmers Not
to Farm
Farmers suffered since end of war-boom in 1918 of
low prices and surpluses in grain. In IA bad counties
were under martial law. Agricultural Adjustment
Admin (AAA) to the rescue. Parity prices were
established for basic commodities. AAA started off
bad. Cotton was already planted for 1933, and pig
meat was used as fertilizer instead of for feeding
the hungry. Farm income was raised by artificial
scarcity, but the act was criticized. All were
unhappy still. Paying farmers not to farm increased
unemployment. Second Agricultural Adjustment
Act of 1938 said if growers observed acreage
restriction on specific commodities, they would be
paid. New AAA gave farmers a fairer price with a
less Socialistic taste.
During depression, mortgages foreclosed, corn
was burned for fuel, and farmers tried to prevent
shipment of crops to saturated markets. AAA
eliminated surpluses by paying growers to reduce
crop acreage. $millions needed for these
payments raised by taxing processors of farm
products, like flour millers, who gave the burden
to consumers. Supreme Court killed AAA 1936 by
declaring its regulatory taxation unconstitutional.
Soil Conservation and Domestic Allotment Act of
1936 made. Acreage withdrawal now achieved by
paying farmers to plant soil-conserving crops like
soybeans, or to let land lie fallow. More
substantial share of US income given to farmers.
Dust Bowls
and Black
Blizzards
Late 1933 drought struck trans-MS Great Plains,
along with wind, causing the Dust Bowl, topsoil
torn from farms from CO to MO. New Dealers
made efforts to help Dust Bowl, like Frazier-Lemke
Farm Bankruptcy Act, which made a suspension of
High grain prices made farmers cultivate marginal
land, and dry farming and mechanization left
powdery topsoil. 10,000s refugees fled to south
CA to San Joaquin Valley, which was similar to the
southern plains of OK and AK. The transition was
foreclosed mortgage possible for 5 years. This was
killed by Supreme Court a year later. A revised law
limited the period to 3 years and was upheld. FDR
made Resettlement Admin, removing farmers to
better land. 200+ million trees were planted on the
prairies as windbreaks by CCC. Not all Indians liked
Indian Reorganization Act, denouncing it as a way
to make museum pieces out of Indians. 77 tribes
refused to organize, but 200 others did.
cruel. The Grapes of Wrath about it. Indians were
reformed by New Deal. Commissioner of Indian
Affairs John Collier reversed forced assimilation of
Dawes Act 1887. He was inspired by a sojourn of
Pueblos in NM and promoted Indian
Reorganization Act 1934, encouraging tribes to
make self-government and preserve culture. It
stopped loss of Indian land and revived interest in
identity and culture.
Battling
Bankers and
Big Business
Reformist New Dealers wanted to curb money-
changers who had caused the Depression. Truth in
Securities Act (Federal Securities Act) forced
promoters to give investors sworn info regarding
soundness of stocks and bonds. Let the seller
beware.
1934 Congress protected public against fraud,
deception, and manipulation by authorizing
Securities and Exchange Commission (SEC) which
was a watchdog admin agency. Stock markets
were more like trading marts and less like casinos.
Spring 1932 Sam Insulls financial empire crashed.
Big business pyramids were killed by Public Utility
Holding Company Act of 1935.
The TVA
Harnesses
the
Tennessee
New $13 billion electric power industry caught
attention of New Deal. TN River gave New Dealers
opportunity. Its tributaries drained a badly eroded
area the size of England, containing the poorest
people in the nation. DC used hydroelectric plant at
Muscle Shoals, putting thousands to work and
reforming the power monopoly. TVA brought jobs
and cheap electricity, along with cheap housing,
nitrates, and flood control. Rivers were cleaner and
the region quickly started to dig itself out of debt.
Foreigners copied the TVA idea, and similar ideas
were made in Columbia, CO, and MO Rivers.
Federally built dams eventually spanned all these
waterways, trapping 30% runoff from Rockies.
New Dealers accused electric industry of charging
too high, especially because its success as a
business was owed to waterpower sites bought
from the public. Tennessee Valley Authority
(TVA) passed in 1933, inspired by George W.
Norris of NE. TVA helped discover how much
production and distribution of electricity cost, so
fairness of rates could be tested across nation.
Utility corporations lashed back, claiming
unfairness of TVA and absence of taxes. Critics
complained it was creeping socialism.
Hydroelectric power drove growth of urban West
and diverted waters nurtured agriculture in
deserts. Reactionaries kept TVA in TN.
Housing and
Social
Security
New Deal framed policies for housing construction.
FDR set up Federal Housing Admin (FHA) to speed
recovery and better homes. Building industry was
to be stimulated by small loans to householders for
improving houses and completing new ones. More
important was success of unemployment insurance
and old-age pensions through Social Security Act
1935. It was made to cushion future depressions
and made federal-state unemployment insurance.
To provide security for old age, retired workers
received regular payments from $10 to $85 a
month and were financed by a payroll tax on
employers and employees. Disabled were given
provisions. Millions of poor men and women were
excluded from Social Security benefits for decades
thereafter. US workers, unlike in Europe, had to be
employed and in certain jobs to get coverage.
1937 Congress authorized US Housing Agency
USHA, designed to lend money to states or
communities for cheap construction. Units for
650,000 poor people were started but new
building fell short of needs. Efforts to expand
project met opposition from real estate
promoters, builders, and landlords, on top of
Republicans. However, for the first time in a
century, slums shrank. Bitter GOP opposition to
Social Security. It was inspired by example of
advanced European countries. In agricultural
America, there were always farm chores for
everyone, but now, government needed to take
responsibility for citizens welfare. 1939 over 45
million eligible for Social Security benefits. Later,
further categories of workers were included, like
farmers.
A New Deal
for Labor
NRA good for labor. As employment went up, so
did labor security and assertiveness. Walkouts
occurred in summer 1934, including a paralyzing
one in San Fran, which was broken when citizens
National Labor Relations Act replaced NRA, more
commonly known as Wagner Act after its sponsor
Robert Wagner. It made a powerful new National
Labor Relations Board and reassured right of labor
became vigilantes. Wagner Act was magna carta of
US labor. Encouraged by National Labor Relations
Board, unskilled workers started organizing
effective unions. John L. Lewis led them. He made
Committee for Industrial Organization CIO in ranks
of skilled-craft AF of L. Skilled workers had been
lukewarm about unionizing the unskilled since K of
L, especially blacks. 1938 Fair Labor Standards Act
set wage and hours for interstate commerce
companies. Industrialists whined, especially
southern textile manufacturers.
to engage in self-organization and to bargain
collectively through self-chosen representatives.
Rebellious CIO moved to car industry. 1936 GM
sit-down strike. CIO won as GM recognized it as
the only union for employees. US Steel Company
voluntarily granted union rights to CIO employees.
Little steel companies fought back in 1937
Memorial Day Massacre. CIO broke with AF of L
1938. CIO Committee was remade to Congress,
under John L. Lewis. 1940 CIO had 4 million
members with .2mil blacks. Fights with AF of L.
Landon
Challenges
the Champ
KS gov Alfred M. Landon against FDR 1936. Landon
was a moderate who accepted some New Deal
legislation, but not the Social Security Act. FDR
denounced economic royalists who sought to hide
behind the flag and Constitution. Landon only got
Maine and Vermont. Blacks, urbanites, and the
poor were now signed-on Democratic voters.
Republicans accused FDRs New Deal of being
frivolous spending. American Liberty League
backed by Hoover was a group of wealthy
conservatives. Landon got only 16 to FDRs 27.
Congress was a hearty Democratic majority.
Blacks were now officially for the Democrats.
Democrats now had New Immigrants (Jews,
Catholics, south and east Europe).
Nine Old
Men on the
Bench
20
th
Amendment had made inauguration in January
instead of March. FDR thought if the people chose
who was in office, then liberals should be in a
Supreme Court in a liberal time. FDR said the oldies
were behind in their work, which was wrong, and
FDRs reputation took a hit.
In 9 New Deal cases in front of the ultra-
conservative Supreme Court, 7 had been ruled
against FDR. FDRs worst misjudgment: asking
Congress to permit him to add a new justice to
Supreme Court for every one over 70, bringing
new total to 15.
The Court
Changes
Course
Congress and nation convulsed over Court-packing
plan. FDR was vilified for trying to mess with
checks and balances. 5-4 decision upheld state
minimum wage for women, reversing its stand on a
similar case a year earlier thanks to Robertss
change of heart. Court reform bill applied to lower
courts. FDR lost his case but won it in a better way.
Deaths and resignations allowed him to make 9
appointments to the tribunal, more than any since
Washington.
FDR accused of being a dictator trying to
browbeat the judiciary. Basic liberties seemed to
be in jeopardy. Conservative Justice Owen J.
Roberts went for FDR. The Court was now more
sympathetic to the New Deal, upholding Wagner
Act and Social Security Act. Congress voted full
pay for justices over 70 who retired. After one
retired, he was replaced by a New Dealer. FDR lost
court battle and war as many New Deal reforms
after 37 were rejected in Congress.
Twilight of
the New Deal
FDRs first term made a great leap from
unemployment at the beginning at 30% to 15% at
the end. FDR finally followed advice of British
economist John Keynes. FDR in 1937 announced a
bold program to stimulate economy by planned
deficit spending. Keynesianism, use of govt
spending to pump-prime, was new orthodoxy for
decades. New Dealers accused of having richest
campaign chest. Hatch Act 1939 barred all but
highest political officials from campaigning and
soliciting. 1938 Republicans regained many seats,
but were still minority.
Recovery was dishearteningly modest, and in
1937, the Roosevelt Recession started.
Government policies had caused it. Social security
taxes bit into payrolls and the admin cut spending
to make a balanced budget. 1937 FDR urged a
growingly conservative Congress to authorize a
reorganization of national admin in interest of
efficiency. It was confused with his supreme court
mishap to be dictatorial and denied. 1939
Congress gave him Reorganization Act, giving him
limited power to reform admins, like the cabinet.
WWII took focus away from domestic issues.
New Deal or
Raw Deal?
New Deal criticized for waste, incompetence,
confusion, contradictions, and cross-purposes.
Budget was not balanced. $19 bil 1932 $40 bil
1939. US became handout state. Workers became
lazy. New Deal did not do enough.
FDR accused of being too experimental.
Bureaucracy blossomed. Federal government
grew larger and larger as states grew smaller and
smaller. Increasing Federalism was detested by
Republicans.
FDRs
Balance
Sheet
New Dealers defended themselves. They knew
there was waste, but reliefnot economywas
the ultimate goal. FDR saved free-enterprise by
saving businesss image. FDR saved capitalism from
itself. National debt caused by WWII, not New
Deal. FDR provided bold reform without revolution
like Jefferson, and avoided fascism and
communism in America.
New Deal relieved worst of crisis in 1933. It
promoted good philosophy and accepted need of
federal economy to manage economy. DC was to
be used, not feared. Collapse was averted, fair
distribution of wealth was achieved, and citizens
were able to retain self-respect. Left-wing said he
did not go far enough, right wing said he went too
far. He was very Hamiltonian.