Chapter 34 - The Great Depression and the New Deal

 

Major Themes

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• The New Deal was a massive federal program generated by the Roosevelt administration designed to bring about relief, recovery and reform and ultimately ushered in a new age of federal supremacy.
• The New Deal, while popular, had numerous liberal and conservative critics.

Major Questions

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• How did the New Deal represent efforts at relief, recovery and reform?
• What were the legacies of the New Deal?
• How did the New Deal represent both liberal and conservative characteristics?

Pre-Reading

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• What were the causes of the Great Depression?
  • The stock market crash
  • The poor lifestyle of the "roaring twenties" Americans
  • Buying stocks on the margin
  • Too little money in the banks
  • Credit cards
  • Drought and farm issues
  • Panic among stockbrokers, bank-users, and American public in general

Outline

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FDR: Politician in a Wheelchair

• FDR's paralysis humbled him, and taught him:
  • patience
  • tolerance
  • compassion
  • strenth of will
• Eleanor Roosevelt was one of FDR's greatest political assets
  • was FDR's legs, she traveled countless miles w/ or on his behalf
  • most active First Lady
    • lobbied
    • gave speeches
    • had a newspaper column
  • battled for the impovershed and oppressed
  • against segregation
• Had massive political appeal
  • commanding presence and great speaking voice despite accent
  • for big gov't spending to relieve those out of work
  • preferred to spend little but believed that money, and not humanity, was expendable
  • thought of as a traitor to his class (coming from a rich family)
• Quickly nominated by democratic convention in Chicago
  • promised a balanced national budget and new, sweeping social and economic reforms
  • accepted nomination in person
  • "I pledge you, I pledge myself to a new deal for the American people."

Presidential Hopefuls of 1932

• Roosevelt took the offensive and was eager to show that he was ready and wanted to show himself off to as many people as possible
  • preached the New Deal for the "forgotten man" repeatedly
    • somewhat vague and contradictory
    • written by a small group of reform-minded intelectuals who later wrote much of the New Deal legislation
  • promised a balanced budget andd scolded deficits created by Hoover
  • very optimistic
    • "Happy Days Are Here Again" was the theme song and it fit FDR's smile
• Hoover's campaign was much different
  • very grim, supporters poorly assured voters that "The Worst Is Past," "It Might Have Been Worse," and "Properity Is Just Around The Corner"
  • when speaking, Hoover only reaffirmed his faith in American free enterprise and individual initiative, and gloomily predicted that if the Hawley-Smoot Tariff was repealed that grass would grow "in the streets of a hundred cities"

Hoover's Humiliation in 1932

• Hoover brought in during great prosperity and was kicked out during the great depression
  • 22,809,638 for FDR and 15,758,901 for Hoover
  • in e.college it was 472 to 59
    • only carried 6 republican states
• Black people switched from being Rep.s to being Dem.s b/c they were the worst sufferers of the depression
• All Dem.s had to do was harness the grudge against the Rep.s
  • most people wanted a new deal not the New Deal
  • almost any Democratic candidate could have won
• Still 4 months left of Hoover after election
  • coldn't try to make any long term goals w/out FDR
    • FDR was uncooperative
    • only arranged 2 meetings w/ FDR to discuss the war-debt problem
    • FDR didn't want to assume responibility w/out authority
  • Hoover confessed to trying to bind FDR to an anti-inflation policy which would prevent many New Deal experiments
  • depression worsened
    • 1/4 of workers were unemployed
    • banks closed all over the nation
    • Hooverites accused FDR of letting the depression worsen, so he could come out as the hero

FDR and the the Three R's: Relief Recovery and Reform

• Inauguration of March 4, 1933, Franky (we already used Roosy) made his famous quote:
  • "Let me assert my firm belief that the only thing we have to fear is fear itself.'
• Step 1: Banking holiday
  • From March 6-10
  • Franky called the Hundred Days Congress which made a ton of legislation to dael with the issue at hand
• The New Deal was based on 3 R's:
  • Relief
  • Recovery
  • Reform
• Came in 2 Varieties
  • Short Range goals (esp. first 2 yrs.)
    • Relief
    • Immediate recovery
  • Long Range goals
    • Permanent recovery
    • Reform
  • Usually overlapped and contradicted
• Because most of the Congress was new, they shared the panic of the country and passed whatever Franky wanted
• He often did things "off the cuff"
  • Felt that any movement was better than none
• Many movements came from the Progressive era
  • Unemployment insurance
  • Old-age insurance
  • Minimum-wage regulations
  • Conservation
  • Child labor restrictions
• Lots of European nations had already made many of these reforms
  • USA seemed backwards for not having them

Roosevelt Tackles Money and Banking

• The Emergency Banking Relief Act of 1933 invested the president with power to regulate banking transactions and foreign exchange and to reopen solvent banks.
• Roosevelt next turned to the radio to deliver the first of his thirty famous "fireside chats"
  • He gave assurances that it was now safer to keep money in a reopened bank than "under the matress'. Confidence returned and banks began to unlock their doors.
• Congress enacted the Glass-Steagall Banking Reform Act.
  • This provided for the Federal Deposit Insurance Corporation which insured indevidual deposits up to $5,000.
  • The epidemic of bank failures ended
• Roosevelt then sought to protect the melting gold reserve and to prevent panicky hoarding.
• He ordered all private holdings of gold to be surrendered to the Treasury in exchange for paper currency and then took the nation off the gold standard.
• Congress responded to his recomendation by canceling the gold-payment clause in all contracts and authorizing repayment in paper money.
• The goal of Roosevelts "managed currency" was inflation, which he thought would relieve debtors' burdens and stimulate new production.
• His principle instrument for achieving inflation was gold buying.
• He instructed the Treasury to purchase gold at increasing prices.
• This policy did increase the amount of dollars in circulation as holders of gold cashed it in at the elevated prices.
• In Feb. 1934 FDR returned the nation to a limited gold standard for purposes of international trade only.

Creating Jobs for the Jobless

• high unemployment rates called for immidiate action
  • 1 out of every 4 workers were jobless when FDR stepped in
  • FDR easily used federal $ to assist the unemployed & "prime the pump" before the flow
• Civilian Conservation Corps (CCC)
  • most popular "alphabetical agency"
  • provided employment in the fresh air on gov't camps for 3 million uniformed young men who might have resorted to/ developed crimial habits
  • reforestation, fire fighting, flood control, swamp drainage
  • had to send home most of their pay to parents
  • human resources & natural resources were conserved
• Federal Evergency Relief Act
  • helped unemployed adults
  • was more for immidiate relief then long-term recovery
  • Federal Emergency Relief Administration est. to advise
• Agricultural Adjustment Act (AAA)
  • many millions of $s were given to farmers to meet their mortgages
• Home Owners' Loan Corporation (HOLC)
  • refinance mortgages on nonfarm homes
  • assisted about 1 million need households
• Civil Works Administration (CWA) 1933
  • branch of FERA
  • provided temporary jobs during the winter emergency
  • "boondoggling" (not lanyard-making like during summer rec) < easy tasks that gave ppl atleast some form of income

A Day for Every Demagogue

• unemployment still soared; temporary fixes weren't enough
• danger signal appeared: rise of demagogues
• Father Charles Coughlin
  • started broadcasting in 1930; slogan: "Socail Justice"
  • preached anti-New Deal to some 40 million listeners
  • fans became so anti-Semetic, fascistic, & demagogic that he was silenced by his ecclesiastic superiors
• Senator Huey P. ("Kingfish") Long of Louisiana
  • publicized his "Share Our Wealth" program, promising to make "Every Man a King"
  • every fam would recieve $5000
  • fear of Long becoming a fascist dictator ended when he was assassinated in Louisiana in 1935
    • (presidential conspiracy anyone?? like the murder of Marylin Monroe...lol)
• Dr. Francis E. Townsend of California
  • retired physician whose saving had been wiped out
  • said everyone 60 and older should recieve $200 a month
• partly to quiet these quacks, Congress issued the:
• Works Progress Administration (WPA) 1935
  • objective: employment on useful projects
  • spent about $11 billion on 1000s of public buildings, bridges, and hard-surfaced roads
  • wan't all about infrastructure
    • 1 controlled crickets in Wyoming
    • another built a monkey pen in Oklahoma City
  • over a period of 8yrs, 9 million ppl were given jobs
  • also found part-time jobs for needy high school & college students as well as actors, musicians, and writers
    • John Steinbeck was a recipient
    • millions of pieces of art were created

A Helping Hand for Industry and Labor

• The NRA was a major step to help the comeback
  • National Recovery Administration (not Rifle!)
  • Was most complex
  • Had a 3-barrel approach:
    • Industry
    • Labor
    • The Unemployed
• Individual industries were ordered to make "codes"
  • Set labor hour maximum
  • Minimum wage levels
• Labor got benefits
  • Workers could bargain through a representative THEY chose
  • Antiunion contracts were illegalized
  • Child labor was restricted
• The "fair competition" codes would be tough on industry
  • Needed sacrifice from labor and management
  • Had mass meetings in the streets to rouse people to the cause
  • Made a Blue Eagle as the symbol
• The self-sacrifice became an issue, and the Eagle lost followers
  • Some people displayed the stickers that showed they were members but they violated the codes in secret
  • In Sup.Court case Schecter ("sick chicken"):
    • Congress can't "delegate legislative powers" to the Prez
    • Congress can't apply interstate commerce control to local (fowl) business
    • Franky wasn't happy, but this actually benefitted him
• Public Works Administration was also meant for recovery and unemployment fixing
  • Lead by Harold L. Ickes
  • $4 billion was spent for about 34,000 projects
    • Public buildings
    • Highways
    • Parkways
    • Grand Coulee Dam (on Columbia R.)
  • This dam seemed foolish
    • Millions of acres can be irrigated
      • Government trying to reduce surplus
    • More electrical power
      • Area had little industry
      • No market for more power
  • Dam would become important during WWII
• Gov't tried to raise $ for itself (to help more people) by stimulating liquor industry
  • 3.2% alcoholic drinks were legalized
  • Tax of $5 on every barrel
  • Drys were unhappy and called Franky names
  • 1933 saw the repeal of the 18th Amendment through the 21st one

Paying Farmers Not to Farm

• since 1918 farmers had suffered from overproduction
• During the depression conditions worsened and many morgages were foreclosed
• the emergency Congress made the AAA which stopped the farmers from producing as much to increase prices
• the AAA paid the farmers not to produce crops
• Some of the crops had already been planted when the AAA was made and was wasted
• In 1936 the AAA was taken down by the supreme court
• The Soil Conservation and Domestic Allotment act was passed instead of the AAA
• This act paid farmers to plant soil conserving plants like soybeans

Dust Bowls and Black Blizzards

• many factors contrubuted to the dust bowl
  • severe drought through the 1930's
  • extreme winds
  • overfarming
  • poor irrigation methods
• many midwest farmers moved west to work as migrant workers
• the New Deal worked to help these farmers
  • Fraizier-Lemke Farm Bankruptcy Act suspended mortgage forclosures for 5 years (voided by supreme court)
  • Resettlement Administration helped farmers find better land
  • CCC planed trees to hold soil and prevent wind
• Native Americans were also granted the right to form thier own tribal governments

Battling Bankers and Big Business

• The Hundred Days Congress passed the "Truth in Securities Act" (Federal Securities Act)
  • Required promoters to transmit investors info regarding stocks and bonds
• Further measures were taken in protection
  • The Securities and Exchange Commission was authorized
    • Was an administrative agency that made stocks operate more like a trading mart and less like a casino
• The Public Utilities Holding Company Act of 1935 prevented bloated growth, except when it was good for the economy

The TVA Harnesses the Tennessee River

• The Electric Power Industry had grown from nothing to an investment of $13 Billion in a few decades
  • Accused by the New Dealers of excessive rates
• The Tennessee River would allow the federal government to break up the electric monopoly through the development of hydroelectric power
  • Would bring many jobs (short term)
  • Would reform the power industry (long term)
• An act creating the Tennessee Valley Authority was passed in 1933
  • Mainly due to Senator George W. Norris (Nebraska)
• The TVA was determined to discover the actual cost f electricity
  • Set up to test the fairness of the rates
• Electric companies argued that the discovered rates were so low because of dishonest bookkeeping and an absence of taxes
• The TVA brought full employment, cheap power, low cost housing, abundant cheap nitrates, restoration of eroded soil, reforestation, improved navigation, and flood control

Housing Reform and Social Security

• Roosevelt set up the Federal Housing Administration as early as 1934 to speed recovery and for better houses
• In 1937 Congress authorized the United States Housing Administration
  • Designed to lend money to states of communities for low cost construction
• The Social Security Act of 1935
  • Provided for federal-state unemployment insurance
  • Security was provided for retired old timers
    • Specific groups recieved regular payment from Washington
    • This was to be paid for by a payroll tax
  • The American system was inspired by the European sections

A New Deal for Unskilled Labor

• The NRA blue eagles were a godsend to organized labor, as New Deal brought decrease in unemployment

Landon Challenges "the Champ" in 1936

• Democrats:
  • Obviously nominated Franky for Round II
• Republicans:
  • Didn't know how to win
  • Decided on Senator of Kansas
    • Alfred M. Landon
  • Was moderate, but had accepted some New Deals
    • Not the Social Securities idea though
  • Hoover backed Landon and the whole group insulted Franky and his ideas for reform
• Democrats:
  • Got 16,674,665 popular, 8 electoral
• Republicans:
  • Got 27,752,869 popular, 523 electoral
• Many people switched from R's to D's after this battle
  • Needy groups turned to Franky
  • Blacks esp. changed to Democrats
    • Lincoln was finally dead
• Franky appealed to the "forgotten man"
  • Reliefers obviously voted D because they were getting gov't aid
  • The South, Blacks, Urbanites, and the poor all started working together
    • New Immigrants (Catholics and Jews) were also treated more fairly under Franky

 

Nine Old Men on the Supreme Court

• In 1937 Roosevelt was reelected
• He saw victory as a reason to continue the new deal
• He thought that the primarily conservative judges on the supreme court were impeading progress
• Early in 1937 he proposed legislation that would add another judge for every judge over 70
• This was a bad idea
• Supreme Court was seen as a sacred part of America

The Court Changes Course

• Roosevelts idea of packing the court was protested against greatly
• He was accused of being a dictator
• The court in response to this idea became more liberal and changed their ruling on womens minimum wage and began to be more friendly to the new deal
• Later during his presidency he did appoint several judges and his proposed legislation did make the court more friendly to the new deal but it made the people less friendly to him
• Few reforms were passed after 1937

The Twilight of the New Deal

• Roosevelts 1st term from 1933 to 1937 did not banish the depression.
• Unemployment persisted in 1936 at about 15%, down from the 25% of 1933.
• The country seemed to be inching its way back to economic health.
• In 1937 the economy took another sharp downturn.
  • Gov't policies had caused it, as new Social Security taxes began to bite into payrolls and as the administration cut back on spending out of continuing reverence for the orthodox economic doctrine of the balanced budget.
• In April 1937 Roosevelt announced a program to stimulate the economy by planned deficit spending. This abrubt policy reversal marked a major turning point in the gov'ts relation to the economy.
• Roosevelt had been meanwhile pushing the remaining reform measures of the New Deal.
• Early in 1937 he urged Congress to authorize a sweeping reorganization of the national administration in the interestsof streamlined efficiency.
• In 1939 in the Reorganization Act, Congress gave Roosevelt limited powers for administrative reforms including the key new Executive Office in the White House.
• The New Dealers were accused of having the richest campiagn chest in history
• Congress adopted the Hatch Act of 1939 which barred federal administrative officials, except the highest policy-making officers from active political campaigning and soliciting. It also forbade thee use of gov't funds for political purposes as well as the collection of campaign contributions from people receiving relief payments.
• The Hatch Act was broadened in 1940 to place limits on campaign contributions and expenditures but clever ways of getting around it were found that on the whole the legislation proved dissappointing.
• By 1938 the New Deal had lost most of its early momentum.

New Deal or Raw Deal

• Foes of the New Deal called Roosevelt incompetent
  • They felt that he had don e nothing and an earthquake could have done better
  • Some felt that he was good because he was doing something at least
• The federal government was gaining power and causing the states to fall into the background
• The national debt was growing greatly
  • In 1932 it was $19,487,000,000
  • In 1939 it was $40,440,000,000
  • US stood for "unlimited spending"
• Conservatives felt that laborers and farmers were getting too much help
• Roosevelt was also accused of trying to purge Congress of all of his opposers in order to get his way
• The New Deal failed to cure the depression
  • Just a band aid
  • There was still a large gap between production and consumption
  • More surplusses than under Hoover
  • Millions still lacked jobs
• WWII solved the problem, not the New Deal

FDR's Balance Sheet

• democrats needed to defend their enormous spending
• they admitted to some waste but defended this by saying that they needed to act quickly
• they argued that the new deal helped to relieve the crisis and paid for it self in human capital
• they cliamed it was the governments responsibility to protect its citizens