Lesson 1: The First New Deal

Chapter 19: Roosevelt and the New Deal

The Election of 1932:The Republicans nominated Herbert Hoover to run for a

second term as President.The Democrats nominated New York Governor Franklin

Delano Roosevelt.Roosevelt will be the first to deliver an acceptance speech to a

nominating campaign.Roosevelt’s campaign plan had programs designed to end

the depression called the New Deal.FDR will win the election in a landslide victory.

FDR came from a wealthy New York family and was educated at Harvard and Columbia Law School. He was a distant cousin of President Teddy Roosevelt.

FDR married TR’s niece, Eleanor.

Roosevelt’s Rise to Power:

Began in 1910, FDR was elected to a seat in the New York State Senate.He supported progressive reform and

opposed party bosses.Appointed Secretary of the Navy under

Woodrow Wilson.1920 FDR caught polio which is a

paralyzing disease with no cure. He will rely on his wife to keep his name

prominent in politics.

Roosevelt’s Political Career:

FDR narrowly won the race for Governor of New York.Roosevelt would use

government power to help people deal with the economic challenges of the time.

His struggle with polio made people feel he could somehow understand their hardships.This popularity in New York

will lead him to become President.

FDR won the election of 1932 in November but his inauguration would not occur until March 1933.

During this time, unemployment continued to rise, bank runs increased, and people began converting their money into gold.

Roosevelt Is Inaugurated:

Some bank runs occurred out of the fear that Roosevelt would end the gold standard.This would reduce the value of the

dollar.People began taking gold and

currency out of the banks, resulting in over 4,000 banks collapsing by March 1933. Many governors declared bank holidays.

Closed the remaining banks before bank runs could put them out of business.

Between March 9 and June 16, 1933 is referred to as the Hundred Days.Congress passed 15 major acts to help the

economic crisis.These programs made up the First New Deal.

To generate the new ideas and New Deal programs, FDR put together a group of advisers in the fields of academia, business, agriculture, government, law, and social work.

The Hundred Days Begins:

FDR’s advisors were divided up into 3 groups:First group supported “New

Nationalism” of Teddy Roosevelt and believed government and business should work to manage the economy.

The second group disturbed big business and wanted government planners to run key parts of the economy.

The third group supported “New Freedom” of Wilson and felt it was the government’s responsibility to restore competition to the economy.

FDR knew that the first thing he needed to do in office was to restore confidence in the banking system.He called a national bank holiday and called Congress

into a special session.Congress passed the Emergency Banking Relief

ActRequired examiners to survey the nation’s banks and

issue Treasury Department licenses to financially sound banks.

The 1st Fireside ChatFDR spoke on the radio directly to the people; he assured

Americans that the banks were now secure.The following day deposits in every city outweighed withdrawals,

ending the banking crisis.

Fixing the Banks and the Stock Market:

New regulations for banks and the stock market were implemented with the Securities Act of 1933 and the Glass- Steagall Banking Act.Securities Act of 1933-

Companies that sold stocks and bonds had to provide complete and truthful information to investors.

The Securities and Exchange Commission (SEC)Created to regulate the stock market and prevent fraud.

The Glass- Steagall ActSeparated commercial banking from investment

banking.It no longer allowed depositors’ money to be risked by

speculation on the stock market.It also created the Federal Deposit Insurance

Corporation (FDIC)Provided government insurance for bank deposits up to a certain

amount.

Roosevelt asked Congress to pass the Agriculture Adjustment ActThe plan paid farmers not to raise certain

crops to lower crops production.While the plan reduced production,

increased prices, and helped some farmers, thousands of tenant farmers were unemployed and homeless.

Large commercial farmers who raised one crop profited more than small farmers who raised several products.

Managing Farms and Industry:

The National industrial Recovery Act (NIRA) suspended antitrust laws and allowed business, labor, and government to cooperate in setting up voluntary rules.Known as codes of fair competition, for each

industry.National Recovery Administration (NRA)

urged consumers to buy only from companies who signed agreements with the NRAActually caused industrial production to fall.It was declared unconstitutional by the

Supreme Court in 1935.

Several policies were introduced by Roosevelt to help Americans deal with their debt.

The Home Owner’s Loan Corporation (HOLC) bought the mortgages of homeowners behind on payments and restructured them with longer terms of repayment and lower interest rates.The HOLC only gave loans to those employed.It foreclosed on property if payment could not be

made.Results in 100,000 foreclosures.

The HOLC refinanced 1 out of every 5 mortgages in the United States.

Providing Debt Relief:

The Farm Credit Administration (FCA) was established to help farmers refinance their mortgages.The FCA loans helped many farmers

in the short term, the loans may have slowed overall economic recovery by giving money to poor inefficient farmers instead of businesses.

Roosevelt supported a series of government agencies to begin work programs for the unemployed.

The Civilian Conservative Corps (CCC) gave unemployed men ages 18 to 25 the opportunity to work with the national forestry service planting trees, fighting forest fires, and building reservoirs.By the time it closed in 1942, the CCC had employed 3

million men.• The Federal Emergency Relief Administration

(FERA) was created to channel money to help state and local agencies fund relief projects.

Spending and Relief Programs:

In 1933 Congress authorized the Public Works Administration to begin a series of construction projects, creating additional jobs.

Harry Hopkins, the head of the FERA, set up the Civil Works Administration (CWA), which hired workers directly and put them on the government’s payroll. It was shut down when FDR became fearful of the

amount of money spent on the program.The most important aspects of FDR’s New

Deal was the change in the spirit of the American people.People became more hopeful and optimistic, and

their faith in America was restored.

Chapter 19

Lesson 2:The Second New Deal

Support of FDR and his New Deal began to fade in 1935.The effectiveness of the New Deal was questioned

by right and left wing politicians.Roosevelt used deficit spending to pay for his

programs.FDR abandoned a balance budget and borrowed

money to pay for his programs.The American Liberty League

Created by business leaders and anti- New Deal politicians from both parties organized to oppose the New Deal.

Challenges to the New Deal:

Huey Long-Left wing Democratic Senator who proposed taking

property from the rich and dividing it up amongst the poor.It was believed that if he ran as a third party candidate, he

would take 10 % of Roosevelt’s vote, possibly enough for a Republican victory.

Father Charles Coughlin-A Catholic priest in Detroit.Sponsored Huey Long through his popular radio

broadcast.Dr. Francis Townsend-

A former public health official.He proposed that the federal government pay citizens

over the age of 60 a pension of $200 a month.This would increase spending and create additional jobs for

younger people.

In 1935 FDR’s second New Deal began with a series of programs and reforms to speed up recovery and provide economic security to every American.Roosevelt hoped the plan would increase his

chances of being re-elected in 1936.The Works Progress Administration (WPA) was

a federal agency headed by Harry Hopkins. It spent $11 billion over several years, creating jobs

for workers.Its most controversial aspect was offering work to

artists, musicians, theater people, and writers.

Launching the Second New Deal:

Schechter v. United States- The court case struck down the National Industrial

Recovery Act.The Court ruled that the Constitution did not allow

Congress to delegate its powers to the executive branch.It ruled the NIRA codes unconstitutional.

FDR feared that the Court would strike down the New Deal so he ordered Congress to remain in session until his new bills were passed.Called the “second hundred days” by the press.

New labor legislation was created because FDR believed in high union wages to allow more spending power to boast the economy.

July 1935, the National Labor Relations Act (Wagner Act) was passed.This guaranteed workers the right to organize unions

with employer interference.The law set up the National Labor Relations Board

(NLRB) which organized factory elections by secret ballot to determine if workers wanted to form a union.

Binding arbitration was also set up, in which a neutral party would listen to both sides and decide the issue.This gave dissatisfied union members a process to voice their

complaints.

The Rise of Industrial Unions:

The United Auto Workers (UAW)After two men were demoted at the General

Motors auto- body plant in Cleveland, Ohio, workers protested with a sit-down strike refusing to work.Workers at a plant in Flint, Michigan did the same.

Violence broke out and finally the company gave in.

The UAW was formed and quickly became one of the most powerful unions in the U.S.

The Social Security Act-Became law in 1935.Providing security for the elderly, unemployed

workers, and other needy people.The bill would provide a monthly retirement

benefit and unemployment insurance.Workers earned the right to receive the benefits by

paying premiums.Social Security helped many people, but

initially it left out many of the neediest members of society.Ex. Farmers and domestic workers.

The Social Security Act:

Chapter 19

Lesson 3: The New Deal Coalition

Millions of voters owed their jobs, homes, and bank accounts to the New Deal.

By the election of 1936, Democratic Party members shifted from mainly white Southerners to include farmers, laborers, African Americans, new immigrants, ethnic minorities, women, progressives, and intellectuals.

Frances Perkins-First woman appointed to a cabinet post.

Roosevelt’s Second Term:

FDR wins the 1936 election in one of the biggest landslides in American history.

The Supreme Court did not support FDR’s New Deal programs.January 1936, the Court declared the

Agricultural Adjustment Act unconstitutional.After the election, FDR attempted to change

the political balance of the Supreme Court with the court- packing plan.FDR sent Congress a bill to increase the number of

justices on the Supreme Court.It was a political mistake and split the Democratic Party

and Americans felt that it would give the president too much power.

In 1937 a rise in unemployment will hurt FDR’s popularity. When FDR cut spending just as the first Social

Security payroll taxes decrease paychecks, the economy plummeted and 2 million people were out of work.This recession led to a debate on how to handle the

situation.Treasury Secretary Henry Morgenthau wanted to

balance the budget and cut spending.The opponents favored “Keynesianism” ideas, which

states that government needed to spend heavily during a recession to jump- start the economy.

In 1938 FDR asked Congress for $3.75 billion for the PWA, WPA, and other programs.

FDR’s successes were limited in his second term in office.

In 1937 National Housing Act Created the US Housing Authority to subsidize

loans for builders willing to buy blocks of slums and build low- cost housing.

The Farm Security Administration-Gave loans to tenant farmers to purchase farms.Congress kept appropriations low, believing that

the plan made agricultural problems worse.

The Last New Deal Reforms:

The Fair Labor Standards Act of 1938Gave protection to workers, abolished

child labor, and created a 40- hour workweek for workers.

New Deal legislation began to get blocked as Congress began to turn against the New Deal. The New Deal era ended in 1939.

The New Deal had limited success, but it gave Americans a stronger sense of security and stability.

The New Deal operated to balance competing economic interests. The New Deal’s mediating role established the broker state which helped work out conflicts among different interests.

The New Deal brought a new public attitude regarding the government.The program gave Americans a safety net that

provided safeguards and relief programs to protect them from economic disaster.

The Legacy of the New Deal: