The New Deal 1932-41

Ch 16

“The only thing we have to fear…”• “…is fear itself.” – FDR’s First Inaugural

Address.• Promised “bold experimentation”.– Did not know what to do, so would try anything to

ease Depression.• USA was very ready for a change from

Hoover’s policies.– Happily went along with most of FDR’s plans.

The First Hundred Days– Refers to first 100 days of new president’s term.

• First step-restore confidence in banks.– Declared 4-day “bank holiday”.– Passed Emergency Banking Act-Gov’t would

inspect financial health of all banks.– Passed Glass-Steagall Banking Act-Established

Federal Deposit Insurance Corporation (FDIC)-insured bank deposits.

• These acts caused people to begin to trust banks and deposit again.– Meant bank loans available again.

• Second step-fix stock market.– Federal Securities Act-required companies to

provide financial info if they sold stocks.– Creation of Securities and Exchange Commission

(SEC)-regulated stock market, set up rules for trading stock.

• Third step-stimulate economy.– Took USA off gold standard-devalues currency in

hopes of raising prices, stimulating exports.– Passed National Industrial Recovery Act-created

National Recovery Administration (NRA).• Controlled production, prices, set wages, regulated

unions.• Helped at first, but higher wages drove prices up, hurt

economy.

• Fourth step-provide relief & create jobs.– Created Federal Emergency Relief Administration

(FERA)-provided funds to local relief agencies.– Civil Works Administration (CWA)-built &

improved roads, parks, airports, etc; employed 4 million unemployed workers.

– Civilian Conservation Corps (CCC)-Built, maintained beaches, parks, forests; employed 2.5 million young men.• Paid $30/month, got room, food, job training.

– Public Works Administration (PWA)-Built dams & bridges across USA.

– Tennessee Valley Authority (TVA)-built hydroelectric dams in Tennessee River valley.

Civil Works Administration

Civilian Conservation Corps

Public Works Administration

Tennessee Valley Authority

• Fifth step-help homeowners & farmers.– Home Owners’ Loan Corporation-Restructured

loans for lower payments.– Federal Housing Administration (FHA)-Improved

housing standards, insured mortgages to stabilize mortgage market.

– Agricultural Adjustment Administration (AAA)- Paid farmers to plow under crops to make prices rise.

• Most of these programs were passed in the first hundred days.– Big start for the New Deal.

• Even with all of the new programs, New Deal had very little success; economy was still in poor shape, unemployment high.

• Supreme Court declared AAA and other programs unconstitutional.

• 1935-FDR began Second New Deal, aka Second Hundred Days.– More social welfare, more control over business,

higher taxes on rich.

Second New Deal• Works Progress Administration (WPA)-provided

8 million jobs.– Built/improved playgrounds, schools, hospitals,

supported work of artists/writers.• Resettlement Administration & Farm Security

Administration.– Loaned $$ to small farmers, set up camps for migrant

workers.• Rural Electrification Administration.– Loaned $$ to electric companies to extend power grid

to rural areas.• Increased demand for electric appliances stimulated

economy.

• Passed Wagner Act-legalized collective bargaining for unions, legalized closed shops.– Only union members could work in closed shops.

• Passed Fair Labor Standards Act.– Outlawed child labor, established minimum wage.

• Passed Social Security Act.– Provided monthly payments to those who could not

support themselves.– Old-age pensions, survivor’s benefits-You paid in with

each paycheck, got money back at age 65.– Unemployment insurance-Business owners financed

it with a tax, if you lost your job, you got a check.– Aid for dependent children, blind, disabled-gave $$

to states to help these people.

Criticisms of New Deal• Less helpful to women.– Allowed lower wages, men had first preference for

jobs.– Offered no help to domestic services (maids, etc).

• People of color helped less.– Only offered non-skilled labor, less pay than

whites, still suffered discrimination.

• Political Criticisms:– Republicans-New Deal made gov’t too big,

intrusive, & controlling.– Wealthy-Taxes too high, shouldn’t have to pay into

Social Security.– Some felt Social Security numbers, limiting

freedoms led to Communism.– Progressives/Socialists-New Deal did not do

enough.• Wanted gov’t takeover of factories/businesses.• Wanted pure socialism in USA.

• From today, New Deal is receiving more & more criticism.

• Many oppose deficit spending-spending more money than gov’t takes in.– Led to debts that still aren’t paid off.

• Opposed gov’t intrusion into free market.– By adjusting supply, created false demands,

messed up prices.• Gov’t spending uses tax money, which citizens

could have spent to improve economy.• Gov’t grew too large, took power from state

gov’ts and citizens.

Court-Packing Plan• During early New Deal, Supreme Court struck

down many of FDR’s programs.• FDR introduced court-reform bill allowing him

to appoint up to six new justices.– Wanted judges who liked New Deal programs.

• FDR slammed from all sides for court-packing plan.– Quickly backed off, but many legislators & citizens

who had supported FDR now began to oppose him.• Court-packing plan destroyed much of FDR’s

credibility with USA, was watched much closer.

Last years of the New Deal• August 1937-production & employment levels

dropped.– US entered recession-period of slow business

activity.• Recession hurt, as FDR had cut back gov’t

spending due to growing national debt.– Total amount of $$ gov’t borrows & has to pay

back.– Happens when spending exceeds revenue

(income).• Recession forced FDR to increase spending.– Spending lasted until early 1942.

Cultural effects of New Deal• WPA, other programs funded arts during

Depression.– Had a lasting effect on US culture.

• Literature:– Let Us Now Praise Famous Men-2 men live with

Alabama sharecroppers, pictures & stories of sharecroppers’ lives.

– Grapes of Wrath-Oklahoma family in Dust Bowl, migrate to California.

• Radio/Movies.– Main sources of entertainment.– Radio-George Burns, Gracie Allen, Jack Benny, first

soap operas.– Movies-1931-1st double feature-25 cents; 1933-first

drive-in.– New Deal Documentaries shown.– Movies showed good beating evil-Mr. Smith Goes to

Washington.– Comedies-Marx Brothers-Monkey Business, Duck

Soup.– Most popular were movies that allowed viewers to

escape Depression-The Wizard of Oz, Snow White and the Seven Dwarfs.

• The Arts.– Federal Writers’ Project-took oral histories, wrote

state guidebooks, etc.– Federal Music Project-recorded folk music,

created community symphonies, gave free lessons.

– Federal Art Project-Painted murals, created sculptures, public art, about 119,000 pieces total.

– Federal Theatre Project-Used plays to create awareness of social problems.• Accused of Communist propaganda, defunded in 1939.

New Deal Achievements• Public Works-Dams, bridges, roads, tunnels.• Federal Agencies-FDIC, TVA, SEC still active.• Social Security-Still in effect for disabled,

handicapped, retirees.• Hope-New Deal programs gave many a feeling

that times would get better.