The New Deal (1933-1941)

I. Forging a New Deal• The nation waited eagerly for FDR (Franklin Delano

Roosevelt) to be inaugurated as President– The inauguration did not occur until March 4th until the

20th amendment was passed “the Lame Duck Amendment”

– Now, the inauguration date is January 20th

• FDR would bring about the biggest change in the Federal Government since its inception

A. Restoring the Nation’s Hope• The first goal of FDR and Eleanor Roosevelt was to

restore Americans’ sense of hope– Building public confidence in the future was essential to

calming panics and gaining support

• 3 great examples of restoring hope:– Eleanor visits the veterans of the 2nd Bonus March on

Washington in the campsites FDR ordered be set up– FDR’s 1st inaugural address: “The only thing we have

to fear is fear itself.”– FDR would speak to large audiences over the radio in his

“Fireside chats” to answer questions and renew hope

B. The First Hundred Days

• From FDR’s inauguration in March through June 1933, the first hundred days

• FDR pushed program after program through Congress to provide relief, create jobs, and stimulate economic recovery– Not taking a Laissez-faire approach

1. Stabilizing Financial Institutions• FDR’s 1st step- restore public confidence in the

nation’s banks

• Ordered all banks to close for 4 days while Congress passed the Emergency Banking Act which inspected the health of all banks (March 5th)– 2/3 of banks were reopened by March 15th

• People regained confidence in the banks – Began depositing more $ than taking out– Federal Deposit Insurance Corporation was created in

1933 which insures our bank deposits

More ways to stabilize the economy (fun economics)

• Securities and Exchange Commission (SEC) was created to regulate the stock market

• Federal Reserve Board could regulate the purchase of stock on margin

• Took the U.S. off the gold standard to devalue American currency to make debt easier to pay back

2. Providing Relief and Creating Jobs• FDR’s next step- help overburdened local relief

agencies– Established a Federal Emergency Relief Agency (FERA)

which sent funds to local agencies as well as put federal $ into public works programs (government-funded projects to build public facilities)

• CWA- Build roads, parks, airports (4 million)

• CCC- (2.5 million) young, unmarried men to work maintaining forests, beaches, and parks… Earned only $30/mnth but lived free of charge

3. Regulating the Economy• The NRA (National Recovery Administration) was

created to balance the unstable economy– Controlled working conditions – Set a minimum wage– Gave organized labor collective bargaining rights

• Was not a huge success but its Public Works Administration (PWA) projects are still very visible to this day– NYC’s Triborough Bridge, Key West’s Causeway

4. Assisting Homeowners and Farmers

• Agricultural Adjustment Administration (AAA) tried to raise farm prices through subsidies (government financial assistance)– Paid farmers NOT to raise certain crops and livestock

• Home Owners’ Loan Corporation (HOLC)- provided low-interest-rate loans to 1 million families

5. The TVA

• Tennessee Valley Authority (TVA) helped farmers and created jobs in one of the country’s least developed regions

• Reactivated a hydroelectric power facility – Provided cheap electricity, flood control, and

recreational opportunities to Tennessee River Valley and surrounding areas

C. Key Players in the New Deal• Appointed the first woman ever to a Cabinet

position (Frances Perkins- Sec of Labor)

• Hired African Americans in more than 100 policymaking posts

• Eleanor Roosevelt- FDR’s wife and most important colleague… traveled widely for her disabled husband and was an important advisor

D. The New Deal Falters• The energy and effort shown by “New Dealers”

pleased many, but when the programs failed to bring about significant economic improvement, criticism began to mount

• Many worried about the increased power of the Federal government (fear of tyranny)

• The Supreme Court ruled the NIRA and the tax that funded the AAA unconstitutional making 2 of the most important programs crumble

E. A Second New Deal• In 1935, President Roosevelt launched a new, even

bolder burst of activity than his first hundred days

• the Second New Deal included more social welfare benefits, stricter controls over business, stronger support for unions, and higher taxes on the rich

• Responded to people who were saying he wasn’t doing enough for ordinary Americans

1. New and Expanded Agencies

• WPA- Works Progress Administration, set up in 1935, lasted 8 years and provided work for 8 million citizens (playgrounds, schools, hospitals, supported artists and writers)

• FSA- Farm Security Administration, set up in 1935, loaned more than $1 billion to farmers to set up camps for migrant workers

2. Rural Electrification

• REA- Rural Electrification Administration, 1935, offered loans to electric companies and farm cooperatives for building power plants and extending power lines as well as to individuals to pay for services – Increased electricity over time from 10% of

farms with electricity to 98% of farms with it

3. New Labor Legislation• The National Labor Relations Act (NLRA) called

the Wagner Act (named after its leading advocate)– Legalized union practices such as collective bargaining

and closed shops (workplaces only open to union members)

– Also, outlawed spying on union activities– Set up the NLRB (board) to enforce provisions

• Challenged as unconstitutional, but the Wagner Act was upheld on the provision that the government can regulate labor disputes linked to interstate commerce

4. Social Security• 1935, Congress also passed the Social Security Act

• Established a Social Security system to provide financial security, in the form of regular payments, to people who could not support themselves

– Old-age pensions and survivor benefits– Unemployment insurance– Aid for dependent children, the blind, and the disabled

F. The 1936 Election• FDR beat the Republican challenger Alfred M.

Landon by an electoral college vote of 523-8!

• The only states Landon won were Maine and Vermont

• Most Americans supported the New Deal

II. The New Deal’s Critics

• There was plenty of support for Franklin Roosevelt’s New Deal, but it also inspired its share of critics

A. The Limitations of the New Deal

• For all its successes, the New Deal fell short of some people’s expectations

• New Deal agencies were generally less helpful to women and minority groups when compared to white men

1. Women• Men and boys received strong preference in relief

and job programs (ex. CCC)

• No New Deal program protected domestic service, the largest female occupation

• Some programs permitted lower standards for women (ex. NRA allowed women to be paid under the established minimum wage)

2. African Americans• Federal relief programs in the South, including

public works projects, reinforced racial segregation

• African Americans were not offered professional jobs or skilled labor positions

• The New Deal did nothing to end discrimination in the North

• Still, African Americans voted for FDR in the 1936 election and many were thankful for job opportunity

B. Political Critics

• People ran widely differing political views

• They criticized the New Deal for both what it did and what it did not do

1. New Deal Does Too Much

• Believed the New Deal went too far– Wealthy people since he raised their taxes– People against Social Security believed it penalized

success… the more you make, the more you have taken away and given to the poor

• The American Liberty League spearheaded much of the opposition to the New Deal

2. New Deal Does Not Do Enough• Felt the programs did not provide enough help

– Progressives– Socialists– Some wanted to completely change the economic

system to prevent a “permanent crisis”

• The New Deal had only limited success at ending poverty

C. Other Critics

• Demagogues- leaders who manipulate people with half-truths, deceptive promises, and scare tactics

• Two specific Demagogues were the leading critics of the New Deal

1. Father Coughlin

• A dynamic speaker who used the radio to broadcast his message– Known as the Radio Priest in Detroit

• At first, he supported the New Deal, but later denounced them and called FDR a “double-crossing liar”

• Lost popularity when he issued openly anti-Jewish statements and began showering praise on Hitler and Mussolini

2. Huey Long• Known as the “Kingfish”- assassinated in 1935

• Powerful Louisiana politician who began to gain national support and wanted to run for President

• Was an excellent speaker who worked to help the underprivileged by improving education, medical care, and public services

• His program was “Share the Wealth” and wanted to limit the amount of $ people could make and then redistribute the rest of the $ to everyone else. – $1 million max, $5,000 minimum per family– Not mathematically possible

D. Modern-Day Critics• Many Americans place FDR as one of the greatest

presidents of all time, yet some historians and economist believe that the New Deal actually hindered economic progress and threatened America’s belief in free enterprise

• Upset about the creation of a large bureaucracy

• Didn’t allow supply and demand to set the market

• Deficit spending- the government borrowed $ from itself which greatly increased the national deficit

E. The Court-Packing Fiasco• In order to ensure that his legislation would be

upheld by the Supreme Court, FDR asked for an amendment that would allow him to appoint 6 more Justices raising the total to 15– He would be able to “pack” the court with Justices

who support the New Deal– It didn’t get passed and was embarrassing to FDR

• People were outraged (both parties) and this was the most negative response FDR ever received– They thought he was trying to take away the balance

of powers in the U.S. (more like a dictator)

III. Last Days of the New Deal

• Many of the New Deal programs would last into the 1940’s, some are even still around today

A. The Recession of 1937• The New Deal was not a miracle cure for the Great

Depression– There was temporary economic improvements

• However, in 1937, there was another economic downturn, a recession– Social Security tax was partly to blame as it came out of

workers’ paychecks, through payroll deductions… leading to fewer purchases

– There was also rising national debt and works project programs had to be cut back (like the WPA)

B. Unions Triumph

• The New Deal changed the way many Americans thought about labor unions

• Labor union members increased from 3 million to 10.5 million by 1941– 36% of workers were unionized by 1945

C. The New Deal’s Effects on Culture

• Artists were aided by federal funds allocated by Congress to support the popular and fine arts to provide jobs

1. Literature

• The Grapes of Wrath (1939) by John Steinbeck– A powerful tale about Dust Bowl victims who travel to

California in search of a better life

2. Radio and Movies

• Radio was a popular source of entertainment for Americans

• The movies recovered from an initial setback by 1933– The Wizard of Oz– Snow White and the Seven Dwarfs– Mickey Mouse

3. The WPA and the Arts

• FDR believed that the arts were not luxuries that people should have to give up in hard times– Gave WPA funds to support unemployed artists,

musicians, historians, theater people, and writers– Collected 2,000 stories from former slaves– Built 17,000 sculptures and had over 100,000 paintings

D. Lasting New Deal Achievements

• It did not end the nation’s suffering but it led to some profound changes in American life

• Just look at the recent bailouts and the recent election debates as proof of lasting change

1. Public Works and Federal Agencies

• Bridges, dams, tunnels, buildings, hospitals still exist to this day

• Some of the Federal agencies created still exist today as well (FDIC, SEC, TVA)

2. Social Security

• Social security has come under harsh criticism by many throughout the years, but it has endured and many Americans depend on their Social Security checks– There have been amendments to Social Security

and more amendments may be in the near future

3. A Legacy of Hope

• Perhaps the greatest achievement of the New Deal was to restore hope

• People again knew that someone cared about them and that the government would do what it could to try and support them in times of need