Transcript The Great Depression & the New Deal

The Great Depression & the New Deal
The Election of 1932
• As the election of 1932 neared,
unemployment and poverty brought dissent
of President Hoover and a demand for a
change in policy. The Republicans nominated
Herbert Hoover to run for president in the
election of 1932. The Democrats chose
Franklin Delano Roosevelt. He had been born
to a wealthy New York family and served as
the governor of New York.
FDR: Politician in a Wheelchair
• Franklin D. Roosevelt's wife,
Eleanor Roosevelt, was to
become the most active
First Lady in history. She
powerfully influenced the
policies of the national
government, battling for the
impoverished and
oppressed.
• Roosevelt's commanding
presence and golden
speaking voice made him
the premier American
orator of his generation.
Presidential Hopefuls of 1932
Presidential Hopefuls 1932
• In the Democratic campaign of 1932, Roosevelt
attacked the Republican Old Deal and
concentrated on preaching a New Deal for the
"forgotten man." He promised to balance the
nation's budget and decrease the heavy
Hooverian deficits.
• Although the campaign for the Republicans was
dire, Herbert Hoover reaffirmed his faith in
American free enterprise and individualism. He
predicted prosperity if the Hawley-Smoot Tariff
was repealed.
Hoover’s Humiliation in 1932
• Franklin Roosevelt won the election of 1932
by a sweeping majority, in both the popular
vote and the Electoral College.
• Beginning in the election of 1932, blacks
became, notably in the urban centers of the
North, a vital element of the Democratic Party.
FDR & the “Three R’s”: Relief,
Recovery, and Reform
• Franklin Roosevelt was inaugurated on March
4, 1933.
• On March 6-10, President Roosevelt declared
a national banking holiday as a prelude to
opening the banks on a sounder basis. The
Hundred Days Congress/Emergency Congress
(March 9-June 16, 1933) passed a series laws
in order to cope with the national emergency
(The Great Depression).
FDR & the “Three R’s”: Relief,
Recovery, and Reform
• Roosevelt's New Deal programs aimed at 3 R's: relief,
recovery, reform. Short-range goals were relief and
immediate recovery, and long-range goals were permanent
recovery and reform of current abuses.
• Congress gave President Roosevelt extraordinary blankcheck powers: some of the laws it passed expressly
delegated legislative authority to the president.
• The New Dealers embraced such progressive ideas as
unemployment insurance, old-age insurance, minimumwage regulations, conservation and development of natural
resources, and restrictions on child labor.
FDR Reforms the Banking System
• The impending banking crisis caused Congress to pass
the Emergency Banking Relief Act of 1933. It gave the
president power to regulate banking transactions and
foreign exchange and to reopen solvent
banks. President Roosevelt began to give "fireside
chats" over the radio in order to restore public
confidence of banks.
• Congress then passed the Glass-Steagall Banking
Reform Act, creating the Federal Deposit Insurance
Corporation (FDIC). A reform program, the FDIC
insured individual bank deposits up to $5,000, ending
the epidemic of bank failures.
FDR Reforms the Banking System
• In order to protect the shrinking gold reserve,
President Roosevelt ordered all private holdings of gold
to be given to the Treasury in exchange for paper
currency and then the nation to be taken off the gold
standard-Congress passed laws providing for these
measures.
• The goal of Roosevelt's "managed currency" was
inflation, which he believed would relieve debtors'
burdens and stimulate new production. Inflation was
achieved through gold buying; the Treasury purchased
gold at increasing prices, increasing the dollar price of
gold. This policy increased the amount of dollars in
circulation.
Creating Jobs for the Jobless
• President Roosevelt had no
qualms about using federal
money to assist the
unemployed in order to
jumpstart the
economy. Congress created
the Civilian Conservation
Corps (CCC), which provided
employment for about 3
million men in government
camps. Their work included
reforestation, fire fighting,
flood control, and swamp
drainage.
Creating Jobs for the Jobless
•
Congress's first major effort to deal
with the massive unemployment was
to pass the Federal Emergency Relief
Act. The resulting Federal
Emergency Relief Administration
(FERA) was headed by Harry L.
Hopkins. Hopkins's agency granted
about $3 billion to the states for
direct relief payments or for wages
on work projects. Created in 1933,
the Civil Works Administration
(CWA), a branch of the FERA, was
designed to provide temporary jobs
during the winter
emergency. Thousands of
unemployed were employed at leaf
raking and other manual-labor jobs.
Jobs for the Jobless
• Relief was given to the farmers with the
Agricultural Adjustment Act (AAA), making
available millions of dollars to help farmers
meet their mortgages.
• The Home Owners' Loan Corporation (HOLC)
assisted many households that had trouble
paying their mortgages.
A Day for Every Demogogue
• As unemployment and suffering continued,
radical opponents to Roosevelt's New Deal
began to arise. Father Charles Coughlin's antiNew Deal radio broadcasts eventually became
so anti-Semitic and fascistic that he was forced
off the air.
A Day for Every Demogogue
• Senator Huey P. Long
publicized his "Share
Our Wealth" program in
which every family in
the United States would
receive $5,000. His
fascist plans ended
when he was
assassinated in 1935.
A Day for every Demogogue
• . Dr. Francis E. Townsend attracted millions of
senior citizens with his plan that each citizen over
the age of 60 would receive $200 a month.
• Congress passed the Works Progress
Administration (WPA) in 1935, with the objective
of employment on useful projects (i.e. the
construction of buildings, roads, etc.). Taxpayers
criticized the agency for paying people to due
"useless" jobs such as painting murals.
A Helping Hand for Industry and Labor
• The National Recovery
Administration (NRA) was
designed to assist industry, labor,
and the unemployed. Individual
industries, through "fair
competition" codes, were forced
to lower their work hours so that
more people could be hired; a
minimum wage was also
established. Workers were
formally guaranteed the right to
organize and bargain collectively
through representatives of their
choosing, not through the
company's choosing.
A Helping Hand for Industry and Labor
• The Public Works Administration (PWA) was
intended for both industrial recovery and for
unemployment relief. Headed by Harold L. Ickes,
the agency spent over $4 billion on thousands of
projects, including public buildings and highways.
• In order to raise federal revenue and provide a
level of employment, Congress repealed
prohibition with the 21st Amendment in late
1933.
A Helping Hand for Business & Labor
• Although initially supported by the public,
collapse of the NRA came in 1935 with the
Supreme Court's Schechter decision in which
it was ruled that Congress could not "delegate
legislative powers" to the president and that
congressional control of interstate commerce
could apply to local fowl business.
Paying Farmers not to Farm
• Congress created the Agricultural Adjustment
Administration (AAA). It established "parity
prices" for basic commodities. "Parity" was
the price set for a product that gave it the
same real value, in purchasing power, that it
had from 1909-1914. The agency also paid
farmers to reduce their crop acreage,
eliminating surpluses, while at the same time
increasing unemployment.
Paying Farmers not to Farm
• The Supreme Court struck down the AAA in 1936,
declaring its regulatory taxation provisions
unconstitutional.
• The New Deal Congress passed the Soil Conservation
and Domestic Allotment Act of 1936. The reduction of
crop acreage was now achieved by paying farmers to
plant soil-conserving crops.
• The Second Agricultural Adjustment Act of 1938
continued conservation payments; if farmers obeyed
acreage restrictions on specific commodities, they
would be eligible for parity payments.
Dustbowls and Black Blizzards
• Late in 1933, a
prolonged drought
struck the states of the
trans-Mississippi Great
Plains. The Dust Bowl
was partially caused by
the cultivation of
countless acres, dryfarming techniques, and
mechanization.
Dustbowls and Black Blizzards
• Sympathy towards the affected farmers came
with the Frazier-Lemke Farm Bankruptcy Act,
passed in 1934. It made possible a suspension
of mortgage foreclosures for 5 years. It was
struck down in 1935 by the Supreme Court.
• In 1935, President Roosevelt set up the
Resettlement Administration, given the task
of moving near-farmless farmers to better
lands.
Dustbowls and Black Blizzards
• The Indian Reorganization Act of 1934
encouraged Native American tribes to
establish self-government and to preserve
their native crafts and traditions. 77 tribes
refused to organize under the law, while
hundreds did organize.
Battling Bankers & Big Business
• In order to protect the public against fraud,
Congress passed the "Truth in Securities Act"
(Federal Securities Act), requiring promoters to
transmit to the investor sworn information
regarding the soundness of their stocks and
bonds.
• In 1934, Congress took further steps to protect
the public with the Securities and Exchange
Commission (SEC). It was designed as a
watchdog administrative agency.
TVA Harnesses the Tennessee River
• Zealous New Dealers accused
the electric-power industry of
gouging the public with
excessive rates.
• 2.5 million of America's most
poverty-stricken people
inhabited Muscle Shoals. If
the government constructed a
dam on the Tennessee River in
Muscle Shoals, it could
combine the immediate
advantage of putting
thousands of people to work
with a long-term project for
reforming the power
monopoly.
TVA Harnesses the Tennessee River
• In 1933, the Hundred Days Congress created
the Tennessee Valley Authority (TVA). It was
assigned the task of predicting how much the
production and distribution of electricity
would cost so that a "yardstick" could be set
up to test the fairness of rates charged by
private companies.
TVA Harnesses the Tennessee River
• The large project of constructing dams on the
Tennessee River brought to the area full
employment, the blessings of cheap electric
power, low-cost housing, abundant cheap
nitrates, the restoration of eroded soil,
reforestation, improved navigation, and flood
control. The once-poverty-stricken area was
being turned into one of the most flourishing
regions in the United States.
TVA Harnesses the Tennessee River
• The conservative
reaction against the
"socialistic" New Deal
would confine the TVA's
brand of federally
guided resource
management and
comprehensive regional
development to the
Tennessee Valley.
Housing Reform & Social Security
• To speed recovery and better homes, President Roosevelt
set up the Federal Housing Administration (FHA) in 1934.
• To strengthen the FHA, Congress created the United States
Housing Authority (USHA) in 1937. It was designed to lend
money to states or communities for low-cost construction.
• The more important success of New Dealers was in the
field of unemployment insurance and old-age
pensions. The Social Security Act of 1935 provided for
federal-state unemployment insurance. To provide security
for old age, specified categories of retired workers were to
receive regular payments from Washington.
Housing Reform & Social Security
• Republicans were strongly opposed to Social
Security. Social Security was inspired by the
example of some of the more highly
industrialized nations of Europe.
• In an urbanized economy, the government
was now recognizing its responsibility for the
welfare of its citizens.
A New Deal for Labor
• When the Supreme Court struck down the
National Recovery Administration (NRA),
Congress, sympathetic towards labor unions,
passed the National Labor Relations Act of
1935 (Wagner Act). This law created a
powerful National Labor Relations Board for
administrative purposes and reasserted the
rights of labor to engage in self-organization
and to bargain collectively through
representatives of its own choice.
A New Deal for Labor
• The stride for unskilled
workers to organize was
lead by John L. Lewis,
boss of the United Mine
Workers. He formed the
Committee for Industrial
Organization (CIO) in
1935. The CIO led a
series of strikes including
the sit-down strike at the
General Motors
automobile factory in
1936.
A New Deal for Labor
• Congress passed the Fair Labor Standards Act
(Wages and Hours Bill) in 1938. Industries
involved in interstate commerce were to set up
minimum-wage and maximum-hour levels. Labor
by children under the age of 16 was forbidden.
• In 1938, the CIO joined with the AF of L and the
name "Committee for Industrial Organization"
was changed to "Congress of Industrial
Organizations."-led by John Lewis. By 1940, the
CIO claimed about 4 million members.
Landon Challenges “The Champ” in
1936
• As the election of 1936
neared, the New
Dealers had achieved
considerable progress,
and millions of
"reliefers" were grateful
to their government.
Landon Challenges “The Champ” in
1936
• The Republicans chose Alfred M. Landon to run
against President Roosevelt. The Republicans
condemned the New Deal for its radicalism,
experimentation, confusion, and "frightful
waste."
• President Roosevelt was reelected as president in
a lopsided victory. FDR won primarily because he
had appealed to the "forgotten man." He had
forged a powerful and enduring coalition of the
South, blacks, urbanites, and the poor.
Nine Old Men on the Bench
• Ratified in 1933, the
20th Amendment
shortened the period
from election to
inauguration by 6
weeks. FDR took the
presidential oath on
January 20, 1937,
instead of the
traditional March 4.
Nine Old Men on the Bench
• Roosevelt saw his reelection as a mandate to
continue the New Deal reforms. The
ultraconservative justices on the Supreme Court
proved to be a threat to the New Deal as the
Roosevelt administration had been thwarted 7
times in cases against the New Deal.
• With his reelection, Roosevelt felt that the
American people had wanted the New Deal. If
the American way of life was to be preserved, he
argued, and then the Supreme Court had to get in
line with public opinion.
Nine Old Men on the Bench
• President Roosevelt released his plan to ask
Congress to pass legislation allowing him to
appoint one new justice to the Supreme Court
for every member over the age of 70 who
would not retire; the maximum number of
justices would now be 15. Shocking both
Congress and the public, the plan received
much negative feedback.
The Court Changes Course
• President Roosevelt was belittled for attempting
to break down the checks and balances system
among the 3 branches of government.
• Justice Owen J. Roberts, formerly regarded as a
conservative, began to vote liberal. In March
1937, the Supreme Court upheld the principle of
state minimum wage for women, reversing its
stand on a different case a year earlier. The
Court, now sympathetic towards the New Deal,
upheld the National Labor Relations Act (Wagner
Act) and the Social Security Act.
Nine Old Men on the Bench
• A succession of deaths and resignations of
justices enabled Roosevelt to appoint 9
justices to the Court.
• FDR aroused conservatives of both parties in
Congress so that few New Deal reforms were
passed after 1937. He lost much of the
political goodwill that had helped him to win
the election of 1936.
Twilight of the New Deal
• In Roosevelt's first term, from 1933-1937,
unemployment still ran high and recovery had
been relatively slow. In 1937, the economy
took another downturn as new Social Security
taxes began to cut into payrolls and as the
Roosevelt administration cut back on spending
out of the continuing reverence for the
orthodox economic doctrine of the balanced
budget.
Twilight of the New Deal
• The New Deal had run deficits for several years, but all
of them had been somewhat small and none was
intended. Roosevelt embraced the recommendations
of the British economist John Maynard Keynes. The
newly-accepted "Keynesianism" economic program
was to stimulate the economy by planned deficit
spending.
• In 1939, Congress passed the Reorganization Act,
giving President Roosevelt limited powers for
administrative reforms, including the new Executive
Office in the White House.
Twilight of the New Deal
• Congress passed the Hatch Act of 1939,
barring federal administrative officials from
active political campaigning and soliciting. It
also forbade the use of government funds for
political purposes as well as the collection of
campaign contributions from people receiving
relief payments.
New Deal or Raw Deal?
• Foes of the New Deal charged the president of
spending too much money on his programs,
significantly increasing the national debt; by
1939, the national debt was at
$40,440,000,000. Lavish financial aid and
relief were undermining the old virtue of
initiative.
New Deal or Raw Deal?
• Private enterprise was being
suppressed and states'
rights were being
ignored. The most damning
indictment of the New Deal
was that it did not end the
depression; it merely
administered "aspirin,
sedatives, and BandAids." Not until World War
II was the unemployment
problem solved.
FDR’s Balance Sheet
• New Deal supporters had
pointed out that relief, not
economy, had been the
primary objective of their war
on the depression. Roosevelt
believed that the government
was morally bound to prevent
mass hunger and starvation by
"managing" the economy.
• FDR was a Hamiltonian in his
idea of big government, but a
Jeffersonian in his concern for
the "forgotten man."