The New Deal

Chapter 24

Chapter 24: “Nothing to Fear but Fear Itself

Section 1: FDR’s New DealI Franklin Delano Roosevelt

A. Pampered youth with opportunitiesB. Dropped out of law school to enter politicsC. Democratic Candidate in for VP in 1920D. Stricken with polio in 1921 and was left

paralyzed (picture)E. Used his disability as a chance to “ sit and

think”F. Elected governor of NY in 1928G. Upon inauguration, states “the only thing we

have to fear is fear itself”Believed America has survived through worse in the past

FDR H. Assembles the Brain TrustHighly qualified experts to head the many departments of the Cabinet-Sec of State: Cordell Hull

Sec of Interior: Harold Ickes Sec of Agricul.: Henry

Wallace Postmaster Gen: James A.

Farley Secretary of Labor-FRANCES

PERKINS

He consulted lawyers, professors, and other experts and invited them to the White House

First Woman Cabinet Member

100 Days

• Banking• Currency• Securities

• Economy and Beer

• Conservation• Housing

• AAA• Industry

• Work Relief

BanksNot trusted, many closed, states

issuing bank holidaysFDR

• Emergency Banking Act• Secretary of Treasury can

investigate banks• 4/5 turn out to be in good

working order• by June, ¾ were back in

businessGlass-Steagall Act creates...• Federal Deposit Insurance

Corp (FDIC)• Insured up to $5000• Added savings banks to Fed

Reserve Board

Regained people’s trust by legislation and “fireside chats”

Currency• Deflation occurring- prices are down, and demand is

down• *some feared printing more $ would lead to runaway

prices• Money was backed by, and represented its worth in gold.• People asked to return gold and gold certificates to Fed

Banks in exchange for Fed Notes (Checks)• Then, Gold Reserve Act of 1934• -Reduced the value of the dollar to 59.06 cents to a

dollar in gold• Provided more currency to spend• Raise prices for goods• Boost exports• Decrease the burden of debt (payback with cheaper

money

Securities (Stocks and Bonds)

• People were lured to stocks and bonds by fraudulent advertising.

• “investing became gambling”• 1934 Congress creates...• Securities and Exchange

Commission (SEC)• -Regulate the stock market and

trading• License and regulate exchanges• Require numbers and info on

buyable stocks• Regulate activities of advisers• Prosecute acts of fraud

Economy and Beer

• New economic idea from English economist John Maynard Keynes

• Don’t cut government spending!• Lower taxes, spend money, and purposely run

up large deficits• Would get people working• Get money into circulation• This would promote spending and prosperity• FDR promised a balance budget, but vowed

to be concerned about people suffering, and not a campaign promise.

Pump Priming!

Uses the nation’s thirst to promote an economy bill first before repealing Prohibition.

1. Economy Bill- cut gov’t salaries and veteran pensions2. Repeal of Prohibition

Conservation (Land &People)• Civilian Conservation

Corps (CCC)

• 250,000 jobs to 18-25 yr. olds

• National Parks and forests received new trees

• Stocked fish in rivers

• Built fire lanes

• Restored historic sites of Civil and Revolutionary War

TVA• 3.5 million people living in the

mountains of KT, TN, AL and in the Tennessee River Valley were extremely poor-

• land exhausted• couldn’t pay for electricity• NO LURE FOR BUSINESS• FDR proposes: Tennessee Valley Authority

(TVA)• Dams on the river and other rivers• Protects against flooding• Creates cheap electricity

Housing

-Millions of homeowners not able to pay their mortgages

1933- Home Owners Loan Corporation

$2Billion in bonds to refinance

1934- National Housing Act created...

Federal Housing Authority (FHA)Insured loans, financed mortgages for new homes1935- Resettlement Administration“greenbelt communities”1937- Wagner Steagall Act creates...United States House Authority Makes loans to cities and states to build low cost housing (350 programs by 1940)

Agricultural Adjustment Act 1933

• Farmers sought to return to parity, or prices before WWI• Must reduce surplus of farmed products• Treasury would give bonuses to farmers who reduced

the land they farmed• Tax would be issued to industries that processed farmed

products• Then, the consumer would pay higher price• Farmers told to “plow under” cotton• 6 million piglets slaughtered so they couldn’t overwhelm

the market• Farming income shot up 240% between 1932-1935.

Industrial Recovery

• National Industry Recovery Act (NIRA) created...• National Recovery Administration (NRA)• Keep up prices and wages• Max hours worked and minimum wages• Which goods should be produced, how many, and at

what price Sect. 7a- gives workers right to organize unions Hugh Johnson-fiery business organizer (offensive) “codes” regulate business practices

Critics of NRA:Small business cry “monopolies killing me”Labor unions cry, “ our company isn’t complying to Section 7a”Business leaders cry, “labor is far too advantaged”

Work Relief• Public Works Administration

(PWA)• Ran by close friend to FDR, Harry

Hopkins• $3 Billion to build roads,

government buildings, sewers, schools, hospitals, Post Offices, tunnels, housing, and the aircraft carriers- Yorktown and Enterprise

• Federal Emergency Relief Act• $500 million in the form of direct

relief to needy citizens• criticized as “dole” or handout• (Positive) fast relief• (Negative) are these people able

to work?, Is it charity?

Civil Works Administration (CWA)

• (Hopkins) $400 million• temporary job program• buildings, large scale projects in which

less $ went to supplies and a bigger percentage went to wages

• Put a $1 Billion back into economy• Hired 4 million in 180,000 programs• Fearing the creation of a dependency,

FDR cut the program in 1934

Election of 1934 (Congressional)

• New Deal spending reached $5Billion, national debt doubled since 1929.

• “human budget” must be balanced first• 2 million people put to work (still 11 million

unemployed)• national income increased 25 %

Democrats victorious• Senate- gain 10 seats giving them 2/3 majority• House- ¾ of all seats

Americans saw improvement, and became optimistic about the promise of prosperity.

24.2:From Recovery to Reform

• After the elections of 1934, it wouldn’t be long until the Supreme Court would begin striking down many of the

New Deal laws proposed by FDR

Relief• $5 Billion granted to the Works

Progress Administration (WPA) to provide work to able-bodied workers.

• Harry Hopkins, again is managing the efforts.

• Focused on large projects like roads, bridges, and other public projects.

• The WPA was unique because it employed outside of manual labor. It provided opportunities for writers, artists, actors, musicians to use their skills.

• A branch of the WPA, the National Youth Administration (NYA) gave work to 16 to 25 year olds, and offered aid for higher learning.

Criticism begins to pour inMany critics of the New Deal felt the government was

overextending its authority, and was leading America into socialism.

Conservative Democrats and Republicans joined the American Liberty League to “uphold the Constitution.”Fast-talking Louisiana Senator, Huey Long attacked FDR, and proposed a “share the wealth” program that every would guarantee income and make every man a king!Father Charles E. Couphlin apposed FDR with a hate campaign via the radio.Dr. Townsend criticized the New Deal for neglecting the elderly, and proposed a guaranteed income to older men and women on the condition they spend it.

Schechter v. United States (1935) is the tipping point for the New Deal’s legislative push. The Supreme Court declares the NRA unconstitutional, giving impetus to New Deal opponents.

Second New Deal

Social Security

• As a result of the harsh criticism of Dr. Townsend, FDR asked Congress for a Social Security Act in 1935.

• Employer and employee put small amount of money into Social Security fund in US treasury. Payments received every month after working age.

• Public assistance would care for blind, dependent children, and elderly if they can prove their needs.

• Unemployment insurance would give laid-off workers income for a few weeks while hunting for work.

Labor

• National Labor Relations Board (created by Wagner Act) sought to regain power lost in ruling banning NRA.

• The Wagner Act allowed workers to join unions and collectively bargain for labor gains. NLRB set up to regulate the practice.

• Considered, “Labor’s Magna Carta”

Election of 1936

• Roosevelt wins election over Governor “Alf” Landon of Kansas, a liberal Republican and onetime Bull Moose Progressive by over 11 million votes.

• With his Presidential victory, FDR becomes spokesperson of the “Forgotten Man,” immigrants and their children, farmers, and laborers. Many of these new followers of FDR were urban residents, thus securing him many votes.

24.3 The End of the New Deal

Taking on the Court• Without his usual consultation with advisors,

FDR sent a bold plan to Congress in February of 1937.

• He issued a plan to reform the Supreme Court from nine to fifteen justices if they refused to retire at the age of 70.

• This “court-packing “ attempt was masked in an attempt to alleviate the Court’s workload, but in reality it was FDR’s attempt to get his New Deal legislation passed.

• Senate killed FDR’s bill, although one justice retires amidst the debating and another retires a year later. FDR loses favor of Congress.

Economy and Labor

• By 1937, 7 million were still unemployed, but business was booming.

• FDR cut the spending of some programs, but a recession by the end of the year forced him to increase government spending once again.

• The recession ended with the help of FDR’s immediate response to the nation’s labor needs.

• Second AAA passes in 1938 giving farmers “ever-normal granaries” that put farm products in storage and then release them in times of need.

• While President Franklin Roosevelt was in Bedford, Mass., campaigning for reelection, a young girl tried to pass him an envelope. But a policeman threw her back into the crowd. Roosevelt told an aide, "Get the note from the girl." Her note read,

I wish you could do something to help us girls....We have been working in a sewing factory,... and up to a few months ago we were getting our minimum pay of $11 a week... Today the 200 of us girls have been cut down to $4 and $5 and $6 a week.

• To a reporter's question, the President replied, "Something has to be done about the elimination of child labor and long hours and starvation wages."

The Fair Labor Standards Act • Secures a minimum

wage at 25 cents and hour (which would increase to 80 by 1946)

• Reduces work week to 40 hours

• Provides “time and a half” for overtime

• Bans child labor under 16 years

By 1938, FDR had a strained relationship with Congress, and intervened in elections with unwanted criticism or support.

That year the New Deal ended with a lack of support, and a national focus on overseas affairs of aggression

What do they do?FDICSECGold Reserve ActAAA21st Amendment

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