Prosperity, Depression, & The New Deal

1. Prosperity, Depression, & The New Deal American History II - Unit 4 Ms. Brown

2. Review • What type of role did Hoover believe the gov’t should play in the economy and society? • Limited role – encourage business growth but don’t regulate; don’t give “handouts” because it weakens the American spirit • What is the theory of trickle-down economics? • economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole • reinforces the reasoning behind not providing direct relief • Which Americans made up the Bonus Army that marched on DC in 1932? What did they want? • WWI vets and their families • Passage of the Patman Bill - $500 upfront and life insurance for vets • How did Americans react to Hoover’s handling of the Bonus Army? • Horrified by the harsh treatment of veterans • Ready for a change in presidential administration

3. 4.8 – FDR’s New Deal

4. Republican – Hoover (recognized little chance of winning) • Democrats – Franklin Delano Roosevelt (FDR) • Results: • 32nd POTUS – FDR • 2/3 Democrat majority in Senate • 3/4 Democrat majority in House of Reps Election of 1932

5. 32nd POTUS (1932-1945) • 2 term governor of NY • Distant cousin to Teddy Roosevelt • Reform-minded - wanted to fix the problems of unemployment and poverty • Fun facts… • Partially paralyzed by polio in 1921, but learned to stand with leg braces and walk slightly with a cane; mostly wheelchair bound • 5th cousin, once removed, from his wife Eleanor Roosevelt • Died while in 4th term Franklin Delano Roosevelt (FDR)

6. Eleanor Roosevelt • Eleanor Roosevelt played a major role in the government • Women’s rights • Humanitarian • Education reform • She gave women a voice in the White House • Public and assertive first lady

7. Getting Ready for Office • FDR assembled a diverse group of men and women known at the “Brain Trust” to devise a plan of economic recovery • Nicknamed this because of their knowledge and expertise on economic issues • Frances Perkins - first female cabinet member (Sec. of Labor)

8. March 9 – June 16, 1933 = The First Hundred Days  FDR’s administration launched a period of intense activity • New Deal – FDR’s program to alleviate the problems of the Great Depression, focusing on relief for the needy, economic recovery, and financial reform. • 3 R’s: relief, recovery, reform • 15 New Deal programs launched in the First Hundred Days (1st New Deal) • Expanded the role of the federal gov’t in the US economy First Hundred Days

9. Fireside Chats • FDR gave many “fireside chats” on the radio • Explained the New Deal in simple terms • Reassured the public that the gov’t was on their side and the president and congress were working to fix the economy

10. Fixing the Banking System • To help save the banks, FDR called for a “bank holiday”  banks closed for four days • To stop people from panicking • Help banks get re-organized • Emergency Banking Relief Act – federal agency to inspect banks • Banks would be given gov’t loans if needed • Once banks paid loans they would reopen • Promoted confidence in banks

11. Fixing the Banking System • March 12, 1933 – 1st fireside chat • FDR explained why the nation’s welfare depended on public support of the gov’t and the banking system • When too many people demand their savings in cash, banks fail, not because they are weak, but because the banks do not keep that much cash physically available. • March 13, 1933 – bank holiday ended, some banks reopened  no longer a rush to withdraw funds and many Americans returned their savings to banks

12. GOAL: To restore confidence in the banks and economy • Glass-Steagall Act – 1933, established the Federal Deposit Insurance Corporation (FDIC) – provided federal insurance for individual bank accounts of up to $5,000 • increased reliability of banks and increased bank cautiousness with consumer money • Federal Securities Act – 1933, regulated the stock market, required corporations to publish all stock offerings and made them liable for misrepresentations. • Securities and Exchange Commission (SEC) – 1934, regulate the stock market • Prevent insider trading (trading within the market due to private knowledge of companies’/corporations’ actions) Regulating Banking and Finance

13. FDR persuaded Congress to allow for the manufacture and sale of some alcoholic beverages  excise tax = gov’t revenue • 1933, 21st Amendment repealed Prohibition altogether End of Prohibition

14. GOAL: raise prices by decreasing production/supply • Agricultural Adjustment Act (AAA) – 1933, paid farmers to leave a portion of land unseeded and kill livestock • Angered some Americans but allowed farmers to recover economically • SCOTUS declared unconstitutional in 1936, FDR replaces it with a similar act Farmer Relief

15. GOAL: Bring relief to the poor in rural regions and provide jobs • Tennessee Valley Authority (TVA) – focused on the badly depressed Tennessee River Valley • renovated 5 existing dams and constructed 20 new ones • Created thousands of jobs • flood control, hydroelectric power Relief for Rural Southerners

16. GOAL: help young men find work and provide relief to areas needing improvement • Civilian Conservation Corps (CCC) – 1933 – 1942: 3 million jobs provided for young men aged 18-25 • Building roads, developing parks, planting trees, flood-prevention and soil-erosion projects  prevent another Dust Bowl • $30/month - $25 sent home to families automatically • Free food and housing Work Projects

17. GOAL: Provide funds to states to help decrease unemployment • National Industrial Recovery Act (NIRA) – 1933, money to states to create jobs chiefly in the construction of schools and other community buildings • Public Works Administration (PWA) – 1933-1943, created jobs on construction projects • Civil Works Administration (CWA) – 1933, more immediate jobs, built schools and paid teachers, built roads Work Projects

18. GOAL: promote recovery by stopping unhealthy competition, wage cuts, falling prices, and layoffs • National Recovery Administration (NRA) – 1933-1935 • Set prices of many products • Set minimum wage and hours • Established “codes of fair production” – reduce destructive competition Fair Economic Practices

19. GOAL: ensure that banks are providing loans • Home Owners Loan Corporation (HOLC) – 1933, gov’t loans to homeowners who faced foreclosure due to missed loan payments • GOAL: to provide relief for needy • Federal Emergency Relief Administration (FERA) - 1933, $500M for direct relief for the needy • $ given to states for food and clothing for unemployed, ill, homeless, aged, etc • Rest of $ given to states to support work relief efforts Food, Clothing, and Shelter

20. FDR’s agencies in the First Hundred Days did a great deal to ease suffering, however did not end the Depression FDR agreed to a policy of deficit spending to fund these efforts – spending more money that the gov’t receives in revenue Liberals – New Deal doesn’t do enough for those in need Conservatives – New Deal is socialist and interferes with free market economy Opposition to New Deal

21. Opposition to the New Deal

22. Opposition to the New Deal

23. SCOTUS Reacts to New Deal • 1935 – SCOTUS declared National Industrial Recovery Act (NIRA) unconstitutional • Declared that the law gave legislative powers to the executive branch • Infringed on states rights to regulate intrastate business • 1936 – SCOTUS declared Agricultural Adjustment Act (AAA) unconstitutional • Agriculture was a local matter to be regulated by states, not the federal gov’t • 1937-1941 – FDR appointed liberal justices to open positions to help New Deal policies