FDR: Depression, New Deal

FDR:Depression,New Deal

Wealthy NY family • Cousin of TR (Republican), whom he admired greatly, as a Progressive • Harvard educated, Joined Democrats, NY legislature, Assist Sec of Navy • Ran as Cox’s running mate in 1920 – lost to Harding. • Paralyzed from polio in 1921- dropped out of politics • Taught him “patience, tolerance, compassion, strength of will”: regained the power of his upper body, only: was able to “walk” with aid of crutches, braces, assistance from his sons, or rode in a wheelchair • Returned to politics in 1928, spoke at nomination of Smith to run against Hoover – then elected Gov. of NY

FDR with young polio victim Great Depression 3.1B

1932: won Democratic Party nomination over Al Smith, to oppose Hoover • Promised sweeping social and economic reform: pledged a “New Deal for the American people," a New Deal for the "forgotten man” • Didn’t reveal any details at this stage / kept it vague, but promised huge Federal Government Intervention / direct Fed. Govt. action / direct relief / regulation…abandon Laissez Faire Economics • Upbeat, happy, optimistic, charismatic personality, impressive speaker, in contrast to the grim, dour Hoover • “Happy Days are Here Again” was the theme song of his campaign • Skillfully handled the press, answering their questions in his frequent press conferences (they kept his secret about polio / disability from the public)

FDR in a parade Great Depression 3.1C

Great Depression 3.1A Montage of Franklin Delano Roosevelt

Benefited from the activities and popularity of his wife, Eleanor…an active Progressive: member of Women’s Trade Union league and League of Women Voters; supported end to child labor, improved health care, better conditions in state hospitals • She was, in part, his social conscience, his eyes and ears for the suffering of the less well off and disadvantaged (though their personal relationship was strained due to his extra-marital affairs) • Won 1932 election by a landslide FDR; 472 - 59 electoral votes (would any Democratic candidate have won the election?– this is why Al Smith was so upset that FDR won the nomination over him); • Democrats controlled both houses of Congress too – a big advantage

Eleanor Roosevelt (center) Great Depression 3.3F

Won a big majority of African American votes – the first Democrat to do so • Voter realignment: African Americans rejected party of Lincoln / Emancipation because of Hoover’s inaction and seeming indifference to the suffering of ordinary people, esp. minorities (Republicans had become the party of big business) • Inauguration: “the only thing we have to fear is fear itself” • Initiated radio “fire-side chats” to explain what he was doing / Govt. policy, in simple language people could understand, and by so doing to build public confidence in his admin. • One of his first reforms - reduce the “lame duck period” from March to January 20th (20th Amend, 1933)

From the party of Lincoln to the party of Roosevelt Great Depression 3.3E

To work out the details of Fed. Govt. action he put together a “Braintrust”: inc. Democrats, Republicans, college professors, Progressive Reformers…African Americans, Jewish, Catholics, women (Frances Perkins was app. Sec of Labor – first ever women to serve in a Cabinet position)…the most diverse group assembled in US History to advise a President or Govt. • From their input began a flurry of activity over the next 100 days: 15 pieces of legislation (most ever in such a short period) setting up numerous agencies and projects and initiatives

FDR at his Desk Great Depression 3.1F

Democratic Congress approved of everything: big advantage – gave FDR a blank check (executive and legislative powers?) • One of his first goals was to restore public confidence in the banking system • Passed the Emergency Banking Relief Act • The banking crisis was at fever pitch - about 9,000 banks collapsing since 1929; depositors continued to withdraw money from those that remained open

The Act closed the banks for four days (March 6 to 10) - a Bank Holiday. • The bill provided for the inspection of all banks by the Treasury Dept. before they would be allowed to be reopened. Federal assistance would be given to some troubled banks and those in greatest difficulty would be thoroughly reorganized….. Bank Regulation by Govt. / Fed Reserve.. • Only stable, safe banks, on a sound-footing would be allowed to reopen: restore public confidence; get people to save with the banks again: savings became loans

Explained to the public, in Fireside Chats, what the Act hoped to achieve: told an audience of 35m that "it is safer to keep your money in a reopened bank than under the mattress". • Succeeded in winning public confidence: 75% of the banks reopened within the next three days, and $1b in hoarded currency and gold flowed back into them within a month • For the first time since the Crash the amount of money saved in banks exceeded the amount of money withdrawn. The immediate banking crisis was over

FDR now began to formulate and implement more of his New Deal • Based on an interventionist philosophy: Federal Govt. involvement / responsibility in Economic / Social issues: movement away from Laissez Faire of previous administrations / regulation: trial and error if necessary, but definite intervention

Relief, Recovery, Reform • New Deal can be divided into programs / initiatives for • Relief (immediate / short term / for the unemployed): FERA, CCC, PWA, CWA.. • Recovery (long-term / to stimulate the Economy), NRA, AAA, HOLC, TVA • Reform (permanent / to prevent such a serious Crash and Economic Depression occurring again) Truth in Securities, SEC, Glass Steagall, FDIC

Relief • Federal Emergency Relief Act / Administration (FERA) • At first given $500m - eventually reaching $3billion - to be distributed by this new agency FERA • Money given to state and voluntary local relief agencies who were under so much pressure, to provide food / soup • And to cities and states to begin public works projects • And to cities to provide dole payments to the unemployed

FERA was to be headed by Harry Hopkins, a former social worker, one of FDR's close friends and advisor • FERA sprung into action and distributed $5m in just two hours • Critics urged FDR / Hopkins not to give away Fed. Govt. money so quickly: Hopkins replied that - "people don't eat in the long run - they have to eat every day” • Dole payments were criticized by Hoover, others – would kill incentive, initiative to find jobs, destroy human dignity…. • FDR also had reservations but intended dole to be temporary – eventually he hoped to take people off the dole through creating jobs

Job creation would come through Federal agencies such as the CCC (Civilian Conservation Corps ) • One of the most popular of the New Deal agencies. It put hundreds of thousands of unemployed restless wandering urban young men to work on environmental projects – reforestation, flood control, and conservation. • Members of the CCC lived in barracks / camps in national parks and forests and followed a strict, semi-military schedule….for the purpose of discipline – criticized for “militarizing young men” • Room and board and monthly salary of $30 provided to each worker; usually sent back to wife and family.

Young Americans working in the Civilian Conservation Corps Great Depression 3.1E

Also among the first recruits were the veterans of the Bonus Army • By the time it ended, the CCC provided jobs for over 3m (not simultaneously) • Another agency was the Public Works Admin (PWA), under Secretary of the Interior, Harold Ickes: same goal - to provide jobs for the unemployed through public works projects • Given $4b – eventually carried out 34,000 public works projects, employing 4m people: building schools and dams, refurbishing govt. buildings, improving highways

revitalized the economies of entire communities throughout the US: gave work to local workers, contracts to local businesses providing materials, supplies.. stimulated industry and spurred economic recovery • another agency to provide jobs was the Civil Works Administration (CWA) - provide temporary relief during winter - jobs raking leaves, clearing snow etc .. eventually came under jurisdiction of the FERA • Huge contrast to Hoover’s Response

Recovery • The National Industrial Recovery Act / Administration(NIRA / NRA) was passed to get industrialists in the same line of business to co-operate about production quotas, quality, codes, prices, fair competition…to self-regulate….anti-trust legislation / govt. regulation would be relaxed • Goal was to get factories producing / expanding again, by providing opportunities for reasonable profits for business

And to create jobs – help with cooperation between industrialists and labor unions about recognition of unions, collective bargaining, fair wages, hours, conditions, ending child labor….preventing costly strikes • NRA claimed to have created 2m jobs • FDR called it the most important and far reaching legislation ever passed by Congress. • Business leaders hailed it as the beginning of a new era of cooperation between govt. and industry and Labor leaders praised it as a "second Magna Carta" for workers. There was, it seemed, something in the bill for everyone

Industrialists joined voluntarily; huge propaganda / publicity campaign to encourage them to do so • Meetings, parades to generate enthusiasm /support; NRA adopted as its symbol the Blue Eagle (NFL team; Philadelphia Eagles) – displayed by businesses who joined • NRA encouraged people to purchase from businesses displaying the Blue Eagle • However, small business owners soon began to complain that big business dominated the NRA, set codes, standards that they could not meet which forced them to shut down

Labor unions also complained that the NRA did not bring about very many improvements for workers …began to disaffiliate….frequent strikes in 1934 • After 2 yrs of Success (limited?) it wd be overturned / declared unconstitutional by the Supreme Court • Schechter Case - Sick Chicken Case: Supreme Court ruled that the attempt to shut down a NY poultry business was a violation of the Inter State Commerce Clause and that the NRA gave the President unconstitutional legislative Powers

Agricultural Adjustment Act, 1933, set up the Agricultural Adjustment Administration (AAA) • Basically to offer to farmers what the NRA offered to industry; to regulate production of 7 basic items - wheat, cotton, corn, hogs, rice, tobacco, dairy products • To reduce the food supply and increase prices / profits: less is more: to create "subsidized scarcity" • The AAA would decide on production limits, and pay farmers subsidies for leaving their land idle • Subsidies were to be funded by a tax on food processors

Crops were already planted for the 1933 season: AAA oversaw the large scale destruction of existing crops and livestock to reduce surpluses: 6m pigs, tons of wheat, corn……destroyed • Critics called it "sinful waste“ – should have been distributed to the poor / unemployed? • Great success: prices increased by half between 1933 and 1936: farmers (those who had not lost their land) saw profits / income improve for the first time in 20 yrs…. the agricultural economy was stabilized

Govt. made loans available to farmers to pay their mortgages through the AAA, and the Home Owners Loan Corporation (HOLC), (later the FHA was also set up) • Frazier-Lemke Farm Bankruptcy Act suspended mortgage foreclosure for 5 yrs, mainly in the Dust Bowl areas • The Resettlement Administration helped farmers to move to new, more profitable lands, out of the Dust Bowl region • But eventually the AAA would meet the same fate as the NRA - declared unconstitutional by the Supreme Court in 1935...- the tax on food processors was illegal / unconstitutional

Another New Deal recovery program was the Tennessee Valley Authority (TVA). • Was an unprecedented experiment in regional development and public planning, in a very poor region • Built dams along the Tennessee River (total of 25) - the biggest one at Muscle Shoals - to generate inexpensive electricity • Also engaged in helping with fishing, manufacture of fertilizer, tourism, begin reforestation, helped farmers to improve productivity through using machinery, preventing flooding, soil erosion…

Huge boost to the region: generated thousands of jobs • Like NRA and AAA, was criticized by some: by • Some farmers whose lands were flooded due to the new dams • Some local businessmen, producers of electricity, fertilizers, who could not compete with new reduced prices • Some minorities who charged that there was discrimination in hiring by the TVA • Some Conservatives who accused the govt. of engaging in “creeping Socialism”

Alphabet Soup • Relief – FERA, CCC, PWA, CWA • Recovery – NRA, AAA, HOLC, TVA • Derisively called FDR’s “alphabet soup” by the bitter Al Smith • Huge contrast to Hoover’s response

Dr. New Deal Great Depression 3.1G

Reform • Reform of Stock Market • The Truth in Securities Act was designed to eliminate fraud in the stock market. Under this law, a company that deliberately deceived investors about its financial status could be sued. Promoters / Stock Brokers had to give investors sworn information about the stock • Securities and Exchange Commission (SEC) In 1934 Congress went even further and established the SEC to regulate / police / be a watchdog over the stock market. Hoped to prevent the kind of speculative practices that had led to the Wall Street Crash of 1929

Reform of Banking System • The Glass Steagall Act prohibited banks from investing savings deposits in the stock market, which was too unpredictable to assure the safety of these funds. • It also established the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits up to $2,500, later increased to $5000 - by the 1939 this was raised to $15,000 - it is now $100,000 - in all member banks. • These two reforms led to even more confidence being regained in the banking system (with Emergence Banking Relief Act) feeling that deposits would be safe

FDR also Repealed 18th Prohibition Amendment in 1933, as he had promised in his election campaign, with 21st Amendment • Hoped to increase in Fed govt. revenues from taxes, as well as put an end to disorder due to gangsters, and provide employment opportunities, as well as protect Civil Liberties

Impact of the New Deal • Economy began to recover • By 1934: the national income rose by 25%, hundreds of businesses re-opened, farming incomes increased, millions of people who had been unemployed were receiving relief /dole or working on federally funded jobs • But the Depression was still deep and serious and there was a long way to go • On average workers in the cities made 13% less than they had made in 1929 • 10m workers were still unemployed. • Farm prices lagged 28% behind 1929 prices. • Nearly 20% of the working pop was still unemployed

Some groups were very critical of FDR /New Deal – some felt he did too little, some felt he did too much • Small businesses criticized the NRA • Labor groups felt industrialists benefited more…strikes in auto and steel industries • Tenant Famers; evicted: their rented land left idle to help farmers qualify for subsidy • Conservatives / Businessmen criticized heavy “reckless spending,” reliance on "economic crackpots", and “socialist policies,” for too much govt. intervention; formed American Liberty League to oppose his policies • Supreme Court: pro-business, Republican; shut down NRA and AAA

Claimed he was saving Capitalism by Reforming it…his policies were not radical, they evolved from the Progressive Years

3 Popular Leaders / Demagogues emerged with critical views • Dr. Francis Townshend; 66 yr old retired CA doctor from Long Beach, had just become bankrupt; came up with a radical plan to aid senior citizens while at the same time stimulating the economy • Every person over the age of 60 would be asked to retire, freeing up jobs for younger people. Each retired person would receive a federal pension of $200 a month – funded by a 2% special sales tax - on the condition that the entire sum of money was spent in 30 days

He claimed that the pension would rescue the elderly from poverty, and enforced spending would act as a transfusion of cash into the economy • Ideas were popular among elderly: supposedly had a following of 5m, showing the level of discontent with their exclusion from the New Deal • Plan defeated by Congress in 1935…impractical, too expensive • But some of his ideas were later incorporated in the Social Security system

Fr. Charles Coughlin; a maverick Roman Catholic priest from Detroit, dubbed the "microphone messiah“ – had a weekly radio sermon-show: 40m listeners; largest radio show in the US • Described as a Demagogue - leader who gains power by appealing to peoples prejudices and fears rather than to reason; blamed the Depression on the Jews, in particular Jewish Bankers; strongly anti-Semitic • Supported New Deal at first, then turned on the Govt. for doing too little • Called for a new plan of "Social Justice"...through:

nationalizing the banks, free silver, increased money supply, redistributed of wealth • formed the National Union for Social Justice, made impassioned speeches at public meetings – attracted sizeable support in Eastern cities and among some members of Congress • eventually silenced by the Catholic Church: embarrassed because of his blatant anti-Semitism and harsh remarks about the govt. • Faded from limelight – often accused of having Fascist leanings?

Senator Huey P. Long (nicknamed the "Kingfish“); Governor of Louisiana: dominated politics like an old machine boss / dictator: • Considered the most dangerous of the “demagogues” • Yet, was very popular with voters in Louisiana; attracted by his flamboyant personality, record of accomplishments for working classes – fair tax system, free text books, lowering utility rates, building schools in poorer areas, building roads and bridges in parts of the city previously neglected.

Huey Long campaigning Great Depression 3.3A

Elected to US Senate in 1930: at first supported FDR, then broke with him. • He launched his own program called "Share Our Wealth", with the slogan, "Every man a king, but no one wears a crown". • Proposed that the govt. limit all incomes to $1m annually, limit capital accumulation and inheritance to $5m • Through confiscation and redistribution Govt. should provide every US family with a minimum of a $5,000 home, and an annual income of between $2,500 to $5,000.

Attracted a following of about 4m • Considered challenging FDR for the Democratic Party nomination or running for Pres as a third party candidate. • But was assassinated in 1935 • All three - Townshend, Coughlin, Long…not serious threats, not really Fascist, Socialist, Communist. • All wanted more Govt. assistance, involvement, reform programs to help the poor, unemployed, disadvantaged…all had visions of a more equitable, more just, society

Their specific movements / organizations did not succeed; were dubbed as crackpots or dreamers • But their significance was that they made FDR realize that he needed to keep on working to make things better: and some of their ideas would be incorporated in his second New Deal • Faced with continuing Depression and Criticism…..he introduced a Second New Deal in 1935…committed to be less concerned with balancing the budget and less concerned with the sensitivities of big business

Second New Deal • New Focus • Upset by the criticism of big business he was determined to be less concerned about trying to please big business - as he had with the NRA – less tolerant of monopolies • Determined to give more assistance to Labor, Youth, Elderly, Unemployed • Determined to fully engage in Keynesian Economics: to stop worrying about balancing the budget; a planned deficit was ok: deficit increased from $20b in 1932, to $40b in 1937, to $258b in 1945

FDR: Depression, New Deal