Chapter Twenty-Four: The New Deal

1. Chapter Twenty-Four:The New Deal Harry Sternberg, "Chicago: Epoch of a Great City,” WPA Mural, 1937, located in the Lakeview Post Office, Chicago, Illinois.

2. Chapter Twenty-Four: The New Deal • Launching the New Deal • Restoring Confidence • Roosevelt’s Personality: Roosevelt’s assuring and optimistic personality comforted people, especially through his “fireside chats” on the radio, which began only days after his March 1933 inauguration (he had used radio in a similar way as governor of New York). His first addressed the banking crisis. • “Bank Holiday” Declared: On March 6, 1933—two days after taking office—FDR proclaimed a euphemistically phrased “bank holiday” to stop the chain reaction of bank failures and allow Congress to meet in a special session to consider emergency banking legislation.

3. Chapter Twenty-Four: The New Deal • Launching the New Deal • Restoring Confidence • Emergency Banking Act: On March 9, FDR sent this act to Congress, where it passed within hours. It made sure bigger banks would not be dragged down by the failure of smaller ones, provided for Treasury Department inspection of banks before they could reopen, gave federal assistance to troubled banks, and reorganized those on the brink of failure. The law restored confidence in the banking system, and $1 billion in withdrawn currency was returned into the banks. • Economy Act: This law cut salaries of federal employees and reduced veteran’s pension payments by as much as 15 percent, all to keep the federal budget balanced. FDR wanted to appear responsible.

4. Chapter Twenty-Four: The New Deal • Launching the New Deal • Restoring Confidence • Glass-Steagall Act of 1933: This important act, signed into law by FDR in June 1933, established the following: • “Firewall”: It created a firewall between commercial and investment banks, not allowing one company to do both (this provision was eliminated by act of Congress in 1999, because it was thought it made U.S. banks less competitive, but also created the conditions for the 2007 economic collapse). • Limits on “Speculation”: It limited “speculative” uses of bank credit. • Federal Deposit Insurance Corporation (FDIC): It created this agency, which insured deposits up to $2,500 (now it’s $250,000) in case of bank failure. • Securities and Exchange Commission (SEC): An act creating this commission to police the stock market was passed in June 1934. • Prohibition Repeal: FDR allowed for the brewing of 3.2 percent alcoholic beer while pushing for the passage of the Twenty-First Amendment, which was ratified on December 5, 1933. Sen. Carter Glass (D - Va.) and Rep. Henry B. Steagall (D – Ga.)

5. Chapter Twenty-Four: The New Deal • Launching the New Deal • Agricultural Adjustment • Agricultural Adjustment Act: Passed in May 1933, • this act set up the Agricultural Adjustment • Administration (AAA), which allowed producers to • set production limits and paid them for leaving some • of their land idle, funding payments through a tax on • food processing. The act did succeed in increasing prices. • Large Farmers Favored: The AAA paid landholders, who were not always those who worked the land. It thus provided incentive for owners to evict sharecroppers and fire field hands, sometimes creating even worse poverty. • Farm Security Administration (FSA): The Resettlement Administration, which became the FSA in 1937, provided loans to poor farmers on bad soil so they could move to better locations, but this program had marginal success, only moving a few thousand farmers. • Rural Electrification Administration: Created in 1935, this effective agency worked to provide electricity to rural areas through utility cooperatives.

6. Chapter Twenty-Four: The New Deal Hugh S. Johnson • Launching the New Deal • Industrial Recovery • National Recovery Administration Established: Under Hoover, business leaders wanted the president to agree to loosen the anti-trust laws so that trade associates could cooperate in stabilizing prices. Hoover refused, but FDR’s administration was amenable. But New Dealers wanted some things in exchange: recognition of the workers’ right to bargain collectively through unions so that workers would share some of the profits as prices rose. This impulse led Congress to create the National Recovery Administration (NRA) in June 1933. • Brigadier General Hugh S. “Iron Pants” Johnson: This new agency was headed by Hugh Johnson, a former general who headed up supply efforts during World War I. He led the “Blue Eagle” campaign that created temporary “industrial codes” securing a minimum wage of 30-to-40 cents an hour, a maximum workweek of 35-40 hours, the abolition of child labor, and more specific codes for specific industries. The codes sought to eliminate destructive competition and maintain employment and production levels.

7. Chapter Twenty-Four: The New Deal Harold L. Ickes • Launching the New Deal • Industrial Recovery • Problems with Codes: The codes for the most part were written poorly and in a way that were favorable to the producers, sometimes actually raising prices beyond what the market would bear, rather than just creating a price floor. • Section 7(a): This section guaranteed workers the right to organize unions and negotiate collectively, but the act had no enforcement mechanism. • Public Works Administration (PWA): This agency, called the Federal Emergency Administration of Public Works until 1939, was created by the NRA law to fund large-scale public works projects. It was headed by Harold L. Ickes (1874-1952), who was also Secretary of the Interior. The PWA provided funds to private builders to construct airports, large electricity-generating dams, bridges, new schools, and highways. Some of its most famous projects were the Lincoln Tunnel, Triborough Bridge, and the Grand Coulee Dam. It definitely created new jobs, but many critics viewed it was too slow and inefficient to be an effective instrument of recovery.

8. Chapter Twenty-Four: The New Deal • Launching the New Deal • Industrial Recovery • Failure of the NRA: Industrial production actually declined under the NRA, and indication that it was not effective. Under considerable pressure, FDR forced the flamboyant and heavy-drinking Hugh Johnson to resign in Fall 1934. Johnson may have also been a bit too enthusiastic about Mussolini’s “corporatist” regime for FDR’s taste. • Schechter Poultry Corp. v. United States: Known as the “sick chicken” case, this Supreme Court decision struck at the heart of the NRA. A Brooklyn poultry producer operating in the Brownsville and East Flatbush neighborhoods was charged with numerous violations of the “Live Poultry” code. The Supreme Court ruled that since the firm did not engage in interstate commerce, the federal government did not have a right to regulate their business, and that Congress had unconstitutionally given the president the Congressional power to regulate commerce by allowing the administration to write the code. Roosevelt called this a “horse and buggy” interpretation of interstate commerce.

9. Chapter Twenty-Four: The New Deal • Launching the New Deal • Regional Planning • Private vs. Public Debate: The AAA and the NRA largely reflected the many New Dealers’ belief in economic planning dominated by private interests; other New Dealers thought that government should take the lead role in economic planning. The TVA was the latter’s biggest success. • Tennessee Valley Authority: In 1932, the private utilities empire of Samuel Insull (1859-1938) collapsed, with exposing extensive corruption and mistreatment of consumers. This generated considerable anger toward private utility companies and led to the creation of the Tennessee Valley Authority, a government authority mandated to build dams and generate hydroelectric power for consumers at reasonable rates, and oversee the economic redevelopment of the region. • Benefits of the TVA: It improved water transportation, eliminated most flooding in the region, provided electricity to thousands who had never had it, and helped lowered rates across the country.

10. Chapter Twenty-Four: The New Deal The Tennessee Valley Authority

11. Chapter Twenty-Four: The New Deal The Norris Dam, the first constructed by the Tennessee Valley Authority; construction started in 1933 and was completed in 1936 (image is from 1941)

12. Chapter Twenty-Four: The New Deal Harry L. Hopkins • Launching the New Deal • The Growth of Federal Relief • Federal Emergency Relief Administration (FERA): In May 1933, this agency replaced the smaller-scale Emergency Relief Administration (ERA) founded under Hoover in 1932; it provided loans to state governments so that they could operate bankrupted relief agencies. FDR selected the head of the New York State relief agency, social reformer Harry L. Hopkins (1890-1946), to lead FERA. • Civil Works Administration (CWA): In November 1933, FDR’s administration established this agency under Hopkins to create jobs for unskilled laborers. FDR preferred that the unemployed work for assistance rather than just receive handouts. While the agency was often criticized for making busy work, it did build some infrastructure of lasting value: roads, schools, sewers, etc.

13. Chapter Twenty-Four: The New Deal • Launching the New Deal • The Growth of Federal Relief • Civilian Conservation Corps (CCC): One • of Roosevelt’s favorite programs, it was created in April 1933 by executive order. Young men were paid $30 a month to work in national parks and other federally-owned wilderness areas to create camp grounds, build trails, and plant trees, all in a semi-military environment, with their food and shelter provided. • Home Owner’s Loan Corporation: This agency, established in June 1933, helped troubled homeowners refinance their mortgages. It helped 1 million people do so by 1936.

14. Chapter Twenty-Four: The New Deal “Ring Around a Roosevelt—pockets full of dough” Political cartoon by Clifford K. Berryman published on May 26, 1938, probably in the Washington Star [D.C.]

15. Chapter Twenty-Four: The New Deal • The New Deal in Transition • Critics of the New Deal • Second New Deal: Roosevelt and New Deal programs enjoyed widespread popularity in the first two years, but formidable criticisms of the policies began to emerge by 1935; in response, Roosevelt launched an aggressive wave of new legislation that has sometimes been referred to as the “Second New Deal.” • American Liberty League Established: In August 1934, wealthy members of the wealthy Du Pont chemical manufacturing family created this organization to protest what they viewed as the tyrannical nature of the New Deal and its attacks on “free enterprise.” It mostly attracted northern industrialist, like the chairman of General Motors, Alfred P. Sloan. It never attained widespread popularity, and faltered after FDR’s 1936 landslide.

16. Chapter Twenty-Four: The New Deal • The New Deal in Transition • Critics of the New Deal • Dr. Francis Townsend (1867-1960): This physician organized a movement of 5 million elderly demanding the creation a federal pension system for anyone over 60 who retired. Each would receive $200 a month from the government for opening up a new job. This plan influenced Roosevelt’s Social Security Act. • Father Charles Coughlin (1891-1979): This Catholic priest gained popularity for his weekly nationally broadcast radio sermons. He at first supported Roosevelt, but by 1934 began criticizing him for failing to deal with the “money powers.” He wanted remonetization of silver, issuance of greenbacks, and nationalization of the banking system. By 1936, he saw international capitalism and Communism as twin evils, backed by a Jewish conspiracy. He began to publicly sympathized with fascists in Europe. • Senator Huey P. Long (1893-1945): This senator and former governor of Louisiana split with FDR in 1933 and had a sizeable national following. Long’s broke with Roosevelt in 1933, developing an alternative to the New Deal: his Share-Our-Wealth Plan would tax the wealthy heavily and provide every family with an initial sum of $5,000 followed by a $2,500 annual salary.

17. Chapter Twenty-Four: The New Deal Huey P. Long broadcasting his “Share Our Wealth” program in 1935 while serving as senator. Father Charles Coughlin broadcasting on March 11, 1935

18. Chapter Twenty-Four: The New Deal • The New Deal in Transition • The “Second New Deal” • New Militancy: When the FDR administration launched a new array of legislation in the spring of 1935, it was the first time its officials openly uttered anti-corporate sentiments publicly for the first time. • Holding Company Act of 1935: This law was designed to break up the great utility holding companies, although lobbyists diluted it. • Tax Reform: Wealthy individuals were alarmed by a new tax law that imposed the highest and most progressive peacetime tax rates ever. • National Labor Relations Board: In 1935, the Supreme Court struck down Article 7(a) of the National Recovery Act, which guaranteed the right to collective bargaining for workers. In response, progressive senators led Robert Wagner of New York passed the National Labor Relations Act, which created a board that could compel employers to recognize and bargain with legitimate unions. FDR realized industrial workers were a key base of support for his administration.

19. Chapter Twenty-Four: The New Deal • The New Deal in Transition • Labor Militancy • Militancy Increased: In the 1920s, U.S. workers had not been militant, but by the 1930s, many obstacles to militancy had been removed. Business leaders temporarily lost the ability to be dominant shapers of government policy. • CIO Founded: More militant labor organizations emerged as well, most notable the Congress of Industrial Organizations (CIO) in 1935. The American Federation of Labor (AFL) only accepted skilled workers, having little interest in the unskilled, who were now the majority of the industrial workforce. Some activists began to argue for a new type of industrial unionism in which all workers in a particular industry would be members of one union, regardless of skill level. • John L. Lewis (1880-1869) of the United Mine Workers wanted to promote industrial unionism. Because of an argument on the issue with AFL leaders at the 1935 convention, he and his followers broke away to form the CIO, which was more militant and open to the membership of women and minorities. It started organizing in many previously unorganized industries.

20. Chapter Twenty-Four: The New Deal • The New Deal in Transition • Organizing Battles • Sit-Down Strike: United Auto Workers saw little progress in organizing until it developed the “sit-down strike” in 1936, which shut down the factory but also prevented scabs from being used. This method spread and by 1937 most automakers had been forced to recognize the union. • “Memorial Day Massacre”: The steel industry was harder to unionize. In 1936, the Steel Workers Organizing Committee (SWOC) started a campaign of bitter and prolonged strikes. Surprisingly, U.S. Steel—the biggest company—recognized the union to avoid a costly strike. But the “Little Steel” companies fought hard against it. On Memorial Day 1937, ten strikers against Republic Steel in Chicago were shot and killed by police during a peaceful march, and the brutal tactics worked in crushing the strike. • Rapid Union Growth: The resistance of Little Steel was an outlier. By the end of 1937, 8 million workers were in unions officially recognized as bargaining units, compared to 3 million in 1932. Little Steel finally recognized SWOC in 1941.

21. Chapter Twenty-Four: The New Deal • The New Deal in Transition • Social Security • A New Deal Goal: Many New Dealers had long been demanding social insurance for the elderly and unemployed. • Social Security Act of 1935: This law created an immediate $15 a month federal payment for the destitute, and a pension system for retirees between $10 and $85 a month depending on contributions through a payroll tax, starting in 1942. Social Security Poster, 1935 (Library of Congress) • Social Security Act of 1935: The law provided for those who were • deemed truly dependent: elderly poor, people with disabilities, and • women with dependent children; everyone else paid into “insurance.”

22. Chapter Twenty-Four: The New Deal • The New Deal in Transition • New Directions in Relief • Short-Term Needs: Social Security addressed long term needs; but New Dealers felt the federal government needed to help to help the currently unemployed. The administration thus created the Works Progress Administration (WPA) in 1935 to build and renovate public buildings, airports, roads, and bridges. It employed 2.1 million, and pumped an enormous money into economy. • Bigger Scale: The WPA replaced the smaller Civil Works Administration (CWA) in the fall of 1934: it had a $5 billion budget compared to the CWA’s $1 billion; it employed at total of 8.5 million over its lifespan. • WPA’s Flexibility: The WPA provided funds for the Federal Writers Project, the Federal Music Project, the Federal Theatre Project, and the Federal Art Project, all of which provided salaries for unemployed writers, artists, and musicians. • iv)Men often given relief in form of work relief and employment whereas women mainly given cash assistance

23. Chapter Twenty-Four: The New Deal • The New Deal in Transition • New Directions in Relief • Harry Hopkins (1890-1946): Chosen to head the WPA in 1934, Hopkins was a classic progressive reformer, having even worked in a settlement house. He served as Secretary of Commerce while simultaneously heading up the WPA. Hopkins had run New York State’s chief relief organization, Temporary Emergency Relief Administration, and came to FDR’s attention that way. • Women and Men and Relief: Women and men were treated very different under New Deal programs: for men, efforts focused on work relief (CCC. CWA, and WPA); but for women, it was mostly cash assistance, largely in the form of the Aid to Dependent Children program of the Social Security Act.

24. Chapter Twenty-Four: The New Deal • The New Deal in Transition • The 1936 “Referendum” • Alf M. Landon (1887-1987): With the economy seeming to improve, the Republicans knew they would lose, so they ran a moderate Kansas governor who led a half-hearted campaign. • Roosevelt’s Rivals in Disarray: With the assassination of Huey Long in September 1935, one of FDR’s main threats was gone. Long’s forces aligned with those of Dr. Townsend and Father Coughlin to create the Union Party, but it failed to get many votes. • Electoral Realignment: FDR received 61 percent of the popular vote compared to 36 percent for Landon. Only Maine and Vermont did not go for FDR. The Democrats also won larger majorities in the House and Senate. The Democrats had built a wide coalition: western and southern farmers, urban working classes, the poor and unemployed, the black population in northern cities, progressives, and liberals.

25. Chapter Twenty-Four: The New Deal • The New Deal in Disarray • The Court Fight • Mandate Squandered: Despite winning big, FDR would find his programs in disarray only a few months of being reelected. • Supreme Court Problems: The Supreme Court had a habit of striking down the constitutionality of components of many key New Deal programs (like the NRA and AAA), so FDR chose to use his mandate to fix that problem. • “Court-Packing Plan”: In Feb. 1937, Roosevelt proposed overhaul of court system to Congress, including adding six new justices to Supreme Court, so that he could appoint liberals and change ideological balance. He claimed that the members of the court were “overwhelmed” and that the court needed new blood. Conservatives were outraged. • Failure of “Court-Packing”: The Judicial Procedures Reform Bill of 1937 eventually failed to pass, but by end of March, the court started ruling more favorably toward key New Deal-related cases. Nonetheless, the administration suffered considerable political damage from this episode.

26. Chapter Twenty-Four: The New Deal “Step by Step” by Billy Warren, Feb. 1937, Buffalo News “Hear Ye! Hear Ye! Hear Ye!” by John Hudson, Feb. 1937, Columbus Citizen

27. Chapter Twenty-Four: The New Deal • The New Deal in Disarray • Retrenchment and Recession • Premature Budget-Balancing: Indicators looked as if the economy was improving: the national income had risen to $72 billion, up from $40 billion in 1932 (but still below the 1929 figure of $82 billion). Roosevelt saw this as an opportunity to cut back on the federal budget, cutting the WPA in half and laying off 1.5 million workers. • The “Roosevelt Recession”: A few weeks later the fragile recovery collapsed and four million additional workers lost their jobs. Economic conditions nearly returned to their 1932 levels. Many blamed the recession on the premature budget-cutting. In April 1938, Roosevelt asked for $5 billion emergency appropriation to start up public works programs again, and this started a tentative recovery again. Roosevelt also asked for more stringent labor legislation, which led to the passage of Fair Labor Standards Act. This law established a national minimum wage, a 40 hour work week, and strict limits on child labor. • End of the New Deal: The political will to pass further major legislation did not exist as the world was gearing up for a major war.

28. Chapter Twenty-Four: The New Deal Mary McLeod Bethune (1875-1955) • Limits and Legacies of the New Deal • African Americans and the New Deal • The “Black Cabinet”: Roosevelt appointment many African Americans to second-level positions within his administration, such as Mary McLeod Bethune, who was head of Negro Affairs in the National Youth Administration. • Discrimination Reinforced: New Deal organizations were federally funded, but locally administered. For example, the CCC was segregated, and the administration tolerated lower wages for blacks and Latinos since it did not want to alienate white southern Democrats, who were key to FDR’s support. Nonetheless, blacks shifted by huge numbers to the Democratic Party from the Republican Party between 1932 and 1936. Beforehand, they had mostly voted for Republicans since the Civil War.

29. Chapter Twenty-Four: The New Deal John Collier • Limits and Legacies of the • New Deal • The New Deal and the “Indian Problem” • Assimilation Policy: Since the late nineteenth century, the federal government had sought to eliminate the Indian problem by assimilating them and decreasing the number who identified as members of tribe. • John Collier (1884-1968): This innovative Commissioner of Indian Affairs was a proponent of cultural relativism, not viewing Euro-American culture as “superior.” He therefore supported legislation to reverse pressures to assimilate and instead be given right to live traditionally. • Indian Reorganization Act: This 1934 legislation, promoted by Collier, increased tribal land by 4 million acres by 1947 (most of it of poor quality). Yet Indians still remained among the poorest people in the U.S.

30. Chapter Twenty-Four: The New Deal • Limits and Legacies of the • New Deal • Women and the New Deal • Symbolic Gains: FDR named Frances Perkins as the first female cabinet member, as Secretary of Labor. FDR also appointed about 100 women to lower levels of the federal bureaucracy. • Frances Perkins (1880-1965): Perkins had worked as a leading consumer and labor advocate, having worked as a sociology professor and as New York State Secretary of Labor before coming to D.C. One of the key moments in her life was witnessing the Triangle Shirtwaist Fire. • Prevailing Gender Norms Accepted: While the New Deal was not openly hostile to the feminist agenda, it reinforced existing gender norms. It provided few jobs for women, and Perkins actively spoke out against married women occupying jobs that could be taken by a man. Frances Perkins and FDR

31. Chapter Twenty-Four: The New Deal • Limits and Legacies of the New Deal • The New Deal and the West • Special Attention: The West as a region did receive special attention from the New Deal agencies and receive more funds per capita than other regions. • Public Works: Excepting the TVA, the largest public works programs—dams and power stations—were located in the West not only because the topography was most suitable, but also because there was great need for power and water control. The Grand Coulee dam on the Columbia River in Washington State was the largest public works project ever in U.S. history to that point, and provided much needed power to the Northwest. • Potential Unleashed: Without this investment in the West, the region’s economic development would have been much slower, and its contributions to the WWII war effort much less.

32. Chapter Twenty-Four: The New Deal The completed Grand Coulee Dam in 1942

33. Chapter Twenty-Four: The New Deal • Limits and Legacies of the New Deal • The New Deal, the Economy, and Politics • Critiques: The most common critique of the New Deal is that it failed to revive the American economy, and that it was World War Two that ultimately did so. The New Deal also did not fundamentally challenge the power structure of American capitalism. • The New Deal’s Economic Legacy: The New Deal did give certain groups—like workers and farmers—more leverage in their struggles with American corporations. It increased federal regulation of formerly troubled areas of the American economy, like the stock market and banking system. And it gave the federal government more tools to promote and regulate economic growth.

34. Chapter Twenty-Four: The New Deal • Limits and Legacies of the New Deal • The New Deal, the Economy, and Politics • American Welfare State Established: While meager compared to other countries’ social welfare states, the New Deal did establish relief programs and the Social Security system. These provided limited welfare protections, marking a significant break from past reluctance to provide any relief for the neediest on the federal level. • Politics Changed: The weak and divided Democratic Party of the 1920s became a power electoral coalition over the next thirty years. Many voters turned away from cultural issues that concerned them earlier to vote in their best economic interest.