The New Deal

1. The New Deal 1933-1939

2. Key Facts About the New Deal • Relief, Recovery, and Reform • When FDR took the oath of office on March 4, 1933 the country had just endured a bleak winter of rising unemployment, failing banks, and closing businesses. The American people called for immediate action to prevent the nation from slipping into economic chaos. • FDR understood the gravity of the crisis. In his Inaugural Address he announced, “I shall ask the Congress for…broad executive power to wage a war against the emergency as great as the power that would be given me if we were in fact invaded by a foreign foe.” • FDR and his “brain trust” of advisors were resolved to use government to address the economic crisis. They proposed a pragmatic series of trial-and-error programs that had three goals: first, adopt measures to restore public confidence and achieve immediate relief. Second, adopt measures to help promote industrial and agricultural recovery. And third, implement long-term measures to reform business practices.

3. Key Facts About the New Deal • The Hundred Days, March 9-June 16, 1933 • The Emergency Banking Relief Act: On March 5th, FDR proclaimed a four-day holiday. The Emergency Banking Relief Act provided for the reopening of the banks under the supervision of the Secretary of the Treasury. A few days later, FDR addressed the nation by radio in the first of his “fireside chats.” He emphasized that most of the banks would reopen in a few days. The next day people making deposits far outnumbered those making withdrawals. As a result, the immediate banking crisis subsided.

4. Key Facts About the New Deal • The Civilian Conservation Corp (CCC): Created a jobs program for unemployed young men aged 18 to 25. The men lived in camps and worked on a variety of conservation projects in the nation’s parks and recreation areas. • CCC: Sections 4, 5, 6, and 7

5. Key Facts About the New Deal • The Tennessee Valley Authority (TVA): Authorized the construction of a system of dams and hydroelectric plants to provide inexpensive electricity and prevent devastating floods. The TVA provided an important experiment in regional planning and rehabilitation.

6. Key Facts About the New Deal • The Agricultural Adjustment Act (AAA): Attempted to increase farm income by paying farmers to leave acres unplanted. New Dealers hoped this action would reduce farm surpluses and thus raise prices. • The National Banking Recovery Act (NBRA): Attempted to combat the Depression by reducing competition. It created a National Recovery Administration to work with business and labor to write codes regulating production, wages, and hours. • The Glass-Steagall Banking Act: Separated commercial and investment banking to prevent speculative abuses. It also established the Federal Deposit Insurance Corporation (FDIC) to guarantee bank deposits up to $5,000.

7. Key Facts About the New Deal • The Second New Deal, 1934-1935 • Works Project Administration (WPA): Funded a massive program of public projects ranging from building bridges to painting murals in post offices. • Securities and Exchange Commission (SEC): Regulated the stock market. • Social Security Act: Guaranteed retirement payments for enrolled workers beginning at the age of 65. This act proved to be the most far-reaching New Deal program. • Wagner Labor Relations Act: Recognized labor’s right to bargain collectively. It created the National Labor Relations Board (NLRB) to protect workers from unfair practices and to arbitrate labor-management disputes.

8. The New Deal Under Attack • Opposition to the New Deal • The New Deal helped pull America out of the depths of the Great Depression. Industrial production slowly rose and unemployment fell from about 13 million in 1933 to 9 million in 1936. • Despite these gains full recovery still seemed elusive. A small but contentious group of critics attacked the New Deal and offered radical plans to revive the economy. At the same time, the New Deal faced an even greater challenge from the Supreme Court.

9. The New Deal Under Attack • Three critics • Father Charles Coughlin was a Michigan-based priest whose popular Sunday radio program reached 40 million listeners. Father Coughlin opposed the New Deal and supported nationalizing the banks and coining more silver dollars. • Dr. Francis E. Townsend was a California physician who argued that the New Deal did not do enough for older Americans. Townsend wanted every person over the age of 60 to receive a monthly government check for $200.00. The recipient had to promise to spend all the money each month. The movement led by Townsend contributed to congressional approval for the Social Security Act. • Huey Long was a Louisiana governor and U.S. senator. Long wanted to take money from wealthy Americans and distribute $5,000 checks to needy people. His “Share Our Wealth” program attracted widespread supported prompting Long to plan a presidential campaign for 1936. Then in September 1935, an assassin shot and killed Long on the steps of the Louisiana state capitol in Baton Rouge.

10. The New Deal Under Attack • The Supreme Court packing fight • In the summer of 1935 the Supreme Court began to deliver a series of decisions overturning key New Deal programs. In Schechter v. United States the Court unanimously struck down the National Industrial Recovery Act because it gave the federal government powers of economic regulation that could not be justified under the Interstate Commerce Clause. A few months later the Court also invalidated the Agricultural Adjustment Act. • Roosevelt and the New Dealers feared that the Court would soon strike down both the Wagner Act and the Social Security Act. In 1937, FDR sent Congress the Court Reform Bill. The President surprised Congress by asking for the authority to appoint a new Supreme Court justice for every member older than 70. This would allow Roosevelt to appoint six new justices more receptive to the New Deal.

11. The New Deal Under Attack • The Supreme Court packing fight • Both the public and members of Congress opposed Roosevelt’s “court-packing” bill as a violation of the judicial independence and the separation of powers. Although the Democrats enjoyed large majorities in both houses, Congress refused to approve the Court Reform Bill. The rejection marked Roosevelt’s first major legislative defeat. Aroused conservatives in both parties made it difficult for Roosevelt to pass additional New Deal reforms. • Ironically, the Supreme Court proved to be more sympathetic to the New Deal after FDR’s court-packing fiasco. The Court upheld both the Wagner Act and the Social Security Act. In addition, several justices retired and Roosevelt ultimately appointed nine new members of the Court.

12. The Impact of the New Deal • The New Deal and the economy • As 1937 opened, Roosevelt optimistically pointed to several promising indicators of economic success. Unemployment fell to 14 percent and industrial output returned to pre-Crash levels. Confident that the economic crisis was receding, FDR reduced funding for New Deal programs. These cuts triggered a sudden economic downturn known as the “Roosevelt Recession” of 1937-1938. Without the stimulus of federal spending, unemployment jumped to 19 percent. • The Roosevelt Recession forced many New Dealers to turn to the unorthodox theories of the British economist John Maynard Keynes. Traditional economists had always argued that governments should strive to balance their budgets. Keynes disagreed. He recommended that governments use deficit spending – spending money beyond that which was raised by taxes – to stimulate the economy. Although FDR did not fully embrace Keynesian economics, he did resume funding the New Deal programs. • The New Deal did not bring about the full economic recovery FDR had promised. The United States finally emerged from the Great Depression when the federal government sharply increased military spending at the start of World War II.

13. The Impact of the New Deal • The New Deal and the role of the federal government • The New Deal accelerated the process first begun during the Progressive Era of expanding the role of the federal government. Under the New Deal the federal government assumed responsibility for the collective welfare of the American people. Social Security payments, farm loans, and relief projects all provided tangible examples of how the federal government became a growing part of everyday life in America. • As the federal government’s role expanded, so did the size of the federal bureaucracy. The New Deal created a number of federal agencies. By the end of the 1930s, the federal government became the largest single employer in the country.

14. The Impact of the New Deal • The New Deal and labor • When the Great Depression began, trade unions represented only about 3 million workers. Most were skilled workers organized by the American Federation of Labor (AFL). • The Wagner Act (National Labor Relations Act) guaranteed every laborer the right to join a union and use the union to bargain collectively with management. John L. Lewis, the leader of the United Mine Workers, took the lead in forming the Congress of Industrial Organizations (CIO) to unionize workers at all levels within an industry. The AFL and the CIO split apart at their national convention in 1935 because the AFL refused to grant charters to new unions organized on an industry-wide basis. • Undaunted by the split with the AFL, Lewis led a series of strikes in the automobile and steel industries. Workers walked off their jobs or in many cases staged sit-ins inside their plants. Eventually the workers won new contracts guaranteeing better wages, hours, and safety measures. By the end of the decade, unions represented 9 million workers or 28 percent of the nonfarm workforce.

15. The Impact of the New Deal • The New Deal and African Americans • The New Deal did not directly confront racial injustice. For example, the CCC camps were often segregated. African Americans, nonetheless benefitted from New Deal relief programs that attempted to alleviate poverty regardless of racial background. • The New Deal caused a dramatic change in how African Americans viewed the Republican and Democratic parties. In 1932, 75 percent of African American voters supported Herbert Hoover as the candidate of the party of Lincoln. Even though the New Deal did not oppose Jim Crow segregation, it did help African Americans survive the Great Depression. In the 1936 presidential election 95 percent of black voters switched their allegiance to Franklin Roosevelt and the Democratic Party. • African Americans formed an important part of the New Deal coalition that formed during the 1930s. The coalition also included labor unions, ethnic minorities, and white southerners.

16. The Impact of the New Deal • The New Deal and women • Many observers noted that women seemed invisible during the Great Depression. The PWA and other New Deal agencies almost exclusively hired men. The CCC excluded women entirely, prompting critics to ask, “Where is the she-she-she?” • Although the New Deal did not directly challenge gender inequality, First Lady Eleanor Roosevelt did play an important role in promoting equal treatment for women and African Americans. In one highly publicized incident, Eleanor Roosevelt resigned from the Daughters of the American Revolution to protest the organization’s decision to bar Marion Anderson, a world-renowned African American singer, from performing at their Constitution Hall in Washington, D.C.

17. Prompt #6 • FDR’s New Deal was successful. Assess the validity of this statement.