The New Deal

1. The New Deal “The real truth…is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson—and I am not wholly excepting the Administration of W.W. The country is going through a repetition of Jackson’s fight with the Bank of the United States—only on a far bigger and broader basis.” F.D.R.

2. Franklin D. Roosevelt BACKGROUND Fifty-one years old when he took office, FDR was a distant cousin of TR and there were many parallels in their personalities and backgrounds. Unlike TR, FDR was a Democrat. He was also less intellectual, moralistic, and evangelical; but he had an urbane and conciliatory manner.

3. BACKGROUND CONTINUED • He also suffered from polio, which left him without the use of his legs. • His was a complex personality: at once light-hearted and somber, candid and disingenuous, open and impenetrable, bold and cautious, decisive and evasive.

4. His ideas • FDR was a child of progressive ideals and he had no qualms about using the government actively to deal with the economic crisis, although he was vague about specifics. • He had a "brain trust" of academic advisors, mostly recruited from Columbia University, who essentially were heirs to TR's New Nationalism.

5. These men believed the economy needed more central coordination to avoid the problems of demand not meeting supply, which they believed were the result of economic concentration. • Other FDR confidants like Louis D. Brandeis, opposed central coordination and believed the government should concentrate on fostering competition.

6. In the end, despite the ideals of his advisors, FDR was primarily a pragmatic man of action.

7. The Hundred Days (Spring-Summer 1933) • The Inauguration: FDR laid the blame for the crisis squarely on the business community and promised prompt action to deal with it. • He declared a national bank holiday and called Congress back into special session. • After convening Congress promptly passed FDR's Emergency Banking Act, which confirmed the bank holiday, and provided for the reopening of solvent banks and reorganization, sale, or liquidation of those that were not.

8. The Hundred Days (Spring-Summer 1933) cont… • Economy Act: passed to balance the federal budget by chopping veteran's benefits and allowances and cutting the salaries of federal employees. • Congress also passed a bill to amend the Volstead Act to allow the sale of light wines and beers • Although the acts were essentially conservative, the sense of action and the defeat of the two most powerful special interests in Washington (veterans and prohibitionists) exhilarated the public and helped restore confidence in the government.

9. Planning for agriculture • To deal with low prices and overproduction FDR proposed "agricultural adjustment," in which the government would pay farmers to reduce their acreage or plow under crops already in the fields • Agricultural Adjustment Act (AAA) passed May 12, 1933 by Congress and searing droughts in 1933-34 helped push up farm prices.

10. Planning for industry • The problem here was a massive cut in production and subsequent unemployment. • The view of FDR's braintrust was that the only way to stop industrial decline was through joint planning by government and business. • The result was the National Industrial Recovery Act (NIRA).

11. NIRA • The first part exempted from antitrust legislation cooperation among trade groups, retaining fair competition. • Section 7a also guaranteed the right of trade unions to organize and bargain collectively • NIRA also set up the National Recovery Administration (NRA) and Public Works Administration (PWA).

12. NRA and PWA • NRA urged employers to accept a voluntary code of conduct, under which they would pledge to observe certain maximum hours and minimum wages, and stop cutting prices and wages. • It also sought to abolish child labor, improve working conditions, encourage worker organization, and extend fair-trade policies. • NRA quickly became the target of criticism for protecting weak businesses from competition, enabling trade associations to fix prices, and embittered employers by protecting trade unions. • The PWA provided $3.3 billion to hire the unemployed to work on public works projects

13. Other Hundred Day legislation • Congress also created the Civilian Conservation Corps (CCC) to employ young men on public works projects. • Deflation and the subsequent increase in the burden of debt led FDR and the Congress to abandon the gold standard. The Gold Act (1934) gave the Treasury Department broad powers to manage the value of the dollar abroad and the conditions of credit at home. It gave the Federal Reserve broad authority to manage the money supply and credit.

14. Other Hundred Day legislation • Securities Act of 1933 and subsequent legislation provided rules and enforcement mechanisms to prevent abuses in the securities exchanges. (SEC) • Other 100 Days legislation included home and farm mortgage refinancing measures, emergency federal relief for the unemployed, deposit insurance to protect bank depositors, and measures to deal with soil erosion, and provide flood management and develop electric power sources (i.e. the TVA).

15. The end of the Hundred Days • This period saw Roosevelt send fifteen messages to Congress and have fifteen major bills passed.

16. The Struggle for Recovery The conquest of fear: the Hundred Days engendered a tremendous revival of national confidence for which FDR could take a good deal of the credit. During 1933, he enjoyed almost universal support, but as the crisis continued critics began to appear who at first had little impact of FDR's popularity (as shown by the midterm election of 1934), but eventually caused him to reorient the New Deal.

17. Critics • FDR's critics on the right consisted mostly of conservative businessmen and politicians, organized around the American Liberty League.

18. Leftist Critics: • Huey Long, governor of Louisiana, was a demagogue who led the "Share Our Wealth Society": which advocated seizure of all incomes over $1 million and inheritances over $5 million. This money would be used furnish each family $5000 to a buy a homestead and a $2000 annual allowance. Long aspired to the presidency, but was assassinated in 1935.

19. Leftist Critics continued… • Father Charles Coughlin: a Roman Catholic priest whose weekly radio sermons offered a curious blend of anti-communism, anti-capitalism and anti-Semitism. • Dr. Francis E. Townsend: advocated $200 pensions to all citizens over sixty on the condition they spent the money the same month they received it. • The leftist critics particularly appealed to baffled and disoriented members of the lower-middle class and rural Americans.

20. Stalemate in 1935 • Economic conditions were better in 1935 than in 1933 but no where near what they had been in 1929. • The Supreme Court aggravated FDR's problems with his critics by declaring the NIRA and AAA unconstitutional.

21. New Direction in policy • The Supreme Court decision invalidated the NRA, the cornerstone of New Deal economic planning. FDR quickly initiated new legislation to fill the gap. • He turned the to the Brandeis group and their neo-New Freedom conception of promoting the survival of small enterprises as the surest means of insuring the survival of competition.

22. New Legislation in 1935 • Works Progress Administration (WPA): Congress provided $4.8 million for WPA work relief and for further PWA projects. • Wagner Labor Relations Act: replaced section 7a of the NIRA and established the National Labor Relations Board to enforce it. • Resettlement Administration: aimed at addressing the problem of migrants and tenant farmers left unsettled by the AAA. • Social Security Act: perhaps the most significant act passed in 1935. It set up a system of old age and disability pensions, plus unemployment insurance. It finally set the United States in the direction of establishing a social welfare state.

23. The philosophy of the New Deal • Policy during the first phase of the New Deal (1933-1935) had been oriented toward reforming the economy and FDR had attempted to cooperate with business. • In the second phase of the New Deal (1935-1937), FDR was pushed by his critics on the left and on the right in Congress into taking an increasingly liberal stance. This phase was much more oriented toward reforming the economy, increasing competition and seeking a more egalitarian distribution of income. Budget deficits were tolerated, although most New Dealers (including FDR) were uncomfortable with them.

24. The Election of 1936 • The estrangement of business: Big business resented the development of big government and labor, which ended its primacy in American society. • They found a validation of their opinions in Supreme Court decision overturning New Deal legislation, and some tried to trace its origins to subversive foreign ideas.

25. Republicans • The Republican Party was split between conservatives who wished to turn the campaign into an all-out fight against the New Deal, and those sympathetic to the New Deal. • The latter faction prevailed at the convention, nominating Alfred M. Landon of Kansas, a former Bull Moose Progressive.

26. The Democrats renominated FDR • The forces of Coughlin, Townsend, and Long coalesced in the Union party, nominating Congressman William Lemke of N. Dakota.

27. The Campaign • Landon took a moderate line, accepting New Deal objectives but arguing that only the Republican party could achieve them thriftily and constitutionally, but grew more conservative as he grew desperate later in the campaign, attacking Social Security. • FDR conducted his campaign in a mood of buoyant optimism despite his critic's attacks.

29. The Supreme Court Fight • Seeing the electoral victory as an endorsement of the New Deal, FDR set out early in his second term to neutralize what he perceived as the biggest roadblock to implementing his policies--old and conservative Supreme Court justices. • Seven of nine pieces of New Deal legislation which had been challenged in the Supreme Court had been overturned there, although three only by narrow margins. • FDR called on Congress to reorganize the federal judiciary, arguing the age of many justices kept them from dealing adequately with the backlog of cases. He proposed appointing an additional justice to the Supreme Court for each justice over 70.

30. The Supreme Court Fight continued… • To FDR's conservative critics his "court-packing plan" confirmed that he was out to destroy the American system, but it also caused consternation among New Deal supporters as well. • The irony is that even as FDR's Judiciary Reform Bill was watered down into a bill making pensions available for retiring justices, the two-swing vote justices began to vote in favor of New Deal legislation. Seven justices also soon took advantage of the pensions to retire and FDR was able to appoint justices sympathetic to the New Deal including Hugo Black, Felix Frankfurter, and William O. Douglas.

31. Social and Economic Crises • The Rise of the CIO • The NIRA and then the Wagner Act had proved a boon to labor organizers. John Lewis and his United Mine Workers spearheaded efforts to organize mass production workers. • The AFL did not prove sympathetic to Lewis' efforts to organize workers by industry rather than craft and expelled Lewis and his followers from the AFL.

32. CIO • Lewis in turn organized the Congress of Industrial Organizations (CIO) in 1936 and it proved a great success as mass-production industries beset by unemployment and pay cuts were ripe for unionization. • The CIO pioneered the "sit-down strike," in which workers sat down by their machines and refused to work until employers would concede them the right to collective bargaining. • Although engendering considerable hostility, major corporations such as General Motors and United States Steel were forced to deal with CIO unions.

33. The recession of 1937-38 • The downturn after September 1937 was actually more severe than during the first nine months after the crash. • A debate was set off within FDR's administration over whether to continue efforts to balance the budget (to restore business confidence it was argued) or to resume deficit spending. FDR initially favored the former group, but as the downturn grew worse he resumed priming the pump

34. 1938 and the purge • The court fight, labor activism, and deficit spending widened the gap between southern conservative and northern liberal Democrats • Southern Democrats, starting with court packing battle, lined up in coalition with Republicans, and became an obstacle to further New Deal legislation • The House Committee on Un-American activities also became a tool of conservative reaction to the New Deal, hounding "radicals" out of government service • The year 1938 marked the end of forward momentum for the New Deal, particularly after the failure of the Lending Bill in 1939

35. The American People and the Depression • The trauma of depression • Manifested by a slowing in the growth rate of the population and an aging of the country • Also by the appearance of social demagogues and the prominence of movements such as fascism and Marxism

36. The public no longer admired businessmen as it had in the 1920s • The New Deal created greater social opportunities for not only wage earners, but also tenant farmers, sharecroppers, old folks, as well as intellectuals and women. People in rural areas particularly benefited from the activities of the Rural Electrification Administration

37. Immigration substantially stopped in the 1930s. Yet the era gave many of the newer immigrant groups from Southern and Eastern Europe their first chance to achieve full acceptance in American society • The CIO opened the doors to immigrant workers

38. The New Deal gave many their first chance for public service • FDR substantially increased the number of Catholics appointed to the federal bench • One result of this growing acceptance was a decline in the foreign language press and more effective acculturation of ethnic minorities into the mainstream

39. Black Americans • The New Deal resulted in rising expectations among African Americans • Although FDR acquiesced to segregation in implementing the New Deal in the South, many blacks were appointed to senior administration positions • FDR also denounced lynching and tried to make it a federal crime • FDR did more for blacks than any other president since Reconstruction (although less than he could have); not surprisingly black voters began to shift to the Democratic Party starting in 1936

40. Native Americans • The New Deal reversed the policy of assimilation begun under the Dawes Act of 1887 • John Collier, Commissioner of Indian Affairs forbade discrimination against Indian religious ceremonies, introduced instruction in Indian languages and culture in schools, doubled the proportion of Indians working in his agency, and funneled millions of New Deal dollars to improve reservations • Indian Reorganization Act of 1934: recognized tribal government, removed Indians on reservations from the jurisdiction of state courts, abandoned the policy of dividing tribal lands into individual parcels

41. Women • The New Deal mitigated but did not eliminate discrimination against women • Women benefited from NRA codes and then the Fair Labor Standards Act; women were employed by the WPA • The CIO also vigorously recruited women • The Democrats also enlisted women into the party both at the local level and in FDR's administration. His wife Eleanor became one the most visible New Dealers and he appointed Francis Perkins to his cabinet as Secretary of Labor

42. The Pattern of the New Society • With the New Deal, the United States renounced laissez faire capitalism without embracing socialism • Government acknowledged a responsibility to insure the economic and social health of the nation through fiscal policy and government regulation • It abandoned efforts to direct industrial production, but set ground rules covering standards of life and labor and insuring adequate competition • Human welfare was to be protected through various forms of social welfare--minimum wage, unemployment compensation, farm-price supports, social-security payments

43. Was the New Deal a success? • In terms of ending the Great Depression it was a failure; it also failed to establish true social and economic justice • However, it did succeeded in creating a middle path between socialism and laissez-faire capitalism. It institutionalized managed capitalism in America