The Great Depression – Part 2 The New Deal

1. The Great Depression – Part 2The New Deal Chapter 18

2. Did you know? • Between Franklin Roosevelt’s election in November 1932 and his inauguration in March 1933, the 20th Amendment was added to the Constitution. This amendment changed the inauguration date form March 4 to January 20.

3. 18.1 – Franklin D. Roosevelt • I. Roosevelt’s Rise to Power (552-554) • A. The Republicans nominated Hoover to run for a 2nd term as president. Democrats nominated NY Governor Franklin D. Roosevelt • B. FDR’s policies to end the depression – New Deal • C. FDR’s background -

4. II. FDR is Inaugurated (554-555) • A. FDR won narrowly, but his inauguration would not occur until March 1933. Meanwhile, unemployment continued to rise, bank runs increased, and people began converting their money into gold • B. Many occurred because of fear the FDR would end the gold standard and reduce value of the dollar. • C. 4000 banks collapsed. Many governors closed banks to keep them from collapsing – bank holidays

5. 18.2 • I. The Hundred Days • A. March 9 – June 16, 1933: Congress passed 15 major acts to help end the crisis. 1st New Deal • B. FDR’s advisors came from academics, business, agriculture, government, law, social work = Brain Trust

6. C. 3 groups • 1. “New Nationalism” of T. Roosevelt- believed government and business should work together • 2. Distrusted big business and wanted government planners to run key parts of the economy. • 3. “New Freedom” of W. Wilson- felt it was the government’s responsibility to restore competition to the economy.

7. II. Fixing the Banks and the Stock Market • A. FDR’s first job – restore confidence in the banking system. Called a national bank holiday. • B. Emergency Banking Relief Act – required inspection of banks • C. To restore confidence, FDR used “Fireside Chats” – radio addresses to the public to explain programs • D. It worked! Bank deposits increased.

8. E. New regulations: • 1. Securities Act – banks must provide complete and truthful information • 2. Glass-Steagall Act – Separated commercial from financial banking • 3. Securities and Exchange Commission (SEC) – regulated the stock market to prevent fraud • 4. Federal Deposit Insurance Corp.- insured bank deposits

9. III. Managing the Economy • A. Agricultural Adjustment Act/Administration (AAA) – paid farmers not to raise certain crops: Why? Supply and demand • B. National Industrial Recovery Act (NIRA) – suspended antitrust laws and allowed business, labor, government to cooperate in setting up voluntary rules (codes of fair competition). National Recovery Administration urged consumers to buy only from companies who signed agreements with the NRA. Declared unconstitutional in 1935.

10. IV. Providing Debt Relief • A. Home Owner’s Loan Corporation (HOLC) bought the mortgages of homeowner behind on payments and gave longer payments and lower interest rates. Refinanced 1 of 5 mortgages. Only helped the employed. • B. Farm Credit Administration (FCA) established to help farmers refinance their mortgages. Helped in short, but may have slowed overall economy by giving money to inefficient farmers instead of business.

11. V. Spending and Relief Programs • A. Civilian Conservation Corp (CCC) – employed 18 – 25 yr. old men to work for the national forestry service • B. Federal Emergency Relief Administration (FERA) created to channel money to help state and local agencies fund relief projects • C. Public Works Admin – created jobs (construction projects) • D. Civil Works Admin – Harry Hopkins; hired workers directly on gov’t payroll; Shut down – too expensive?

12. F. New Deal – change in spirit of the American people, became optimistic and their faith in America was restored.

13. 18.3 • I. Challenges to the New Deal • A. Support of FDR and his New Deal began to fade in 1935 – Questioned by right & left wing politicians • B. Deficit Spending to pay for programs; abandoned balanced budget • C. American Liberty League – businessmen opposed to New Deal

14. D. Huey “Kingfish” Long – Share our Wealth societies. Take money from the rich and redistribute. • E. Charles Coughlin – Catholic priest who drummed up Long’s support through radio • F. Dr. Francis Townsend – proposed federal government pay seniors a pension; Old Age insurance, paid for by younger workers

15. II. Launching the New Deal • A. 1935 – 2nd New Deal to counter criticism • B. Works Progress Administration (WPA) – Created jobs for artists, writers, musicians, etc. • C. Schecter v. US – NIRA declared unconstitutional, Congress gave up powers to President • D. Would lead to Court Packing Plan • E. National Labor Relations Board (Wagner Act) secured Unions

16. IV. Social Security Act • A. Provided security for the elderly, unemployed workers and needy. Provided monthly retirement benefit and unemployment insurance. Younger workers pay premiums. • B. Helped many people, but initially left out many of the neediest, such as farmers and domestic workers.

17. 18.4 • I. Second Term • A. Shift in Democratic Party from mainly white Southerners to include immigrants, African Americans, minorities • B. Frances Perkins – 1st woman appointed to a cabinet post.

18. II. Court Packing Plan • A. Response to AAA ruling • B. Attempt to shift Supreme Court ruling, tried to increase # of justices. • C. Politically a mistake; Split Demo. Party. Too much presidential power. • D. 1937 recession – debate over how to handle it. • Henry Morgenthau – balance budget and cut spending • John Maynard Keynes – Spend heavily to jump-start the economy

19. E. FDR asked Congress to increase spending

20. II. Last New Deal Reforms • A. Limited successes in 2nd Term • B. National Housing Act – Subsidized loans for builders willing to build low-cost housing • C. Farm Security Admin made loans to purchase farms • D. Fair Labor Standards Act protected workers, abolished child labor, and created 40-hour work week. • E. By 1939 Congress turned against the New Deal

21. III. Legacy of the New Deal • A. New Deal had limited success, but gave Americans a stronger sense of security and stability • B. New Deal balanced competing interests; established the broker state. • C. New attitude toward the government – the government established a safety net (welfare, unemployment)