FDR and the New Deal

1. FDR and the New Deal

2. The Depression • Collapse of US economy between 1929 and 1932 1929 GNP=103.9 B, Exports 7.1 B • GNP= 56.0 B, Exports 2.4 B 1932, 25% unemployment • Dust Bowl compounded economic collapse and unemployment • Hoover’s Rugged Individualism and Welfare Capitalism limited government role in fighting depression • Hoovervilles

3. FDR Takes Office • FDR Took office in March 1933 • Known as a domestic president; concerned with the lower and middle classes rather than with foreign policy • Democratically controlled Congress passed his bills • Labeled his philosophy towards change as The New Deal • 100 Days: flurry of legislation to combat Depression

4. 3 R’s • FDR had no set policy when he started his term: experimentation • “Relief, Recovery, Reform” • Relief: immediate remedy to the human suffering, in handouts, make-work projects • Recovery: longer-lasting remedies to get people back on their feet and return economy to prosperity • Reform: government regulation and programs to prevent a similar depression from recuring

5. FDR’s First Actions • By executive order, closed all banks immediately. • Emergency Banking Act: supported and re-organized banks • Economy Act: slashed 500 million from government spending (later, economists would criticize this policy) • Beer Act: ended prohibition by legalizing beer and wine, provided revenue through taxes

6. 100 Days: Alphabet Soup • CCC (Civilian Conservation Corps): forestry, parks, wildlife • AAA (Agriculture Adjustment Admin): quotas, planning (later declared unconstitutional) • FERA (Federal Emergency Relief Act): money to states • TVA (Tennessee Valley Authority): development of Tenn. area, anti-flood, hydroelectric • HOLC (Homeowner's Loan Corporation) and FCA (Farm Credit Admin): refinance home and farm mortgages • PWA (Public Works Admin): public building programs

7. Later in the 1930s • WPA (Works Progress Administration): make-work projects • “Wagner Act”: create National Labor Relations Board to help labor and management negotiate; replaced idea of National Recovery Act • Securities Exchange Commission to regulate stock market and investigate fraud • Social Security Act: pensions • Tax populace today • Pay pensions at retirement • Unintended effect: “Roosevelt Recession” of 1937 because of money removed from economy

8. Results of New Deal • Tremendous popular support for FDR; a president who understood the common man. • Public sense that the government was trying to end the depression. • Significant, but not dramatic, drop in unemployment; true recovery came due to WW2 • Unemployment 1933 12,830,000 24.9% 1934 11,340,000 21.7% 1935 10,610,000 20.1% 1936 9,030,000 16.9%

9. Results of the New Deal • Increase in federal gov’t spending (but total fed, state, local fell) Federal Taxes, Expenses, Balance 1929 3.9 billion 3.1 billion +.8 1933 2.0 billion 4.6 billion -2.6 1939 6.3 billion 9.1 billion -2.8 • FDR accused of dictatorial and socialist methods • Federal government became competitor in economy • Several bills declared unconstitutional • Accused of trying to stack supreme court • FDR used expanded presidential powers to influence society directly • New governmental programs became permanent as gov’t increased role in the national economy

10. Debate over FDR’s New Deal Legacy • Proponents praise FDR for his courage and flexibility in combating the Great Depression, his sympathy for the working man, and attempt to safeguard common man against unchecked capitalism. • Opponents of FDR claim he operated beyond the limits of the constitution, unfairly erected barriers to free-market capitalism, and created an overly large federal government whose continually rising expenses have seriously threatened the contemporary economic health of the nation.