FDR and the New Deal: Economic Reforms in the Great Depression

1. Franklin D. Roosevelt, distant cousin of Theodore Roosevelt, gained popularity as Governor of New York by helping people economically. Ch. 10. FDR & the New Deal (1933-39). ► FDR only president to serve more than 2 terms (re-elected 4x, 1933-45). ► The 22 Amendment, passed in 1947, limits president to 2 terms.

2.  Adolf Hitler appointed Chancellor in 1933; Japan withdraws from League of Nations in 1933; Spanish Civil War in 1936; Hitler annexes Austria in 1938.  Before FDR’s inauguration, unemployment still rose, bank runs increased, Governors declared “bank holidays” before bank runs put them out of business; only 1 in 4 workers was employed. ITO Miyoji Francisco Franco

3. Total employment in US, in millions, excluding farms and WPA.

4. I. The 1st New Deal.  Franklin Delano Roosevelt (FDR) elected President in 1932 in a landslide against Hoover.  In FDR’s nomination acceptance speech, he pledged “to a new deal for the American People.” During inauguration address: “…let me assert my firm belief that the only thing we have to fear is fear itself...” -- FDR

5. The New Deal was the title President Franklin D. Roosevelt (FDR) gave to a sequence of programs and promises he initiated between 1933 - 1938 with the goal of giving reform to the people and economy of the U.S. during the Great Depression.  Had polio, but had great attitude and said “If you had spent two years in bed, trying to wiggle your big toe, after that anything else would seem easy.”  Not an intellectual or strong ideology, but practical, sought range of advice, chose advisers that disagreed with him and each other, wanted to hear different opinions, but always made final decision. To fight the Depression, FDR believed the first thing to do was to restore peoples confidence In the banks.

6. A. “Hundred Days” – Congress passed 15 major bills to meet economic crisis.  Set pace for legislation that’s never been equaled.  Together, the 15 acts known as the First New Deal.

7. B. Fixing the Banks & Stock Market. 1. Emergency Banking Relief Act (EBRA) – Federal examiners issue licenses to those financially stable. • Let Americans know what he was trying to do’ Assured people the banks were safer than putting money under their mattress. •  Next day, deposits outweighed withdrawals; the banking crisis was over.

8. a) Fireside Chat – FDR’s direct talks over the radio w/ US.

9. 2. Regulating Brokers. a) Securities and Exchange Commission (SEC) – Regulate the stock market & prevent fraud/another crash (1934). • Supported the Securities Act of 1933 – required companies that sold stocks to provide complete and truthful information to investors.

10. b) Federal Deposit Insurance Corporation (FDIC) – Gov’t insurance for bank deposits. FDR signs the Banking Act of 1933, a part of which established The FDIC. Sen. Glass of VA on the left and Rep. Steagall of AL on the right. June 16, 1933  Insured up to certain amounts; Increased public’s confidence in banking.  Created by the Banking Act, aka the Glass-Steagall Act.

11. C. Managing Farms & Industry. 1. Agricultural Adjustment Administration (AAA) – Gov’t paid farmers not to grow certain livestock and crops. The Agricultural Adjustment Admin. is considered the 1st modern U.S. farm bill. • Such as hogs, cotton, corn, wheat, and tobacco. • Mostly successful, but criticized for raising prices during Depression and not all farmers benefited like poor tenant farmers, many African Americans, who became homeless and unemployed when landlords chose their fields to be taken out of production.

12. The National Industrial Recovery Act (NIRA) created the NRA. 2. National Recovery Administration (NRA) – codes of fair competition for each industry. Eleanor Roosevelt hanging an NRA sign: "We Do Our Part"

13. Schechter v. the United States ruled the NRA as being unconstitutional. PetitionerSchechter Poultry Corporation Petitioner's ClaimThat the code of fair business practice established under the National Industrial Recovery Act of 1933 could not affect its business because the code did not have the force of law. Date of Decision27 May 1935 DecisionThat the federal legislation establishing the National Recovery Administration was unconstitutional in that it delegated too much law-making power to non-governmental individuals. SignificanceThe decision overturned the major effort of the first administration of Franklin Roosevelt (1933-1937) to regulate and control the economy during the Great Depression.

14. D. Providing Debt Relief. 1. Home Owners’ Loan Corporation (HOLC) – Helped homeowners pay their mortgages. 2. Farm Credit Administration (FCA) – Helped farmers refinance mortgages.

15. E. Spending & Relief Programs. 1. Civilian Conservation Corps (CCC) – Men 18-24 to work outdoors. CCC workers on road construction, Camp Euclid, Ohio in 1936. •  Most highly praised of new programs. • Under national Forestry Service, planting trees, fighting forest fires, construction, and building water reservoirs. • Return home after 6 months; program ended in 1942 after putting almost 3 million people to work.

16. The "First New Deal" (1933) had something for almost every group, and the "Second New Deal" (1935–36), which introduced class conflict, especially between business and unions. FDR at a Civilian Conservation Corps camp. • A second round of programs and reforms to speed economic recovery and security for every American.

17. 2. The Civil Works Administration (CWA) – Hired 4 million people to get through the winter of 1933/34). The CWA created construction jobs, mainly improving or constructing buildings & bridges. It ended on March 31, 1934 after costing $200 million a month. • Included 300,000 women; Build or improved 1,000 airports, 500,000 miles of roads, 40,000 schools, and 3,500 playgrounds, parks, and playing fields; Lasted only 5 months (winter of 1933/34).

18. 3. Federal Emergency Relief Administration (FERA) – $ ½ Billion to state & local agencies for relief programs. FERA training camp for unemployed women, Pennsylvania, 1934. ► Authorized a couple weeks after the CCC. ► From May 1933 - December 1935, it gave states and localities $3.1 billion to operate local work projects and transient programs. ► FERA provided work for over 20 million people and developed facilities on public lands across the country.

19. The Tennessee Valley Authority (TVA) is a federally owned corporation in the U.S. created in May 1933 to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development in the Tenn Valley, a region particularly impacted by the Great Depression. RED = Reservoirs YELLOW = Fossil plants PURPLE = Nuclear plants  The New Deal produced visible effects in the Tenn Valley Authority (TVA) dam-building project, which created flood control, conserved forestlands, and brought electricity to rural America.  20 dams, employed 40,000 workers, reforested millions of acres, build power plants, strung thousands of miles of electric wires.  Many business groups opposed the TVA in the 1930’s on the grounds that it unfairly competed with private power companies.  Today, provides power for almost 8 million people, and recreation for millions of others.

20.  By end of first year in office, he convinced Congress to pass many various policies.  Did not restore prosperity, but reflected FDR’s zeal for action, willingness to try, and brought a new sense of hope and optimism in their nation, restoring faith in America. The "alphabet soup" agencies of the New Deal included the TVA, CCC, WPA, FDIC, SEC and IRA. FDR addressing Congress

21. II. The 2nd New Deal (1935). The first New Deal was only in effect for 2 years and created 2 million new jobs, But 10 million were still unemployed. • With improvement to the economy slower than expected, FDR faced opposition from several different people and groups. • 1935, FDR began the Second New Deal, including the Works Progress Administration (WPA) and several other programs.

22. Similar to the ‘Public Works Administration’ (PWA) in 1933 which hired contractors to build projects; required to hire people of color and helped break racial barriers. A. Works Progress Administration (WPA) – 1935, Federal $ for work relief & increase employment by building useful projects. Michigan artist Alfred Castagne sketching WPA construction workers. (May 19, 1939) • Over next several years, hired 8.5 million workers and spent $11 billion to build 650,000 miles of highways, roads, and streets, 125,000 public buildings, over 8,000 parks; Built or improved 124,000 bridges and 853 airports.

23. B. Challenges to the New Deal.  With improvement to the economy slower than expected, FDR faced opposition from several different people and groups.  The Right wing (conservative Republicans and southern Dems) opposed New Deal from the start, imposed too many regulations on business & expanded the federal gov’ts power at states rights expense. Left-wing Liberal (Democratic party) Right-wing Conservative (Republican party) Moderate, or in the middle (Lower taxes, less immigration) (for civil rights, working class)

24. 1. American Liberty League – Anti-New Deal politicians from both parties joined together. Father Coughlin (liberal). Heavy taxes on rich, nationalize banks. “Share Our Wealth” (liberal) clubs. •  Purpose was to organize opposition to the New Deal. • The Right (conservatives) believed programs hurt business; The Left said it didn’t go far enough to intervene in the economy and shift wealth fro the rich to the middle and lower classes. • Challenges to FDR came from Huey Long and Father Coughlin.

25. To pay for New Deal programs, Roosevelt abandoned a balanced budget and began using deficit spending. 2. Deficit Spending – FDR borrowed $ to pay for programs. The Depression was an emergency the scale of which could only be matched by a war. To combat this, FDR resorted to deficit spending in order to bring relief to the economy.  FDR abandoned a balanced budget to spend money on relief and employment programs.

26. Keynes ideas, called Keynesian economics, had a major impact on modern economic and political theory as well as on many gov’ts' fiscal policies. He advocated interventionist gov’t policy, by which the gov’t would use fiscal and monetary measures to mitigate the adverse effects of economic recessions, depressions and booms. He is one of the fathers of modern theoretical macroeconomics.  John Maynard Keynes – British economist favored the heavy gov’t spending during a recession, even running a deficit, to jumpstart the economy (Keynesian economics). Keynes appeared on Dec 31, 1965 edition of TIME magazine. Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches :  A reduction in interest rates.  Government investment in infrastructure.

27. A 1936 cartoon shows the GOP building its platform from the Conservative planks abandoned by the Democrats.

28. The U.S. is spending in excess of current receipts (income from taxes) by $1 billion per day (2007).

29. The WPA employed 2 to 3 million unemployed for unskilled labor. WPA summarized its achievements.

30. The federal government commissioned a series of public murals from the artists it employed under the WPA. William Gropper's "Construction of a Dam" (1939), is characteristic of much of the art of the 1930s, with workers seen in heroic poses, laboring in unison to complete a great public project. • Most controversial part of program – Hired artists, musicians, and theatre people to create thousands of murals, sculptural works, and to beautify public walls and halls.  FDR said the artists “have to eat just like other people.”

31. C. Rise of Industrial Unions. 1. The Wagner Act created the National Labor Relations Board (NLRB) – Workers allowed to organize unions w/out interference from employers & to bargain collectively. Created by the WAGNER ACT The National Labor Relations Act, also known as the Wagner Act, is often referred to as the Magna Carta of organized labor because it dramatically strengthened the ability of labor unions to represent workers. LAUSD employees

32. 2. Binding Arbitration – A neutral party listens to both sides to decide on issues.  Binding Arbitration benefited dissatisfied unions.

33. 3. Sit-down strikes – Workers stopped working & sat down. Sit-down strike by United Auto Workers (UAW) at a GM plant in Flint, Michigan, 1937.  Interrupted the work flow and prevented the employers from bringing in replacement workers.  Aided by the Wagner Act (National Labor Relations Act), workers used sit-down strikes to protect their rights to organize, and union membership increased rapidly.

34. 4. Fair Labor Standard Act (1938) – established a national minimum wage; 40-hour workweek; abolished child labor. The Equal Pay Act of 1963 amended Fair Labor Standards Act and made it illegal to pay workers lower wages on the basis on their sex. It is often summed up with the phrase “Equal pay for equal work.” This was a major step towards closing the wage gap in women’s pay.

35. D. The Social Security Act (SSA) – 1935, gov’t guaranteed insurance benefits for elderly & unemployed. FDR signing the Social Security Act, 1935.  One of most important pieces of legislation in U.S. history !!! • Included two insurance programs: A federal program provided retirement insurance (monthly payment at age 65).  States administer the unemployment compensation using federal $.

36. 2002  Social Security also provides modest welfare payments to other needy people, including people with disabilities and poor families with young dependant children.  FDR did not count on Congress borrowing money from Social Security to pay for other programs while failing to raise payroll deductions enough to pay for benefits. The Payroll contributions (tax): “give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits” -- F.D.R.

38. III. New Deal Coalition. A. FDR’s 2nd Term.  FDR won reelection in 1936 (one of largest landslide victories in history; 60% of vote and carries all but 2 states (Maine & Vermont),

39. The diagram shows the historic political realignment of African Americans and other minorities triggered by the New Deal.  Democratic Party now was a coalition of, farmers, laborers, African Americans, new immigrants, ethnic minorities, women, progressives, intellectuals and (fewer) southerners.

40. 1. Frances Perkins – FDR appointed the 1st woman to a cabinet post (Secty of Labor).  Perkins also headed team that designed the Social Security program.

41.  Eleanor Roosevelt played a big part in bringing about the African-American and women vote (made modest gains under the New Deal).  She showed strong sympathies for diverse groups as she toured the country. Eleanor on Olvera Street (LA) in 1932.

42. B. The Court-Packing Plan – ↑ size of Supreme Court w/ like-minded judges. The Supreme Court overturned FDR’s NRA and AAA programs. Violate the Constitution’s ‘Separations of Powers’  The Court disagreed w/ the New Deal and declared some unconstitutional. • Saying the court was overworked, if any justice served over 10 years and did not retire in 6 months after reaching 70 years old, the president could appoint an additional justice to the court. • First political mistake; appeared to be power hungry; Southerners feared FDR would appoint anti-segregationists, African Americans feared future president would appoint anti-civil rights justices.

43. The Supreme Court would over-rule several measures of the New Deal, which led FDR to propose some changes to the structure of the Court. This proposal created a threat to the checks and balances of our system and resulted in some of the harshest criticism FDR would experience as President.  FDR faced controversies over the plan to increase the size of the Supreme Court and over a recession caused by his desire to stop deficit spending.

44. After almost a decade of the New Deal (and 1937 Recession), many were disappointed that the New Deal did not live up to its promise.

45. There are several New Deal programs still in operation; the largest such programs today are Social Security, the FDIC, CCC, & Securities and Exchange Commission (SEC) - the primary regulator of publicly traded U.S. firms. The New Deal increased gov’t control over the economy and money supply, intervention to control prices and agricultural production, the beginning of the federal welfare state, and the promotion of trade unions. C. Legacy of the New Deal. FDR and Eleanor at Warm Springs, Georgia, 1939. • New Deal expanded the federal gov’ts role in society and the economy by providing a safety net for people. • The economy would not fully recover until WWII, but the New Deal gave many Americans a sense of security and stability.

46. 1. Broker State – Gov’t works out conflicts between groups. 2. Safety net – Safeguards & relief programs that protect against economic disaster. Social Security and debt relief → Franklin D. Roosevelt primarily blamed the excesses of big business for causing an unstable bubble-like economy. Democrats believed the problem was that business had too much power, and the New Deal was intended as a remedy, by empowering labor unions and farmers and by raising taxes on corporate profits. Some New Deal regulations (the NRA and AAA) were declared unconstitutional by the U.S. Supreme Court. Most New Deal regulations were abolished or scaled back in the 1970s and 1980s in a bipartisan wave of deregulation. However the Securities and Exchange Commission, Federal Reserve, and Social Security won widespread support.

47. During Roosevelt's 12 years in office, there was a dramatic increase in the power of the federal government as a whole. • FDR’s large array of agencies (New Deal liberalism) protected various groups of citizens—workers, farmers, and others—who suffered from the crisis, and enabled them to challenge the powers of the corporations. • The wartime Fair Employment Practices Commission (FEPC) executive orders that forbade job discrimination against African Americans, women and ethnic groups was a major breakthrough that brought better jobs and pay to millions of minority Americans. The New Deal was the inspiration for President Lyndon B. Johnson's Great Society in 1960s. Johnson (on right) was elected to Congress from Texas in 1938.

48. ACTIVITY In groups of 2-3, discuss: ► What values and policies do you associate with today’s political parties? ► What political party would you join? (Democratic, Republican, Green, Libertarian, Independent?)

50. Cab Calloway and The Cotton Club Orchestra, 1934 photo of His High-de-Highness of Ho-de-Ho and the band.