1920-1945 Domestic-4

1920-1945 Domestic-4 The New Deal

First 100 Days • The Banking Crisis = 1st priority • March 5: special session of Congress • March 6: Conference with state governors: said feds would step in if governors allowed people to starve • Used RFC for states, banks, businesses

Banking • March 6: Banking holiday: Feds to examine banks to determine soundness • March 9: Emergency Banking Act: to prevent larger banks from being dragged down by smaller ones. Banks were given federal assistance

Banking • Note: Banks were not nationalized • By March 15 ¾ of Federal Reserve Banks were sound and reopened • March 16th: First fireside chat. FDR encouraged people to stop hoarding their money and to redeposit it

Banking • Glass-Steagall Act June 1933 • Banks could no longer finance corporations or sell securities • Also provided for an FDIC (insured small deposits…up to $2500) • Bankers fought the above but: • Promoted stability • Protected small depositors • Increased public confidence

Finance • SEC created to act as a watchdog on the stock market. Joe Kennedy was first in charge • Federal Securities Act (Truth in Securities Act): Companies that issued securities (stock) had to provide investors with complete and reliable information

Finance • Britain and others went off of the gold standard • The U.S. did not but reduced gold content in the dollar • Forbade the private hoarding of gold • Called in all gold coins • Treasury bought lots of silver

Finance • The Economy Act: to balance the budget • Cut $400,000 from payments to veterans • Cut $1 billion from federal government employees • Did not help offset the cost of the New Deal • Pump-priming: continued to pour government credit into trade to stimulate the economy

The Tariff • 1934 Reciprocal Trade Agreements Act: U.S. would reduce tariffs on foreign-made goods when they reduced their tariffs on U.S.-made goods

Amendment 21 • Repeal of Prohibition • 18th the only amendment to be repealed by another amendment

Agriculture • The New Deal tried to raise prices by controlled inflation of the economy • The Frazer-Lemke Farm Bankruptcy Act: provided for a 5-year moratorium on farm foreclosures

Agriculture • The AAA (The Agricultural Adjustment Act) • Paid farmers to take land out of production • Larger farmers benefitted more than small ones • Sharecroppers SOL • Dust Bowl: top soil blown away • 1932-1936 Total farm income rose by 50%

Agriculture • AAA struck down by the Supreme Court • Was replaced by the new AAA: (The Soil Conservation and Domestic Allotment Act) • Farmers had to share with sharecroppers, tenants • Had to pland trees, etc to restore soil & prevent erosion

Industry • Used Hoover’s RFC • Tried to end the depression by reducing competition (no anti-trust enforcement for now. Large companies were encouraged…they employed more people) • The NIRA (National Industry Recovery Act)

NIRA • Representatives of labor and industry to draw up codes of fair competition: • They controlled production and spread employment by: • Reducing work week • Fair Prices • Floor on wages

NIRA • The codes were supervised by the NRA (National Recovery Administration) • Allowed the President to draft codes • Struck down by the Court in the Sick ChickenCase (Schechter Brothers v United States)

NIRA and the Court • Problems with NIRA: • Codes for all industries? Flyswatters? • Violated Anti-trust laws • Gave the President legislative powers • Prices rose faster than wages • Violations of Section 7a: Right to collective bargaining • Too many violations to prosecute..

NIRA • Included PWA (Public Works Administration): provided work on sewers, dams, canals, etc. • NIRA was replaced with The Wagner Act • With NLRB to oversee problems • The Wagner Act WAS able to give union protection. Gave rise to the CIO and UAW

Trade Unions • By 1932 1/3 of all U.S. laborers were unemployed • 1932 Hoover: Norris-LaGuardia Act • 1934 Strikes everywhere • AFL not adept at organizing assembly workers • AFL split at national convention over organizing workers on an industry-wide basis

Unions • 1935 AFL issued a charter to the CIO • John Lewis first CIO leader • Organized the steel industry first • 400 organizers signed up steel workers all over the U.S. • Threatened to strike but didn’t have to • 1937 gained 40-hour work week with pay increase from Taylor (President of the Board of Steel Corp)

The UAW • Auto workers were unique • High wages but seasonal • Unskilled and difficult to organize • 1936 CIO gave charter to UAW • Homer Martin 1st head of the UAW • Sit-down strikes were very effective • By 1941 Auto companies recognized UAW • By 1939 over 9 million members of UAW

Relief Measures • FERA (Federal Emergency Relief Administration): Loans and gifts to states for public relief: food, clothing, money + some loss of self-respect • CCC (Civilian Conservation Corps) young single men 18-25 given outdoor work. Paid $30 a month but $22 sent to their families

Relief • PWA (Public Works Administration) under NIRA: dams, sewers, waterworks. Headed by Ickes: Sec of Interior • CWA (Civil Works Administration) built roads, schools, hospitals • WPA (Works Progress Administration) White Collar jobs: teachers, Nurses, Artists

Relief • NYA (National Youth Administration) gave part-time jobs to full-time high school and college students. (Prevented teens from taking full-time jobs from heads of households) • Increased # of high school grads

Relief • Homeowners Loan Corporation: provided for refinancing small mortgages at lower rates • Federal Housing Agency Guaranteed loans to pay for new housing and home repairs • Rural Electrification Administration: provided electricity to rural areas

Social Security Act • Inspired by European Countries • Gave $ to care for dependent children • Gave $ for old-age pensions • Paid for by payroll deductions (very difficult) • Flaws: (lots of critics from the right) • Benefits insufficient • Did not help: farmers, domestic workers, merchant marine

Social Planning • TVA (Tennessee Valley Authority) • One of the most depressed areas of the U.S. • Government went into the business of providing electricity and fertilizer (similar to the Norris Bill vetoed by Hoover) • Built 25 great dams, really cheap electricity • Provided 40,000 jobs • Hugely successful but Socialism • Power Companies very angry

Critics from the Right • Called FDR a commie dictator • Formed the American Liberty League • Denounced lack fo free enterprise • Goal: To defend and constitution and restore respect of private property • Business and banking were doing much better by 1934! • Hoover wrote A Challenge to Liberty (blasted FDR)

Critics from the Left • Upton Sinclair: almost won governor of California. Advocated ending poverty by establishing cooperative colonies of the unemployed • Dr. Townshend also California. Proposed every retiree over 65 be given $200 monthly to spend every month as long as they spent it all. Paid for by sales tax (could not be put into trust funds, etc) To be paid for by sales tax

Critics from the Left continued • Father Coughlin Michigan (12 mile and Woodward) His church was burned down by the KKK in 1926. WWJ radio goave him a ½ hour slot on a Sunday to beg for money. Got a big following and lots of $. Built the Shrine of the Little Flower. Advocated guaranteed income for everyone paid for by taxing the snot out of the wealthy. Had more fan mail than FDR

Critics from the Left continued • Huey Long sometimes Governor, sometimes senator of Louisiana. • Share the Wealth Plan: confiscate the property of the wealthy and give everyone a home, $2,000 annual income, free college • Social Security Act, Food Stamp Plan, etc soon followed. FDR hoped to get left support. Knew he couldn’t git it from the right.

The Courts • The court had declared much early New Deal legislation unconstitutional • Much deemed unconstitutional based on division of powers (federal v state) • FDR needed Court’s cooperation before passing the Social Security Act • Threatened to “Pack the Court”: proposed that he appoint 1 additional justice for every one over age 70! (6 were)

The Court • The Court backed down without any other action and the new New Deal Legislation was not overturned • BUT conservative (anti-New Deal) democrats still supported states’ rights)

Election of 1936 • Democrats: FDR 523 • Republicans: Al Landon 8 (accused FDR of usurping too much power and endangering free enterprise • AFL endorsed FDR: first time it endorsed a presidential candidate…grateful for union help • Black vote: To Dems. They shared in ND help

Election 1936 • FDR promised to cut New Deal costs • BUT couldn’t • He cut work relief, etc. but it caused a recession • So…new pump-priming • By 1938 Republicans making a comeback in congress

Child Labor • Fair Labor Standards Act Abolished Child Labor, ceiling on hours, floor on wages • Compare New Deal to Progressivism: basic differences: • Progressives tried to improve life for the average Joe. To protect citizens from abuse • New Deal tried to keep us ALL alive (business and banking too)

Other Stuff • Although New Deal did not solve the Depression, it kept us alive until war production improved the economy • Technology: 30’s: commercial aviation, Dupont came up with cellophane • Entertainment: News analysis on Radio, Disney Entertainment • War of the Worlds

1920-1945 Domestic-4