Franklin D. Roosevelt and the New Deal

1. Franklin D. Rooseveltand the New Deal

2. Agricultural overproduction Industrial overproduction Unequal distribution of wealth Over-extension of credit The Great Crash War debts, reparations, and tariffs Causes of the Great Depression

3. How Herbert Hoover Dealt with the Crisis • At first, he played the game of confidence economics. • He just continued saying: “Prosperity is just around the corner.”

13. Voluntary Measures • Hoover eventually established two privately-funded organizations: • The National Credit Association provided $1/2 billion to businesses for emergency loans, but it was too under-funded to do much good. • The Organization for Unemployment Relief was a clearing house for relief agencies. However, state and local governments were already in too much debt to benefit from it.

14. Limited Government Intervention • In the end, Hoover resorted to government intervention: • The Reconstruction Finance Corp gave $1-1/2 billion in federal loans to banks, insurance companies, and industry to prevent bankruptcies, but it was too little, too late. • The Home Loan Bank Act provided federal loans to homeowners to prevent foreclosures, but got bogged down in red tape.

15. Limited Public Works

16. Election of 1932

17. Why was Hoover ineffective? • Hooverthought business should be self-regulating. • He had a mania for a balanced budget. • He believed in self-reliance over all else. Direct aid would weaken that for the American people. • He lacked political skills.

18. Why F.D.R.? • In 1932 presidential election, FDR was perceived as a man of action. • Hoover was viewed as a “do-nothing president.” • F.D.R. had a successful track record combating the Depression as gov. of N.Y. • Results: a landslide for Democrats and a mandate to use government as an agency for human welfare.

19. A New Deal? • At the Chicago Democratic Party convention in 1932, F.D.R. pledges a “new deal for the American people.” • What did he mean by that statement?

21. Situation When FDR Entered Office • In March 1933, the country was virtually leaderless and the banking system had collapsed.

22. FDR Restored Confidence • In his inaugural address, he said “The only thing we have to fear is fear itself….” • He promised vigorous leadership and bold action, called for discipline and cooperation, expressed his faith in democracy, and asked for divine protection and guidance.

23. FDR’s Personal Qualities • He was a practical politician who practiced the art of the possible. • He was a charismatic person who exhibited a warmth and understanding of people. • He knewhow to handle press by focusing attention on Washington. • He provided leadership in a time of crisis. • He was willing to experiment

24. Goals of the New Deal • Relief: to provide jobs for the unemployed and get the needy food, clothing, and shelter. • Recovery: to get the economy back into high gear, “priming the pump” to stimulate consumption. • Reform: To regulate banks, business, and agriculture so this never happened again. • Overall objective: to save capitalism from itself

25. Sources of New Deal Ideas • Brain Trust: specialists and experts, mostly college professors, idea men • New Economists: government spending, deficit spending and public works, government should prime economic pump • Built off the ideas of British economist John Maynard Keynes

26. Bank Holiday - First Step

27. Bank Failures

28. Bank Holiday - First Step • Closed banks for four days to reorganize. • Those that were healthy could remain open. Those that weren’t had to close • President explained plan in a “fireside chat” . Explains FDIC will be there to protect their deposits. • Confidence is restored.

29. Glass-Steagall Act • Made it illegal for savings banks to invest in stock market, or lend money to people to invest in stock market • Created to Federal Deposit Insurance Corporation (FDIC) to protect peoples money in banks. • FDIC guarantees if a bank closes you’ll get a portion of you money back. • Today the FDIC insures deposits up to $250,000 per account. Paid thru taxes.

30. First New Deal: 1933-1934(The First 100 Days) • Objectives: higher prices for agriculture and business, help the needy • Beneficiaries: big business, agricultural, and ordinary people

32. Alphabet Soup?

33. National Recovery Administration (NRA) • Purpose: recovery of industry • Created a partnership of business, labor, and government to attack the depression • Any business could become a member • Put in place price controls, minimum wages, and codes of fair competition • Ruled unconstitutional by the Supreme Court

37. The Dust Bowl The 100th Meridian

38. The Dust Bowl

39. What caused the Dust Bowl disaster? • Over-plowing/over- cultivation by farmers (high demand during WWI) • Severe drought (no rain) • High winds • All these conditions destroyed the grasses that held the soil in place • These storms were called “Black Blizzards” • Parts of the Great Plains became known as the Dust Bowl

40. Severe Drought!

41. Over Cultivation!

42. High Winds!

43. Who did the drought hit the hardest? • Migrant workers • Poor farmers from Oklahoma and Arkansas headed west to escape the Dust Bowl • Many moved to the west coast to find jobs on farms • They were not welcomed by locals • Locals feared that the migrants would take local jobs • Migrant workers lived in poor conditions (tents, no water or electricity)

47. Dorothea Lange's "Migrant Mother”.

48. First Agricultural Adjustment Act (AAA) • Purpose: the reform and recovery of agriculture • Paid farmers who agreed to reduce production of basic crops such as cotton, wheat, tobacco, hogs, and corn • Money came from income and business taxes. • DECLARED UNCONSTITITIONAL BY THE SUPREME COURT!