America in the 1930s

FDR and the New Deal

A depressed nation

• The Crash surprised / ruined many lives • No leader could offer effective solutions• By 1932 hope & optimism were gone• Winter of 1932/33 one of desperation &

anger for many• Hoover and government short on

energy & ideas – little power to change situation

• Roosevelt refused to work with Hoover

Winter 1932/33

• Winter of stagnation for:1) The unemployed2) The homeless/those threatened with

eviction3) Banks unable to keep reserves as

depositors withdrew savings.4) Manufacturers who couldn’t see where new

markets would come from5) Farmers whose incomes had decreased

due to low prices for their produce.

Franklin Delano Roosevelt

• Born to a wealthy family in New York state in 1882

• Trained as a lawyer before entering politics• Assistant Secretary to the Navy during WWI• Married Eleanor Roosevelt (Theodore

Roosevelt’s niece) in 1905• Contracted polio in 1921, left him

permanently disabled.• Surprised many by his determination to lead

a normal life.

The Inauguration of FDR

• Did not seem like a strong candidate – seemed sensible/decent but indecisive and lacked clear policies.

• His warm character in total contrast to Hoover’s reserved/defeatist manner

• Gathered around him many economic advisors (‘The Brain Trust’) to form policies to solve the growing crisis

• FDR won a landslide victory in 1932• Congress completely dominated by Democrats

and Progressive Republicans

Over to you…• Make a list of the major factors that FDR’s

administration had to solve.1) Overproduction2) Under consumption3) Bank failures4) Corruption in major corporations and financial system5) Unequal distribution of wealth6) Farm incomes fallen from $22 billion (1919) to $8

billion (1928)7) High tariffs on exports to the USA8) 25% unemployment9) Despair among American people, sense of

pessimism.

The First New Deal, 1933-34

Key question:

Did it provide relief and start recovery?

The Hundred Days

• From 9th March-16th June 1933.• An exceptional 15 bills passed, setting

direction of the first New Deal.• Symbol of FDR’s energy, commitment &

flexibility.• 19th April Roosevelt abandoned the Gold

Standard, forcing decline in value of the dollar and increase in price of goods/stocks to stimulate consumerism/investment.

…one major problem!

• People did not spend!• Effects of the Crash had discouraged

investors and savers from taking risks.

• Government had to not only create more money but make sure it was being spent.

What were the New Deal programmes?

• Aims of 1st New Deal:1) To relieve human suffering2) To promote economic recovery

Aims to be achieved by…

1) Correcting the financial crisis2) Offering short-term relief to the unemployed3) Promoting industrial recovery by increased

government spending and agreements between government, industry and unions.

4) Raising prices of farm produce to reduce production and to reduce supply making goods more valuable.

5) Last ‘unwritten’ aim was to restore hope and energy to Americans as individuals.

Major legislation of the first New Deal, 1933-34

• Agricultural Adjustment Act (AAA) - Used farm subsides to regulate farm production.

• Civilian Conservation Corps (CCC) – Provided work for young men 18-25. Organised like army, men worked on regional environmental projects. Most of salary sent back to families.

• Tennessee Valley Authority (TVA) – Regional planning of deprived areas, inc. hydroelectricity, flood control, education/health projects in Virginia, N. Carolina, Tennessee, Georgia, Alabama, Mississippi and Kentucky.

Major legislation of the first New Deal, 1933-34

• Public Works Administration (PWA) – financed 34,000 federal, state and local projects costing $6 billion – a large source of employment.

• National Recovery Administration (NRA) – Established national economic planning. Controlled production, prices, labour relations and trading practices.

• Banking Act (Glass-Seagall Act) – Prohibited commercial banks from selling stock or financing corporations (created separate commercial/investment banks). Federal Deposit Insurance Corporation guaranteed savings deposits up to $2500, protecting depositors’ savings.

Why were the Hundred Days important?

The second New Deal, 1935-38

Key question:

Did it complete recovery and start reform?

FDR re-elected in 1936

• The first New Deal had raised expectations (on the left) and anger (on the right)

• So, Roosevelt chose to focus on more social and economic reform.

• Another landslide victory in 1936.• Recognised remaining problems in

inaugural address.

“In spite of our efforts and in spite of all our talk, we have not weeded out the over-privileged, and we have not

effectively lifted up the under-privileged. We do not destroy ambition, no do we seek to divide our wealth into equal

shares – we do assert that the ambition of the individual to obtain for him and his a proper life is an ambition to be

preferred to the appetite for great wealth and great power.”

FDR’s new focus

• Less on business needs, more on reforming areas that affected ordinary people

1) Unions able to fight for workers’ needs

2) Financial security in old age3) Cheap electricity4) Continued fight against high

unemployment

Major legislation of the second New Deal, 1935-38

• National Labor Relations Act (the Wagner Act) – Strengthened the power of labour unions by allowing collective bargaining. Resulted in peaceful resolution of labour disputes.

• Works Progress Administration (WPA) – Established work relief programmes, inc. Federal Art Project. Employed 8.5 million.

Major legislation of the second New Deal, 1935-38

• The big one…• Social Security Act (SSA) – created

guaranteed retirement payments for over-65s.

• Federal insurance for the unemployed.• Assistance for the disabled, for public health

and for dependent women and children. • Farm Security Administration (FSA), 1937 –

Guaranteed loans to farmers to buy farms and rehabilitate farms.

Major legislation of the second New Deal, 1935-38

• Fair Labor Standards Act, 1938 – set a minimum wage and maximum working hours. Raised the wages of 12 million workers by 1940.

• National Housing Act, 1938 – Established the United States Housing Authority, setting up housing projects for low income families.

Why had the depression not ended by 1939?

Unemployment • 1933: 13 million• 1937: 7.7 million• 1939: 10 million

• 1929:……….1 MILLION!!!!• So…… had the New Deal failed?

YES NO MAYBE

Conclusion: America in the 1930s – Did the New Deal end the Depression?

1. FDR continued the expansion of presidential power started by T. Roosevelt/Wilson, centralised decisions in the White House

2. New Deal wide-ranging in its provisions of direct relief for 1/3 of population from 1933-39

3. Federal government would now intervene in the national economy if the private sector could not guarantee economic security

4. Regulation of stock markets and financial power now centered in Washington

Conclusion: America in the 1930s – Did the New Deal end the Depression?

5. The New Deal continued Progressive ideals of order and regularity for the good of the majority.

6. Laid foundations for post-war welfare state7. Regognition that poverty was a structural

economic problem, not the fault of the individual.

8. The Democrat Party changed its popular base to include organised labour, black Americans, women, unemployed, immigrants, middle-class property owners. It became a broad coalition of different group interests.

Conclusion: America in the 1930s – Did the New Deal end the Depression?

9. The New Deal promoted union membership while allowing the development of large corporations.

10. There is a continuing argument as to whether the New Deal was conservative or radical, but it was definitely pragmatic and practical.

11. The New Deal was proactive in meeting the problems of 1933. It was reactive to problems that followed.

12. Only the coming of world war ended the problem of unemployment.