THETHE

NEW NEW DEALDEAL

1933-19401933-1940IB History of the IB History of the

AmericasAmericas

GUIDING QUESTIONSGUIDING QUESTIONSHow successful was the Roosevelt Administration’s “New Deal” in solving the problems of the Great Depression? (Consider: relief, Recovery, Reform; e.g. Agricultural Adjustment Act; Securities and Exchange Commission; Wagner National Labor Relations Act; Social Security Act)

How did it change the role of the federal government? How did it fashion a more stable economy and a more equitable society?

FDR: A “NEW DEAL”FDR: A “NEW DEAL”“A New Deal for the American People”"The only thing we have to fear is fear itself.“

confidence, optimism, public relations“Fireside chats”Eleanor Roosevelt

“Brain Trusts”Goals: “Three R’s” - relief, recovery, reform

Roosevelt Delivering a Fireside Roosevelt Delivering a Fireside Chat, 1935Chat, 1935

““Brain Trusts” Brain Trusts” FDR wanted to gather around him all the knowledgeable people he could to help him solve the problems associated with the Depression. So, the group of academics, or “Brain Trust” developed FDR's economic policy and developed programs that became the backbone of the New Deal.

Roosevelt’s Roosevelt’s Management StyleManagement Style

New Congress willing to pass almost anything Roosevelt asked forMuch legislation was written by the “Brain

Trust”Led by intuition; didn’t know exactly where he

was goingHe was a quarterback – next play depends on outcome of previous playPublic was willing to support any action (even wrong) over doing nothing

FDR Holding a Press Conference, FDR Holding a Press Conference, 19391939

Outline of the New DealOutline of the New DealHundred Days focused on short-term problems; long-term reforms came later

Passed many essential reforms that industrialized Europe had had for yearsUnemployment insurance, old-age insurance, minimum-wage regulations, conservation and development of natural resources, restrictions on child labor

Eleanor Roosevelt visiting a West Virginia

Coal Mine, 1933 (c) Bettmann/Corbis

Eleanor Roosevelt visits West Virginia Eleanor Roosevelt visits West Virginia Coal Mine, 1933Coal Mine, 1933

Copyright © Houghton Mifflin Company. All rights reserved.

First Hundred DaysFirst Hundred DaysRoosevelt acts decisivelyMarch 6 – 10 – nationwide banking holiday declaredOverwhelmingly Democratic Congress called into special sessionMarch 9 – June 16, 1933 – Hundred DaysCongress cranked out laws to deal with Depression

Alphabet AgenciesIn total, at least 100 offices were created during Roosevelt's terms of office as part of the New Deal, many known by their acronyms.

FIRST HUNDRED DAYSFIRST HUNDRED DAYS“Bank holiday”

Emergency Banking Relief Act (Mar. 9)

Beer-Wine Revenue Act (Mar. 22)

Twenty-First Amendment (Nov. 1933)(repealed 18th Amendment of Prohibition)

Civilian Conservation Corps (CCC) (Mar. 31)

Public Works AdministrationTennessee Valley Authority (TVA) (May 18) Civilian Conservation Corps workers plant seedlings

to reforest a section of forest destroyed by fire.

FIRST HUNDRED DAYSFIRST HUNDRED DAYSAgricultural Adjustment Agricultural Adjustment Act (AAA)Act (AAA) (May 12) National Recovery National Recovery Administration (NRA)Administration (NRA)

The National Industrial Recovery Act (June 16)

Schechter v. U.S. (1935)

Federal Emergency Relief Act (FERA)Glass-Steagall Act (Banking Act of 1933) (June 16)

Federal Deposit Insurance Corporation (FDIC)

Emergency Banking Relief Act

Gave president power to regulate banking transactions and foreign exchange and reopen solvent banks

Beer-Wine Revenue ActMarch 1933 – Beer Act

Light wine and beer with alcoholic content of 3.2% legalized$5 tax on every barrelWould provide employment and raise money for government“drys” labeled Roosevelt a “3.2 percent American”

Late 1933 – Prohibition repealed by the 21st Amendment

The Problem of Unemployment

1 of every 4 workers unemployed in 1933FDR used federal money to assist unemployed and “prime the pump” (start the flow) of industrial recovery

Civilian Conservation Corps (CCC)

Employment for 3 million young men

Reforestationfirefighting, Flood control swamp drainage

Recruits sent home $25 of their $30 monthly pay to parents

Roosevelt visits a Civilian Conservation Roosevelt visits a Civilian Conservation

Corps camp 1933Corps camp 1933

Public Works Administration (PWA)

Long-range recovery through industrial recovery and unemployment relief$4 billion spent on 34,000 projects Public buildings, highways, parks

Grand Coulee DamPWA built Grand Coulee Dam on Columbia River (Washington)Made possible irrigation of millions of acres of farmland After WWII, dam transformed entire region

Provided abundant water and power

Tennessee Valley Authority (TVA)

BackgroundNew Dealers accused utilities of overcharging consumersTVA was a federally owned corporation in the United States created to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development in the Tennessee Valley 2.5 million very poor people lived in area

TVA

Short-term – put people to workLong-term – reformed the power monopoly

Most revolutionary (anti-capitalist) reform of the New Deal

Critics charged TVA was “creeping socialism”

Benefits of the TVA– Full employment– Cheap electricity– Low-cost housing– Cheap nitrates (fertilizers)– Restoration of eroded soil– Reforestation– Improved navigation and flood control

TVATVA

The Problem with Farming

Farmers had historically suffered from low prices and overproduction, made worse by WWI boom years Conditions desperate during Depression

Mortgages foreclosed, corn burned for fuel

Agricultural Adjustment Act (AAA)Farmers were to receive “parity [equal] prices” with those received during 1909 – 1914AAA would create “artificial scarcity” by paying farmers to reduce crop acreageMoney to pay farmers raised by taxing processors of farm products (like flour mills)

This cost would be passed on to consumers, another way of raising farm prices

Waste in 1933 because of AAA

Passed after cotton crop had already been planted; farmers forced to plow much of the cropSeveral million pigs slaughtered; much of the meat went to poor families, but some used as fertilizerLed leftists (like John Steinbeck) to criticize the US economic system because of this waste, when so many people were hungry

Grapes of Wrath

Other Problems with AAA

All groups (farmers, food processors, consumers, taxpayers) unhappy because of sacrifice requiredPaying farmers not to farm increased unemployment

Field hands let go;sharecroppers removed from land

National Recovery Administration (NRA)Passed under the National Industrial Recovery Act (NIRA)Individual industries (over 200) were to work out codes of “fair competition”

Hours of workers reduced to provide more jobs to more people Minimum levels of wages established

Labor given additional rights Organize and bargain collectively through representatives that they chose “yellow-dog” contract forbidden: as a condition of being hired, agreeing to not be in a unionRestrictions placed on child labor

Patriotism and the NRAPatriotism and public pressure to achieve compliance with NRA

Mass meetings and marchesBlue eagle symbol with slogan “We Do Our Part” that merchants displayed in window

Glass-Steagall Act

June 1933Created the Federal Deposit Insurance Corporation (FDIC) Insured individual deposits up to $5,000 (now $100,000)Ended bank failures in US

Failures before and after the Glass-Steagall

Act

Federal Emergency Relief Act (FERA)

Headed by New York social worker Harry L. Hopkins, friend of FDR$3 billion granted to states for dole (welfare) payments or wages on work projects

““THE NEW DEAL IN THE NEW DEAL IN TRANSITION”: A TRANSITION”: A “SECOND” NEW “SECOND” NEW DEALDEAL

“Second New Deal” (1935 onward) First New Deal focused on 1 of the 3 R’s, Recovery. Second New Deal focused on the other 2 R’s, Relief and Reform

WPA Artist Sketching WPA WPA Artist Sketching WPA Construction WorkersConstruction Workers

Works Progress Administration (WPA)Passed party to stop criticism from demagogues $11 billion spent on public buildings, bridges, roads, and public art9 million people given jobs, not handouts

National Labor Relations Act (Wagner

Act)

Replaced NRA (declared unconstitutional in 1935)Created National Labor Relations BoardGuaranteed workers’ right to join a union and a union’s right to bargain collectively

Social Security Act Federal-state unemployment insuranceSpecific categories of retirees received monthly payments

($10 to $85) $138 to $1173 in 2005 dollarsPayments later raised

Financed by payroll taxes on employers and employeesHelp for blind, handicapped, delinquent children and other dependents

Social Security reflected big change in

philosophy of government

Rural family farms had provided chores for all ages

Families took care of their own dependentsGovernment recognized responsibility for welfare of its citizens Modeled on social programs from industrialized countries in EuropeIn contrast to Europe, people had to be employed to get benefits in US