FDR- Dealing with the Depression

Chapter 12- The NEW DEAL

Dealing with the Depression

• Goals FDR had for dealing with problems of the Depression

• Recovery- from the Depression

• Relief- for the Victims

• Reform- of the Economic System

FDR-Leadership

• Why was he a good leader

• A Democrat, but had progressive ideas

• Held Fireside Chats

• Govt. Experience at different levels– state legislator in NY– Governor of NY– previously Asst. Sec to Navy

FDR relied on others

• Brain Trust

• Diverse Cabinet– different pol. backgrounds, opinions,

geographic location, one women member

• Wife- Eleanor- “eyes and ears”

• Also used the press (media) wisely, to get public support

Banking Crisis in the U.S.

During the “lame duck” period of Hoover’s Presidency

Before FDR came into office

Causes of the banking panic

• Lost faith in economy because of depression

• Depositors withdrew money in accounts

• Not enough gold in circulation

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The 100 DAYS

• During the first 100 days of FDR’s presidency he worked closely with congress to pass legislation

• During the period from March 9th to June 16th, 1933, Congress passed 15 Major bills to deal with the Depression.

• 1st Fireside Chat 1st Fireside Chat encouraged people encouraged people to return money to to return money to banks.banks.

• His assurances His assurances restored public faith restored public faith in the financial in the financial system.system.

• Bank crisis ended.Bank crisis ended.

Roosevelt’s Fireside Roosevelt’s Fireside ChatsChats

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FDIC CreatedFDIC Created• June 1933,

Congress passed the Glass-Steagall Act which created the FDIC

• Federal

• Deposit

• Insurance

• Corporation

Securities and Securities and Exchange CommissionExchange Commission

• Created by the Federal Securities Act of 1933

• Designed to regulate the Stock Market

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Major types of spending

• Instead of increasing the amount of money in circulation, which would have caused inflation, Roosevelt chose to use two other methods to try to stimulate the economy.

• The Government began using deficit spending and pump priming.

• These were govt. spending programs initiated to increase production, provide jobs, and increase demand for products.

FERA• Federal Emergency Relief Administration

• Was to help with relief, for unemployed

• They could make grants to state governments to distribute as they saw fit

• Usually used doles, or direct handouts of money, food, or clothing.

• This concerned people- some felt it would reduce peoples incentive to work, and they might also loose job skills if not working

Public Works AdministrationPWA

• Offered jobs instead of handouts.

• Spent about $6 billion during the 1930’s.

• 650,000 workers who might have been jobless were employed by the PWA.

Harold Ickes

• Under direction of Secretary of the Interior– Harold Ickes.

• PWA was created on June 1933 under Title II of National Industrial Recovery Act.

More About Ickes

• Broke down long standing racial barriers in the construction trades by insisting that contractors hire African Americans

• He generally worked through private contractors.

Building & Improvement Jobs:

• Highways

• Dams

• Sewer Systems

• Waterworks

• Schools

• Government Buildings

TVA

• TENNESSEE VALLEY AUTHORITY– Built dams to help

develop a 7 state region in the south

– Included reforestation, flood control, opened new lands for farming, and power plants to provided cheap electricity for agriculture and industry

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Built power plants and fertilizer factories

The most noticeable change was the amount of cheap electricity.

TVA

TVA helped build towns.

Employing 40,000 workers

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Critics of the TVA

• Other power companies felt the TVA operated under unfair conditions

• They felt since the TVA was paid subsidies by the government related to flood control, they could provide cheaper electricity, and this went against capitalist ideas.

Cheap electricity allowed farmers to install refrigerators, milking machines and other equipment.

Critical power companies were powerful enough to prevent anymore regional authorities like the TVA, but the New Deal did build other power plants.

Farming/Banking Crisis - revisited

• Since 1929, bank foreclosures forced property of 10% of farmers to be repossessed

• Moratorium on foreclosures- 5 year moratorium (suspension)

• Low prices and overproduction were still at the heart of the farmers problems

CCC

• Civil Conservation Corps

• Gave jobs to unemployed men ages 18-25, mostly outdoors jobs

• Included building lakes, reservoirs, planting trees, fighting forest fires, stopping soil erosion

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• Established 1,500 camps for the workers by midsummer.

• Helped conserve nation’s natural resources by hiring 3 million to plant trees

• The Agricultural Adjustment Act (AAA) was passed to help farmers during the depression. (May 1933)

• This was used to address overproduction

• The AAA paid the farmers not to grow certain crops.

• This Act helped out the farmers during the Great Depression, paying them to reduce production of wheat, cotton, corn, tobacco

• In 1933 Cotton farmers plowed under a quarter of their acreage.

• Who did it hurt?

People hurt by the AAA

• Small farmers, with little land- Larger farmers benefited more than smaller landowners

• Tenant farmers/Sharecroppers, because land owners took land out of production to receive payments

• Laborers/ Migrant workers-less workers required for planting, harvesting of crops-

• about 150,000 whites, and 195,000 African Americans who were tenants/sharecroppers quit farming in the 1930’s

Funding the AAA

• Funds for these programs, came from taxes levied on flour mills, slaughter houses and other food processing businesses.

• 1934-35 10 million acres were withdrawn from production

• Benefits paid were more than $1 Billion

FSA

• Farm Security Administration– Created to give tenants loans to purchase

land– Many farmers still stopped, and became

laborers joining migrants wandering searching the country for jobs

– Only 3400 African Americans got any of the loans

• The CWA built or improved the following:

• 1,000 Airports• 500,000 miles of roads• 40,000 school buildings• 3,500 parks,

playgrounds, and playing fields

• The cost of the CWA program was incredibly high, amounting to $1 billion in five months

• Therefore, Roosevelt cancelled the program in the Spring of 1934, due to criticism from conservatives.

Critics of the New Deal

• Father Charles Coughlin-“The Radio Priest”– Criticized bankers and financial leaders and allowed FDR to let

them use too much power.– Solutions- Restructure the Federal Reserve System, help build

strong trade unions, supported organized labor, Sen. Long’s idea of the Bonus Bill to pay veterans. Accused FDR of being too “socialist”

• Senator Huey Long-Share the Wealth Clubs- Give every man $5000 to buy a home, and $2500 per year.Paid for by heavy taxes on the wealthy

• Dr. Francis Townsend- pension plan for people over 60

In 1934 and 1935 a terrible disaster struck. Farmers began to break up grazing land into crop land. This created loose topsoil.

The Dust Bowl 1934-45

• Origins of the Dust Bowl- During WWI more land was broke out to farm.

• Much of this land had been pasture/grasslands that helped prevent soil erosion & conserve moisture.

• From 1933-35 a drought period with little relief, struck the plains, turning it into an almost desert region.

• This allowed winds to blow away topsoil, destroying farmland, and crops.

• Many farmers then left the midwest/plains regions

The area became unusually dry and the land became like a desert. Wind storms carried away tons of topsoil which obscured the sun.

• Short term solutions by the govt.-

-provided farmers w/ new seed and livestock, and funding

• Long term solutions– planted wind breaks, grasslands for soil

conservation– Changed farming methods

• Crop rotation• strip farming

• Farmers feelings on the NEW DEAL Programs

• Liked- Assistance directly from the Govt, better prices, lower surpluses

• Disliked- being told what to grow, reducing production while people starved

• NATIVE AMERICANS & THE NEW DEAL• Stopped Assimilation- or trying to make

them more like “Americans”• Indian Reorganization Act-1934-

Returned lands to tribes, encouraged use of their traditions

*Two Major Benefits- Increased land, Increased population

New Deal Help for Industry

• National Industrial Recovery Act (NIRA)– Aimed to answer problems of overproduction by

setting “codes of fair competition” for each industry.

• Goals– Set prices to eliminate discount selling– Shortened workers hrs. to create more jobs– Limit factories to 2 shifts per day to spread production

among diff. factories

• Created the NRA-National Recovery Administration to direct this program

NRA- National Recovery Administration

• Had little power to enforce codes, so they used the public/consumers to persuade businesses to comply. – Signs were placed in windows if they company, or

store, participated in the program, & people were encouraged to buy from these stores.

– Problems—leaders of big businesses usually wrote the codes, so they favored big businesses to eliminate small business competition.

LABOR UNIONS-during the Depression

– Union membership began to rise in the early 1930’s– AFL grew to one million members in 1933– Strikes occurred for higher wages, job security, and

stronger labor laws were demanded

By 1935 Americans were calling for another set of NEW DEAL Programs, because

*wages were still low

*farm markets were low

*unemployment was still high

Call for more Reform

• By 1935 Americans were calling for another set of New Deal Programs because:– Wages were still low– Farm markets were low– Unemployment was still high

The Second New Deal

• WPA

• REA-rural electricity

• Reconstruction Fin. Corp steps up loans

• CCC increased workers

• Social Security Act

• Wagner Act

NLRA- established NLRB

WPA- Works Progress Administration- 1935

• Employed 8.5 million people

• Worked on building roads, subways, airports, zoos.

• Many were employed in offices, schools, museums and factories

• Some studied oral histories

• Funded writers, composers, artists, and actors

Social Security

• Most important act of the 2nd New Deal

• Provided retirement benefits to people over 65, and other disabled workers, also unemployment insurance plans started

• Flaws- didn’t protect farmers, and household workers

• NLR Act- passed to help with the formation, & preservation of unions, & workers rights

• Wagner Act of 1935- passed when NIRA was declared unconstitutional became the 2nd most important Act of the 2nd New Deal , next to Social Security

• Established a Labor relations board to find out if workers wanted to unionize

• Took away some power of the open shop• Negotiated grievances for workers• Reinstated workers fired for supporting unions• Stopped anti-union activity by employers• This act further stimulated union activity, leading to some

conflict about which workers could be in certain unions

Conflict over Unions

• AFL, which was a series of specialized craft unions, rejected the idea of an industrial union, where all workers in a certain industry could join.

• CIO (Congress of Industrial Organizations) formed because many workers that had different skills wanted to be in the same union.

GM Strike• CIO headed a “sit-down” strike at the GM

plant in Flint, Michigan- Dec. 1936

• This type of strike kept the factory from operating and from trying to replace them with “scabs”- that were non-union members

• Ended after 6 weeks when GM gave in to union demands

• This and the U.S. Steel strike in 1937 made the CIO a major labor force.

REAMay 1936

• Rural Electrification Administration– This was a program to loan money to farmers

co-ops and other groups to bring electricity to rural areas of the U.S.

– Rural homes with electrical power grew from only 10% to 90% in the next decade

1936 Election

• FDR vs. Republican Alf Landon from Kansas.– Landon and Republicans tried to mount a campaign

against the most popular President in years. – They focused on downplaying and opposing some

New Deal programs, feeling they were socialist programs, and didn’t help everyone. The one program Landon opposed the most was Social Security.

– Landon felt that the farmers and Af. Americans were left out of Social Security, and it was funded wastefully during a time when the money could have went into the economy.

Why FDR Won

• Got support from many different voting groups-farmers, labor, retirees, and African Americans who benefited from relief programs when they were the first workers fired. Af. Americans in the North switched party loyalty from Rep. to Dem.

• Republican attempts at accusing FDR of creating a planned economy failed.

FDR’s Attempt at Court Packing

• When the Sup. Court declared the NIRA and AAA unconstitutional, Roosevelt asked Congress to expand the number of Sup. Court justices.

• He wanted to create new positions, so he could appoint younger, more liberal justices to support NEW DEAL programs

• This failed to happen, but the court did uphold the constitutionality of the Soc. Sec. Act, and the Wagner Act

1937 Recession

• By 1937 the economy came close to 1929 levels, but unemployment was still high

• FDR called for a balanced budget, leading to many programs, including the WPA to cut workers

• The Fed. Reserve began restricting loans• All of this caused a Recession

– Crop surpluses caused ag. Markets to drop – Industrial production was down 1/3

Response to Recession

• FDR blamed monopolies & no new business investments

• He expanded the WPA• Pushed for the Fair Labor Standards Act

to eliminate child labor, set hrs./wages• NEW AAA• By the 1938 Election FDR claimed no

more NEW DEAL programs because war was evident in Europe

Impact of the NEW DEAL

• In the Home and on the Family– Birth and divorce rate decreased– Families moved to smaller, less expensive, homes– Housewives did others laundry & sewing for extra income– Home canning increased again

• In the Workplace– Stronger child labor laws– Reversal of gender roles- stay at home DADS– Increased women’s wages– African Americans suffered

• Fell through the cracks of the Social Security & AAA• No civil rights programs• High discrimination• CCC segregated Af. Am. From whites• Overall their needs weren’t met by govt. programs