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The Brief American Pageant Seventh Edition Chapter 33 The Great Depression and the New Deal 1933-1939.

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1 The Brief American Pageant Seventh Edition Chapter 33 The Great Depression and the New Deal 1933-1939

2 FDR: Politician in a Wheelchair In 1921, FDR was stricken with polio which left him paralyzed and in a wheelchair. Despite his physical handicaps, he continued with an impressive political career. Along FDR’s side was his wife, Eleanor, who would become America’s most active First Lady in terms of influence. Their personal relationship was a bit of a mystery however as they had turbulent times due to FDR’s frequent infidelity. Nevertheless, FDR was the right man at the right time for America as he possessed the talents and the ability to communicate his ideals to the nation. In his role of governor of New York he had used government monies to assist the downtrodden, a playbook he would bring with him to Washington. In 1932 at the Democratic convention, FDR broke precedent arriving at the meeting to accept the nomination of his party in person where he pledged a “New Deal for America.”

3 Roosevelt Routs Hoover in 1932 FDR ran in 1932 in the name of what he called the “Forgotten Man.” His campaign slogan tried to paint America’s future as bright by stating that “Happy Days Are Here Again!” On the other side, Hoover ran a rather grim campaign advocating the maintenance of the Hawley-Smoot Tariff. In the end, FDR overwhelmed Hoover 472-59 in the electoral college. A seismic shift in voting demographic occurred in the 1932 election as black Americans abandoned the Republicans in favor of Roosevelt and the Democrats. By the time FDR took office in March 1933, one out of every four Americans was unemployed, banks continued to close at an alarming rate, and people’s confidence in the banking industry faltered as they began to bury money in jars in the front lawn and stuff their cash between the mattresses.

4 FDR and the Three R’s: Relief, Recovery, and Reform Roosevelt avoided any binding commitments during his time as president-elect, favoring to wait until he has authority. (“That’s not my baby.”) One of his first bold moves was to declare a national bank holiday from March 6-10. The idea was to reopen the banks on sounder footing. FDR then called Congress (Democratically controlled) into session to take part in the “Hundred Days.”

5 FDR and the Three R’s: Relief, Recovery, and Reform Congress began passage of the New Deal, which sought to bring Americans relief, recovery, and reform. In the short term, the Congress passed legislation which created unemployment insurance, old age pensions, minimum wage laws, restrictions on child labor, and promoted conservation of resources. In the long run, Congress set about the process of developing legislation aimed at tackling the problems that led to the Great Depression.

6 Roosevelt Tackles Money and Banking The need for confidence in the banking system was of the utmost importance and in response Congress passed the Emergency Banking Relief Act (1933) which granted the President the power to regulate bank transactions, foreign exchange, and reopen solvent banks. In order to keep Americans up to date, FDR used his radio addresses known as “fireside chats” to urge citizens to return to the banks. Another piece of landmark legislation passed in the “Hundred Days” was the Glass-Steagall Banking Reform Act (1933) which created the Federal Deposit Insurance Corporation. Initially the FDIC guaranteed deposits up to $5000, which has been raised today to $250,000.

7 Roosevelt Tackles Money and Banking Roosevelt took another bold step in terms of monetary policy when he took the US off of the “gold standard.” FDR ordered all gold held by private individuals be turned over to the Treasury in exchange for paper currency. FDR hoped that by promoting the paper currency, inflation would occur thus easing the burden of those in debt. In order to collect enormous gold reserves, the price of gold was raised from $21 per ounce to $35 per ounce in 1934. This stimulated individuals to sell their gold to the government in exchange for paper money.

8 Creating Jobs for the Jobless In order to create jobs, Congress created the Civilian Conservation Corps (CCC) which employed 3 million men to carry tasks such as reforestation, fire fighting, flood control, and swamp drainage. Congress sought to provide assistance to those people without jobs. They passed the Federal Emergency Relief Act (1933), which granted over $3 billion to states to be used to pay wages for public works projects. To meet the needs of specific groups, the Congress passed: Agricultural Adjustment Act- granted millions of dollars in assistance to farmers to help them pay their mortgages Home Owners Loan Corporation- allowed for the refinancing of mortgages, thus help mortgage holders and banks that lent money for mortgages Civil Works Administration- provided temporary jobs which included tasks as simple as raking leaves (this action was heavily criticized as “boondoggling”)

9 A Day for Every Demagogue The desperation of the Great Depression brought forth many demagogues making outlandish claims and promises: Charles Coughlin- Catholic priest who opposed the New Deal, promoted “social justice,” speeches on radio were very anti-Semitic Huey Long- Senator from Louisiana, promised every family $5000 at the expense of the rich, people feared he wanted to be a fascist dictator, shot by an assassin Dr. Francis Townsend- called for senior citizens to receive $200 monthly payments that must be spent within the month

10 A Day for Every Demagogue In order to satisfy the unemployed and silence the fringe elements, the Congress created the Works Progress Administration (WPA) in 1935. The organization used $11 billion of government money to hire citizens to perform public works projects such as building bridges, public buildings, and paved roads. During the eight years of the WPA, over 9 million Americans were provided with jobs.

11 New Visibility for Women FDR was very progressive in terms of using women in his administration. He appointed the first woman to a presidential cabinet. (Frances Perkins- Secretary of Labor) The president also gave a high ranking job to an African American woman, Mary McLeod Bethune, who served as Director of the Office of Minority Affairs.

12 A Helping Hand for Industry and Labor In an effort to assist industry, labor, and the unemployed, the Congress created the National Recovery Administration (NRA). Industries were to cut the number of hours worked by employees so that labor could be spread out to more people. While a ceiling was placed on the number of hours a person could work, a floor was created in terms of the minimum amount a person could be paid. The NRA assisted labor by formally recognizing their right to organize and participate in collective bargaining. The “yellow dog” contracts of the past were forbidden, and child labor was restricted.

13 A Helping Hand for Industry and Labor Congress took another step at combating unemployment with the creation of the Public Works Administration (PWA). The PWA spent over $4 billion on public projects such as roads, bridges, and highways. A crowning achievement of the PWA was the Grand Coulee Dam which made possible the irrigation of thousands of acres of farmland and made possible the generation of electricity. Prohibition was also repealed by the Congress in 1933 with the ratification of the 21 st Amendment. FDR figured that the regulation of alcohol sales would generate revenue for the government and provide new employment opportunities for Americans.

14 Paying Farmers Not to Farm One area of over-production had been farming, where surpluses had driven prices down. In order to combat the dire situation of farmers, the Agricultural Adjustment Administration (AAA) sought to create artificial shortages by paying farmers to reduce their yields which would drive prices up. The AAA was short lived however as the Supreme Court ruled it unconstitutional, however the Congress responded by passing the Conservation and Domestic Allotment Act (1936). This legislation paid subsidies to farmers who grew soybeans (which conserved soil) or if they allowed their fields to lay dormant.

15 Dust Bowls and Black Blizzards To make matters worse for struggling farmers, a vicious drought struck the Great Plains in the 1930s. Rainless months passed, which were followed by high winds that brought about towering clouds of topsoil blown across the plains. The region earned the nickname, the “Dust Bowl.” In order to escape the drought, thousands of plains people fled to California. Those who stayed behind were assisted by the Frazier- Lemke Farm Bankruptcy Act (1934) which placed a moratorium on mortgages for five years. The CCC was used to plant trees across the barren plains to serve as windbreakers to block the giant sandstorms. Native Americans adversely affected by the drought were encouraged by New Deal legislation such as the Indian Reorganization Act (1934) which promoted the establishment of local self government among tribes.

16 Reforming Business and Creating Public Power In order to prevent loose practices by investment advisers, Congress passed the “Truth in Securities” Act. The law required information be required to potential investment in regards to the soundness of the stocks. In 1934 more protections for investors were installed with the creation of the Securities and Exchange Commission (SEC). The organization served as a watchdog group over investments to prevent fraud and deception.

17 Reforming Business and Creating Public Power In order to create jobs and provide electrical power to poverty stricken Americans, the Congress created the Tennessee Valley Authority in 1933. By using the Tennessee River to its advantage the TVA provided 2.5 million people low cost electricity as well as erosion and flood control. Conservatives rallied against the TVA as a planned economic activity found in socialist states. As a result additional plans to create similar agencies elsewhere in the country were halted.

18 Housing Reform and Social Security Housing was a central issue within the New Deal as well. It was addressed through the creation of the Federal Housing Administration (FHA). The program provided low interest loans to homeowners and was expanded to include the United States Housing Authority. This agency provided monies to state to build housing for low income Americans.

19 Housing Reform and Social Security The Social Security Act (1935) provided assistance to those without jobs by granting unemployment insurance. The law also provided assistance to older Americans. (Initial payments ranged from $10 to $85 per month) These payments were financed through the creation of a payroll tax paid by employers and their employees. The Social Security Act also provided assistance to the physically handicapped and dependent children.

20 A New Deal for Unskilled Labor The National Labor Relations Board Act (1935) brought forth a surge in organization of unskilled labor. The Committee for Industrial Organization (CIO) was created and employed a new strike method known as the “sit down” strike. Member of the CIO who worked at General Motors refused to leave the factory and blocked the entrance of replacement workers. The strike was a success as GM officially recognized the union and began to practice collective bargaining with employees.

21 Roosevelt’s “Coddling” of Labor US Steel opened its arms to unions as many of its employees claimed membership in the CIO. In 1938, labor won another victory with the passage of the Fair Labor Standards Act (1938), which stated that industries doing business over state lines must pay a minimum wage and maximum hours. The law banned labor by children under 16 and standardized a work week as 40 hours. The Democratic parties’ pro-union platform was rewarded with a massive bloc of voters.

22 Landon Challenges “the Champ” in 1936 As the 1936 presidential election approach, it was assumed FDR would roll to victory. The Republicans put forth Alfred Landon (KS) who condemned the New Deal as radical and wasteful. Americans experienced relief as a result of the New Deal and the Republicans did not stand a chance as FDR cruised to a 523-8 victory in the electoral college.

23 Conflict over the Court Roosevelt became the first president inaugurated in January due the passage of the 20 th Amendment. The move was undertaken to shorten the lame duck status of outgoing presidents and Congress. FDR saw his re-election as a mandate to continue the New Deal. FDR enjoyed overwhelming popularity, however he had one roadblock in his way: the United States Supreme Court. During his first term there had been 9 challenges to New Deal legislation, which had resulted in 7 defeats. The Court was ultra-conservative and featured six members that were over the age of 70. FDR was impatient to replace justices, therefore he took a bold step. The president proposed a “court-packing” scheme that would have allowed him to increase the size of the court to 15. The move was unpopular as people saw it as an overt action by FDR to rig the Court in his favor. Congress would not support the plan and FDR’s image was negatively impacted.

24 The Twilight of the New Deal Near the end of FDR’s first term, unemployment still hovered around 15%. Unexpectedly, in 1937 the economy took another sharp downturn as Social Security payroll taxes began to take a bite out of employees’ paychecks. Deficit spending in the “Keynesian” spirit had run its course, and the New Deal for all intents and purposes had as well by 1938. The storm of global conflict in 1939 turned Americans attention away from the big spending done previously by the Roosevelt administration and most likely saved FDR’s political backside.

25 New Deal or Raw Deal? Looking back at the New Deal, opinions are mixed. In its day, conservatives criticized the program as radical, Marxist, and alleged its aim was to make America communist. Other criticisms included that the New Deal was counterproductive to the American ideals of individualism, thrift, self-reliance, and limited government in favor of a welfare-state of dependency. The most damaging indictment of the New Deal is that it did not fix the Great Depression. Some historians see the program as simply a band-aid that required much more deficit spending. Critics point to higher than average unemployment that remained in the US until the outbreak of WWII.

26 New Deal or Raw Deal? Supporters of the New Deal argued that it provided relief in crisis and that once and for all the debate over the role of government had been settled. They saw government as a vehicle to bring about relief not fear. New Dealers stated that wealth was more evenly distributed in America and that citizens retained their self worth. Supporters also hailed FDR as a savior of the American free enterprise system for purging the worst elements from the system. Another positive aspect of the New Deal supporters point out is the fact that revolution was brought about peacefully.

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