GREAT DEPRESSION AND NEW DEAL

Great Depression and New Deal l Causes –Uneven distribution of income –Easy Credit - High debt –Unbalanced foreign trade 1930 Hawley Smoot Tariff Act –Mechanization

Great Depression -Suffering l National Income - total paid to producers of the nation’s goods and services dropped by 50% l No system of direct relief – No unemployment insurance –Result: Hobos, Bonus Army and “Hoovervilles”

President Hoover’s approach l Rugged Individualism –direct relief through individuals and local government agencies –Lend money to states and agencies –Perception: money to corporations while people starved

Hoover’s Solutions l 800 million for public works –Boulder Dam (Hoover Dam) l Reconstruction Finance Corp. –Banks, industries, railroads l Home Loan Bank Act –stop foreclosures

Hoover’s Errors l Refused to cancel debts owed to the USA from World War I l Abrasive relationship with Congress –Denounced Congress rather than negotiate l Too little, Too late

Franklin Delano Roosevelt l Defeats Hoover in a landslide l Appeared to be doing something –“New Deal” promised –“Brain Trust” to work on the details

Roosevelt’s Political Views l Reform capitalist institutions rather than change them l Pragmatism- the value of an idea is based on whether it works or not l Government interference in business and society to protect the masses - Socialism to critics

First Hundred Days l Bi-partisan cabinet –Democrats, Republicans, Progressives, Isolationists –First female - Francis Perkins (Secretary of Labor) –Black Cabinet

First Hundred Days l Special session of Congress called –Produced more significant legislation than usually passed in two years –Focus on reform, relief and recovery –Deficit spending and “Pump priming”

First Hundred Days l Financial reform- –Bank holiday declared to end runs –Emergency Banking Relief Act Nationalize banks –Federal Securities Act –Securities and Exchange Commission

First Hundred Days l Help for Unemployed –Federal Emergency Relief Act Money to states and municipalities to distribute Most provided a dole –Tennessee Valley Authority –Civil Works Administration –Civilian Conservation Corps

First Hundred Days l Relief for Agriculture –Agriculture Adjustment Act Farmers paid to cut production –Direct assistance to the Dust Bowl l Relief for industry –National Industrial Recovery Act Fair trade codes – Controversial

SECOND NEW DEAL l Focused on reforming capitalism l Works Progress Administration –Government created jobs –Construction and the Arts l Social Security Act –pension system for retired workers and spouses

Second New Deal l National Labor Relations Act (known as the Wagner Act) 1935 to replace labor provisions of NIRA - Employers must bargain –NIRA declared unconstitutional Schechter Poultry Corp v. US executive using legislative powers cannot create state industry codes

Second New Deal l Fair Labor Standards Act –Minimum wage; maximum work week; over 16 to work in factory l New Deal opposition -see worksheet l Roosevelt re-elected 1936 in a landslide

“Court- Packing” ends the New Deal l FDR considered landslide election as a mandate to curb Supreme Court opposition to the New Deal l Presented Congress with legislation to appoint an additional justice for every justice over 70 l Defeated - threat to system of checks and balances

Effects of the New Deal l Higher incomes - farmers and workers l Preservation of natural resources l Security for the sick and aged l Organization of Unions l Increase in national infrastructure l National debt raised l Federal bureaucracy doubled

New Deal Philosophy Today l Extension of the power of the federal government and the President – esp. in your life l Deficit spending l Welfare state established l Greater concern for workers l Conservation l Regulation of business

The New Deal failed to end the Depression. High unemployment continued until World War II.