Chapter 36

The Great Depression and the New Deal

1933-1938

FDR- Great orator with tons

of charm, sponsored heavy state spending to relieve human suffering

- Deficit Spending – spending money the govn’t doesn’t have. But justified that money is expendable but humans are not.

- Brain trust: group of intellectuals who helped him with his decisions

Eleanor Roosevelt• Most active First

Lady in history. “The legs” of FDR. Traveled the U.S. to battle poverty and the oppressed. Battled segregation. Loved by liberals.

Election of 1932

• New shift in AA voters now voting democratic. (Used to be GOP since Lincoln).

• FDR won easily b/c everyone is angry at the Republican party and Hoover for not doing enough for the GD.

• FDR does not come into office until March

Once FDR Got into office:• Declared a Bank Holiday (March 6-

10)• Called the Democratic Congress into

a special session to declare the Hundred Days where he cranks out over 15 legislations to deal with the emergency

• Declared the NEW DEAL: relief (short term), recovery (long term), reform (how to prevent it from happening again)

• Congress gave FDR “blank-check” powers which allowed him to have authority over legislation as the chief of the executive branch.

• Fire-side Chats: talk to 35 million Americans on the radio to restore confidence in banks.

• He had no idea where he was going but at least he was doing something b/c it’s better than doing nothing.

FDR takes finance and banks

• Emergency Banking Relief Act: gave FDR the power to regulate bank transactions and foreign exchange and to reopen a bank when it is sound again. Categorized banks into four phases. 1) Good to go 2)Only some withdrawls can be made 3)On verge of collapse 4)Has no money

• Glass-Steagall Act: created the Federal Deposit Insurance Corporation (FDIC) which insured deposits up to $5,000 in bank

• People were taking gold and stashing it. FDR wants to prevent the panic of hoarding in their homes. He calls for all private gold reserves to be swapped out for paper money and takes the nation off the gold standard. Created inflation buy buying the gold at $35 rather than $21 for one year. U.S. off the gold standard for one year

FDR Creates Jobs for the jobless• 1 out of 4 is jobless and FDR has no

problem using federal money to get the ball rolling

• Federal Emergency Relief Act– gave immediate relief by creating the Fed. Emergency Relief Administration (FERA) under Harry Hopkins- Civilian Conservation Corp (CCC) – gave 3 million young men jobs in reforestation, fire fighting, flood control, and swamp drainage. They sent their money home to parents.

– Agricultural Adjustment Act (AAA)– Home Owners Loan Corporation (HOLC)– Civil Works Administration (CWA) –

provided relief by creating jobs and make-work tasks to get citizens through the harsh winter

– Works Progress Administration (WPA) – employment on useful projects like public buildings, bridges, and roads. Build a monkey pen, count dogs, paint murals. Gave self-respect and million of art created and displayed.

Agricultural Adjustment Act• Farmers are no longer making

the money they used to make during WWI. They can’t sell their overproduction of goods and therefore, cannot pay mortgage on farms.

• Pay farmers not to farm “basic crops” – corn, wheat, cotton, rice, peanuts, tobacco, and milk

• AAA evened the supply and demand of farm commodities by creating “artificial scarcity” in two controversial ways:– Paying farmers to farm less or

not at all– Slaughtering over 6 million pigs

and burning the wheat

Tennessee Valley Authority• This area covers Tennessee,

Alabama, Georgia, Kentucky, Mississippi, North Carolina, and Virginia

• FDR asks congress to create a “corporation clothed with the power of government but possessed of the flexibility and initiative of free enterprise.”

• Purpose: build dams in the rivers of the TVA and create jobs, which will prevent flooding, create hydro-electric power (making electricity cheap for the poor in this region), create jobs for farmers

Civilian Conservation Corporation (CCC)• Promoted environmental

conservation and to build good citizens through vigorous, disciplined outdoor labor.

• The “Tree army” kept unemployed youth ages 17-25 “off the street corners”

• Operated under the army so that each camp had commanders. Boys had to address superiors as “sir.”

• Focused on soil conservation, reforestation, wildlife shelters, stocking rivers and lakes with billions of fish, restoring historic battlefields, clearing beaches and campgrounds, etc.

• Employed 3 million and paid $30 a month, which would get sent to parents.

Works Progress Administration• Gave jobs to match people’s

talents.• Majorly criticized but people at

least got some cash, skills, self-respect

• Harry Hopkins says, “Give a man a dole and you save his body and destroy his spirit. Give him a job and you save both body and spirit.”

• Employed women: sewing, book binding, caring for the elderly, school lunch programs, nursery school, recreational work

• Put artists to work: created over 2,500 murals, 17,000 sculptures

• Bolstered self esteem.

FDR helps industry and labor• Purpose is to spark business

growth and improve labor conditions

• Symbolized by the blue eagle• National Recovery

Administration (NRA)- Labor was given a minimum wage and a maximum of hours or work. Workers were guaranteed the right to organize and bargain. outlawed Child labor

• In the end, this failed b/c business owners would violate the codes and the Schechter decision says that the congress cannot give the executive legislative powers

Securities and Exchange Commission (SEC)

• Is the watchdog organization on the stock market. Makes sure that stock owners are following the Federal Securities Act by telling the entire truth about the stock.

FDR assists the Housing Crisis• Home Owners Loan

Corporation (HOLC) – helps people refinance their loans so they don’t have to foreclose

• Federal housing Authority (FHA) – lowers the interest on loans of new home construction

• US Housing Authority – makes available government-owned low-income housing (projects)

National Youth Administration (NYA)

• Gives college kids jobs with work study

Social Securities Act• Guaranteed an income for

the unemployed and retirees.

• FDR expressed concerns for “young people have to come to wonder what would be their lot when they came to old age”

• A safety net for retirees and the disabled, provides death benefits to tax payer dependents.

***First time the government takes responsibility of assiting people in need.

21st Amendment

• Helped with recovery by repealing prohibition and taxing it. Saloons are back in business.

Did the New Deal Work?

Positives:

FDR saved American Democracy, Capitalist System/Free market,

Negatives:- Some say FDR became an imperial president- Still by 1939, unemployment was 19%. Some

say he created way too much debt through deficit spending.