Chapter 24: The New Deal

SEC

~ Another act of June 1934 established the Securities and Exchange Commission (SEC) to police the stock market ~ Among other things, the establishment of the SEC was an indication of how far the financial establishment had fallen in public estimation ~ The criminal trials of a number of once-respected Wall Street figures for grand larceny and fraud eroded the public stature of the financial community still further

FDIC

~ established under the Glass-Steagall Act of 1933 ~ It guaranteed all bank deposits up to $2,500

Women in the New Deal

~ As with African Americans, the New Deal was not hostile to feminist aspirations, but neither did it do a great deal to advance them ~ That was largely because such aspirations did not have sufficiently widespread support to make it politically advantageous for the administration to back them ~ There were, to be sure, important symbolic gestures on behalf of women ~ Roosevelt appointed the first female cabinet member in the nation's history, Secretary of Labor, Frances Perkins ~ He also named more than 100 other women to positions at lower levels of the federal bureaucracy ~ They created an active female network within the government and cooperated with one another in advancing causes of interest to women ~ Such appointments were in part a response to pressure from Eleanor Roosevelt, who was a committed advocate of women's rights and a champion of humanitarian causes ~ Molly Dewson, head of the Women's Division of the Democratic National Committee, was also influential in securing federal appointments for women as well as in increasing their role within the Democratic party ~ Several women received appointments to the federal judiciary. ~ And one, Hattie Caraway of Arkansas, became in 1934 the first women elected to a full term in the U.S.Senate ~ But New Deal support for women operated within limits, partly because New Deal women themselves had limited views of what their aims should be ~ Frances Perkins and many others in the administration emerged out of the feminist tradition of the Progressive era, which emphasized not so much gender equality as special protections for women ~ Perkins and other women reformers were instrumental in creating support for, and shaping the character of, the Social Security Act of 1935 ~ But they built into that bill their own notion of women's special place in a male-dominated society ~ The principal provision of the bill specifically designed for women- the Aid to Department Children program- was modeled on the state level mothers pensions that generations of Progressive women had worked to pass earlier in the century ~ The New Deal generally supported the belief that in hard times women should withdraw from the workplace to open up more jobs for men ~ New Deal relief agencies offered relatively little employment for women ~ The NRA sanctioned wage practices that discriminated against women ~ The Social Security program at first excluded domestic servants, waitresses, and other predominantly female occupations

"Bank Holiday"

~ But Roosevelt could not rely on image alone ~ On March 6, 1933, two days after taking office, he issued a proclamation closing all American banks for four days until congress could meet in special session to consider banking-reform legislation ~ So great was the panic about bank failures that the "bank holiday", as the president euphemistically described it, created a general sense of relief ~ Three days later, Roosevelt sent to congress the Emergency Banking Act, a generally conservative bill designed primarily to protect the larger banks from being dragged down by the weakness of the smaller ones ~ The bill provided for Treasury Department inspection of all banks before they would be allowed to reopen, for federal assistance to some troubled institutions, and for a thorough reorganization of those in the greatest difficulty ~ A confused and frightened congress passed the bill within four hours of its introduction ~ Whatever else the new law accomplished, it helped dispute the panic ~ Three-quarters of the banks in the Federal Reserve system reopened within the next three days,and $1 billion in hoarded currency and gold flowed back into them within a month ~ The immediate banking crisis was over

Roosevelt recession

~ By the summer of 1937, the gross national product had risen back to nearly $72 billion ~ Other economic indices showed similar advances ~ Roosevelt seized on these improvements as an excuse to try to balance the federal budget, convinced by Treasury Secretary Henry Morgenthau and many economists that the real danger now was no longer depression but inflation ~ Between January and August 1937, he cut the WPA in half, laying off 1.5 million relief workers ~ A few weeks later, the fragile boom collapsed as other cuts in spending followed ~ The index of industrial production dropped from 117 in August 1937 to 76 in May 1938 ~ Four million additional workers lost their jobs ~ Economic conditions were soon almost as bad as they had been in the bleak days of 1932-1933 ~ The recession of 1937,known to the president's critics as the Roosevelt Recession, was a result of many factors ~ But to many observers at the time, it seemed to be a direct result of the administration's unwise decision to reduce spending ~ And so, in April 1938, the president asked congress for an emergency appropriation of $5 billion for public works and relief programs, and government funds began pouring into the economy once again ~ Within a few months, another tentative recovery seemed to be under way, and the advocates of spending pointed to it as proof of the validity of their approach

National Industrial Recovery Act and the NRA

~ Ever since 1931, leaders of the US Chamber of Commerce and many others had been urging the government to adopt an antideflation scheme that would permit trade associations to cooperate in stabilizing prices within their industries. Existing antitrust laws clearly forbade such practices, and Herbert Hoover had refused to endorse suspension of the laws. The Roosevelt administration was more receptive. In exchange for relaxing antitrust provisions, new dealers insisted on other provisions. Business leaders would have to make important concessions to labor-reorganize the worker's right to bargain collectively through unions-to ensure that the incomes of workers would rise along with prices. And to help create jobs and increase consumer buying power, the administration added a major program of public works spending ~ The result of these and many other impulses was the National Industrial Recovery Act, which congress passed in June 1933 ~ At first, the new industrial recovery program appeared to work well ~ At its center was a new federal agency, the National Recovery Administration (NRA), under the direction of the flamboyant and energetic Hugh S. Johnson ~ Johnson called on every business establishment in the nation to accept a temporary "blanket code": a minimum wage of between 30 and 40 cents an hour, a maximum workweek of 35-40 hours, and the abolition of child labor ~ Adherence to the code, he claimed, would raise consumer purchasing power and increase employment ~ At the same time, Johnson negotiated another, more specific set of codes with leaders of the nations major industries. The industrial codes set floors below which no company would lower prices or wages in its search for a competitive advantage ~ He quickly won agreements from almost every major industry in the country ~ From the beginning, however, the NRA encountered serious difficulties ~ The codes themselves were hastily and often poorly written ~Administering them was beyond the capacities of federal officials with no prior experience in running so vast a program ~ Large producers consistently dominated the code-writing process and ensured that the new regulations would work to their advantage and to the disadvantage of smaller firms ~ And the codes at times did more than simply set floors under prices; they actively and artificially raised themselves to levels higher than the market could sustain ~ Other NRA goals did not progress as quickly as the efforts to raise prices ~ Section 7(a) of the National Industrial Recovery Act promised workers the right to form unions and engage in collective bargaining and encourage many workers to join unions for the first time ~ But Section 7(a) contained no enforcement mechanisms. Hence recognition of unions by employers did not follow ~ The Public Works Association (PWA) was established in 1933 to administer the NIRA's spending programs ~ Perhaps the clearest evidence of the NRA's failure was that industrial production actually declined in the months after the agency's establishment despite the rise in prices that the codes had helped to create ~ By the spring of 1934, the NRA was besieged by criticism, and businessmen were ignoring many of its provisions ~ That fall, Roosevelt pressured Johnson to resign and established a new board of directors to oversee the NRA ~ Then, the supreme court intervened ~ In 1935, a case came before the supreme court involving alleged NRA code violations by the Schechter brothers, who operated a wholesale poultry business confined to Brooklyn, New York. The court ruled unanimously that the brothers were not engaged in interstate commerce, and thus not subject to federal regulation. The court also ruled that congress had unconstitutionally delegated legislative power to the president to draft the NRA codes. The justices struck down the legislation establishing the agency. Roosevelt denounced the justices for their "horse-and-buggy" interpretation of the interstate commerce clause. He was rightly concerned, for the reasoning in the case threatened many other New Deal programs as well. But the courts destruction of the NRA itself gave the New Deal a convenient excuse for ending a failed experiment

Social Security

~ In 1935, Roosevelt gave public support to what became the Social Security Act, which congress passed in the same year ~ It established several distinct programs ~ For the elderly, there were two types of assistance. Those who were presently destitute could receive up to $15 a month in federal assistance ~ More important for the future, many Americans presently working were incorporated into a pension system, to which they and their employers would contribute by paying a payroll tax; it would provide them with an income on retirement ~ Pension payments would not begin until 1942 and even then would provide only $10 to $85 a month to recipients ~ And broad categories of workers were excluded from the program ~ But the act was a crucial first step in building the nation's most important social program for the elderly ~ In addition, the Social Security Act created a system of unemployment insurance, which employers alone would finance and which made it possible for workers laid off from their jobs to receive temporary government assistance ~ It also established a limited system of federal aid to people with disabilities and a program of aid to dependent children ~ The framers of the Social Security Act wanted to create a system of insurance not welfare ~ And the largest programs were in many ways similar to private insurance programs, with contributions from participants and benefits available to all ~ But the act also provided considerable direct assistance based on need-to the elderly poor, to those with disabilities, to dependent children and their mothers ~ These groups were widely perceived to be small and genuinely unable to support themselves ~ But in later generations the programs for these groups would expand considerably

American Liberty League

~ In August 1934, a group of the most fervent Roosevelt opponents, led by members of the Du Pont family, reshaped the American Liberty League (formed initially to oppose prohibition of liquor), to arouse public opposition to the New Deal's "dictatorial" policies and its supposed attacks on free enterprise ~ But the new organization was never able to expand its constituency much beyond the northern industrialists who had founded it

Congress of Industrial Organizations

~ Leaders of the AFL craft unions for the most part opposed the new concept ~ But industrial unionism found a number of important advocates, most prominent among them John L. Lewis, the talented, flamboyant, and eloquent leader of the United Mine Workers ~ At first, Lewis and his allies attempted to work within the AFL, but friction between the new industrial organizations Lewis was promoting and the older craft unions grew rapidly ~ At the 1935 AFL convention, Lewis became embroiled in a series of anger confrontations with craft union leaders before finally walking out ~ A few weeks later, he created the Committee on Industrial Organization ~ When the AFL expelled the new committee and all the industrial unions it represented, Lewis renamed the committee the Congress of Industrial Organizations (CIO),established it in 1936 as an organization directly rivaling the AFL, and became its first president ~ The CIO expanded the constituency of the labor movement ~ It was more receptive to women and to blacks than the AFL had been, in part because women and blacks were more likely to be relegated to unskilled jobs and in part because CIO organizing drives targeted previously unorganized industries where women and minorities constituted much of the workforce ~ The CIO was also a more militant organization than then AFL ~ By the time of the 1936 schism, it was already engaged in major organizing battles in the automobile and steel industries

Huey Long

~ More alarming to the administration was the growing national popularity of Senator Huey Long of Louisiana ~ Long had risen to power in his home state through his strident attacks on the banks, oil companies, and utilities and on the conservative political oligarchy allied withy them ~ Elected governor in 1928, he launched an assault on his opponents so thorough and forceful that they were soon left with virtually no political power ~ Many critics in Louisiana claimed that Long had, in effect, become a dictator ~ But he also maintained the overwhelming support of the Louisiana electorate, in part because of his flamboyant personality and in part because of his solid record of conventional progressive accomplishments: building roads, schools, and hospitals; revising the tax codes; distributing free textbooks; lowering utility rates ~ Barred by law from succeeding himself as governor, he ran in 1930 for a seat in the U.S. Senate and won easily ~ long supported Franklin Roosevelt in 1932 ~ But within six months of Roosevelt's inauguration, he had broken with the president ~ As an alternative to the New Deal, he advocated a drastic program of wealth redistribution, a program he ultimately named the Share-Our-Wealth Plan ~ The government, he claimed, could end the depression easily by using the tax system to confiscate the surplus riches of the wealthiest men and women in America and distribute these surpluses to the rest of the population ~ That would, he claimed, allow the government to guarantee every family a minimum homestead of $5,000 and an annual wage of $2,500 ~ In 1934, Long established his own national organization: The Share-Our-Wealth Society, which soon attracted a large following through much of the nation ~ A poll by the Democratic National Committee in the spring of 1935 disclosed that Long might attract more than 10% of the vote if he ran as a third-party candidate, possibly enough to tip a close election to the Republicans

Dr. Townsend and his Plan

~ More menacing to the New Deal then either the far right or the far left was a group of dissident political movements that defied easy ideological classification ~ Some gained substantial public support within particular states and regions ~ Dr. Francis E. Townsend, an elderly California physician, rose from obscurity to lead a movement of more than 5 million members with his plan for federal pensions for the elderly ~ According to the Townsend Plan, all Americans over the age of 60 would receive monthly government pensions of $200, provided they retired (thus freeing jobs for younger, unemployed Americans) and spent the money in full each month (which would pump needed funds into the economy) ~ By 1935, the Townsend Plan had attracted the support of many older men and women ~ And while the plan itself was defeated in congress in 1935, the public sentiment behind it helped build support for the Social Security System, which congress did approve in 1935

FDR's Personality

~ Much of Roosevelt's success was a result of his ebullient personality ~ He projected an infectious optimism that helped alleviate the growing despair over the great depression ~ He was the first president to make regular use of the radio, and his friendly fireside chats, during which he explained his programs and plans to the people, helped build public confidence in the administration ~ Roosevelt held frequent informal press conferences and won the respect and friendship of most reporters

Effects on the National Economy

~ Nevertheless, the New Deal did have important and lasting effects on both the behavior and the structure of the American economy ~ It helped alleviate new groups- workers, farmers, and others- to positions from which they could at times effectively challenge the power of the corporations ~ It contributed to the economic development of the west and, to a lesser degree, the south ~ It increased regulatory functions of the federal government in ways that helped stabilize previously troubled areas of the economy: the stock market, the banking system, and others ~ And the administration helped establish the basis for new forms of federal fiscal policy, which in the postwar years would give the government tools for promoting and regulating economic growth

Industrial Unionism

~ Once the Wagner Act became law, the search for more effective forms or organization rapidly gained strength in labor ranks ~ The American Federation of Labor (AFL) remained committed to the idea of the craft union: organizing workers on the basis of their skills ~ But that concept had little to offer unskilled workers, who now constituted the bulk of the industrial workforce ~ During the 1930's, therefore, a newer concept of labor organization challenged the craft union ideal: Industrial Unionism ~ Advocates of this approach argued that all workers in a particular industry should be organized in a single union, regardless of what functions the workers performed: all autoworkers should be in a single automobile union, and all steelworkers should be in a single steel union ~ United in this way, workers would greatly increase their power

African Americans and Native Americans and the New Deal

~ One group the New Deal did relatively little to assist was African Americans ~ The administration was not hostile to black aspirations, rather, the New Deal was probable more sympathetic to them than any other previous government of the 20th century ~ Eleanor Roosevelt spoke throughout the 1930s on behalf of racial justice and put continuing pressure on her husband and others in the federal government to ease discrimination against blacks ~ She was also partially responsible for what was, symbolically at least, one of the most important events in the decade for African Americans. When the renowned concert singer Marian Anderson was refused permission in the spring of 1939 to give a concert in the auditorium of the Daughters of the American Revolution, Eleanor Roosevelt resigned from the organization and then helped secure government permission for her to sing on the steps of the Lincoln Memorial. Anderson's Easter Sunday attracted 75,000 people and became one of the first modern civil rights demonstrations ~ The president himself appointed a number of black officials to significant second-level positions in his administration ~ Roosevelt appointees such as Robert Weaver, William Hastie, and Mary McLeod Bethune created an informal network of officeholders who consulted frequently with one another and who became known as the Black Cabinet ~ Eleanor Roosevelt, Harold Ickes, and Harry Hopkins all made efforts to ensure that New Deal relief programs did not exclude blacks; and by 1935, perhaps a quarter of all African Americans were receiving some form of government assistance ~ One result was a historic change in black electoral behavior. As late as 1932, most African Americans were voting Republican, as they had since the Civil War. By 1936, more than 90% of them were voting Democratic-the beginnings of a political alliance that would endure for decades ~ African Americans supported Franklin Roosevelt because they knew he was not their enemy ~ But they had few illusions that the New Deal represented a major turning point in American race relations. For example, the president was never willing to risk losing the backing of southern Democrats by supporting legislation to make lynching a federal crime. Nor would he endorse efforts in congress to ban the poll tax, one of the most potent tools by which white southerners kept blacks from voting ~ New Deal relief agencies did not challenge, and indeed reinforced, existing patterns of discrimination ~ The Civilian Conservation Crops established separate black camps ~ The NRA codes tolerated paying blacks less than whites doing the same jobs ~ African Americans were largely excluded from employment in the TVA ~ The Federal Housing Administration refused to provide mortgages to African Americans moving into white neighborhoods, and the first public housing projects financed by the federal government were racially segregated ~ The WPA routinely relegated Black, Hispanic, and Asian workers to the least-skilled and lowest-paying jobs, or excluded them altogether; when funding ebbed, nonwhites, like women, were among the first to be dismissed ~ The New Deal was not hostile to African Americans, and it dis much to help them advance, but it refused to make the issue of race a significant part of its agenda ~ In many respects, government policies towards the Indian tribes in the 1930's were simply a continuation of the long established effort to encourage Native Americans to assimilate into the larger society and culture ~ But the principal elements of federal policy in the New Deal years worked to advance a very different goal, largely because of the efforts of the extraordinary commissioner of Indian affairs in those years, John Collier ~ Collier was a formal social worker who had become committed to the cause of the Indians after exposure to tribal cultures in New Mexico in the 1920's. More important, he was influenced by the work of 20th century anthropologists who promoted the idea of cultural relativism, which challenged the three-centuries old assumption among white society the Indians were savages and that white society was inherently superior and more civilized ~ Collier promoted legislation that would, he hoped, reverse the pressures on Native Americans to assimilate and would allow them the right to live in traditional Indian ways ~ Not all tribal leader agreed with Collier; indeed, his belief in the importance od preserving Indian culture would not find its broadest support among the tribes until the 1960's ~ Nevertheless, Collier effectively promoted legislation- which became the Indian Reorganization Act of 1934- that restored to the tribes the right town land collectively. (It reversed the allotment policy adopted in 1887, which encouraged the breaking up of tribal lands into individually owned plots) ~ In the 13 years after the passage of the 1934 bill, tribal land increased by nearly 4 million acres, and Indian agricultural income increased from under $2 million in 1934 to over $49 million in 1947 ~ Even with the redistribution of lands under he 1934 act, however, Indians continued to possess, for the most part, only territory whites did not want- much of it arid, some of it desert ~ And as a group, they continued to constitute the poorest segment of the population ~ The efforts of the 1930's did not solve what some white people called the 'Indian Problem" ~ They did, however, provide Indians with some tools for rebuilding the viability of the tribes

Sit-Down Strike Tactic

~ Out of several competing auto unions, the United Auto Workers was gradually emerging preeminent in the early and mid 1930s ~ But although it was gaining recruits, it was making little progress in winning recognition from the automobile corporations ~ In December 1936, however, autoworkers employed a controversial and effective new technique for challenging corporate opposition: the sit-down strike ~ Employees in several General Motors plants in Detroit simply sat down inside the plants, refusing either to work or to leave, thus preventing the company from using strikebreakers ~ The tactic spread to other locations, and by February 1937, strikes had occupied 17 GM plants ~ While male workers remained in the factories, female supporters demonstrated on behalf of the strikers, lobbied on their behalf with state and local officials, and provided food, clothing, and other necessities to the men inside ~ The strikers ignored court orders and local police efforts to force them to vacate the buildings ~ When Michigan's governor, Frank Murphy, a liberal Democrat, refused to call on the National Guard to clear out the strikers, and when the federal government also refused to intervene on behalf of the employers, General Motors relented ~ In February 1937, GM became the first major manufacturer to recognize the UAW; other automobile companies soon did the same ~ The sit-down strike proved effective for rubber workers and others as well, but it survived only briefly as a labor technique ~ Its apparent legality aroused so much public opposition that labor leaders soon abandoned it

New Deal's "3 R's"

~ RELIEF: The government will help those in need at once ~ RECOVERY: The government will help businesses get back on their feet ~ REFORM: The government would initiate changes that would rid the nation of the problems that brought about the Great Depression

Second New Deal

~ Roosevelt launched the Second New Deal in the spring of 1935 in response both to growing political pressures and to the continuing economic crisis ~ The new proposals represented, if not a new direction, at least a shift in the emphasis of New Deal policy ~Perhaps the most conspicuous change was in the administration's attitude towards big business ~ Symbolically, at least, the president was now willing to attack corporate interests openly ~ In March, he proposed to congress an act designed to break up the great utility holding companies, and he spoke harshly of monopolistic control of their industry ~ The Holding Company Act of 1935 was the result, although furious lobbying by the utilities led to amendments that sharply limited its effects ~ Equally alarming to affluent Americans was a series of tax reforms proposed by the president in 1935, a program conservatives quickly labeled a "soak-the-rich" scheme ~ Apparently designed to undercut the appeal of Huey Long's Share-Our-Wealth Plan, the Roosevelt proposals called for establishing the highest and most progressive peacetime tax rates in history-although the actual impact of these rates was limited

CCC

~ Roosevelt's favorite relief project was the Civilian Conservative Corps (CCC) ~ Established in the first weeks of the new administration, the CCC was designed to provide employment to the millions of young men who could find no jobs in the cities ~ The CCC created camps in national parks and forests and in other rural and wilderness settings ~ There, young men worked in a semimilitary environment on such projects as planting trees, building reservoirs, developing parks, and improving agricultural irrigation ~ CCC camps were segregated by race ~ The vast majority of them were restricted to white men, but a few of them were available to African Americans, Mexicans, and Indians

Critics of the New Deal

~ Seldom has an American president enjoyed such remarkable popularity as franklin Roosevelt did during his first two years in office ~ But with no end to the depression yet in sight, the New Deal gradually found itself the target of fierce public criticism ~ Some of the most strident attacks on the New Deal came from critics on the right ~ Roosevelt had tried for a time to conciliate conservatives and business leaders ~ By the end of 1934, however, it was clear that the American right in general, and much of the corporate world in particular, had become irreconcilably hostile to the New Deal ~ Roosevelt's critics on the far left also managed to produce alarm among some supporters of the administration, but like the conservatives, they proved to have only limited strength ~ The Communist Party, Socialist Party, and other radical and semiradical organizations were at times harshly critical of the New Deal ~ But they, too, failed to attract genuine mass support ~ In the 1930's, Roosevelt's principle critics were conservatives, who accused him of abandoning the constitution and establishing a menacing, even tyrannical state ~ In later years, the New Deal's most visible critics attacked it from the left, pointing to the major problems it left unsolved and the important groups it failed to represent ~ And beginning in the early 21st century, conservative attacks on the New Deal would emerge again

WPA

~ Social Security was designed primarily to fulfill long range goals ~ But millions of unemployed Americans had immediate needs ~ To help them, the Roosevelt administration established the Works Progress Administration (WPA) in 1935 ~ Like the Civil Works Administration, and earlier efforts, the WPA established a system of work relief for the unemployed ~ But it was much bigger than the earlier agencies, both in the size of its budget and in the energy and imagination of its operations ~ Under the direction of Harry Hopkins, the WPA was responsible for building or renovating 110,000 public buildings and for constructing almost 600 airports, more than 500,000 miles of roads, and over 100,000 bridges ~ In the process, the WPA kept an average of 2.1 million workers employed and pumped needed money into the economy ~ The WPA displayed flexibility and imagination in offering assistance to those whose occupations did not fit into any category of relief ~ The federal Writer's Project of the WPA, for example, gave unemployed writers a chance to do their work and receive a government salary ~ The Federal Arts Project, similarly, helped painters, sculptors, and others to continue their careers ~ The Federal Music Project and the Federal Theater Project oversaw the production of concerts and plays, creating work for unemployed musicians, actors, and directors

FDR's Court Packing Scheme

~ The 1936 mandate, Franklin Roosevelt believed, made it possible for him to do something about the problem of the supreme court ~ No program of reform, he had become convinced, could long survive the conservative justices, who had already struck down the NRA and the AAA and threatened to invalidate even more legislation ~ In February 1937, Roosevelt sent a surprise message to Capitol Hill proposing a general overhaul of the federal court system; including among the many provisions was one to add up to six new justices to the supreme court, with a new justice added for every sitting justice over the age of 70 ~ The courts were overworked, he claimed, and needed additional manpower and fresh ideas to enable them to cope with their increasing burdens ~ But Roosevelt's real purpose was to give himself the opportunity to appoint new, liberal justices and change the ideological balance of the court ~ Conservatives were outraged at the court-packing plan, and even many Roosevelt supporters were disturbed by what they considered evidence of the presidents hunger for power ~ Still, Roosevelt might well have persuaded congress to approve at least a compromise measure had not the supreme court itself intervened ~ The court took up a new moderate position which made the court-packing bill seem unnecessary ~ On one level, the affair was a significant victory for Franklin Roosevelt ~ The court was no longer an obstacle to New Deal reforms, particularly after the older justices began to retire, to be replaced by Roosevelt appointees ~ But the court-packing episode did lasting political damage to the administration ~ From 1937 on, southern Democrats and other conservatives voted against Roosevelt's measures much more often than they had in the past

Rural Electrification

~ The AAA also launched several efforts to assist poor farmers as well ~ The Resettlement Administration and the Farm Security Administration provided loans to help farmers cultivating submarginal soil to relocate to better lands ~ But the programs never moved more than a few thousand farmers ~ More effective was the Rural Electrification Administration, created in 1935, which worked to make electric power available for the first time to thousands of farmers through utility cooperatives

TVA

~ The AAA and the NRA largely reflected the beliefs of New Dealers who favored economic planning but wanted private interests to dominate the planning process ~ Other reformers believed that the government itself should be the chief planning agent in the economy ~ Their most conspicuous success, and one of the most celebrated accomplishments of the New Deal, was an unprecedented experiment in regional planning: The Tennessee Valley Authority (TVA) ~ The TVA had its roots in a political controversy of the 1920s ~ progressive reformers had agitated for years for public development of the nations water sources as a source of cheap electric power ~ In particular, they had urged completion of a great dam at Muscle Shoals on the Tennessee River in Alabama- a dam begun during World War 1 and left unfinished when the war ended ~ But opposition from the utility companies had been too powerful to overcome ~ In 1932, however, one of the great utility empires in the region collapsed spectacularly, amid widely publicized exposes of corruption ~ Hostility to the utilities soon grew so intense that the companies were no longer able to block the public power movement ~ The result in May 1933 was the TVA, which was authorized to complete the dam at Muscle Shoals and build others in the region, and to generate and sell electricity from them to the public at reasonable rates ~ It was also intended to be an agent for a comprehensive redevelopment of the entire region: for stopping the disastrous flooding that had plagued the Tennessee Valley for centuries, for encouraging the development of local industries, for supervising a substantial program for reforestation, and for helping farmers improve productivity ~ The TVA revitalized the region in numerous ways: it improved water transportation, virtually eliminated flooding in the region, and provided electricity to thousands who had never before had it ~ Throughout much of the country, largely because of the "yard-stick" provides by the TVA's cheap production of electricity, private power rates declined ~ Even so, the Tennessee Valley remained a generally impoverished region despite the TVA's efforts ~ And like many other New Deal programs, the TVA made no serious effort to challenge local customs and racial prejudices

Welfare state established

~ The New Deal also created the basis for the federal welfare state, through its many relief programs and above all through the Social Security System ~ The conservative inhibitions New Dealers brought to this task ensured that the welfare system would be limited in its impact, would reinforce some traditional patterns of gender and racial discrimination, and would be expensive and cumbersome to administer ~ But for all its limits, the new system marked a historic break with the federal governments traditional reluctance to offer public assistance to its neediest citizens

Agricultural Adjustment Act

~ The initial actions proposed by Roosevelt were largely stopgaps, to buy time for comprehensive programs. The first of them was the Agricultural Adjustment Act, which congress passed in May 1933 ~ It's most important feature was its provision in reducing crop production to end agricultural surpluses and halt the downward spiral of farm prices ~ Under the provisions of the act, producers of seven basic commodities would decide on production limits for their crops ~ The government, through the Agricultural Adjustment Administration (AAA), would then tell individual farmers how much they should produce and would pay them subsidies for leaving some of their land idle ~ A tax on food processing would provide the funds for the new payments ~ farm prices would be subsidized up to the point of parity ~ The AAA helped bring about a rise in prices for farm commodities in the years after 1933 ~ Gross farm income increased by half in the first three years of the New Deal, and the agricultural economy emerged from the 1930s much more stable and prosperous than it had been in many years ~ The AAA did, however, favor larger farmers over smaller ones, particularly since local administration of its programs often fell into the hands of the most powerful producers in a community ~ By distributing payments to landowners, not those who worked the land, the government did little to discourage planters who were reducing their acreage from evicting tenants and sharecroppers and firing field hands ~ In January 1936, the supreme court struck down the crucial provisions of the Agricultural Adjustment Act, arguing that the government had no constitutional authority to require farmers to limit production ~ But within a few weeks, the administration had secured passage of new legislation which permitted the government to pay farmers to reduce production so as to "conserve soil", prevent erosion, and accomplish other secondary goals ~ The court did not interfere with the new laws

Failure to Achieve Recovery

~ The most frequent criticisms of the New Deal involve its failure genuinely to revive or reform the American economy ~ New Dealers never fully embraced government spending as a vehicle for recovery, and their efforts along other lines never succeeded in ending the Depression ~ The economic boom sparked by World War 2, not the New Deal, finally ended the crisis ~ Nor did the New Deal substantially alter the distribution of power within American capitalism; and it had only a small impact on the distribution of wealth among the American people

NLRB

~ The supreme court decision in 1935 to strike down the National Industrial Recovery Act also invalidated section 7(a) of the act, which had guaranteed workers the right to organize and bargain collectively ~ A group of progressives in congress led by Senator Robert Wagner of New York introduced what became the National Labor Relations Act of 1935 ~ The new law, popularly known as the Wagner Act, provided workers with a crucial enforcement mechanism missing from the 1933 law: the National Labor Relations Board (NLRB), which would have power to compel employers to recognize and bargain with legitimate unions ~ The president was not entirely happy with the bill, but he signed it anyway ~ That was in large part because American workers themselves had by 1935 become so important and vigorous a force that Roosevelt realized his own political future would depend in part on responding to their demands

Glass-Steagall Act

~ Through other legislation, the early New Deal increased federal authority over previously unregulated or weakly regulated areas of the economy ~ The glass-Steagall Act of June 1933 gave the government authority to curb irresponsible speculation by banks ~ It also established a wall between commercial banking and investment banking ~ Equally important, it established the Federal Deposit Insurance Corporation

End of the New Deal

~ despite the many achievement during the New Deal, by the end of 1938, the New Deal had essentially come to an end ~ Congressional opposition now made it difficult for the president to enact any new major programs ~ But more important, perhaps, the threat of world crisis hung heavy in the political atmosphere, and Franklin Roosevelt was gradually growing more concerned with persuading a reluctant nation to prepare for war than with pursuing new avenues of reform