4.06 The New Deal

sit-down strike:

strike in which workers shut down a factory from within

What Happened During the First Hundred Days?

After President Roosevelt took office in March of 1933, he quickly began working to achieve his goals of relief, recovery, and reform for the United States. Relief measures were designed to make an immediate impact on the economy and stop conditions from getting worse. Temporary acts focused on restarting the economy were part of the recovery effort, and long-term programs were put in place to reform the country and prevent future economic problems. During his First Hundred Days in office, Roosevelt proposed 15 bills that became law. These new laws became the heart of the First New Deal, which took place during 1933 and 1934.

Agriculture

As part of the first New Deal, President Roosevelt also proposed government programs to help struggling Americans earn needed money. The Agricultural Adjustment Act (AAA), passed in 1933, gave farmers payments to not plant crops or to kill extra livestock. Roosevelt wanted to discourage the overproduction that had lowered farm prices so greatly. The AAA would decrease supply and allow prices to rise to meet demand. This was an example of a recovery effort. Many Americans complained that the AAA paid farmers to destroy food even as people suffered from hunger around the country. But these actions did lead to higher prices for agricultural commodities. This, in turn, helped struggling farmers.

What Caused the U.S. Economy to Decline?

By the 1932 presidential election, times were tough in the United States. Bank runs and closures had eaten up many people's life savings, and unemployment climbed as high as 25 percent. Herbert Hoover had hoped that private organizations could help the people. However, they had not been able to provide enough relief to meet everyone's needs. Americans were unhappy and frustrated, so President Herbert Hoover faced a difficult bid for re-election. His opponent, Franklin Roosevelt, was the Democratic governor of New York and a former Assistant Secretary of the Navy under President Woodrow Wilson. He came from a wealthy background, but understood personal challenges. In 1921, Roosevelt had contracted a dangerous disease called polio. Although he survived the infection, he permanently lost the use of his legs. During the campaign, Roosevelt promised Americans that he would give them a New Deal. Unlike Hoover, Roosevelt believed that government could and should directly help bring about an economic recovery. He promised to reform the troubled banking industry and to provide relief to the American people. Voters liked Roosevelt's message and elected him the 32nd President of the United States. Though the Bible does not specify how big or involved a government should be, the expansion of the government in the 1930s would change a basically free market/capitalist economy into one with more socialistic tendencies because the people looked to the government to solve their problems. Roosevelt's New Deal brought with it the development of programs and organizations to help the American public. These programs and organizations often had their own acronyms and abbreviations. It can be difficult to keep track of them all.

What Long-term Changes Did the New Deal Cause for U.S. Society?

Changes in the Culture: People faced hard times during the 1930s. However, they still enjoyed life and had fun. And many of the leisure time activities they enjoyed remain part of our culture today. Americans tuned in to radio programs in high numbers. Nearly 90 percent of all U.S. households had a radio by the end of the 1930s. Listeners enjoyed comedies, variety hours, detective programs, Westerns, and soap operas. Big band music and swing dancing gained wide popularity. Americans also tuned in to hear encouraging news and information from their president in one of his regular "fireside chats." Americans also frequently attended movies to escape their troubles for a few hours. Animated films and historical dramas such as Gone with the Wind enjoyed great popularity. The poster on this screen shows the two most popular screen idols of the day. People watched movies about gangsters and musicals with popular songs such as "We're in the Money." Some literature reflected the troubles of the times. The Grapes of Wrath by John Steinbeck told of the fictional Joad family moving West after losing their Oklahoma farm to the Dust Bowl. But escapism also influenced what people read. Detective stories and comic books gained popularity. Familiar characters such as Superman and Batman first appeared toward the end of the 1930s. They remain popular today in comics, cartoons, and movies. Growth of Government: The impact of the New Deal is also felt in the United States today. Politicians still argue about Social Security. They continue to debate banking reform and farm subsidies. Americans continue to disagree about how to implement New Deal ideas even 75 years later. The federal government grew enormously during the New Deal. It took on new importance in the overall U.S. economy. New Deal initiatives increased government oversight of the financial sector. It created massive public building programs. The lack of adherence to basic biblical principles relating to money helped to bring a more expansive government into people's everyday lives. Freedom must be coupled with responsibility. When people are irresponsible, tighter constraints are necessary. In the eyes of Roosevelt, the government was best served to provide those constraints. It also became more involved in people's personal finances. For example, the government took taxes directly out of Americans' paychecks to support its programs. It also made the first direct payments to unemployed workers and elderly people. These payments helped create a lasting welfare state in which the government bears responsibility for the well being of its citizens. Roosevelt also changed the role of the president. He proposed laws to achieve social aims and to influence the U.S. economy. He oversaw a huge bureaucracy of federal agencies to achieve his goals. Roosevelt also connected with ordinary Americans in new ways. His radio addresses helped him achieve an extremely high level of public approval. Roosevelt's great influence made him largely independent of Congress. The New Deal expanded the office of the presidency.

Program or Initiative and its Purpose...

Emergency Banking Act: Gave administration the right to regulate banks Banking Act (Glass-Steagall Act): Separated commercial banking from investment banking to help protect deposits; created the FDIC Agricultural Adjustment Act: Paid farmers to reduce crops Tennessee Valley Authority (TVA): Constructed dams and power plants to improve the impoverished region Civilian Conservation Corps (CCC): Employed young men on public-works projects National Recovery Act: Established the NRA National Recovery Administration: Regulated industry by setting minimum wages, controlling prices, and protecting workers Public Works Administration: Hired people to work on government-funded construction projects, such as road construction and public buildings Social Security Act: Created a system of federal unemployment insurance Works Progress Administration (WPA): Employed people to work in a variety of fields, such as the arts, public works, and research Court-packing Plan: Plan to raise the number of Supreme Court Justices from nine to 15; justices would be appointed by the president Wagner Act: Guaranteed workers the right to organize unions and practice collective bargaining Fair Labor Standards Act: Established minimum wage and the maximum workweek of 40 hours per week for businesses

Banking

Roosevelt first began working to restore faith in the banking system. The day after his inauguration, he declared a bank holiday and stopped the gold trade. Within a week, Congress passed the Emergency Banking Act. This law allowed the government to review, reorganize, and reopen banks that had enough money to operate. The relief plan worked. When banks began reopening later that month, people deposited more money than they withdrew. Soon after that, Congress passed the Banking Act, also known as the Glass-Steagall Act. This law separated commercial banking—institutions that take deposits from individuals and business—from investment banking used to make money. Risky investments had forced many banks to close, so splitting these functions helped protect deposits. The Banking Act also created the Federal Deposit Insurance Corporation (FDIC). This government organization insured deposits in commercial banks for up to $5,000 per account. These measures helped people feel safe about putting their money in banks again and were part of Roosevelt's plan for reform. The Federal Securities Act was also passed in 1933. This act required companies selling stock to disclose important information to potential buyers, including company profits, losses, and corporate officers. The reports provided to buyers had to be reviewed by independent auditors to prevent companies from falsifying information. Historians generally agree that the financial reforms made during the First Hundred Days essentially ended the banking crisis. They stabilized the nation's banking system for years to come.

How Did Early New Deal Programs Change Life for Americans?

Roosevelt hoped that the First New Deal would turn around the depressed economy and provide relief to Americans. As you've learned, some New Deal programs helped do just that, but other programs received mixed reviews. By 1934, opposition to the First New Deal had begun to grow. Conservatives such as former President Hoover opposed the large role that government had taken to support the economy. They argued that the government had become too big and too powerful, which went against the principle of free enterprise. Others complained that the government was spending more money than it took in. They believed this was bad for the nation in the long run. Those on the extreme left, however, argued that the administration was not doing enough to help the poor. -Catholic priest Father Charles Coughlin hosted a popular radio show in which he spoke out against Roosevelt. He called for the nationalization of several industries. -California doctor Francis Townsend claimed the government needed to do more to provide older Americans with direct financial support. -Populist Senator Huey Long wanted to put high taxes on the rich to redistribute wealth to the poor. Long planned to run against Roosevelt for president in 1936. However, he was assassinated in his home state of Louisiana the year before the election.

Employment

That same year, Congress also created the Tennessee Valley Authority (TVA). This agency employed people to build dams and perform other work in the impoverished Tennessee River valley. By doing so, much of the large region received electricity for the first time. The long-term nature of the project made this one of Roosevelt's attempts at aiding the nation's recovery. The government also employed workers through the Civilian Conservation Corps (CCC). This relief agency hired young, unemployed men to plant or restore forests. The young men lived in camps that were somewhat like Army barracks. One of the most important laws of the First New Deal was the National Recovery Act. It created the National Recovery Administration (NRA). This agency worked with business and labor to set minimum wages, regulate prices, and protect workers. It also channeled government money into the Public Works Administration (PWA). The PWA, created in 1933, hired people to work on government-funded construction projects. Other recovery programs worked to employ Americans, provide home loans, and help the unemployed. In terms of battling unemployment, as many as three million people worked for the CCC during the 1930s. These workers tended forestland that became state parks and helped conserve the nation's natural environment. The PWA grew the nation's infrastructure by constructing bridges, dams, and buildings still used today. The agency's legacy includes the Overseas Highway connecting Key West and Miami, Florida. The TVA managed flooding and helped the environment in the Tennessee Valley. It also generated electric power for the region. Local businesses complained that they could not compete with the government enterprise, however, because it paid no taxes. The National Recovery Administration failed because it was too complex for its own good. It also did not focus enough on growing the economy.

How Did the Government Face the Great Depression?

The Great Depression began with a crash. Plummeting stock prices soon led to a financial crisis and high unemployment. Extreme weather conditions and low crop prices destroyed farms. By 1932, many Americans faced great hardships. They elected a new president, Franklin D. Roosevelt, who promised to use the power of government to help restore economic stability and to support the impoverished. Over the next several years, President Roosevelt's administration created numerous new government efforts to do just that.

How Did the New Deal Affect Labor Unions and Workers?

The New Deal sought to help improve conditions for those who already had jobs, as well as put people back to work. Congress passed the National Labor Relations Act, also called the Wagner Act, in 1935. This reform law guaranteed workers the right to organize unions and practice collective bargaining. It also created the National Labor Relations Board (NLRB) to investigate claims of unfair labor practices. At about the same time, a new labor group, the Congress of Industrial Organizations (CIO) began organizing industrial workers. Members of the CIO used a new tactic, the sit-down strike, to achieve their goals. Workers remained within the plant until employers agreed to their demands. Owners could not simply hire temporary workers or remove strikers from the site. Autoworkers in Michigan staged a large sit-down strike against General Motors in late 1936, as shown in the photo. This strike forced General Motors to recognize the United Auto Workers union. This success attracted many more workers to labor unions over the next several years. By the end of 1937, Roosevelt's influence was beginning to decline. The federal government cut spending and raised interest rates. It also began taking the first payroll taxes from workers' paychecks. Combined, these factors sent the economy sharply downward. In 1938, Roosevelt sent his last piece of major New Deal reform legislation to Congress. The Fair Labor Standards Act established a national minimum wage and capped the workweek at 44 hours. It also outlawed child labor. Later that year, voters elected many new Republicans to Congress. Republicans and conservative Democrats worked together to oppose further new programs and reforms. The New Deal was over.

What Was the Second New Deal?

The efforts of the First New Deal had helped end some of the immediate problems of the Great Depression by the end of 1934. The following year, the government tried to improve people's lives in ways that had never been done before. Between 1935 and 1938, the Second New Deal saw wide-ranging initiatives emerge that tried to support the general welfare of the American people. In January of 1935, Roosevelt proposed a plan for Social Security. The Social Security Act created a system of federal unemployment insurance to provide direct payments to non-farm workers who lost their jobs through no fault of their own. It also established a federal program to provide a small, regular income to older Americans and people who could not work because of a disability. This relief and reform plan was financed by new payroll taxes paid by workers. That spring, Congress created the Works Progress Administration (WPA) to create more new jobs. The WPA employed an average of more than two million people annually in a variety of fields. Workers built highways and public buildings. They cleaned up rivers and practiced environmental conservation. Some WPA employees were artists and musicians who painted murals, took photographs, and played free concerts. Others were writers who interviewed former slaves and transcribed their stories for history. The mural shown on this screen was painted during the 1930s. Still other relief and recovery programs sought to increase access to water in the dry West and connect more rural farms to electric supplies. In 1930, only about 10 percent of farms had electricity. By 1940, more than 30 percent did. In 1936, the New Deal began to face its first major challenges. The U.S. Supreme Court declared the NRA and parts of the AAA unconstitutional. Roosevelt countered the following year by proposing to expand the size of the Court from nine to 15 justices. As president, he would have the power to appoint all six of these new justices. He was certain to select judges who would support the New Deal. However, Roosevelt's court-packing plan never came to pass. The Supreme Court began ruling in favor of the New Deal, and soon some of the sitting justices began to retire. Roosevelt was thus able to appoint New Deal supporters without expanding the size of the court. Nevertheless, some historians consider the court-packing plan the low point of Roosevelt's presidency.

Did you know?

The federal government also extended New Deal legislation to its territories. Alaska, Hawaii, Puerto Rico, and other U.S. possessions either received aid from national programs or benefited from programs targeted specifically for them. The Puerto Rico Reconstruction Administration (PRRA), for example, funded housing developments, farm loans, agricultural cooperatives, and constructed hydroelectric plants.

Social Security:

federal program that makes regular payments to people who are older, have disabilities, or are unemployed

New Deal:

government policies and programs under Roosevelt during the 1930's

First Hundred Days:

initial period of Roosevelt's presidency during which many of the First New Deal programs were passed

First New Deal:

period of the New Deal spanning 1934-1935; focused mostly on financial reform and job creation

Second New Deal:

period of the New Deal spanning 1935-1938; included Social Security and other acts designed to promote the general welfare of the country

court-packing plan:

plan suggested by Roosevelt to expand the U.S. Supreme Court by 6 judges

welfare state:

system under which citizens rely on the government to protect their basic economic security

bank holiday:

the temporary closure of U.S. banks designed to give the government time to stabilize the banking system following the crash of the stock market in 1929