American History II: Note Set #23: FDR's New Deal
After taking office in 1933, Franklin Delano Roosevelt (often referred to as FDR) was willing to take risks to try to fix the US economy – it was better to try something and have it fail, than to sit and do nothing at all
FDR made the focus of his "New Deal" relief, recovery, and reform
John Maynard Keynes (1883 – 1946)
Keynes was a British economist who argued that the best way to end the economic recession was through government spending programs and creating a national debt
Roosevelt’s New Deal plan was based on Keynesian economics and would require the government to engage in deficit spending - spending more on direct relief programs than it took in in taxes
Roosevelt assured Congress that the deficits created by the New Deal was an emergency measure which would be temporary (it wasn’t)
FDR's First Hundred Days
Between March 9 & June 16, 1933 (FDR’s first 100 days in office) he got Congress to pass 15 major acts which launched his New Deal reforms
The Emergency Banking Relief Act
FDR declared a federal holiday, closed all banks, and called Congress into a special session
Congress passed the Emergency Banking Relief Act in a single afternoon
The act called for all banks to be assessed for credit-worthiness by the US government and banks found to be stable were issued special federal licenses to reopen
Roosevelt's Fireside Chats
Roosevelt then went on the radio and assured Americans that it was safe to deposit their money back into these newly licensed banks
Surprisingly, Americans believed him and stopped withdrawing their money from the banking system and began resuming deposits
Throughout his presidency, FDR kept America informed of his intentions and progress through these radio-broadcast “fireside chats”
The Securities Act (1933)
New law which required all stocks and bonds sold in the US to be registered with the federal government and required companies which sold them to provide complete and truthful information to investors
The Securities and Exchange Commission (SEC)
Government agency created in 1934 to enforce the Securities Act
The SEC was (and still is) responsible for supervising companies in US which deal in securities (stocks, bonds, and other financial investments)
The Glass-Steagall Act (1933)
Law which separated commercial banking (everyday banks that accept deposits, make mortgage loans, etc.) from investment banking by banning commercial banks from risking customers' deposits on investments in the stock market
The law also established the Federal Deposit Insurance Company (FDIC)
The FDIC was designed to boost Americans’ confidence in banks
Today, the FDIC insures bank deposits up to $250,000 per account and supervises all banks in the US to ensure that they are stable
The Civilian Conservation Corps (CCC), (1933 - 1942)
Government agency which provided work in the forestry service to unemployed men between ages 17 and 25
Workers planted trees, fought forest fires, and built drinking water reservoirs
Workers lived in special camps and earned $30 per month
Over 3 million men worked for the CCC over its 9 years of existence
The Federal Emergency Relief Administration (FERA), 1933
FERA was created by the Federal Emergency Relief Act in 1933
The agency provided work for over 20 million Americans by giving over $3 billion to state and local governments so they could create jobs for unskilled labor
Many of the jobs created were in manufacturing consumer goods for the needy – canning fruits & vegetables, making mattresses and bedding, distributing surplus food to the hungry
FERA was replaced by the Works Progress Administration (WPA) in 1935
The Civil Works Administration (CWA)
Subdivision of FERA which provided short-term work to 4 million between 1933-34
The CWA built sewer systems, roads, airports, and over 40,000 schools
The agency spent over $1 billion in about 5 months
The National Recovery Administration (NRA), 1933 - 1935
Created by the National Industrial Recovery Act (NIRA)
The NRA's mission was to stabilize prices for manufactured goods and prevent any more businesses from closing
The NRA created codes of fair competition in an effort to reduce harmful competition
The NRA's practices were declared unconstitutional by the Supreme Court in the case of Schechter v. US (1935)
The Public Works Administration (PWA), 1933 - 1939
The PWA was also created by the National Industrial Recovery Act (NIRA)
The PWA spent over $6 billion creating jobs for skilled workers through large-scale public works projects, such as the construction of dams, bridges, and highways
The Tennessee Valley Authority (TVA), 1933 - Today
The TVA built dams in the South to create jobs, bring electric power, and provide flood control to one of the poorest and most rural parts of the nation
Later New Deal Programs
The Works Progress Administration (WPA), 1935 – 1943
The WPA was the largest New Deal organization; at one time it was the largest single employer in the US
The WPA spent over $11 billion providing construction jobs to unskilled laborers
The WPA also hired artists, writers, and others to keep the American arts alive
The National Labor Relations Board (NLRB), 1935 - Today
The NLRB was created by the National Labor Relations Act (also called the Wagner Act)
The NLRB was designed to monitor unfair business management practices, monitor labor union activity, and act as an arbitrator between management and the unions
The Social Security Administration (SSA), 1935 - Today
The SSA provides retirement income for all workers once they reach age 65; it also provides payments to needy children and people with permanent disabilities
The SSA also included the nation's first unemployment insurance
All of this is paid for through a payroll tax which every worker in America pays
The Fair Labor Standards Act (1938)
Raised the minimum wage to $.40/hour and set a maximum number of work hours at 44 hours per week
Banned child labor for those under 16 years of age (except on farms)
The Agricultural Adjustment Administration (AAA), 1933
The AAA provided government loans to farmers and paid farmers not to grow crops in order to reduce supply and push up crop prices
The program saved American farmers from ruin, but angered many consumers because it increased the price of food
The Home Owners’ Loan Corporation (HOLC), 1933-35
The HOLC was created to save homeowners from foreclosure
Under the HOLC, the federal government bought risky mortgages from banks and then restructured them with lower interest rates and longer terms
During the Great Depression, about 10% of home owners in the US had mortgages held by the HOLC; even so, manystill could not make their payments and the HOLC was forced to foreclose
The Farm Credit Administration (FCA)
Version of the HOLC designed to save farms from foreclosure
The FCA helped farmers refinance the mortgages on their farms
The National Housing Act (1937)
Created the United States Housing Authority (USHA)
The USHA subsidized loans to builders who were willing to tear down old tenements and build large tracts of new, low-cost housing (referred to today as "the projects") to help the poor
The USHA was the first federally funded public housing effort in the US
The Farm Security Administration (FSA), 1937
The FSA was created to loan money (over $1 billion) to tenant farmers to help them buy their own farms (mostly farms that had been foreclosed upon by the FCA)
Opposition to the New Deal
The American Liberty League (created in 1934)
Group which combined business leaders and conservative politicians in organized opposition to the New Deal programs, especially Social Security and the AAA
Huey Long (1893 – 1935)
Very popular Democratic Senator from Louisiana and head of a powerful political machine
Long ran a “Share Our Wealth” campaign which called for taxing the rich to pay for assistance programs for the poor
Long developed a strong following and announced he was running for president, but he was assassinated in 1935
Father Charles Coughlin (1891 – 1979)
Catholic priest who used his weekly radio show to call on FDR to do more to help the poor, such as raising taxes on the wealthy and nationalizing the banking industry
During WWII, he was arrested for violation of the Espionage Act due to his continued criticisms of FDR; after his arrest, the Catholic Church ordered him to end his radio program
Dr. Francis Townsend (1867 – 1960)
Proposed in his Townsend Plan that the government provide all citizens over 60 with a $200 per month pension with the requirements that they must retire (creating jobs for young people) and must spend the entire $200 each month (which would boost the economy)
The Townsend Plan gained widespread support among the elderly and increased political activism among seniors
The Supreme Court
Starting in 1935, the mostly conservative Supreme Court began attacking Roosevelt’s New Deal programs, striking down several as unconstitutional
These attacks worried Roosevelt, prompting him to take action to reshape the Court in his favor
FDR’s Court Packing Scheme
FDR proposed a bill to Congress which would allow the President to appoint extra Justices to the Supreme Court anytime a Justice had served over 10 years or had passed the age of 70
This plan would have allowed FDR to appoint 6 new justices almost immediately, and he would of course have appointed ones supportive of his New Deal programs
Congress refused to expand the Court, but the Supreme Court sensed the danger and did not strike down any more New Deal programs
Consequences of the New Deal
The U.S. Becomes a “Broker State”
The federal government assumed the new role of balancing and mediating the competing economic interests of businesses, farmers, workers, and consumers
The U.S. Becomes a “Welfare State”
FDR’s New Deal programs also began to shift spending priorities in the federal budget
As Americans became used to the idea of government assistance for the needy, more and more of the federal budget began to be spent on public welfare programs