The New Deal

How the Great Depression Produced a Political Realignment, Turning the

Democratic Party into the Dominant Party for the Next 20 years, and Redefining the

Role of the Federal Government

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Themes and Topics

• Role of Government Franklin Roosevelt's Leadership

Response to the Great Depression: First and Second New Deals (and why their wasn’t a Third New Deal

• Cultural Change

New Deal Coalition as a more representative form of democratic political culture

New Deal Coalition as a new American Identity

• Private Enterprise

Trade Associations as a solution to the Capitalist Trade Cycle

High Wage Unionism and Welfare State as solutions to the Capitalist Trade Cycle

• Multiculturalism

Realignment of ethnics, and minorities into the Democratic Party during the New Deal

Persistence of institutional racism in the 1930s

New Deal for Indians

Central Analytical Questions

• How did Franklin Roosevelt differ from Herbert Hoover on Presidential Leadership?

• What was the First New Deal and how did it differ from the Second New Deal

• Why did the “Third New Deal” never materialize?

• How successful was the New Deal in overcoming the Depression?

• What were the permanent changes to the role of the Federal Government as a result of the New Deal?

Election of 1932

• A Watershed Election

Roosevelt/Democrats sweep into power reversing 12 years of GOP rule

Roosevelt’s campaign promises

Hoover’s bitterness at the loss

• Hated Roosevelt

• He lived to be ninety!

Franklin Delano Roosevelt

• Inaugural Address How he prepared himself

The Crowd

FDR’s message

• Grave

• Accusatory and populist

• Bold

• Stern and Didactic

• Called for a new morality

• Called for Action

• Issued a Warning

• Doesn’t outline a plan or program

“The only thing we have to fear is fear itself, nameless, unreasoning fear.”

http://www.history.com/videos/inaugural-address-franklin-d-roosevelt - inaugural-address-franklin-d-roosevelt

Roosevelt’s Cabinets

• FDR’s cabinet included Francis Perkins, Sec. Of Labor, Harold Ickes, Sec. Of Interior, Henry Wallace, Sec. Of Agriculture, and Sec. Of Treasury, Hans Morgenthau

• In addition, FDR relied on his “Brain Trust,” Columbia University Professors Raymond Moley, Rexford G. Tugwell, and Adolph A. Berle, strong critics of laissez faire

FDR’s Cabinet, note the woman, Francis Perkins

First Hundred Days

• FDR established a new standard by which to define bold, productive leadership

Congress passes 15 major pieces of legislation within the first 100 days of FDR’s reign

What is the scope of the First New Deal?

• Reform

• Recovery

• Relief

• Regional Development

First Hundred Days and Beyond

• First New Deal (1933-1934) Reform

• Target the Financial System Declares a “Bank Holiday”

Securities Act of 1933

Securities Act of 1934

Glass-Steagall Banking Act of 1933

Banking Act of 1935

Long Term Consequences:

Stability in the banking and monetary field that lasted into the 1970s

Inflation undermined this structure, which was replaced by de-regulation during the Carter-Reagan years

Financial upheaval followed

In 1990s, massive consolidation in Banking

First Hundred Days and Beyond

• First New Deal (1933-1934) Recovery

• Elite Corporatism (not populism) defined initial program of industrial recovery because Big Business rejected “liquidation”

• How did Corporate America define the problem and solution?

Problem: overproduction and declining prices

Solution: give business the authority to cartelize industry through existing trade associations

Problem: solution violates anti-trust laws

New Deal repeals anti-trust laws with National Industrial Recovery Act of 1933, creating the National Recovery Administration (NRA)

Law includes new rights for labor (unions, 8 hour day)

Shows FDR sought “class cooperation” in first New Deal

Give farmers power to restrict production of seven major staple crops (Wheat, Corn, Cotton, Tobacco, Cattle, Chickens, and Pigs) through Agricultural Adjustments Act of 1933, creating Agricultural Adjustments Administration (AAA)

National Recovery Administration

• To generate enthusiasm for the New Deal, the Administration created a new symbol of national unity, the blue eagle and held parades to promote the movement

• Businesses placed this symbol on their storefronts to show “we do our part” as evidence of their compliance

First Hundred Days and Beyond

• First New Deal (1933-1934) Recovery

• NRA in action Trade Associations drew up codes

Some businessmen complained because the codes included the right of workers

• AAA in action Farm incomes rose between 1933 and 1935

Congress also created the Commodity Credit Corporation, which made loans to farmers to take their crops off the market, in effect, it was a Sub-treasury Plan

Congress also created a quota laws for cotton and tobacco and taxed farmers who sold more than their share of the quota

• Supreme Court and the NRA “Black Monday,” May 27, 1935, Court declared NRA unconstitutional in Schechter Poultry

Corporation v. U.S.

Court argues constitution did not give Congress the power to regulate intra-state commerce

Congress had delegated too much power to the executive when it granted code-making authority, and had exceeded its power under the Commerce Clause

Court declared AAA unconstitutional in U.S. v. Butler (1936)

A processing tax was illegal because the law violated commerce clause

First Hundred Days and Beyond

• First New Deal (1933-1934) Relief

• This was the First New Deal’s greatest achievement because it brought federal aid to the relief of millions of distressed Americans

Civilian Conservation Corps (CCC)

brought jobs (work relief) to 18-25 year olds

Employed 3 million workers in the winter of 1933-34

Cost $900 million

Federal Emergency Relief Administration (FERA)

Loans/Grants to states for students, transients

Cost: $500 million

Civil Works Projects Administration (CWPA, Later WPA)

Replaced FERA

Initially, under CWPA, make work jobs, highway repair; Cost: $900 M

Later, with Second New Deal, Massive Public Works Projects; Cost $48 B

National Youth Administration for high school/College youth

First Hundred Days and Beyond

• First New Deal (1933-1934) Relief

• This was the First New Deal’s greatest achievement because it brought federal aid to the relief of millions of distressed Americans

Jobs programs helped the dependant unemployed populations of the cities

The New Deal also targeted protecting owners from losing their homes and farms

It reorganized the Farm Credit Administration and refinanced farm mortgages for $100 million

It did the same for homeowner mortgages

First Hundred Days and Beyond

• First New Deal (1933-1934) Regional Development: The Tennessee Valley Authority (May

1933) • Object: bring electrification to rural America through Hydro-electric

power, eventually 90% of farms are served

• Marks the first time in US history the Federal Government has directly engaged in regional development investment

Dust Bowl Conditions

Migration offered the only solution to the problem of soil erosion: Mid-westerners headed west; while southerners headed north

Politics of the New Deal

• Governor Al Smith, Republicans, and the “Liberty League” Define the New Deal as

“Communism,” “Socialism,” or “Regimentation” of Free Enterprise

Want to reverse course

• Sen. Huey Long, Father Charles Coughlin, and Dr. Edward Townsend of the Union Party Define the New Deal as pro-

fascism

Push for populist change FDR and Al Smith in a Friendly Moment

1934 Mid-Term Elections: Senate

• Showed how enormously popular FDR and the Democrats had become

Added 9 seats, for a 69+2 majority

1934 Mid-Term Elections: House

• The Democratic Party takes commanding control of the House of Representatives, with nearly 75% of all seats

Critical Thinking Question

• Roosevelt Moved Left: 1935-1936, creating a Second New Deal

• What emboldened him to further experiment?

Popular Resistance to Hardship

• Despite the New Deals multi-pronged approach to the Depression, hardship persisted and provoked popular resistance

• Unemployment demonstrations swept the country

• Food and services protests led to riots and inspired self-help activities

• In the workplace, class conflicts increased dramatically as workers organized Congress on Industrial

Organization moved to organize mass production industries

Longshoreman’s Strike in S.F.

1937 Strikers

New Deal for Labor

• Following Schechter v. U.S., Congress passed the Wagner Act in July 1935

It created the National Labor Relations Board, a federal agency set up to protect the right of workers to bargain collectively

The long term consequences of this act increased the number of American workers in unions from 3 million to 14 million by 1945

Unions Empowered

Numbers in millions

Social Security

• FDR’s left critics had called for reforms addressing the needs of the elderly and the dependent

• In August 1935, Congress passed the Social Security Act, creating the Social Security Board, later Administration (SSA)

Other Features of the 2nd New

Deal

• Revenue Act of 1935

Called the “soak the rich” act because it increased the tax rate on incomes above $5 million to 75%

Politically effective, it didn’t increase revenue

• Anti-trust actions

Wheeler-Rayburn Public Utility Holding Company Act of 1935 targeted pyramiding of holding companies

Politics of the 1936 Election

• This election featured some of the sharpest class rhetoric in U.S. history

• Republicans accused FDR of being a communist and a dictator

• FDR’s reply, “Government by organized money is just as bad as government by mob rule. [The economic elite] are unanimous in their hatred of me, and I welcome their hatred.” Alfred Landon

Election of 1936

Senate Elections 1936

• Republicans were

reduced to 16

Senate seats, the

lowest number by

an opposition party

since

Reconstruction

FDR’s “Court Packing” Plan

• Buoyed by the election, FDR moved to punish the Court which had invalidated so much of the First New Deal and still threatened the Second New Deal

• He proposed to increase the number of justices from 9 to 15

• He argued the ages of the Justices justified the additional help, one new justice for every justice over 70

• There ages were: 61

64

70

74 X 3

75

76

80

FDR’s “Court Packing” Plan

• Despite considerable efforts at lobbying, by summer 1937, FDR recognized he did not have the support of the Democratic majority

• No vote was ever taken on FDR’s proposal

• This setback demonstrated to FDR’s opponents he could be beaten

• In the short term, the court got the message and began approving key elements of the 2nd New Deal, including Social Security, the NLRA, and the minimum wage law

• In the longer term, FDR won because those “nine old men” began to retire

• Eventually, FDR appointed all nine members of the court

Roosevelt Recession 1937

• FDR’s second misstep of 1937 grew out of his failure to understand the nature of his own recovery policies The Second New Deal

embraced an consumption theory of recovery

But in 1937, he cut spending, seeking to balance the budget

The country plunged back into recession

Roosevelt Recession of 1937

• Internally, his team debated what to do Morgenthau argued for a cut

in spending and balanced budgets

Hopkins and Ickes wanted to increase government spending to revive business (the Keynesian Solution)

Thurman Arnold favored trust busting to restore competition

• April 1938, Congress voted $33 billion for public works and set up the TNEC

John Maynard Keynes

Toward a 3rd New Deal

• In 1937-1938 FDR succeeded in getting several additional reforms passed The National Housing Act

The Farm Tenant Act • Set up the Farm Security Administration to make loans to

purchase farms and for farmers sinking into tenancy

The Second Agricultural Adjustments Act

Fair Labor Standards Act • Created a Federal Minimum Wage for businesses engaged in

interstate commerce

• Established a Federal 40 hour work week

• Abolished Child Labor

1938 House Elections

Democrats suffered major Reversals in the 1938 Congressional races Notes especially the loss Of support in the mid-west

1938 Senate Elections

Republicans gained six seats in the Senate But the Democrats Still held a 2 to 1 margin

What Limited the 3rd New Deal?

• The Election of 1938 Failed to purge the Democratic Party of its

conservative wing

A conservative block emerged in Congress uniting southern Democrats and Republicans

• Thus by 1939, the New Deal’s creative energies were spent By 1939, FDR sought only to preserve existing

reforms

Return to Political Stalemate

New Deal and African Americans

• A major shift from GOP to Democratic Party in 1936

• Real tangible benefits derived from class legislation aiding workers and poor

• Little tangible actions achieved because of political reasons

New Deal for Indians

• New Deal for Indians resulted from the Indian Reorganization Act of 1934 John Collier, Dept of the

Interior, Bureau of Indian Affairs, supported cultural pluralism

Closed Federal Indian Boarding Schools

Ended Dawes System

Restored 4 million acres of land

Collier and Friends

Critical Thinking Exercise

• How do we assess the significance of the New Deal

• Three historiographic perspectives

Radical

Conservative

Liberal

Which view gets it right?

Disability and Achievement

• This is one of only two photos among 40K in FDR’s Presidential Library which show FDR is in a wheelchair

• To most Americans, the fact polio had left FDR paralyzed hardly mattered, he was their handicapped savior

Conclusions

• The New Deal redefined the role of government in American social and economic life During this period, the Federal government

became the “honest broker” between labor and capital, urban and rural, native born and immigrant Americans

Although African Americans embraced the Democratic Party, they received class-based, not race based benefits