The Great Depression (Chapter 33) - WILLIAMSON
III. FDR and the New Deal
A. Election of 1932
1. FDR calls Hoover a reckless spender of the public’s money. He promises a balanced budget.
2. He is seen as the symbol of hope for many who had become hopeless.
3. He borrowed ideas from everyone (liberals and conservatives) – he was a pragmatist.
4. Later he used the ideas of John Maynard Keynes (Br. Economist) who said you spend your way out of a depression (deficit spending).
5. For first time, black Americans voted in significant numbers for a Democrat.
6. FDR gets 472 to 54 – Hoover is the scapegoat and there is even an anti-Hoover Amendment (20th).
7. On Feb. 15, 1933 in Miami, Giuseppe Zangara fired five shots at FDR (he blamed capitalists for his stomach pain). President-elect Roosevelt was unharmed, but Chicago Mayor Anton Cerak was killed (Zangara electrocuted within days).
B. The New Deal is generally divided into “The Three R’s” (Relief for the unemployed, Recovery for the economy, and Reform so that it will hopefully never happen again) – His program was a step up from the Bull Moose and New Freedom programs.
1. The First New Deal (also called the “Hundred Days” from March 9 to June 17, 1933) – During the Hundred Days, more social legislation than in the history of the nation. This period was an attempt by FDR to take care of emergencies first (banking was definitely the biggest)
a. “Bank Holiday” (Recovery 3/9/33) – After 5,000 banks had already gone under, by executive order he closed all the banks in the nation for four days to prevent bank runs, and to devise a plan of attack. He reassured Americans each night with the “Fireside Chats” (“the only thing we have to fear is fear itself”).
b. Emergency Banking Act (Recovery 3/9/33) – authorized the RFC (Reconstruction Finance Corporation) to purchase bank stock and with the capital banks could reopen. Complaint was the little banks weren’t offered help and went under.
c. Glass-Steagall Act (Reform – 5/16/33) – this act created the FDIC (Federal Deposit Insurance Corporation) and established rules for banks such as no investment affiliates for commercial banks and Federal Reserve Banks cannot loan money for stock market speculation (many of these rules were ignored in the 1990s and finally in 1999 the Clinton Admin. repealed it – oh no!).
d. Repeal of Prohibition of Alcohol with the 21st Amendment (Reform 3/22/33) – jobs, taxes, and less law enforcement.
e. Economy Act – This was a political move to show Americans that he was also taking a sharp pencil to wasteful programs and streamlining others (like veterans payments and reducing federal salaries).
f. Civilian Conservation Corps (Relief 3/31/33) – most popular – a six month job – 18 to 25 years old - $30 a month with $25 of it going home – not only built Blue Ridge Parkway and Arlington National Cemetery but men also taught vocational skills.
g. “Off the Gold Standard” (Recovery 4/19/33) – to create inflation the process begins of reducing the amount of gold behind the dollar - begins in 1933 and finishes in 1972. Executive Order 6102 is a United States presidential executive order signed on April 5, 1933, by President Franklin D. Roosevelt “forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States.” The order criminalized the possession of monetary gold by any individual, partnership, association or corporation.
h. Federal Emergency Relief Administration FERA (Relief 5/12/33) – headed by Harry Hopkins (FDR’s closest advisor) – the U.S. govt gave $3 billion to the states and the states gave it to those in need (sort of like a welfare program). Hopkins didn’t like the program because it was an insult to a man’s dignity and begged FDR to cancel it.
i. First Agricultural Adjustment Administration AAA (Relief – 5/12/33) – most unpopular – headed by Progressive Republican and Sec. of Ag. Henry A. Wallace – Farmers were paid subsidies not to plant (fallow) or sell certain farm products and to destroy crops and livestock so that prices would go up to the parity level of 1914. The money for these subsidies was generated through an exclusive tax on companies which processed farm products. Since sharecroppers and tenant farmers were already living on the edge of existence, they were to receive a percentage of the big farmer’s subsidy. It was economically a big success, but made things much worse for sharecroppers. Since it was almost impossible to enforce this subsidy payment, the sharecropper’s and tenant farmer’s lives went from awful to homeless and penniless. This was the beginning of the end for the sharecropping system in the South since most became day laborers (this way they definitely received no subsidy). It was also a boom for big farmers and processors. Finally, it was a PR nightmare since it was tough to convince urban and non-farm Americans of the benefits of the program as thousand of urban dwellers were starving and freezing to death. It was declared unconstitutional by Butler vs. US (1936) as the Court said that taxes could not be used to manipulate agricultural production, and that only state govts could do that. The Second AAA of 1938 got around this and other objections by the court.
j. Tennessee Valley Authority (Relief and Recovery – 5/18/33) – Headed by Republican George Norris – It built 21 dams in 10 years – Some were critical because tax money was used to help people in only one area. Also most radical as the federal government placed itself in a role traditionally held by the private sector (early “creeping socialism”). Fontana Dam is only TVA dam in NC.
k. Federal Securities Act, called a Lemon Law in North Carolinga(Reform – 5/27/33) – Sometimes called “The Truth in Securities Act”, it requires the seller to tell the buyer the relative value of stocks, bonds, etc.
l. Home Owners Loan Corporation (Relief – 6/13/33) – Fed govt would help non-farm families meet their mortgage payments and helped mortgage banks.
m. National Industrial Recovery Act [NRA] (Recovery – 6/16/33) – FDR’s only voluntary organization – It created codes for businesses, labor, and farmers to follow. It also appealed to patriotism (Big Blue Eagle). Section 7a was inserted into all codes, except farming, which guaranteed rights for workers like minimum wage, maximum hours, right to organize, collective bargaining, etc. NRA declared unconstitutional by Schechter Poultry Company vs. U.S. (1935). Court said that codes were not congressional laws and therefore could not be treated like laws. It was probably the most complex of the New Deal agencies.
n. Public Works Administration (Recovery – 6/16/33) – Sec. of Interior Harold Ickes (a Progressive Republican) – Jobs were bridges, dams (Grand Coulee), public buildings, and even aircraft carriers (Yorktown and Enterprise).
2. The Second New Deal – November of 1933 to 1939
He received considerable advice from a group of fellow Harvard graduates and other geniuses that the press nicknamed “The Brain Trust.”
a. Civil Works Administration (Relief – 11/9/33) – headed by Harry Hopkins – came out of the old FERA, and the two are considered the biggest spender - $1 billion in 5 months and allowed to die! It did some good things like GHS Auditorium, schools, and playgrounds. But mostly unrewarding work such as raking leaves, picking up trash, mowing grass, and renovating almost 250,000 outhouses. These projects were often referred to as “boondoggling.” Sec. of Interior Harold Ickes urged FDR to get rid of this one!
boondoggling
b. Securities and Exchange Commission (Reform – 6/6/34) – headed by former rumrunner Joseph P. Kennedy – Often called the “Watchdog of the Stock Market” – It required 80% down not 10% for a stock purchase.
c. Federal Housing Administration (Relief – 6/28/35) – Still around today – Small loans to homeowners who are renovating or completing their home.
d. Works Progress Administration (Relief – 4/8/35) – headed by Harry Hopkins – it was a catchall program and also the largest program (8-9 million – #1 employer for black Americans and women) - built schools, playgrounds, patched potholes, even hired actors, and artists to do projects ((Federal Arts Project).
e. Social Security Administration – (Reform – 8/14/35) – headed by Frances Perkins – it created a “Safety Net” under Americans (unemployment, old age, dependent, and disabled) – FDR was criticized as a socialist, communist, etc. for this one. One problem was that unemployment benefits did not begin until 1940 (people had to pay into it first). Some have called it the greatest ponzi scheme ever! It also moved America closer to the social welfare state than ever before.
f. Rural Electrification Administration – (Recovery – 1935) – With this agency, the process was begun to electrify rural and farm areas (only 10% had it as opposed to 90% of city dwellers). It was sort of any extension of the TVA idea, but was placed under the Department of Ag. Utilities were not usually willing to simply string wires into “nowhere.” When they did they charged farm families 4 times the city cost. It also met with similar condemnation of socialism since an agency of the federal govt was competing with private enterprise. The utilities and political opponents believed that farmers were too dumb to manage electrical cooperatives and too poor to pay for it! Actually farmers bought more electricity than city folks.
g. National Youth Administration – (Relief – 1935) – Part of the WPA until later merged into the WMC during WWII. Wpork study and local projects – women included as well as blacks.
g. United States Housing Authority (Reform – 9/1/37) – purpose was to loan money to states and communities in the process of constructing low-cost housing. The idea of creating housing for the poor was attacked by real estate agents, housing contractors, and especially so-called “slumlords. Also many anti-New Dealers saw it as pouring money down a rat hole. It’s still around today.
h. Soil Conservation and Domestic Allotment Act of 1936 & the Second Agricultural Adjustment Administration (Relief – 2/6/38) – After the First AAA was shot down, the New Dealers came up with a plan to use the Dust Bowl (Grapes of Wrath by Steinbeck – the “Okies and the Arkies” move to California to find work as pickers) and similar environmental tragedies to once again attempt to pay farmers not to sell their products in order to raise crop and livestock prices. These programs used soil conservation as the “excuse” to get farmers not to grow certain crops, and instead to plant cover or fallow crops. Once again it was the big commercial farmers who got this benefit of this program, and the tenant farmers and sharecroppers continued to struggle just to stay alive.
i. Wagner Act or National Labor Relations Act (Reform – 4/5/35) - “Labor Bill of Rights” – it restored many of the things taken away by Schechter Case (Section 7a). No black lists, organize, collective bargaining, and the creation of the National Labor Relations Board (NLRB).
j. Fair Labor Standards Act (Reform – 6/25/38) – created max. hours (40/week) and min. wage (25 cents/hr) and no child labor (except agriculture).
** The Wagner Act and the Fair Labor Standards Act were vital to the creation of the Committee of Industrial Organization by John L. Lewis (president of the UMW). It was created for unskilled workers (like UMW, UAW, and steel workers) and later became known as the Congress of Industrial Organization. It was the first to borrow the European tactic of the “Sit Down Strikes.”
C. Challenges and Problems faced by FDR and the New Deal
1. Some Americans believed that the ND went too far (too liberal). The American Liberty League which included both people from both parties and others (Hoover, Al Smith, Alfred Sloan, and “Father” Charles Coughlin). Coughlin was called “the Radio Priest” and his influence was tremendous – He created the National Union of Social Justice (ultra-conservative group) – Blamed the Depression on banks and then Jews. Flirted with fascism and lost support.
2. Some Americans believed that the ND was not going far enough (too conservative). Groups like the American Communist Party, the American Socialist Party, and individuals pushed for more reforms and programs. Dr. Francis Townsend – hero of the senior citizens – called the New Deal a “raw deal”. He proposed a national sales tax to give all old folks a $200/month check on the condition that they spend it that month. Does Townsend’s idea sound familiar?
3. Huey P. Long (“Kingfish”) – Gov. of Louisiana (1928 to 1932) and US Senator (1932 to 1935) – Every man should be a king – He set a $1 million wealth limit and the govt would take the “extra” cash and give it to the nation’s poor (“soak the rich”) – Long was going to run against FDR in the primaries, but he was assassinated in 1936 in the state capital. FDR called him one of the two most dangerous men in America (the other was Douglas MacArthur). Fictional account of his life is All the King’s Men by Robert Penn Warren.
4. Election of 1936 – FDR (D) vs. Alfred Landon of Kansas (R) – loses to FDR by 523 to 8. Landon says “no one shoots Santa Claus.” Black Americans, who can vote, vote for a Democrat (the old party of the slave owner).
5. Court Packing Incident – 1937 – FDR is afraid that Court will declare the Wagner Act and other things unconstitutional like they did earlier programs so he tries to convince Congress and the people to go from 9 to 15 justices. FDR is told “no” by everyone, but it did cause some moderate or conservative justices to realize that “a switch in time saves nine.”
6. Roosevelt Recession – 1937 – FDR reduces spending by the federal govt and at the same time the Federal Reserve increases the interest rates.
7. Roosevelt “Purge” – 1938 – FDR tries to get rid of conservative Southern Democrats who upset with this big spending and his schmoozing with black Americans. He tried to manipulate the party organization and see to it that only ND Democrats win in the primary elections. He is rebuffed and this contributes to the process of turning many Southerner Democrats into Republicans which will be accelerated by the Civil Rights movement (and cashed in on with Nixon’s “Southern Strategy” in 1968 and 1972).
D. Effects of the New Deal on African Americans
Although they were still the “First Fired and Last Hired” the New Deal did a few things that created hope for blacks. They could work in most programs, especially CCC, PWA, NYA, and WPA. Blacks responded by supporting the Demos for first time and this would continue to accelerate. Passage of the Wagner and Fair Labor Standards Act which further legitimized labor unions were of some help to the blacks (example: Phillip Randolph and the Brotherhood of Sleeping Car Porters). Eleanor Roosevelt was a big crusader for blacks (Marian Anderson story). Unlike her husband who often viewed racial situations with an eye towards politics, she ate in the “colored” sections of restaurants and often spoke at predominately black colleges (especially for her friend Mary M. Bethune who founded the Cookman Institute in Florida). Bethune was a major figure in the National Youth Administration (Division of Negro Affairs) and she was part of FDR’s “Black Cabinet” who advised FDR on African American concerns. The Progressive Republican Harold Ickes (Secretary of Interior) served as NAACP chairman, and was often referred to as “FDR’s Secretary of Negro Relations.” Other members of the “Black Cabinet” were attorney Thurgood Marshall and Robert C. Weaver.
Black Americans were hurt by the First AAA since they were usually sharecroppers, they were paid less with the NRA, and were denied loans under the FHA, and since they were usually agricultural workers they were not eligible for Social Security assistance.
Even though blacks made some gains they continued to face discrimination. The Scottsboro Cases which began in 1932 is often seen as “a travesty of justice” – This is a very detailed story, but in 1931 in Alabama, nine young black males were arrested for raping two white females. They were quickly tried in groups and without proper legal representation. They were also tried in a very hostile atmosphere with groups outside calling for a lynch mob to “take care of the situation”. The U.S. Supreme Court in Powell vs. Alabama (1932) ruled that the men did get proper representation (14th Amendment) and demanded a new trial for the defendants. The U.S. Communist Party hired gifted attorney Samuel Liebowitz to represent the men. Even though one of the two “ladies” admitted they had concocted the story to get out of their own possible legal troubles (Mann Law). Once again the men were found guilty and once again their cause was heard by the U.S. Supreme Court (Norris vs. Alabama – 1935). This time the Court ruled that the men were convicted by a jury that did not contain any African Americans (not a jury of their peers). The last of the “Scottsboro Boys” finally left Alabama prison in 1950. This case became a huge embarrassment for the U.S. and a public relations gain for Communists both in the US and abroad. It also began to clear the way for the belief that citizens deserve proper representation for capital crimes (Gideon vs. Wainwright in 1963). Harper Lee’s To Kill a Mockingbird is a fictional account of the Scottsboro Boy’s story.
Lynching continued in the South and some say FDR looked the other way in Tennessee and Alabama so as to not stir up trouble for the TVA project. It has been estimated that an African American was lynched every three week during 1935. He certainly could and should have used his popularity to have done more.
Many blacks turned to their churches (especially Baptist, Methodist, and AME churches) for help with their finances, housing, and food, how to gain respect, education, job training, and even how to demand fair treatment from govt agencies. Some Northern and Midwestern urban blacks often looked to extreme alternatives such as “The Father Divine” cult in New York City. George Baker created a cult-like organization with “heavens” in many urban areas. These units preached against prejudice, segregation, denial of rights, etc. Donations from whites and blacks also assisted members with food, housing, schooling, etc.
E. Effects of the New Deal on Women
Thanks to the tireless efforts of Eleanor Roosevelt, the cause of women in leadership roles both in business and in the public eye. Secretary of Labor Frances Perkins became the first member of a presidential cabinet, and of course, she was the first administrator of the Social Security Administration.
F. Creation of the FDR Coalition
During the ND, the Democrats were able to forge a voting coalition that is generally still around. It included African Americas, other ethnic minorities, unionized labor, residents of big cities, intellectuals (teachers, professors, writers, Hollywood folks, etc.), and the “Solid South.” Obviously, the last one has dramatically changed since Nixon established his Southern Strategy in the mid-1960’s.
G. Summary of the New Deal
1. Positives
a. Returned confidence to a nation and its people.
b. Unemployment dropped from 25% (1933) to 17% (1937) to 14.5% (1941) – Of course, WWII pull the world out of the Depression
c. Humane and compassionate govt (it is to relieve the suffering of its people)
d. Social Security created a safety net to catch Americans when things fall apart
e. First woman in a presidential cabinet
f. Govt has a job to stimulate the economy
g. He saved America’s capitalism and democracy
h. Hundred Days created much needed social and economic reforms
i. Restored confidence in the US banking system (FDIC)
j. Improved the plight for workers, especially union workers
k. Established fair business practices
l. Changed US monetary policy
m. Conservation
n. Expanded electricity to rural/farming areas (Rural Electrification Administration)
o. Eleanor Roosevelt – Probably greatest First Lady ever (see above) – She later became the US rep to the General
Assembly of the UN (including a founding member of the Human Rights Commission of the UN)
** FDR was a cross between Hamilton and Jefferson
1. He gave us reform without revolution (many places in Europe were experimenting with Socialism, Communism, Fascism, and Nazism.
2. FDR took a middle of the road approach (he made both the liberals and conservatives both mad & glad).
3. He liked a big responsive govt that would not forget the “little man.”
2. Negatives
a. Most of the programs should have ended when WWII began.
b. It led to the beginning of the welfare state.
c. It tripled the bureaucracy of the federal govt (0.5 million to 1.3 million employees).
d. Duplication of services, wasteful programs, administrative confusions, unnecessary programs.
e. Created govt restrictions and “red tape” for farmers and businesses.
f. ND really didn’t pull America out of the Great Depression.
f. Did very little to really solve the problems of African Americans.
IV. Culture in the 1930s
A. Movies were one form of escapism – Wizard of Oz, Gone with the Wind, and King Kong. Famous director and writer Frank Capra also was important with his social commentary movies like Mr. Smith Goes to Washington.
B. Radio shows were also escapism – variety shows, Lone Ranger and Tonto, G-Men, War of the Worlds by H.G. Wells
C. Literature as escapism – Grapes of Wrath, Native Son, comic strips, and comic books like Flash Gordon, Superman, and Dick Tracy.
D. Empire State Building – Constructed during the 1930s, many saw this as a sign of hope that America was emerging from the Great Depression.
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