The New Deal
*In 1932, Herbert Hoover had almost no chance of being re-elected, but he ran nonetheless, and lost by the largest margin a president facing re-election has ever suffered (winning only 6 states and 39.7% of the popular vote). His opponent was Franklin Delano Roosevelt, distant cousin of Theodore.
Roosevelt was also a distant cousin
of his own wife, Eleanor (FDR's niece).
promised a New Deal for
*FDR was sworn in on 4 March, 1933. This was the last time a president was inaugurated in March, as the XX Amendment (ratified in 1933) moved the presidential inauguration date to 20 January, because waiting almost five months between the election and inauguration made it too hard for the new president to respond to crises (partly because FDR refused to work with Hoover on anything substantial, to make sure he got all the credit for any programmes that worked well).
his inaugural address, Franklin D.
Roosevelt assured Americans that he and the government
would take care of
them. He told America ‘the only thing we have to
fear is fear itself.’
*His first vice-president (1932-1940) was John ('Cactus Jack') Nance Garner IV. His cabinet included a wide range of people:
Cordell Hull, born in a log cabin in
Henry Morgenthau, junior, FDR's neighbour, and a
Jewish businessman who
(among other things) grew Christmas trees.
Later he would play a large role in trying to
rescue Jews from
-Interior: Harold Ickes, a Progressive Republican
-Agriculture: Henry Wallace, an agricultural scientist, new-age seeker of religious enlightenment, Freemason, socialist, and later Vice-President (1940-1944)
-Post-Master General: James Farley, FDR's campaign manager, a businessman, a Knight of Malta, and one of the first nationally prominent Roman Catholics
Frances Perkins, the first woman to serve in the
*Roosevelt also employed a group of professional and academic experts known as the Brain[s] Trust to help him create his New Deal.
*When FDR came into office, there was great enthusiasm for his New Deal, and in the First Hundred Days (a standard against which all subsequent administrations have been measured), Congress passed many of his ideas into law. Furthermore, he communicated his ideas to the people by radio, in a series of fireside chats that helped keep Americans calm during crises.
*A new banking panic was gripping the country as people began withdrawing funds again. To prevent any more banks failing (as over 4,000 already had),
*Banking reform was a major part of the New Deal, and a major part of that was the Glass-Steagal Act, which, among other things, forced banks to separate their investment branches from their commercial branches and from insurance companies, a rule that broke even the House of Morgan into two banks (which have since gone on to be two of the largest banks on Earth) and which stood until 1999 (and whose repeal is sometimes blamed for the recent financial crisis).
*The Glass-Steagal Act also created the Federal Deposit Insurance Corporation (FDIC), which insured deposits up to $2,500 per person (soon raised to $5,000; now up to $250,000). Runs on banks largely ended as people felt their money was secure.
*The Securities Exchange Commission (
*The Federal Housing Administration (FHA) regulated interest rates and other rules about home loans and insured mortgages so that banks would not be afraid to lend money to homebuyers.
*On 5 April, 1933, FDR made it illegal for private citizens (including foreigners with gold held in the United States) to own significant amounts of gold (aside from jewellery, collectible coins, and gold for industrial uses), requiring them to turn it over to the Federal Reserve by 1 May, 1933 in exchange for paper money. Some who refused had their assets seized by force.
*On 30 January, 1934, the US was removed from the gold standard. US dollars were no longer backed by a specific amount of gold, although US dollars were still convertible to gold.
XXI Amendment (December, 1933) ended Prohibition.
*The Indian Reorganization Act (or Indian New Deal) reversed the Dawes Act, preserving tribal lands and encouraging independent tribal government (with mixed success).
*FDR believed that
*The Agricultural Adjustment Act (AAA) helped farmers with subsidies, paying farmers to limit their production (and even destroy excess produce they had on hand, which many starving Americans saw as immoral). This led to a rise in farm prices, but farmers have depended on the government for other subsidies ever since. Although the AAA was declared unconstitutional in 1937, but was soon replaced by other farm aid programmes.
the South, the AAA made tobacco profitable
and stable for the first time in years, and eventually
helped cotton prices
improve, too. However, the drive for efficiency and
meant that many tenant farmers were no longer profitable,
either for themselves
or their landowners, and many lost their livelihoods and
left the state, or at
least the countryside.
*Some tenant farmers tried to fight this—some, both white and black, even joined the Southern Tenant Farmers’ Union (headquartered first in Arkansas, then in Memphis), and organized sit-down strikes in the cotton fields in 1935, but this did not work, and Roosevelt largely ignored the tenant farmers. The New Deal made agriculture profitable again, but mostly for big business farmers, not for small farmers.
1933 George Norris, a senator from
*The Tennessee Valley Authority (TVA) built dams in the
*There were people who opposed TVA, particularly the utility companies of
*The Rural Electrification Administration (REA) helped bring power to other rural areas.
*The National Recovery Act (NRA) set minimum wages and minimum prices, so both workers and businesses could make money, or at least that was the idea. In fact, it created so many regulations that both business owners and their employees hated it, and most parts of it were declared unconstitutional in 1935 in Schechter Poultry Corp. v. United States (known as the Sick Chicken Case because the government accused the Schechters of selling sick chickens; the Supreme Court determined while judging the case that Schechters did not do enough interstate commerce to be regulated). Overall, it was viewed as a failure, although the Public Works Administration (PWA) which it created hired private contractors to build dams, bridges, tunnels, and other public works throughout the 1930s.
*After all, if the economy could not create enough employment on its own, the government could create make-work programmes to do so instead.
*The Civilian Conservation Corps (
Federal Emergency Relief Administration
(FERA) lent money to states to fund make-work programs and
even programs of
direct relief through handouts of cash, food, and
clothing, although FDR and
Harry Hopkins who was in charge of FERA and later other
make-work programs and
even became Secretary of Commerce in 1938 preferred to
help Americans work
rather than offer direct relief.
*The Civil Works Administration (CWA) and later, the much larger Works Progress Administration (WPA) (both also led by Harry Hopkins) created many kinds of public works jobs for the unemployed, building dams, bridges, highways, power plants, and government buildings. The
Wagner Act of 1935 recognised the right
of workers in all industries to join unions and created
the National Labor
Relations Board to help work out disputes between business
and labour, in part
to try to solve the problems that the National Recovery
failed to address.
Social Security Act of 1935 taxed
workers, but paid pensions to retired workers who had
contributed to it. This
was based in part on ideas put forth by
a retired California doctor named Francis Townsend, who
proposed a national
sales tax that would allow the government to pay every
American aged 60 or
older $200 a month on the condition that they stop working
and spend their
entire check. Instead
of a sales tax,
FDR chose pay check withholdings, and at first only paid
$20 a month.
*To pay for all these programmes, the government went deeply into debt as the deficit increased nearly 10 times between 1932 and 1936. This was based on the ideas of the economist John Maynard Keynes, who said governments needed to do this during depressions in order to prime the pump, as getting money into the hands of the people through government spending would allow people to begin consuming again, thus allowing factories to begin producing again, thus creating jobs, all of which could be taxed to repay the government’s debts eventually--and if not, by the time it mattered, the politicians who had run up the debts and the economists who had advised them to do so would be dead by then.
Here is one-third of a nation ill-nourished, ill-clad, ill-housed--NOW!
Here are thousands upon thousands of farmers wondering whether next year's prices will meet their mortgage interest--NOW!
Here are thousands upon thousands of men and women laboring for long hours in factories for inadequate pay--NOW!
Here are thousands upon thousands of children who should be at school, working in mines and mills--NOW!
I "Here are strikes more far-reaching than we have ever known, costing millions of dollars--NOW!
Here are spring floods threatening to roll again down our river valleys--NOW!
Here is the Dust Bowl beginning to blow again--NOW!
If we would keep faith with those who had faith in us, if we would make democracy succeed, I say we must act--NOW!"
*Conservatives said that
*In 1934, Democrats like John Davis (one of Wilson's advisors and the 1924 presidential candidate) and Al Smith (1928 presidential candidate) joined up with conservatives--mostly Democratic, but some Republicans--to form the American Liberty League to oppose Roosevelt for ending Prohibition and for attacking private property through his attempts to control industry and redistribute wealth through taxes that paid for welfare and make-work schemes.
liberals (particularly socialists)
also accused Roosevelt of passing up a chance to truly
reform or even replace
the capitalist system.
*On the other hand, some people criticised Roosevelt for not going far enough. The normally conservative Father Charles Coughlin criticised
*Among Roosevelt's critics on the left was Huey Long, governor and senator from Louisiana wanted to Share the Wealth by placing very high taxes on the rich and giving the money to the poor through a guaranteed minimum annual income and through building public works such as schools and roads and free public education. He promised to make Every Man a King.
had grown up poor and was very popular
with many poor people in
Long also shared the wealth by skimming
some off for himself and his friends, as every government
employee had to pay
into Long's 'deduct box.' Even once he was in the
Senate, he still tried
*Despite opposition from both the left and right wings of American culture and politics,
*As soon as
*During his second term,
*Workers in many unskilled or low-skill jobs (who could not join the skilled craft unions of the
*The New Deal did help African-Americans in many ways.
*Despite this, FDR began to bring African-Americans into the Democratic Party while strengthening its traditional base among farmers and industrial workers. This New Deal Coalition was so powerful that, after 40 years as a minority party, the Democrats were able to hold the majority in the House of Representatives for all but four years between 1933 and 1995 and hold the presidency for all but eight years between 1933 and 1969. This is also described as America’s Fifth Two-Party system, and would last until at least 1968 and perhaps as late as 1994.
*Furthermore, FDR became the most powerful president up to his time, and set standards that all subsequent presidents have tried to follow, from measuring the beginning of their terms by how much they could accomplish in the first Hundred Days to having to not only be leaders of the Free World but media stars on radio and later on television.
after the Court Packing scheme