the first phase of the New Deal dealt exclusively w/ economic reform. • Step1 – bank protections: • BANKING HOLIDAY- banks were shut down and subject to gov't inspection; allowed to open when deemed "healthy” • FDIC – Federal protection of people’s deposits • BANKING ACT of 1933 – Glass-Steagall: Banks can no longer invest their clients’ savings into the stock market. Either you’re a deposit bank, or you’re an investment bank – not both. • people's confidence returned; they re-deposited, giving banks cash to invest in the economy
Step 2 - stock market reform • Security Exchange Commission: to police the NYSE • first chairman: Joseph P. Kennedy • practice of buying on margin was regulated • Step 3 – put more cash in circulation • FDR went off the GOLD STANDARD • gov't could print more $, so put more in circulation, wages and prices increased • Inflation gave gov't spending power
NATIONAL INDUSTRIAL RECOVERY ACT (NIRA) • NATIONAL RECOVERY ADMIN (NRA) • established to end animosity between labor and business. • fair labor codes established • Minimum wages, no child labor, shortened work hours • business people challenged the NRA, • claiming it was communist: • they formed the LIBERTY LEAGUE • Under LL pressure, the Supreme Court • overturned the NIRA & NRA in 1935, claiming that • the fed. gov. exceeded its authority • (by interfering in state jurisdictions) • National Labor Relations ACT (NLRA): 1935 • Also called Wagner Act • Fixed the problems with NIRA – protected Union Organizing SPECIFIC PIECES OF LEGISLATION(“Alphabet Soup”)
TVA - TENNESSEE VALLEY AUTHORITY used to promote hydroelectric power, control flooding lower electric rates boosted private industry (nationalization v. privatization) WPA – WORKS PROGRESS ADMINISTRATION • employed millions of unskilled workers to carry out public works (infrastructure) projects: • construction of public buildings • Roads • operated large arts, drama, media, and literary projects.
CCC – CIVILIAN CONSERVATION CORPS • Provided unskilled manual labor jobs related to the conservation and development of natural resources • provided employment for young men in relief families • in nine years, 2.5 million young men participated.
AAA – AGRICULTURAL ADJUSTMENT ACT • passed in 1933 to aid formers • to restore farmers' purchasing power and to restore the family farms • had farmers cut back on crop production by paying them SUBSIDIES (paid not to produce) • Bad side: • food production went down when millions were starving • Black sharecroppers were hurt: white landowners got rid of Black tenant formers because they were being paid NOT to farm • in 1935, AAA was declared unconstitutional by courts (too much control over individual states), so it was revised and introduced as new legislation: • EX: Food Stamp Act of 1939 - gave away surplus food to poor, also guaranteed (small) farmers a market
NYA – NATIONAL YOUTH ADMINISTRATION • created jobs for young in urban areas • Provided vocational education for young men and women SSA – SOCIAL SECURITY ACT • feared by opponents as "creeping socialism” • Provided unemployment insurance, old age pensions • Problem: it took some $ out of circulation (payroll deductions) at a time when purchasing power was already low- also, it only covered the unemployed
ELECTION OF 1936 • FDR won easily • (v. Republican Alf Landon, Kansas governor) • this victory gave FDR a mandate to continue his New Deal policies • first objective: to reorganize that obstructionist Supreme Court!! • FDR proposed packing the Court with 15 justices • Such great opposition,FDR withdrew the proposal • BUT judges were chastened & several retired • FDR appoint new justices that approved all New Deal legislation
The Late 1930’s • FDR concerned more with international issues • 1939: he proposed no new major domestic reform measures (1st time in his pres.) • ELECTION OF 1940: FDR broke with tradition & ran a 3rd time • FDR (v. Wendell Wilkie) • Big issue was American support of the Allies, now embroiled in WWII v. Nazi Germany • both U.S. pol. parties wanted to support Britain but to remain neutral • both parties approved of (most) New Deal legislation & wanted an isolationist foreign policy
Isolation won’t last long…