Franklin Roosevelt and the New Deal -The Great Depression began in 1929 after the stock market crashed. Businesses closed, unemployment rose, and the economy suffered greatly.
Hoover’s Policies Failed • President Hoover was viewed as not having done enough to slow down the effects of the Great Depression.
The Election of 1932 • The Democrats nominated NY Governor Franklin D. Roosevelt (FDR) for President • His plan, called the New Deal, was for the federal government to play a larger role in ending the Depression • This was a contrast to Hoover’s laissez-faire policies
The Election of 1932 • FDR won the election in a landslide • FDR was now responsible for ending the Great Depression • Roosevelt was elected President 4 times, and served from 1933-1945. • In the 1950s, the 22nd amendment was ratified, and limited presidents to two terms • Quotes from FDR’s Inaugural Address • “So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself.” • “Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself…” • “I shall ask the Congress for the one remaining instrument to meet the crisis—broad Executive powerto wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.”
The New Deal 1933-1935 • FDR wanted to focus on what was called the 3 R’s: Relief, Recovery, and Reform • His overall goal was to save the capitalist economic system • In his first 100 days in office, many reforms were made. • FDR’s first task was to fix the banking system. People did not have confidence in banks. • He temporarily closed all banks (a “bank holiday”), and found that most banks had sufficient amounts of money to continue operating. • This led to millions of Americans putting money back in the banks, and the banking crisis stabilized. • Congress also created the Federal Deposit Insurance Corporation (FDIC). • The FDIC guaranteed a certain amount of money people put into the banks ($2,500 initally, raised to $5,000 soon after, $250,000 today). • "deposits are backed by the full faith and credit of the United States Government."
The New Deal 1933-1935 • New Deal Reform • 1. FDIC (1933) • 2. Securities Exchange Act (1934)—created Securities Exchange Commission (SEC), which could regulate the practices of the stock market • 3. Social Security Act (1935)--Provides for old age insurance, unemployment insurance, also helped the infirm, elderly, and dependent children. Funds were provided though a tax on employers and employees. • New Deal Relief • 1. Civilian Conservation Corps (CCC), (1933): employed young men to perform unskilled work in rural areas. Paid $30/month, $25 sent to parents. 2.5 million worked for the CCC.
The New Deal 1933-1935 • Public Works Administration(PWA)-1933 • It concentrated on the construction of large-scale public works, with the goal of providing employment, and contributing to a revival of American industry. • Built roads, schools, dams, bridges, tunnels, and other industrial projects. • The PWA gave contracts to private firms who did all the hiring. • Works Progress Administration (WPA)-1935--Another government sponsored work program. It ran from 1935-1943 and included not only construction jobs and public works, but also offered work to musicians, writers, and artists.
The New Deal 1933-1935 • New Deal Recovery • Tennessee Valley Authority (TVA)—1933—built dams, provided jobs, inexpensive electricity, and protection from floods throughout large parts of the south. • Many of the poor rural regions of the south did not have electricity until the TVA came along in the 1930s.
The New Deal 1933-1935 • Agricultural Adjustment Act (AAA)—1933--restricted agricultural production by paying farmers not to plant part of their land and to kill off excess livestock. Its purpose was to reduce crop surplus to raise the value of crops. • This was done in response to the low crop prices caused by overproduction in the 1920s. • National Labor Relations Act (Wagner Act)—1935—oversees the relations between labor and owners. Guaranteed the right of workers to join a union, and to have collective bargaining. The National Labor Relations Board (NLRB) was created to enforce the law.
Critics of the New Deal • The New Deal went too far • Conservatives said the New Deal allowed for too much government interference • Some called the New Deal socialist or communist • In 1935, the Supreme Court declared the AAA unconstitutional • Schecter Poultry Corp. v. United States (1935) declared NIRA unconstitutional (NIRA set wages and prices for industry) • Critics also were against deficit spending during the New Deal • The New Deal did not go far enough • Liberal critics said the government needed to do more to lift the country out of the Depression • Senator Huey Long of Louisiana was FDR’s main critic. He wanted to tax the rich, limit personal fortunes, and redistribute wealth so all families could have a decent standard of living (some criticized Long’s plan for being socialist)
The Court-packing Plan • After several New Deal programs were declared unconstitutional, FDR came up with a plan so the Supreme Court could not undo the New Deal any further. • He wanted to replace the older, more conservative justices that opposed the New Deal • He proposed that justices over 70 be forced to retire, or that he be allowed to add a justice to the Court for every justice over 70 years old • The public was against FDR’s plan because it seemed like he wanted too much power • The court-packing scheme was defeated by Congress
The Dust Bowl • In the Great Plains during the 1930s, the Dust Bowl was caused by drought and overuse of the land. • Huge dust storms killed crops, livestock, and people. • Many farmers were forced to move further west • New Deal programs planted millions of trees in the Midwest to hold the soil in place, and FDR encouraged farming methods that conserved soil
Impact of the New Deal • Did the New Deal help the US out of the Depression? • Recovery was slow, but unemployment dropped by WWII. 25% in 1932 (year before New Deal), and 10% by 1941 (beginning of U.S. involvement in WWII) • The New Deal succeeded in slowing the Depression, and avoiding complete economic collapse • The federal government became stronger as a result of the New Deal • Politically, the New Deal led to the dominance of the Democratic Party until the late 1960s (the Republican Party had dominated American politics from the Civil War through the 1920s). • World War II ultimately brought economic prosperity back to America