Launching the New Deal • Much of Roosevelt's success was a result of his ebullient personality, he assured Americans the “the only thing we have to fear is fear its self” in his inaugural address, he was the first president to make regular use of the radio, he used his “Fireside Chats” to explain his programs to the people, helped build public confidence in the administration
Launching the New Deal • Bank Holiday – on March 6, 1933 FDR issued a proclamation closing all American banks for 4 days until Congress could meet in special session to consider banking reform legislation
Launching the New Deal • The Emergency Banking Act was designed primarily to protect the larger banks from being dragged down by the weakness of smaller banks, the Treasury Department inspected all banks before they would be allowed to reopen and provided federal assistance to some troubled institutions, helped dispel the panic, 75% of the banks in the Federal Reserve system reopened within the month, provided an end to the immediate banking crisis
Launching the New Deal • The Economy Act was designed to balance the federal budget by cutting the salaries of government employees and veterans by as much as 15%, this act drew protests from the progressives in Congress
Launching the New Deal • The Beer Act legalized the manufacture and sale of beer with a 3.2% alcohol content, this was an interim measure pending the repeal of prohibition, which was accomplished with the 21st Amendment which ended prohibition in 1933
Launching the New Deal • Agricultural Adjustment Act (May 1933) it was designed to reduce crop production to end agricultural surpluses and halt drop in farm prices, producers of seven basic commodities (wheat, cotton, corn, hogs, rice, tobacco, and dairy) would decide on production limits for their crops,
Launching The New Deal • The government (through the Agricultural Adjustment Administration) would then tell individual farmers how much they should produce and would pay them subsidies for leaving some of their land idle, this subsidy would be paid for by a tax on food processing, farm prices were to be subsidized up to the point of parity
Launching the New Deal • The results of the AAA brought about a rise in prices for farm commodities and made the agricultural economy more stable and prosperous than it had been in many years, but it favored larger farmers over smaller ones and made payments directly to landowners resulting in tenant farmers being kicked off their land in order to qualify for payments, the Supreme Court ruled the government had no right to require farmers to limit production and struck down the AAA in 1936
Launching the New Deal • Soil Conservation and Domestic Allotment Act permitted the government to pay farmers to reduce production to "conserve soil", this was not struck down by the Supreme Court
Launching the New Deal • The Resettlement Administration and its successor the Farm Security Administration provided loans to help farmers cultivating sub marginal soil to relocate to better lands, the Rural Electrification Administration worked to make electric power available to thousands of farmers through utility cooperatives
Launching the New Deal • The Roosevelt administration relaxed antitrust provisions for businesses in exchange for employer recognition of workers rights to bargain collectively through unions, to insure that incomes rose along with prices, to help create jobs and to increase consumer buying power the administration added a major program of public works spending
Launching the New Deal • The National Industrial Recovery Act (June 1933) created the National Recovery Administration led by Hugh S. Johnson, Johnson called on every business in the nation to accept a temporary "blanket code" that included a minimum wage of 30 to 40 cents an hour, a maximum workweek of 35 to 40 hours, and the abolition of child labor, adherence to the “blanket code” would raise consumer purchasing power and increase employment.
Launching the New Deal • In addition to these the Industrial Codes negotiated by Johnson applied to major industries and set floors below which no company would lower prices or wages in search of a competitive advantage and they included provisions for maintaining employment and production, he quickly won agreements with every major industry in the US
Launching the New Deal • NIRA Difficulties – the codes were hastily and often poorly written, administrating them was beyond the capacities of federal officials with no prior experience in running so large a program, large producers dominated code writing process and wrote them to their advantage, sometimes they artificially raised prices leading to a decline in industrial production, Section 7(a) promised workers the right to form unions and engage in collective bargaining but contained no enforcement mechanisms
Launching the New Deal • The Public Works Administration was established to administer the spending programs of NIRA but only gradually allowed the money to flow out, not until 1938 was the PWA putting a large amount of money into the economy, industrial production declined from July to December in 1933, by early 1934 many businesses were flaunting its provisions, FDR pressured Johnson to resign in the fall of 1934 and established a new board of directors to oversee the NRA
Launching the New Deal • In the Schecter Case (1935), the Supreme Court ruled that the Roosevelt administration did not have the power to draft the NRA codes (instead it belonged to Congress) and the case involved intrastate commerce not interstate commerce and therefore the federal government had acted in an unconstitutional manner, Roosevelt criticized the Court for its “horse and buggy” interpretation of the interstate commerce clause
Launching the New Deal • The AAA and the NRA reflected the beliefs of New Dealers who favored economic planning but wanted private interests (farmers or business leaders) to dominate the planning process, others believed that the government should be doing the planning for the economy
Launching the New Deal • The Tennessee Valley Authority was authorized to complete the dam at Muscle Shoals (started during WWI but never finished) and build others in the region, to generate and sell electricity from the dams to the public at reasonable rates, it was also intended to be an agent for a comprehensive redevelopment of the entire region, it improved water transportation, provided electricity, stopped flooding problems, power rates declined, but the Tennessee Valley remained generally impoverished
Launching the New Deal • Roosevelt considered the gold standard a major obstacle to the restoration of adequate prices, he signed an executive order shifting the US off the gold standard, the US now had government-managed currency, where the dollar’s value could be raised or lowered by government policy according to economic circumstances, this did not have any major impact on the economy
Launching the New Deal • The Glass-Steagall Act gave the government authority to curb irresponsible speculation by banks, it established the Federal Deposit Insurance Corporation, which guaranteed all bank deposits up to 2,500
Launching the New Deal • The Truth in Securities Act required corporations issuing new securities to provide full and accurate info about them to the public, another act created the Securities and Exchange Commission in order to police the stock market, JP Morgan’s son and successor could not even get a respectful hearing on Capital Hill to address the issue
Launching the New Deal • Federal Emergency Relief Administration provided cash grants to states to prop up bankrupt relief agencies, Harry Hopkins was chosen to lead the agency but had misgivings about establishing a government "dole"
Launching the New Deal • The Civil Works Administration put 4 million people to work on temporary projects constructing roads, schools, and parks, the important thing to Hopkins was pumping money into an economy badly in need of it and providing assistance to people with nowhere else to turn
Launching the New Deal • The Civilian Conservation Corps was designed to provide employment to the millions of young men who could not find jobs in the cities, they created camps in the national parks, forests, and other wilderness areas, the men worked in a semi-military environment on such projects as planting trees, building reservoirs, developing parks, and improving agricultural irrigation, the CCC was segregated and the vast majority of jobs went to whites, women were excluded altogether
Launching the New Deal • The Farm Credit Administration provided mortgage relief for millions of farm owners and homeowners by refinancing 1/5th of all farm mortgages in the US, the Home Owners Loan Corporation refinanced the mortgages of 1 million homeowners by 1936, and the Federal Housing Administration was established to insure mortgages for new construction and home repairs
The New Deal In Transition • By early 1935 with no end to the Depression in sight, the New Deal found itself the target of fierce public criticism, most of the criticism came from the right but some came from the left (Communist and Socialist Parties)
The New Deal In Transition • The American Liberty League was formed by a group of the most fervent and wealthiest Roosevelt opponents, designed to arouse public opposition to the New Deal's “dictatorial” policies and attacks on free enterprise, did not attract much popular support
The New Deal In Transition • Dr. Francis E. Townsend, an elderly California physician, led a movement of more than 5 million members with his plan for federal pension for the elderly, the Townsend Plan stated that all Americans over the age of 60 would receive monthly government pensions of $200, provided they retired and spent the money in full each month, the public sentiment behind this proposal directly led to the Social Security System which Congress approved in 1935
The New Deal In Transition • Father Charles E. Coughlin was a Catholic priest in Detroit, his weekly sermons broadcast nationally over the radio, advocate for changing the banking and currency systems, he proposed the re-monetization of silver, issuing greenbacks, and the nationalization of the banking system, he became a critic of FDR for not dealing harshly enough with the “money powers” and established the National Union for Social Justice
The New Deal In Transition • Governor Huey P. Long from Louisiana, rose to power based on his strident attacks on the banks, oil companies, utilities and on the conservative political oligarchy allied with them, he became a dictator in the state of Louisiana but the people loved him because of his progressive accomplishments such as building roads, schools, hospitals, revising the tax codes, distributing free textbooks, and lowering utility rates.
The New Deal In Transition • He easily won election to the Senate in 1930, an early supporter of FDR he broke with the President and proposed an alternative to New Deal which advocated a drastic program of wealth redistribution
The New Deal In Transition • The Share-Our-Wealth Plan called for using the tax system to confiscate the surplus riches of the wealthiest men and women in America and distribute them to the rest of population, this would allow the government to guarantee every family a homestead of $5,000 and an annual wage of $2,500, a poll by the Democratic National Committee in the Spring of 1935 showed that Long might attract more than 10% of the vote if he ran as a third-party candidate for President
The New Deal In Transition • The Second New Deal was launched in the spring of 1935 and FDR was now willing to attack corporate interests openly • The Holding Company Act of 1935 was designed to break up the great utility holding companies that held monopolies in most metropolitan areas
The New Deal In Transition • In 1935 the Supreme Court struck down the National Industrial Recovery Act, which invalidated Section 7(a) that allowed workers to organize into unions and bargain collectively to improve wages and working conditions
The New Deal In Transition • A group of progressives in Congress led by Senator Robert Wagner (NY) introduced the National Labor Relations Act (Wagner Act) which provided workers with a crucial enforcement mechanism missing from the 1933 law, the National Labor Relations Board would have the power to compel employers to recognize and bargain with legitimate unions
The New Deal In Transition • The American Federation of Labor remained committed to the idea of the craft union which organized workers on the basis of their skills, but the bulk of industrial workers were now unskilled and so a new labor organization emerged to challenge craft unionism
The New Deal In Transition • Industrial Unionism argued that all workers in a particular industry should be organized in a single union, regardless of what functions the workers performed, all autoworkers should be in a single automobile union, all steelworkers in a single steel workers union, united in this way all workers would greatly increase their power.
The New Deal In Transition • John L. Lewis (United Mine Workers) created the Congress of Industrial Organizations (CIO) in 1936, expanded the constituency of the labor movement, more receptive to women and blacks, targeted previously unorganized industries (textiles, laundries, tobacco factories, etc.) more militant than the AFL
The New Deal In Transition • The United Auto Workers utilized the Sit-Down strike against General Motors factories in Detroit, employees simply sat down inside the plants refusing to work or leave, thus preventing the company from using strikebreakers, this technique spread to 17 other GM factories, the strikers ignored court orders and police efforts to force them to vacate the buildings, Michigan had a progressive governor who refused to call out the National Guard, GM became the first major manufacturer to recognize the UAW
The New Deal In Transition • The United Steelworkers of America targeted United States Steel and launched an organizing drive in March 1937, US Steel recognized the union rather than risk a costly strike when it sensed that the company was on the verge of recovering from the Depression
The New Deal In Transition • “Little Steel” was far less accommodating, on Memorial Day 1937, a group of striking workers from Republic Steel gathered with their families for a picnic and demonstration on the South Side of Chicago, when they attempted to march toward the factory police opened fire on the strikers, 10 were killed and another 90 wounded, the “Memorial Day Massacre” had the desired effect, the 1937 strike failed
The New Deal In Transition • In 1937 there were 4,720 strikes, and over 80% were settled in favor of the unions, union membership went from 3 million in 1932 to 8 million in 1937 to 10 million in 1941
The New Deal In Transition • Secretary of Labor Frances Perkins had been lobbying for a system of federally sponsored social insurance for the elderly and the unemployed, the Social Security Act (1935) provided two types of assistance for the elderly- those presently destitute received $15 a month in federal assistance, those presently working were incorporated into a pension system to which they and their employers would contribute by paying a payroll tax.
The New Deal In Transition • It would then provide them with an income upon retirement, payments would begin in 1942 and then would provide $10 to $85 a month to recipients, domestic servants and agricultural laborers were not included
The New Deal In Transition • The Social Security Act also created a system of unemployment insurance which made it possible for workers laid off from their jobs to receive temporary government assistance, established a system of federal aid to people with disabilities and dependent children, the framers of Social Security wanted to create a system of “insurance” not “welfare”
The New Deal In Transition • In 1935 the Works Progress Administration was created which established a system of work relief for the unemployed, under the direction of Harry Hopkins, it had a beginning budget of $5 billion, kept an average of 2.1 million workers employed, the WPA built or renovated 110,000 public buildings (schools, post offices, etc), constructed almost 600 airports, 500,000 miles of roads, and over 100,000 bridges.
The New Deal In Transition • it also offered assistance to those whose occupations did not fit into any traditional category of relief (Federal Writers Project, Federal Arts Project, Federal Music Project, Federal Theater Project, etc.)
The New Deal In Transition • The government’s response to the Depression dealt with the two sexes in very different ways, for men the government concentrated on work relief (CCC, CWA, and the WPA, for women cash assistance was provided mainly through the Aid to Dependent Children program of Social Security
The New Deal In Transition • In the middle of 1936 the economy was visibly reviving, there was not much doubt that FDR would get a second term in the 1936 election, the Republicans nominated the moderate governor of Kansas, Alf Landon, who did not wage much of a campaign, Huey Long was assassinated in September 1935, Roosevelt polled just under 61 %, carried every state except Maine and Vermont, and the Democrats increased their already large majorities in both houses