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Chapter 27

Chapter 27. The New Deal 1933-1941. The Hundred Days. Prior to FDR’s inauguration, hundreds of banks were forced to close “Bank Holiday” – bank shutdown by government decree 21 st Amendment – repealed prohibition Partisanship was subordinated to the needs of the nation

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Chapter 27

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  1. Chapter 27 The New Deal 1933-1941

  2. The Hundred Days • Prior to FDR’s inauguration, hundreds of banks were forced to close • “Bank Holiday” – bank shutdown by government decree • 21st Amendment – repealed prohibition • Partisanship was subordinated to the needs of the nation • First programs enacted to fight the depression

  3. The Hundred Days • Economy Act – reduced salaries of government employees and cut veterans’ benefits • National Bank Holiday • Prohibition of exportation of gold • Fireside chats – president speaking to the public • Banks reopened under Treasury Department license

  4. The Hundred Days • US taken off the gold standard – hoped prices would rise • Established the FDIC (Federal Deposit Insurance Corporation) – protected bank deposits • Established the Home Owners Loan Corporation (HOLC) – refinanced mortgages and prevented foreclosures • Federal Securities Act – regulated stock transactions

  5. NationalRecovery Administration (NRA) • Created the Civilian Conservation Corps (CCC) – provided jobs to men 18-25 in reforestation and conservation • Congress passed National Industrial Recovery Act (NIRA) • Established to stimulate industry • Established Public Works Administration (PWA) – allowed some monopolistic practices but also gave union rights

  6. NationalRecovery Administration (NRA) • NIRA a variant of the corporate state similar to experiments carried out by fascist Germany and Italy • Created the National Recovery Administration (NRA) – supervised drafting and operation of business codes. Participating industries received the Blue Eagle symbol. • Did not significantly impact the depression – businesses did not increase labor force and unions increased membership

  7. NationalRecovery Administration (NRA) • John L. Lewis formed the Committee for Industrial Organization (CIO) – organized workers without regard for craft lines • AFL expelled these unions and CIO became Congress of Industrial Organizations (a union rival to AFL)

  8. Agricultural Adjustment Administration (AAA) • FDR concerned that farmers getting short shrift in comparison to industry • Combined restrictions on production with subsidies – goal was to raise agricultural prices • 1933 crops already planted when law went into effect – government paid farmers to destroy crops and kill livestock (6 million baby pigs and 200,000 pregnant cows killed) • After 1933, acreage limitations proved sufficient to raise prices

  9. Agricultural Adjustment Administration (AAA) • Dairy farmers, cattlemen, and railroads hurt by new laws as were consumers • AAA also hurt tenant farmers and sharecroppers (land taken out of cultivation was often their land) • Reliance on machinery also hurt as land could be cultivated more cheaply than the sharecropper / tenant farmer

  10. Tennessee Valley Authority (TVA) • 1933 law creating a board that authorized the building of dams, power plants, transmission lines, and to sell fertilizer and electricity to individuals and communities • It improved the standard of living of valley inhabitants and provided a “yardstick” for private power companies

  11. The New Deal Spirit • Roosevelt administration filled with energy and optimism • “Brain Trust” – academics asked for new ideas • New Deal actually drew on old populism • Rival bureaucrats clashed over policy • “Spenders” versus strict economists

  12. The Unemployed • Despite continued unemployment, Democrats swept the elections • 1933 Federal Relief Administration (FERA) created • Headed by Harry Hopkins • Established the Civil Works Administration (CWA) to create jobs building and repairing government roads and buildings, teaching, and painting murals • Cost frightened FDR ($5 billion in <5 months) so CWA abolished

  13. The Unemployed • 1935 Hopkins put in charge of Works Progress Administration (WPA) • Helped American culture by hiring artists, writers, actors, etc. • Federal Writer’s Project produced guidebooks and collected local lore • Unemployment still remained at high levels – FDR afraid of unbalancing budget

  14. Literature • Many Depression authors critical of American life • Many intellectuals enamored with communism • John Dos Passos- wrote anti-capitalist description of life in America in USA • John Steinbeck- depicted desperate plight of an American family in the Depression in The Grapes of Wrath

  15. Three Extremists

  16. The Second New Deal • The Depression was still bad, conservatives were denouncing Roosevelt, extremists were luring away supporters, and the Supreme Court was knocking down many key New Deal reforms • Schecter v. United States – Supreme Court made NIRA unconstitutional • FDR launched the Second New Deal

  17. The Second New Deal • National Labor Relations Act (aka Wagner Act) gave unions more rights • National Labor Relations Board (NLRB) established to supervise plant elections and act to influence big business in labor matters • Social Security Act- set up old-age pensions and unemployment insurance

  18. The Second New Deal • Rural Electrification Administration – lent money to companies and cooperatives to bring electricity to rural areas • Wealth Tax Act- raised taxes on wealthy and included gift and estate taxes • Roosevelt never accepted Keynesian economics (John Maynard Keynes)- spending out of Depression

  19. Election of 1936 • Republican opponent- Alf Landon (governor of Kansas) • Third Party- The Union Party supported by Coughlin and Townsend nominated Congressman William Lemke • FDR carried all but Maine and Vermont • Democrats again dominated both houses of Congress

  20. Roosevelt versus the Court • A majority of the nine members of the Supreme Court were anti- New Deal • Many New Deal laws overturned or in danger as was Second New Deal legislation • FDR asked Congress to increase number of justices • Congress and others denounced FDR’s request – “court-packing” dangerous

  21. Roosevelt versus the Court • FDR was forced to back down • Second New Deal legislation was allowed to stand as some judges voted against conservatives • FDR was able to appoint new judges upon the retirement of oldest • FDR’s prestige suffered permanent blow

  22. New Deal Winds Down • New Deal had brought power to labor unions • 1937 – series of sit-down strikes • Tolerant attitude of FDR caused auto manufacturers to meet most labor demands • Union tactics caused many average Americans to end support

  23. New Deal Winds Down • 1937 – improving economic conditions caused FDR to cut back on programs causing a recession • FDR’s popularity plummeted especially due to Hoover-like attitude • Conflict erupted in the administration between Keynesian spenders and conservatives

  24. New Deal Winds Down • FDR finally committed to spending more but alienated many Southern Democrats • A purge of the old-timers only resulted in resentment – the old-timers won reelection • Conservative Democrats and Republicans were able join together to stop much of FDR’s later legislation

  25. Significance of the New Deal • The Depression ended as Europe went to war and ordered goods from America • FDR given credit for ending Depression but not true • He vacillated over policy and vastly increased the federal bureaucracy • More aspects of American life came under federal regulation

  26. Significance of the New Deal • The New Deal did help labor and farmers • The TVA and Rural Electrification program changed the lives of millions of Americans • Government projects like the Grand Coulee dam helped develop America

  27. The New Deal and Minorities

  28. Triumph of Isolationism • FDR an internationalist but protective of US economy • Took US off of gold standard – move denounced by Europe • Forms of embargoes considered in light of increased belligerency • Munitions makers against all embargoes – caused Senate investigation led by Gerald Nye (ND) – investigation more inquisition than honest effort • Nye contended that munitions makers led US into WWI • New history of WWI argued that British propaganda, heavy trade between Allies and US, and Wilson’s preference to Britain caused US to enter war • Result was increased isolationism

  29. Triumph of Isolationism • Danger of new world war mounted as Fascist Germany, Italy, and Japan became increasingly belligerent • Congress responded with Neutrality Act of 1935 – prohibited sale of munitions to all belligerents when president proclaimed state of war existed • FDR did not want the legislation but could not stand up to isolationists

  30. Triumph of Isolationism • October 1935 – Italy invaded Ethiopia • Second Neutrality Act passed forbidding all loans to belligerents • 1936 – Spanish Civil War began – clash between fascism and democracy • Congress passed another neutrality act broadening arms embargo to civil wars

  31. Triumph of Isolationism • April 1937 – Congress passed another neutrality act – continued arms embargo, forbade loans, forbade travel on ships belonging to belligerents, and placed sale of goods to belligerents on cash and carry basis • 1938 – Congress narrowly defeated the Ludlow Amendment that would have prohibited Congress from declaring war without vote by nation • Neutrality laws aided fascist powers and hurt democratic powers

  32. War in Europe • Japan’s increasing aggression worried FDR – “quarantine speech” met with isolationist backlash • Hitler’s demands on Poland caused FDR to urge Congress to repeal the Neutrality Act so the US could sell arms to Britain and France • Congress refused

  33. War in Europe • Hitler’s invasion of Poland in 1939 caused WWII • Again FDR asked for the Neutrality Act to be repealed • Congress allowed sales of arms on a cash and carry basis and short-term loans • Reacting to the Fall of Europe to Hitler and warnings by Einstein, FDR committed to the Manhattan Project

  34. War in Europe • FDR illegally sold surplus government weapons to Britain and France • Fall of France caused FDR to ask Congress for $4 billion for defense • Britain asked the US for 50 destroyers – the sale or loan of the vessels would violate US and international law

  35. War in Europe • Delay would might mean defeat for Britain so FDR “traded” the destroyers for six British naval bases in the Caribbean • The deal helped Britain and was approved by the public as the bases for 50 ships was a “good deal” • In 1940 Congress approved the first peacetime draft bringing in 1.2 million men for 1 year’s service and calling to active duty 800,000 reservists

  36. Roosevelt’s Third Run • Election of 1940 pit FDR against Republican Wendell Willkie • Reviving economy and the fact that much of FDR’s policies he agreed with made his campaign difficult • He made war the issue – said FDR would have US in war by April 1941 • FDR assured US American boys would not be sent to war

  37. The Undeclared War • The cash and carry system was draining Britain and FDR was resolved to help • Created the Lend-Lease Program • Pushed his ideas to public through fireside chats – public approved • Asked Congress for $7 Billion for war materiel he could lend, lease, sell, exchange, or transfer to any country he deemed vital to the US defense

  38. The Undeclared War • According to FDR the war was being fought for the “Four Freedoms” – speech, religion, want, and fear • US began shadowing German U-Boats • April 1941 – US occupied Greenland • US helped USSR after German invasion • July 1941 – US occupied Iceland

  39. The Undeclared War • September 1941 – U-Boat attacked USS Greer • FDR ordered navy to shoot on sight any submarines in waters west of Iceland • USS Reuben James sunk by U-Boat • October 1941 – Congress authorizes arming of US cargo ships and permit them to travel to Allied ports • For all intents and purposes – US at war

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