The Great Depression Part 2: Political Re-alignment and New Deal Programs

Democrats Win the House and the Presidency In the midterm elections of 1930, an avalanche of Democrats were elected to Congress Roosevelt won the 1932 election and a primarily democratic Congress supported his New Deal programs However, the 1938 midterm elections saw the re-emergence of a conservative majority in both houses of Congress

A New Political Re-alignment “Conservative coalition” (conservative Republicans and Democrats) tended to dominate the House and Senate until the 1960s “Liberal coalition” (liberal democrats and left-wingers) dominated Presidential politics from the 1930s to the 1960s (4 out of 5 Presidents were Democrats until Nixon)

Roosevelt’s Immediate Responses, 1933 Federal Emergency Relief Act Initially provided federal funds for relief (for immediate needs like food and clothing) Shortly evolved into a $3.1 billion funding program to help states create government jobs (20 million jobs created over two years) National Industrial Recovery Act Fair work and competition codes: set price and wage limits Administration to enforce codes: government now had power to regulate business all over the country (Supreme Court declared this item unconstitutional by 1935) Federal government finally guaranteed laborers the right to unionize

New Deal Programs: Civilian Conservation Corps Provided about 3 million jobs over a 9-year period Addressing soil erosion Building bridges, dams, roads Tree planting, caring for national parks Irrigation and range management

Tennessee Valley Authority One of the poorest and least developed areas of the U.S. at the time, the Tennessee Valley benefitted from the TVA with new infrastructure, services and literally thousands of new jobs (flood control, electricity, irrigation, water supply)

Works Progress Administration WPA Largest government agency and largest employer in the U.S. at the time By 1935, employed 8 million Bridges, roads, reservoirs, irrigation, sewage, schools, playgrounds, education, training Work programs paid minimum wages, pulled people off charity and soup lines

1935 Social Security Act Safety net for all Americans Government took a percentage from each income earner’s paycheck Federal old-age pension program Funding for the States to administer: Disability benefits Mother and child benefits Unemployment insurance Worker’s compensation (for on the job injuries)

Financial Reforms **Glass-Steagall Act (Re: 2008?) Mandated the separation of commercial banks (low risk financial transactions), and investment banks/securities firms (high risk financial transactions) Also prohibited Federal Reserve member banks from: Dealing in non-governmental (and therefore higher risk) securities for customers OR themselves Affiliating themselves with, or hiring employees from companies that DID deal in non-governmental securities Agricultural Adjustment Act Replaced Hoover’s Federal Farm Board Federal Deposit Insurance Corporation (FDIC) Insured individual bank deposits (Replaced Hoover’s Reconstruction Finance Corporation) Securities and Exchange Commission (SEC) Regulated trading practices in stocks and bonds and prosecuting crimes such as financial fraud, embezzlement, and insider trading

The Disadvantages of Liberal or “Keynesian” Economics While the New Deal programs did reduce unemployment rates and incidences of abject poverty, it also contributed to a rapidly ballooning national debt, with no clear plan to deal with it…. 1929 – 17 billion 1932 – 19 billion 1935 – 29 billion 1938 – 37 billion https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287