The New Deal Chapter 23

Keep in Mind Throughout this chapter you need to think about what FDR did for America and how different he was from any other president. Pre- FDR government was small and didn’t play a role in people’s lives Post- FDR government agencies control many different aspects of your life.

Roosevelt’s Rise to Power 1932 Election A. The Republicans nominated Herbert Hoover to run for a second term as president. The Democrats selected New York Governor, Franklin Delano Roosevelt. B. Roosevelt’s policies to end the depression became known as the New Deal. Roosevelt won the election in a landslide. C. Roosevelt came from a wealthy New York family and was educated at Harvard and Columbia Law School. He caught polio and was paralyzed in 1920. He was a distant cousin of President Theodore Roosevelt. Franklin married Theodore’s niece, Eleanor. http://historymatters.gmu.edu/d/5057

Discussion Question What did Americans see in Roosevelt? (Americans saw Roosevelt as a sign of hope in their challenging economic times. His energy and optimism and his own struggle with polio gave him a better understanding of what Americans were going through.)

II. Roosevelt Is Inaugurated A. Franklin Roosevelt won the November 1932 presidential election, but his inauguration would not occur until March 1933. During this time, unemployment continued to rise, bank runs increased, and people began converting their money into gold. B. Some bank runs occurred out of fear that Roosevelt would end the gold standard, which would reduce the value of the dollar. C. People began taking gold and currency out of banks, resulting in over 4,000 banks collapsing by March 1933. Many governors declared bank holidays, which closed the remaining banks before bank runs could put them out of business. /

Discussion Question Why did bank runs occur before Roosevelt’s inauguration? (Many Americans feared Roosevelt would abandon the gold standard and reduce the value of the dollar in order to fight the depression. Many Americans and foreign investors with deposits in American banks took their money out of the banks and converted it into gold before it lost its value.)

No more lame ducks Between Franklin Roosevelt’s election in November 1932 and his inauguration in March 1933, the Twentieth Amendment was added to the Constitution. This amendment changed the inauguration date from March 4 to January 20.

III. The Hundred Days Begins “Relief, Recovery and Reform” A. Between March 9 and June 16, 1933, referred to as the Hundred Days, Roosevelt sent many bills to Congress. Congress passed 15 major acts to help the economic crisis. B. To generate new ideas and New Deal programs, Roosevelt put together a group of advisers in the fields of academia, business, agriculture, government, law, and social work. Named the Brain Trust. These programs made up the First New Deal.

Discussion Question Why did Roosevelt choose advisers with differing views? (Roosevelt purposely chose advisers who disagreed to hear many points of view)

IV. Fixing the Banks and the Stock Market A. When Roosevelt took office, he knew the first thing he needed to do was to restore confidence in the banking system. He called a national bank holiday and called Congress into special session. B. Congress passed the Emergency Banking Relief Act, which required federal examiners to survey the nation’s banks and issue Treasury Department licenses to financially sound banks. In Roosevelt’s first “fireside chat,” where he spoke on the radio directly to the people, he assured Americans that the banks were now secure. The following day deposits in every city outweighed withdrawals, ending the banking crisis.

You and Alphabet Soup! You are going to divide into groups and research an Alphabet soup program. You must Create a poster answering the following: Where does it fall in the slogan “Relief, Recovery, Reform”? How did the program change history?(meaning why was it needed) How effective was it during the depression? What if any are its impacts today? Use pictures to show what the programs were about. SEC,FDIC,AAA,TVA,NIRA+NRA,HOLC,FCA,CCC,FERA,PWA,CWA,WPA,NLRB,SS

Did You Know? The game Monopoly was created by an unemployed engineer, Charles Darrow, during the Great Depression. The goal of the game is to make money while forcing opponents into bankruptcy. Today the game is popular throughout the world and is published in more than 25 nations in 19 languages.

ALPHABET SOUP BEGINS! C. New regulations for banks and the stock market were implemented with the Securities Act of 1933 and the Glass-Steagall Banking Act. Under the Securities Act of 1933, companies that sold stocks and bonds had to provide complete and truthful information to investors. D. The Securities and Exchange Commission (SEC) was created to regulate the stock market and prevent fraud.

E. The Glass-Steagall Act separated commercial banking from investment banking. It no longer allowed depositors’ money to be risked by speculating on the stock market. The act created the Federal Deposit Insurance Corporation (FDIC) that provided government insurance for bank deposits up to a certain amount.

Discussion Question How did the FDIC change public opinion of the banking system? (The FDIC increased public confidence in the banking system. Bank deposits were now insured up to a certain amount, so people could deposit money without fear that it would be lost.)

V. Managing Farms and Industry A. Roosevelt asked Congress to pass the Agricultural Adjustment Act—a plan that paid farmers not to raise certain crops to lower crop production. The act was administered by the Agricultural Adjustment Administration (AAA). While the plan reduced production, increased prices, and helped some farmers, thousands of tenant farmers were unemployed and homeless. Large commercial farmers who raised one crop profited more than small farmers who raised several products.

B. The National Industrial Recovery Act (NIRA) suspended antitrust laws and allowed business, labor, and government to cooperate in setting up voluntary rules, known as codes of fair competition, for each industry. The program was run by the National Recovery Administration (NRA), and it urged consumers to buy only from companies who signed agreements with the NRA. The gains of the NRA were short-lived and actually caused industrial production to fall. It was declared unconstitutional by the Supreme Court in 1935.

Discussion Question What were codes of fair competition? (These rules set prices, established minimum wages, and limited factories to two shifts per day to spread production to as many companies as possible. Other codes shortened hours to create additional jobs and gave workers the right to form unions.)

VI. Providing Debt Relief A. Several policies were introduced by Roosevelt to help Americans deal with their debt. B. The Home Owners’ Loan Corporation (HOLC) bought the mortgages of homeowners behind on payments and restructured them with longer terms of repayment and lower interest rates. The HOLC gave loans only to those employed. It foreclosed on property if payment could not be made. The result was 100,000 foreclosures. However, the HOLC refinanced 1 out of every 5 mortgages in the United States. C. The Farm Credit Administration (FCA) was established to help farmers refinance their mortgages. While the FCA loans helped many farmers in the short term, the loans may have slowed overall economic recovery by giving money to poor inefficient farmers instead of to businesses.

Discussion Question How did the HOLC and the FCA help provide debt relief? (The HOLC bought the mortgages of homeowners behind on payments and restructured them with longer terms of repayment and lower interest rates. The HOLC refinanced 1 out of every 5 mortgages in the United States. The FCA was established to help farmers refinance their mortgages.)

VII. Spending and Relief Programs A. Roosevelt supported a series of government agencies to begin work programs for the unemployed. B. The Civilian Conservation Corps (CCC) gave unemployed men aged 18 to 25 the opportunity to work with the national forestry service planting trees, fighting forest fires, and building reservoirs. By the time it closed in 1942, the CCC had employed three million men. C. The Federal Emergency Relief Administration (FERA) was created to channel money to help state and local agencies fund relief projects.

D. In 1933 Congress authorized the Public Works Administration to begin a series of construction projects, creating additional jobs. E. Harry Hopkins, the head of FERA, set up the Civil Works Administration (CWA), which hired workers directly and put them on the government’s payroll. It was shut down when Roosevelt became fearful of the amount of money spent on the program. F. The most important aspect of Roosevelt’s New Deal was the change in the spirit of the American people. People became hopeful and optimistic, and their faith in America was restored.

Discussion Question Why did Roosevelt want Congress to establish work programs for the unemployed? (Roosevelt did not want to simply give money to the unemployed to help stimulate the economy. He and his advisers felt that work skills and self-respect could be maintained if people earned their money.)

VIII. Challenges to the New Deal A. Support of Roosevelt and his New Deal began to fade in 1935. The effectiveness of the New Deal was questioned by right and left wing politicians. B. Roosevelt used deficit spending to pay for his programs. He abandoned a balanced budget and borrowed money to pay for his programs. C. The American Liberty League was created as business leaders and anti-New Deal politicians from both parties organized to oppose the New Deal.

D. Left wing Democratic senator Huey Long proposed taking property from the rich and dividing it up amongst the poor. It was believed that if he ran as a third party candidate, he would take 10 percent of Roosevelt’s vote, possibly enough for a Republican victory. E. Father Charles Coughlin, a Catholic priest in Detroit, gave further support to Huey Long through his popular radio broadcast. F. Dr. Francis Townsend, a former public health official, proposed that the federal government pay citizens over the age of 60 a pension of $200 a month. This would increase spending and create additional jobs for younger people.

Discussion Question How did the right wing and left wing politicians feel about Roosevelt’s New Deal? (The right wing felt the New Deal imposed too many regulations on business and that it expanded the federal government’s power at the expense of states’ rights. The left wing believed that Roosevelt had not gone far enough. They wanted the government to intervene even more dramatically in the economy to shift wealth from the rich to middle-income and poor Americans.)

IX. Launching the Second New Deal A. In 1935 Roosevelt’s second New Deal began with a series of programs and reforms to speed up recovery and provide economic security to every American. Roosevelt hoped the plan would increase his chances of being re-elected in 1936. B. The Works Progress Administration (WPA) was a federal agency headed by Harry Hopkins. It spent $11 billion over several years, creating jobs for workers. Its most controversial aspect was offering work to artists, musicians, theater people, and writers. C. In the Supreme Court case Schechter v. United States, the court struck down the National Industrial Recovery Act. The Court ruled that the Constitution did not allow Congress to delegate its powers to the executive branch. It ruled the NIRA codes unconstitutional. D. Roosevelt feared that the Court would strike down the New Deal. He ordered Congress to remain in session until his new bills were passed. This was nicknamed the “second hundred days” by the press.

Discussion Question Why did Roosevelt plan a Second New Deal? (Roosevelt feared that his political support could be undermined by the attacks from the left and right wings. He was disturbed that the New Deal failed to generate a rapid economic recovery.)

X. The Rise of Industrial Unions A. New labor legislation was created because Roosevelt believed in high union wages to allow more spending power to boost the economy. B. In July of 1935, the National Labor Relations Act (Wagner Act) was passed, guaranteeing workers the right to organize unions without employer interference. The law set up the National Labor Relations Board (NLRB), which organized factory elections by secret ballot to determine if workers wanted to form a union. Binding arbitration was also set up, in which a neutral party would listen to both sides and decide the issue. This gave dissatisfied union members a process to voice their complaints.

C. In 1935 the Committee for Industrial Organization (CIO) was formed to organize industrial unions. D. After two union men were demoted at the General Motors auto-body plant in Cleveland, Ohio, workers protested with a sit-down strike where they stopped working but refused to leave the plant. Workers at the company’s plant in Flint, Michigan, did the same. Violence broke out, and finally the company gave in. The United Auto Workers (UAW) was formed and quickly became one of the most powerful unions in the United States.

Discussion Question Why did President Roosevelt and other Democrats push new labor legislation? (They knew the working class vote was important in winning re-election. They also believed that unions could help end the Depression. They thought that high union wages would let workers spend more money.)

XI. The Social Security Act A. The Social Security Act became law in 1935, providing security for the elderly, unemployed workers, and other needy people. The bill would provide a monthly retirement benefit and unemployment insurance. Workers earned the right to receive the benefits by paying premiums. B. Social Security helped many people, but initially it left out many of the neediest members of society, such as farmers and domestic workers.

Discussion Question What was the purpose of the Social Security Act? (Its purpose was to provide some security for the elderly and unemployed workers. It provided welfare payments to other needy people, including those with disabilities and poor families with young dependent children. The act provided a monthly retirement benefit for people when they stopped working at age 65.)

XII. Roosevelt’s Second Term A. Millions of voters owed their jobs, homes, and bank accounts to the New Deal. By the election of 1936, Democratic Party membership shifted from mainly white Southerners to include farmers, laborers, African Americans, new immigrants, ethnic minorities, women, progressives, and intellectuals. First lady Eleanor Roosevelt spoke with many people from these various groups, and she persuaded her husband to address some of their concerns in his New Deal programs. B. Roosevelt’s Secretary of Labor, Frances Perkins, was the first woman appointed to a cabinet post. C. Roosevelt won the 1936 election in one of the biggest landslides in American history.

D. The Supreme Court did not support the president’s New Deal programs D. The Supreme Court did not support the president’s New Deal programs. In January 1936, the Court declared the Agricultural Adjustment Act unconstitutional. After the election, Roosevelt attempted to change the political balance of the Supreme Court with the court-packing plan. Roosevelt sent Congress a bill to increase the number of justices on the Supreme Court. It was a political mistake and split the Democratic Party. Americans felt it would give the president too much power. E. In 1937 a sudden rise in unemployment further hurt Roosevelt’s popularity. When he cut spending just as the first Social Security payroll taxes decreased paychecks, the economy plummeted and two million people were out of work. This recession led to a debate about how to handle the situation. Treasury Secretary Henry Morgenthau wanted to balance the budget and cut spending. The opposition pushed for more government spending. They supported “Keynesianism,” the theories of British economist John Maynard Keynes. In his book, he argued that the government needed to spend heavily during a recession to jump-start the economy. F. In 1938 Roosevelt asked Congress for $3.75 billion for the PWA, WPA, and other programs.

Let’s take a look at Eleanor How did Eleanor Roosevelt help bring change to the Democratic Party? You are going to read some letters written to Mrs. Roosevelt. What is the importance of these letters?

XIII. The Last New Deal Reforms A. Roosevelt’s successes were limited in his second term in office. B. The 1937 National Housing Act, promoted by Eleanor Roosevelt, created the United States Housing Authority to subsidize loans for builders willing to buy blocks of slums and build low-cost housing. C. The Farm Security Administration gave loans to tenant farmers to purchase farms. Congress kept appropriations low, believing that the plan made agricultural problems worse.

D. The Fair Labor Standards Act of 1938 gave protection to workers, abolished child labor, and created a 40-hour workweek for workers. E. New Deal legislation began to get blocked as Congress began to turn against the New Deal. The New Deal era ended by 1939.

Discussion Question Why was Roosevelt’s second term of office less successful than the first term? (The fight over the court-packing scheme and the recession of 1937 had weakened Roosevelt politically.)

XIV. The Legacy of the New Deal A. The New Deal had limited success, but gave Americans a stronger sense of security and stability. B. The New Deal operated to balance competing economic interests. The New Deal’s mediating role established the broker state, which helped work out conflicts among different interests. C. The New Deal brought a new public attitude regarding the government. The program gave Americans a safety net that provided safeguards and relief programs to protect them from economic disaster.

Alphabet Soup Collage OK you have done a ton of work and taken a lot of notes. You are going to divided into groups and explain a New Deal program and its importance to the class. This is a great test review! SEC AAA HOLC FCA CCC FDIC FERA PWA CWA WPA NLRB SSA = ALPHABET SOUP

NEXT! FDR leads the US through War!