The Depression Hoover and FDR

Herbert Hoover Elected in 1928 primarily because the Republicans were associated with prosperity Believer in individualism, free enterprise, and laissez-faire

Conditions which helped produce or intensify the Depression Overproduction Unequal distribution of wealth Overexpansion of credit The depressed condition of agriculture Stock Market speculation: buying on margin Unwise government policies High tariff, no curbs on Stock Market

Hoover Policies Calls for voluntary cooperation Asks leading industrialists not to cut pay, production, or workers Asks labor leaders to discourage demands for strikes and higher pay Asks governors and mayors to spend more on public works to create jobs But economy continues to tumble

Hoover Optimistic: “prosperity just around the corner”

Agricultural Marketing Act 1929 To help farmers help themselves, largely through producers’ cooperatives Established Federal Farm Board which had no real power to reduce production.

Hawley-Smoot Tariff 1930 Increased prices on foreign-made goods Intended to increase buying of American-made goods European countries responded with tariffs on American-made goods. Not successful.

FDR and the New Deal “I pledge you, I pledge myself, to a new deal for the American people.” Election of 1932 ushered in an era of a different kind of a politician. Master politician: intelligent, confident, charming Master communicator: fireside chats

Preparing to Lead The Cabinet: Frances Perkins was the first woman to hold a Cabinet post (Labor). The “Brain Trust”: Informal group of advisors consisting of intellectuals, lawyers, and economists Humanitarian wife Eleanor had a great deal of influence.

New Deal in Action RELIEF for those people who were suffering. RECOVERY for the economy so that it could grow again. REFORM measures in order to insure against future depressions.

Stages of the New Deal 1933-1935: dealt with relief and recovery; most passed in the “First Hundred Days” 1935-1936: The “Second New Deal”: focused more on social reform 1936 election: high point of the N.D. 1937-1938: recession due in part to New Deal cutbacks in spending 1938: N.D. ended to opposition in Congress and WWII

New Deal Strategies Use of commerce and elastic clauses of the Constitution to take direct government action. Fiscal action to stimulate economy and lower unemployment by lowering taxes and increasing government spending. Government responsibility for the general welfare of citizens. Increase regulatory role over banks, businesses, and the stock exchange. Deficit spending: Keynesian Economics

Relief Legislation Emergency Banking Act (1933) Federal Emergency Relief Act (FERA) (1933) Public Works Administration (PWA) (1933) Civilian Conservation Corps (CCC) (1933) Works Progress Administration (WPA) (1935)

Recovery Legislation National Industrial Recovery Act (NIRA) 1933 Home Owners Loan Corporation (HOLC) 1933 Federal Housing Administration (FHA) 1934 First and Second Agricultural Adjustment Acts (AAA) (1933 and 1937) Tennessee Valley Authority (TVA) (1933)

Reform Legislation Glass-Steagall Banking Act (1933): created the FDIC Securities Exchange Act (1934) Social Security Act (1935) National Labor Relations Act (1935): also known as the Wagner Act; collective bargaining Fair Labor Standards Act (1938) set a minimum wage

Reactions to the New Deal FDR built up a “New Deal coalition” “Solid Democratic South” “new immigrant” workers Big cities African-Americans Organized labor Elderly Business people farmers

Criticism to the New Deal Strongest opposition came primarily from Big Business American Liberty League: attacked FDR for using too much power; free enterprise was being attacked Dr. Francis Townsend: provide government pensions for the elderly Father Charles E. Coughlin: blamed business owners, especially Jewish ones, for the economic crisis Senator Huey Long: income and inheritance taxes on wealthy to give each American a $2500 income, a car, and a college education

Supreme Court Reacts to New Deal NIRA declared unconstitutional in Schecter Poultry Corporation v. United States (1935): law illegally gave power to Congress to regulate intrastate commerce United States v. Butler (1936) ruled that AAA was unconstitutional on grounds that agriculture was a local matter

FDR Reacts to New Deal “Court-Packing”: FDR asked Congress to increase the number of judges from 9 to 15 Aimed at making the S.C. approve the N.D.

Andrew Mellon Secretary of the Treasury Believed course of depression had to be run Depression a good thing because values would be adjusted, people will work harder