Chapter 15: The New Deal Section 1: A New Deal Fights the Depression

Standards 11.6.4 Analyze the effects of and the controversies arising from New Deal economic policies and the expanded role of the federal government in society and the economy since the 1930s Works Progress Administration Social Security National Labor Relations Board farm programs regional development policies energy development projects such as the Tennessee Valley Authority, California Central Valley Project

Objectives: Following lecture and reading of this section, students will be able to: Summarize the initial steps Roosevelt took to reform banking and finance Describe New Deal work programs Identify critics of Roosevelt’s New Deal

Review Republican success led to election of Hoover Under Hoover the economy fails (not his fault) Risky business practices cause the failure of the stock market (Black Tuesday 10/29/29) Stock prices become over inflated b/c how buying stocks On margin Speculation Hoover does not offer direct government relief Believes the economy is cyclical and will rebound Does not want people to rely on government Hoover eventually offers relief but it is too late

The New Deal 1932; FDR elected as president Reform minded; worked to solve poverty and unemployment Roosevelt & the “Brain Trust” designed the New Deal while waiting for inauguration. A set of policies to alleviate the problems of the great depression focused on: Relief for the needy Economic recovery Financial reform

The Hundred Days A period of intense action by FDR & Congress 15 major acts or laws passed Significant expansion of the power of federal government in the economy FDR declared a “Bank Holiday” after taking office Along with Emergency Banking Relief Act, only banks that were inspected and sound could re-open… Now people could re-deposit money knowing they could get it back!

Fireside Chats Addresses by FDR to the nation: Explained his policies and New Deal ideas Clear and simple His communication allowed people to see his plans and help the new president achieve them People listened to the fireside chats via the radio In his 1st chat he discussed the banking situation and how it was now safe to deposit money

Banking and Finance Glass-Steagall Act (1933) Established the FDIC (federal deposit insurance co) Federal insurance for deposits $5,000 today $250,000 People now knew their money was safe Regulating the Stock Market Federal Securities Act (1933) Corporations had to provide complete information on all stock offerings and were liable for misrepresentations Securities and Exchange Commission (SEC) [1934] Prevent people with inside information from rigging the stock market (insider trading) 21st Amend.- 18th gone, allowed alcohol; taxed it

New Deal Programs Program Purpose Results

Agricultural Adjustment Act (AAA) Purpose: Raise crop prices by lowering production Results: Reduction in supply caused an increase in demand and price Gov’t paid farmers to leave certain amount of land unseeded Plow under crops already developed Slaughter livestock w/o sale Upset Americans, as many were going hungry and food was destroyed.

Tennessee Valley Authority (TVA) Purpose: Provide work and energy resources in the Tennessee Valley Results: Provided jobs and developed energy resources for the Tennessee Valley Repaired 5 dams and constructed 20 new dams Provided: flood control Thousands of jobs Hydroelectric power

Civilian Conservation Corps Purpose: Provide economic relief through work projects and cash payments Results: Many men 18-25 found work Planting trees (200 million in the dust bowl area) Building roads Soil-erosion and flood control projects built. Workers paid in cash; money sent back to families

Civil Works Administration Purpose: To fill in for the failures of the PWA, which was to provide $ to states so they could hire workers for projects Results: 4 million jobs created 40,000 schools built Salaries of 50,000 teachers in rural areas ½ million miles of roads

National Industrial Recovery Act Purpose: Promote industrial growth by establishing codes of fair practice for individual industries Results: Created the National Recovery Administration (NRA): Set prices of products and established standards Goal of the NRA- to promote recovery by interrupting the trend of wage cuts, falling prices, and layoffs Limited production & established prices Guaranteed worker’s right to unionize & bargain

Food, Clothing, & Shelter Home Owners Loan Corporation (HOLC) Purpose & Results: Provided gov’t loans help people avoid foreclosure Federal Housing Authority (FHA) Federal loans for home mortgages and repairs Federal Emergency Relief Administration $500 million to provide direct relief to needy ½ given to states to provide food and clothing ½ given to states for work projects For every $3 the state paid FERA paid $1

Liberals and Conservatives Attack the New Deal Millions of Americans were helped by New Deal actions Opposition to New Deal policies: Many complained about deficit spending More $ out, not enough $ in FDR said it was a necessary evil Conservatives: Concerned over gov’t interference in free-market economy Liberals: Does not do enough to help those in need

Supreme Court Attacks the New Deal The Supreme Court struck down 2 ND programs, NIRA and AAA NIRA: Gave legislative powers to executive branch Enforcement went beyond federal power to regulate interstate trade AAA: Agriculture is a local matter and should be regulated by states not federal gov’t Fearing the Supreme Court would dismantle all his ND policies, FDR proposed a bill; he would allow appoint six new justices to the Court (Court-packing” bill) This aroused protests, but FDR got his way when two justices retired and he made his own appointments

Other Attacks on the New Deal Roosevelt’s toughest critics: Charles Coughlin Catholic priest Wanted guaranteed annual income & nationalization of banks Francis Townsend Did not think the ND did enough to help the elderly Huey Long Became a serious challenger to the New Deal and FDR as he was looking at a presidential run… He was assassinated