The New Deal and WW2 Economy

the 3 Rs of the new deal (as described by historians)

• Relief

• Recovery

• Reform

why were the first 100 days of FDR’s presidency so important

rapid legal change

• pushed 15 bills through congress

• set up the alphabet agencies

1932 election was…

a watershed election, the beginning of a ‘New Deal Order’

Agricultural Adjustment Act

May 1933 - set up the AAA

AAA

Agricultural Adjustment Administration

• overproduction = biggest problem facing agriculture

• gov. would subsidise farmers to reduce their acreage & production so cost of food/farmers incomes increase

AAA actions

6 million piglets slaughtered - used to feed the homeless, but sparked public outrage

total farm income rose

• 1932 - $4.5 billion

• 1935- $6.9 billion

TVA

Tennessee Valley Authority - May 1933

• dealt with poverty in the area, harnessing power of the river that ran through 7 of the poorest states

• constructed 20 huge dams controlling floods

• ecological schemes provide jobs

• produced hydro-electric power for areas with no electricity

EBRA

Emergency Banking Relief Act - March 1933

• Roosevelt calls for a 4-day banking holiday, giving treasury officials enough time to draft new emergency legislation

• Reconstruction Finance Corporation (RFC) took on collapsing bank debts

• Fireside chats - intended to restore public confidence in banks

Glass-Steagall Act

1933 - put the banking system on firmer footing

• individual bank deposits insured against bank failure up to $2,500

• commercial banks dependent on small-scale deposits banned from speculative investment banking

• bank officials not allowed to take personal loans from their own banks

Truth in Securities Act

1933 - required bankers to offer clients realistic information of the securities they were buying (stock exchange)

The Securities Act

1934 - set up the Securities Exchange Commission (SEC) which oversaw stock market activities and prevented fraud eg, insider trading

National Industrial Recovery Act

1933 - set up the National Recovery Administration (NRA) and Public Works Association (PWA)

NRA

National Recovery Administration

• aimed to help business recovery - firms encouraged to agree to codes of practice to improve, but often ended up allowing unfair business practices

• codes did not help with economic recovery

• May 1935 - Supreme Court finds the NRA unconstitutional

PWA

Public Works Administration

• funded with $3.3 billion, purpose was ‘pump-priming’, giving away money to public works projects stimulate economy

• built 50,000 miles of roads and 13,000 schools

CWA

Civil Works Administration Nov 1933

• created with $400 million grant from the PWA

• gave emergency relief in the harsh ‘33/34 winter

• put 4 million people in work, but closed in March when the winter was over

Federal Emergency Relief Act

established FERA in May 1933

FERA

• $500 million given to be divided between states to provide for the unemployed

• many states found relief distasteful, those requiring relief not treated well/indeterminable waits

• limited effectiveness, but did set a precedent of federal gov giving direct relief and intervention

CCC

Civilian Conservation Corps

• unemployed men aged 17-24 worked in national forests, parks and public lands

• operated for 9 years and planted 1.3 billion trees

• successful - gave young men camraderie, respect, love of outdoors

• had up to 500,000 members

Second New Deal

1935-38

why was a 2nd new deal necessary

• end of 1934 - 22 million unemployed Americans

• there was a sense that US faced serious problems that needed reform and more state intervention

Alphabet agencies by 1938

59 set up

WPA

Works Progress Administration, 1935

• established to create jobs through public works projects

• employed up to 2 million individuals

• monthly wages = $52 dollars, higher than traditional relief, but still lower than industry wages

Wagner-Connery Labour relations Act

July 1935

• guaranteed workers rights to collective bargaining in unions of their choosing

• set up a new National Labour Relations Board

• employers prohibited in unfair practices against unions members

• LANDMARK - gov. recognises unions and federal role in labour relations

Social Security Act

1935 - established an ‘economic safety net’

• old age pensions w/contributions from employers and employees

• provided unemployment insurance

• LANDMARK - departure from previous gov. actions

• but limited - not enough money offered

Banking Act

1935

• centre of financial management moved from NY to Washington DC

• greater federal oversight in the banks

• long-term change to the banking sector caused by fears of excessive influence of Wall st. on national finance

impact of 2nd New Deal

• marked a shift in the role of the federal government

• effectiveness illustrated by 1936 election results - landslide victory, Republicans received 8 electoral college votes as opposed to FDR’s 523

• proactive policy would lay groundwork for later developments in social security'/labour relations

Left Wing opposition to the New Deal

• End Poverty in California (EPIC)

• ‘Share Our Wealth’ Huey Long - clubs had up to 4.3 million members

• Father Charles Coughlin - founded National Union for Social Justice, wanted redistribution of wealth

• Old Ager Revolving Pensions Incorporated - wanted $200 a month for all over 60s , Townsend clubs had up to 50,000 members

Right wing challenge to the New Deal

• Liberty League - Republicans, had 125,000 members, formal alliance

• many wealthy supporters turned against FDR when it appeared capitalism had been saved - too much gov. involvement in economy

• big business dislike high taxes and gov interference

Judiciary Reform Bill/ Court Packing Plan

1936 - biggest blunder of the administration

• forced retirement of Supreme Court Justices at 70

• to allow younger support for Roosevelt

• backlash - made him look like a dictator, did not go through Congress

Roosevelt Recession

1937-38 industrial production dropped sharply

• unemployment rose to nearly 20%

• ‘double dip recession’, took nearly a year to recover

• shows ND had not ensured complete economic recovery

unemployment by 1939

9 million unemployed still

ND was not a complete success economically

• 9 million still unemployed

• not enough gov, spending, Roosevelt believes in a ‘balanced budget’

• wage increases were only slender

Women in the ND

• held important gov positions, eg Eleanor Roosevelt, Frances Perkins Secretary of Labour

• some ND legislation worked against them eg, NRA codes allowing unequal pay, barred from the CCC

Native Americans in the ND

Indian Reorganisation Act 1934 - recognised tribes as self governing bodies

John Collier, new comissioner of the Bureau wanted to reverse the policy of assimilation

measures did not relieve NA poverty and had only a limited effect

African Americans in the New Deal

• this group were let down by the ND

• President did employ more A-As to his gov, 150,000 in civil service

• Roosevelt concerned with the vote of southern democrats, ND saw no civil rights legislation

• anti-lynching bills rejected by FDR 1934&1937

WW2 caused unemployment to practically cease

unemployment 1940 = 14.6% 1945 = 1.2%

WW2 caused Gross National product to rise

GNP

1939 = $91.3 billion

1945 = $166.6 billion

WW2 caused average wages to increase

avg wages in WW2 increased by 40%

WW2 caused farm income to increase

WW2 - farm income grew by 250%

HOWEVER National debt increased during WW2

National Debt

1941 = $41 billion

1945 = $260 billion

Higher prices in the war years

prices rose by 28% in WW2

higher taxes introduced to fund WW2

highest bracket = 94% tax