Key ID’s 

Chapter 26: Franklin Roosevelt and the New Deal, 1932 - 1941

1. FDR’s Brain Trust

• During the campaign, FDR had been vague about his promised New Deal. While working on the New Deal, Roosevelt’s advisers met in New York to discuss economic and social programs. Three Columbia University professors, Adolf A. Berle, Raymond Moley, and Rexford G. Tugwell, were present as well. Newspapers began referring to this group as the Brain Trust. They had formed ideas for Roosevelt’s campaign speeches and later wrote much of the New Deal legislation.

2. African Americans & the New Deal Coalition

• Since Lincoln and Emancipation, blacks had supported the Republicans. But they were hit harder than other groups by the Depression. Although the New Deal was not colorblind, it did provide relief to blacks. Eleanor Roosevelt was an eloquent advocate for minorities. And FDR had a group of unofficial black advisors, the Black Cabinet, to make sure that issues important to African Americans were raised.

• As a result, African Americans moved solidly into the Democratic Party, giving the Democrats 80% or more of their votes in many elections.

• In addition to African Americans, FDR’s New Deal coalition included the poor, union members, and ethnic and religious minorities (many of them the so-called New Immigrants), and white Southerners. This New Deal coalition allowed the Democrats to dominate national politics until the late 1960’s.

3. Twentieth Amendment (Lame Duck)—1933 

• FDR was elected in November of 1932 but did not take office until March of 1933 (the interregnum). During that time he was reluctant to work with Hoover on economic policies.

• The Twentieth Amendment moved up the dates to January for the new president and Congress to take office, reducing the lame duck period.  

4. Mass Deportations—1929-1939 (NOT in OpenStax)

• As unemployment grew, the Hoover administration and later the Roosevelt administration deported perhaps as many as two million Mexican Americans, of whom 60% were US citizens. Many of the rest were in the country legally, having been recruited by companies such as Ford Motors to provide much needed labor during the boom years of the 1920’s. 

• Known as the Repatriation, this involved raids and arrests carried out by the Immigration and Naturalization Service often without warrants and due process. A government commission that later investigated the deportations called the process “unconstitutional, tyrannic and oppressive.”

5. Giuseppe Zangara tries to kill FDR – February 15, 1933

• Five shots went off while FDR gave a speech from the back of his Buick. Zangara was only 25 feet away but somehow missed FDR; some reports suggest a woman intervened. 

• Although FDR was unhurt, four others were shot and the mayor of Chicago was mortally shot in the stomach. 

• Mr. Perley’s college professor refers to this day as one of the five most impactful days in human history. He argues that the impact of FDR’s death prior to both the New Deal and WWII is indescribable. 

6. The Hundred Days

• In the first one hundred days of FDR’s administration, Congress passed over a dozen major New Deal measures, including the FERA, CCC, AAA, TVA, and NIRA.

• The effect of this flood of legislation was to give the public a sense that action to combat the Depression was being taken. In addition, these measures set the precedent for increased federal intervention in the economy.

7. Relief, Recovery, & Reform

• The New Deal had several goals. In the short term, the goals were to provide relief (assistance to the poor and unemployed) and immediate recovery (improved performance in the economy). In the long term, the goals were permanent recovery and reform of the economic system (to allow the capitalist system to function more reliably).

• Examples: Relief—CCC, FERA. Recovery—bank holiday, AAA. Reform—SEC, Glass-Steagall Act.

8. Emergency Banking Relief Act (Bank Holiday)—1933

• In the first three years of the Depression, 5100 banks failed. In the first three months before FDR’s inauguration, an addition 4000 banks failed. Two days after FDR’s inauguration, he ordered a bank holiday to halt bank collapses as depositors withdrew their money in panic.  

• Congress met in a special session on March 9 to hear the terms of FDR’s Emergency Banking Relief Bill. It passed in eight hours and, by the end of the day, was signed into law. It gave the Treasury Department authorization to inspect the country’s banks. The sound banks could open at once, the ones that needed help received loans, and insolvent ones were forced to remain closed. About 10% of all banks stayed closed.

9. Fireside Chats 

• After the bank holiday, FDR addressed the nation on radio, explaining how the banking system worked in simple language. This was the first fireside chat, FDR’s method of explaining New Deal policy in homey metaphors.   

10. Glass-Steagall Banking Reform Act—1933

• The Glass-Steagall Act started the Federal Deposit Insurance Corporation. This protected bank deposits up to $5,000, and as a result, depositors didn’t have to worry about losing their savings. 

• This act also limited risky speculation by banks through separating commercial and investment banking. In other words, banks were forbidden from taking people’s deposits and speculating in the stock market with that money. 

11. Twenty-First Amendment—1933

• This repealed prohibition.

• Prior to its repeal, FDR endorsed and Congress approved a law allowing the sale of beer and wine. FDR also passed a Beer Tax to further raise revenue. 

12. Federal Emergency Relief Administration (FERA)—1933

• The FERA, run by Roosevelt aide Harry Hopkins, gave an initial $250 million to the states in order to feed and clothe the unemployed, the elderly, and the sick. The FERA provided an additional $250 million, given on the basis of one federal dollar for every three state dollars contributed. It provided direct relief to the needy and paid wages for federal work projects.

13. Civilian Conservation Corps (CCC)—1933

• The Civilian Conservation Corps hired unemployed single males ages seventeen to twenty to work on building roads, planting trees, and helping with soil-erosion and flood control. They lived in camps run by army officers and were directed by foresters and construction foremen. Twenty-five of the thirty dollars they earned each month was sent to their families. They got free food and uniforms. 

• Within eight years, the CCC had planted over 200 million trees, built hundreds of miles of trails, and fought dozens of forest fires. By 1941, close to 3 million men had gone through the CCC. 

14. Securities & Exchange Commission (SEC)—1933

• This was established to prevent insider trading and manipulation of stock prices. Joseph Kennedy (the father of President Kennedy) was put in charge of the new SEC.  While at first some people objected, they began to see the need for regulation after Richard Whitney, president of the New York Stock Exchange, was put in prison for dishonest financial practices.

15. Home Owners’ Loan Corporation (HOLC)

• This program provided assistance to nonfarm homeowners who were struggling to meet mortgage payments as well as to banks who held these mortgages. It enabled homeowners to refinance their mortgages.

16. Federal Housing Administration (FHA)—1934

• One of the longest lasting New Deal programs, the FHA provided loans for new home construction or remodels.

17. Agriculture Adjustment Act (AAA)—1933

• Net farm income per farmer had dropped from $162 in 1929 to $48 in 1932. Farmers’ purchasing power had fallen 60% since farm prices dropped faster than industrial prices. The nation was beginning to see mob violence from angry farmers, and the National Guard had been called out in some states to put counties under martial law. 

• The Agricultural Adjustment Administration sought to reduce oversupply of farm commodities. It offered to pay farmers a certain amount for each acre left unplanted. The government paid cotton farmers $200 million to plow under 10 million acres of their crop and also paid hog farmers to slaughter 6 million swine. To pay for these subsidies, the government imposed a tax on the processors of agricultural products (for example, on mills that ground wheat into flour).

• Many were upset about the waste of food while so many Americans were going hungry. 

• The Supreme Court struck down the AAA, saying that its taxing provisions were unconstitutional because the AAA taxed one group of society (processors) to benefit a second group (farmers). (The Second AAA was passed in 1938. It was funded out of general tax revenues and was therefore found to be constitutional.)

18. National Industry Recovery Act 

•  This was one of the most ambitious acts FDR passed during his Hundred Days. It suspended antitrust laws and required industries to write industrywide codes of fair competition to fix wages and prices. These codes were comparable to FDR and the federal government attempting to regulate and plan the entire economy to promote stable growth. 

• The most enduring legacy of the NIRA was it guaranteed collective bargaining for workers by the federal government. 

• The NIRA also established the NRA and WPA to ensure compliance with the act. 

19. National Recovery Administration (NRA) (Blue Eagle)—1933

• The National Industrial Recovery Act created the National Recovery Administration. The NRA called for codes detailing fair practices for industry. Each industry was to set up its code. If it didn’t, the NRA would do so. Industries operating under such an NRA code were exempt from anti-trust action. This was done in hopes of limiting production so prices would go up, thus producing a profit. In addition, minimum wages and maximum work hours were set. Child labor was abolished. Small businesses and consumers argued that the codes favored big business. 

• The NIRA was declared unconstitutional in the 1935 Schechter Poultry case.

20. Schechter v. US —1935

• In what was known as the “sick chicken case,” a poultry corporation supposedly sold an unfit chicken to a butcher. The Supreme Court ruled NIRA unconstitutional, saying that it gave legislative powers to the executive branch and that some of the industry codes covered intrastate commerce. 

• The decision indicated that the Court saw activities such as mining, construction, manufacturing, and agriculture as essentially local and out of the control of the federal government.

21. Public Works Administration (PWA)—1933

• The NIRA also set up the Public Works Administration, which was to engage in pump priming through funding major construction projects such as dams, hospitals, and airports.

22. Tennessee Valley Authority (TVA)—1933

• Since WWI Congress had been arguing what to do about the hydroelectric plants the government had built in Muscle Shoals, Alabama, along the Tennessee River, to produce explosive nitrates. After the war, private utility companies wanted to buy or lease the plants. Senator George W. Norris of Nebraska headed a group of congressmen who believed that the federal government should continue to develop the natural resources.  

• In 1933, the TVA was started, originally to set an example of regional economic planning. FDR wanted to try a coordinated system of economic development instead of a group of separate and unrelated reforms. The TVA brought new factories, new energy, and new jobs to one of the nation’s poorest regions. Prior to the TVA, only 2% of the farms in the region had electricity. 

• The TVA encouraged grassroots participation and was successful in doing so. But it was racially segregated. Only whites could help in the planning, and only whites shared in the benefits.

23. American Liberty League 

• The American Liberty League was a nonpartisan organization formed in 1934 in opposition to the New Deal. Its members believed that the New Deal’s regulative nature threatened Constitution-given individual liberties and expanded the executive power beyond what the Constitution intended (some decisions of the Supreme Court that declared certain New Deal policies unconstitutional suggest that this criticism was not unfounded). The League engaged in campaigns in which it aimed to educate the public about the legislative process.

• While the American Liberty League’s members were divided over the NRA, they fervently criticized the AAA (calling it “a trend toward fascist control of agriculture”) and Social Security (which they saw marking “the end of democracy”). 

• After Roosevelt’s 1936 victory, the League slowly dissolved, disappearing entirely in 1940.

24. Father Charles Coughlin and Dr. Francis Townshend—New Deal Critics

• Coughlin, a priest in Detroit, broadcast his sermons. At first, Coughlin was a staunch supporter of the 1932 presidential candidate FDR, campaigning in support of FDR on his radio broadcast. Coughlin was vehemently against Wall Street, and he warned his audience of the evils of capitalism. 

• However, dissatisfied with the slow moving monetary reform of FDR’s New Deal, Coughlin declared the New Deal a communist conspiracy. He proceeded to use his radio sermons as a political forum in which to attack President Roosevelt. After 1936, his talks combined harsh attacks on Roosevelt as the tool of international Jewish bankers with praise for the fascist leaders Mussolini and Hitler, leading to his political demise.

• Townshend, a retired physician, advocated providing the elderly with federal pensions. The plan applied to Americans over sixty who retired (freeing jobs for younger workers); they would receive a monthly check for $200 (a significant sum at the time), but that check had to be spent within one month, thus pumping money into the economy. However, this program would have consumed as much as half the national budget.

• Although Townshend’s proposal was not enacted, it helped to build support for FDR’s Social Security plan. 

25. Upton Sinclair and EPIC

• While not really an opponent of Roosevelt, Sinclair popularized a program known as End Poverty in California ( EPIC ).

• EPIC called for public works projects, tax reform, and guaranteed pensions. It also proposed that unused farmland should be given to the unemployed who could establish cooperative farms. Many farmers and unemployed workers supported EPIC, although Sinclair lost the governorship of California in 1934. Though Roosevelt did not endorse Sinclair, the program influenced later New Deal policies.

26. Huey Long 

• Considered by FDR to be the most dangerous foe of the New Deal, Long started out as a poor salesman of patent medicines. After studying law he began to fight the oil and utility companies that controlled the state. A great speaker, he was elected governor in 1928, giving Louisiana schools, roads, bridges, and hospitals. Long’s administration in Louisiana was marked by corruption and political repression, however. In 1930 he became a senator.  

• Called the Kingfish, Long began to consider the presidency. He started Share the Wealth in 1934, with the motto “Every Man a King.” It was supposed to guarantee $5,000 a year income for every family in the United States by taking over the wealth of millionaires and dividing the nation’s land and mineral treasures. Every family should own a house, an automobile, and a radio.  

• Long was shot to death in the state capitol in Baton Rouge in 1935. 

27. The Business Plot (NOT in OpenStax)

• Also known as the White House Coup, the plot was a 1933 political conspiracy against Roosevelt. Smedley Butler, a retired Marine Corps Major General, testified before the Special Committee on Un-American Activities that wealthy businessmen were plotting to create a fascist veterans’ organization to overthrow the president. No one was prosecuted. 

• While historians have questioned whether a coup was actually close to execution, most agree that some sort of “wild scheme” was contemplated and discussed. Contemporary media dismissed the plot, with a New York Times editorial characterizing it as a “gigantic hoax.”

28.  Banking Act of 1935

• This clarified and cemented the legislation passed under the Banking Relief Act of 1933. 

29.  Emergency Relief Appropriation Act of 1935 

• This gave FDR $5 billion to support the New Deal’s worker programs, such as the WPA and NYA. s

30. Works Progress Administration (WPA)—1935

• The Works Progress Administration headed by Harry Hopkins was to provide as many jobs as fast as possible. It received a budget of $5 billion, the largest amount any country had ever spent on public welfare. Between 1935 and 1941 8 million persons were employed.  

• Workers built or repaired 651,000 miles of roads and constructed 110,000 libraries, schools, and hospitals. Women sewed 300 million garments for the needy. The WPA found work for unemployed artists, musicians, and actors, by presenting free public concerts to make the artists known. 

• A notable project funded by the WPA was the Federal Writers’ Project. It was intended to employ writers, historians, teachers, and librarians. The Federal Writers’ Project is best known for creating a series of historical and cultural guidebooks for each state and for recording the oral histories of over 2,000 former slaves.

• The WPA was criticized for encouraging people to vote Democratic in exchange for handouts, for boondoggles or make-work jobs, and because 20 percent of the funds went to the arts instead of construction.  

31. National Youth Administration 

• This New Deal program was designed to address the problem of unemployment among Depression-era youth who some were worried may grow up uneducated or worse, disgruntled and rebellious towards the government. 

• The NYA first provided educational grants to high school and college students in exchange for work (Today, this is known as Work Study – you should all apply for it when you file your FAFSA on October 1^st). Secondly, for those out of school and not unemployed, the NYA provided work and vocational skill training.  

32. Social Security Act—1935

• In 1935 Congress passed the Social Security Act, providing a pension system for retired workers and their spouses and death benefits for children up to the age of eighteen. The pensions were not based on financial need. Farm workers and domestics were not covered.  

• This is believed to have affected the lives of more people than any other legislation passed in the New Deal. (Other industrialized nations had already created such programs a generation or more before.) 

33. National Labor Relations Act (Wagner Act)—1935

• This bill was sponsored by Senator Robert F. Wagner to replace the labor provisions of the now-unconstitutional NIRA. 

• The NLRA gave workers a number of important rights. Employers were required to engage in collective bargaining with their workers. The law banned unfair practices, including threatening workers for union activity, firing union members, and interfering with union activities. It set up the National Labor Relations Board to hear testimony about unfair labor practices and to supervise elections where workers indicated whether they wanted to be represented by a union. 

34. Congress for Industrial Organization (CIO)—1935

• Originally the Committee for Industrial Organization, this group led by John L. Lewis of the United Mine Workers organized unskilled workers. The parent organization AFL had traditionally focused on skilled workers. 

• The CIO, using the sit-down strike, a tactic where striking workers refused to leave the factory to prevent the importation of strikebreakers, successfully organized the auto industry. 

• In 1938 the CIO broke away from the AFL.

35. The Election of 1936

• Roosevelt was opposed by Kansas Governor Alf Landon, who supported many of the New Deal programs (though not Social Security). The Republican Party platform condemned the New Deal for its radicalism, confusion, and waste. Roosevelt counterattacked, condemning “economic royalists.”

• FDR won all but two states. The Democrats controlled two-thirds of both houses of Congress.

36. FDR’s Court-Packing Effort—1937

• Prior to the New Deal, the Supreme Court rarely overturned laws of Congress (only eight times between 1789 and 1910). But in May of 1935, the Court invalidated three New Deal programs including the AAA and NIRA. FDR complained that the Court was not up to date in its views. After his huge 1936 victory, he proposed a plan that would allow the appointment of as many as six additional Supreme Court justices. Roosevelt, of course, planned to appoint justices who would be sympathetic to the New Deal.

• This proposal was widely condemned as an attempt to overturn the constitutional separation of powers. Congress rejected it, and FDR lost some of his political influence as a result.

• However, in 1937 the Court upheld by 5-4 votes a minimum wage law for women, the Wagner Act and the Social Security Act. Shortly thereafter retirements from the Court allowed FDR to appoint sympathetic justices.

37. Conservative Coalition 

• The court-packing plan strengthened conservative opposition to the New Deal. By 1937, an informal yet strong group of congressmen and representatives opposing the New Deal formed in Congress. Known as the Conservative Coalition (at the time, the term “conservative” referred to the opponents of the New Deal and did not imply any specific party affiliation), it initiated a conservative alliance that, with modifications, shaped Congress until the 1960s. 

• The coalition’s members did not form a solid anti-New Deal legislation voting bloc. Instead, they responded to each proposed law depending on how much, in their opinion, it violated the conservative principles that they supported.

• The results of the 1938 midterm election demonstrated that the dissatisfaction with New Deal policies grew. In the Democratic primaries, Roosevelt endorsed the challengers of his conservative opponents but the anti-New Deal incumbents won. In the national election, more conservative candidates won seats in Congress with Republicans recording substantial gain in both the House and Senate.

38. The Roosevelt Recession – A recession within a depression…

• From mid-1937 to 1938, the economic recovery from the New Deal was stalling. Unemployment rose 6% and manufacturing fell by 37%. FDR was able to secure $3.75 billion from Congress to further support New Deal agencies and programs and economic recovery continued. 

• Economists argue why this recession took place, but most Keynesians point to FDR’s spending cuts in 1937. As FDR returned to deficit spending, economic recovery continued and unemployment dropped.  

39. Economist John Maynard Keynes

• Keynes argued that in order to lift an economy out of a depression, the government had to engage in massive deficit spending, that is, spending much more than it collected in taxes. 

• Although FDR had engaged in pump priming throughout the New Deal (spending government money to stimulate the economy), he had in some ways been a fiscal conservative who sought to limit federal deficits. Indeed, in 1937 with the economy showing signs of recovery, FDR cut back on New Deal spending. Unemployment rose, stocks lost value, and industrial production dropped in what has been called the Roosevelt Recession.

• But FDR eventually embraced Keynesian economics. And it was the massive deficit spending of WWII that finally lifted the country out of the Depression.

40. Fair Labor Standards Act (Wages and Hours Bill)—1938

• This replaced the part of the NIRA that dealt with wages and hours. It established the first national minimum hourly rate for wages (25¢/hour at first, moving up to 40¢ in two years), a national maximum work week (44 hours/week moving to 40 hours in two years), and a ban on factory work by workers under sixteen. 

41. Hatch Act—1939 (NOT in OpenStax)

• This act barred federal officials, except for top political office holders, from participating in political campaigns or raising campaign contributions. It forbade the use of government funds for political campaigns, and prohibited the collection of campaign contributions from people receiving relief payments.

42. Soil Conservation & Domestic Allotment Act—1936

• The Soil Conservation and Domestic Allotment Act instead paid farmers to reduce their acreage by planting soil-conserving crops or by letting their land lie fallow.

43. The New Deal and 20th Century Liberalism (NOT explicitly mentioned in OpenStax)

• Although FDR was not a systematic political thinker, his New Deal policies, combined with Harry Truman’s later Cold War policies, formed the basis of liberalism in the 20th century.

• Classical liberalism supported change, was optimistic about progress, and favored giving people (and businesses) more freedom. Twentieth century liberalism retained the optimism about progress and combined it with a faith in government to bring about that progress. 

• Specifically, 20th century liberalism saw government as having responsibility for managing the economy (a move away from the laissez-faire economics of classical liberalism) and for providing citizens with an economic safety net (sometimes referred to as a limited welfare state). During the Cold War, liberalism added vigorous anti-communism to its beliefs.

44. Indian Reorganization Act 

•  This act ended the US policy of assimilation towards Native American tribes. The IRA encouraged Native Americans to return to their lands (if they had not been sold, as in the case of Oklahoma…) and embrace their historic and cultural traditions. The act also allowed for self-government and sovereign constitutions to be negotiated through the Bureau of Indian Affairs. 

• Often referred to as the “Indian New Deal,” the IRA also secured sound economic foundations for Native American tribes to support their reservations. 

45. Frances Perkins 

• Perkins was the first female Cabinet member. She was largely responsible for the passing of social security, unemployment insurance, child labor laws, and the adoption of a federal minimum wage. 

46. Eleanor Roosevelt 

• In 1921 FDR contracted polio, leaving his legs paralyzed. But with the aid of his wife Eleanor, he continued a career in politics.   

• Eleanor traveled in place of her husband on campaign trips and on fact-finding missions, bringing her husband first-hand reports of the conditions people faced. She became an articulate voice on behalf of the poor and minorities and helped push FDR in a more liberal direction. She was the administration’s face for civil rights.