Chapter 21 (1932-1940)

Chapter Overview and Essential Themes of the New Deal ($1932$-$1940$)

• Transformative Historical Period: The New Deal represents one of the most transformative eras in American history, essentially reshaping the government, economy, and political culture during President Franklin D. Roosevelt's (FDR) tenure.

• Expansion of Federal Role: Washington assumed responsibility for the first time in managing the economy, providing social welfare, regulating business operations, and protecting the rights of workers.

• Redefining American Freedom: Freedom was redefined from its classical sense (freedom from government interference) to a new conception requiring government action to ensure economic security.

• Political Realignment: The New Deal coalition brought together a diverse group of voters under the Democratic Party banner, including:     * Urban workers.     * Immigrants.     * African Americans (primarily those in the North).     * Farmers.     * Intellectuals.     * Southerners.

• Permanent Features of American Life: Massive public works, banking reform, agricultural support, labor rights, Social Security, and unemployment insurance became lasting components of American society.

• Limitations and Criticisms:     * The New Deal did not end the Great Depression; only World War II accomplished this.     * It accommodated southern racism and provided unequal benefits to women and minorities.     * It faced fierce opposition from conservatives who categorized the policies as socialism.

The Public Works Revolution and Economic Transformation

• Grand Coulee Dam and Symbolism: Folk singer Woody Guthrie’s $1941$ song "Roll On, Columbia" celebrated the federal transformation of the Pacific Northwest.

• The Columbia River Project:     * The river flows $1,200$ miles from Canada through Washington and Oregon.     * Comprehensive dam construction began in the $1930$s to provide cheap electricity and employment.     * Completed in $1941$, the Grand Coulee Dam became the largest man-made structure in world history.     * Productivity: Produced over $40\%$ of the nation's hydroelectric power and facilitated irrigation for desert lands.     * Economic Impact: Enabled the creation of new towns and aluminum factories necessary for World War II airplane production.

• Environmental and Human Costs:     * The project made no provision for fish passage, leading to the near disappearance of salmon.     * The Colville confederated tribes lost their fishing livelihoods.     * Reservoir flooding submerged thousands of acres of reservation land, homes, and burial grounds.     * Promises regarding revenue sharing and electricity for reservation residents were broken.

• The Scope of Investment: The "public works revolution" spent more on roads, dams, airports, bridges, and housing than on any other activity during the Roosevelt administration.

The $1932$ Election and Roosevelt's Mandate

• Economic Context of the Election:     * Unemployment reached $25\%$.     * Banks were failing and industrial production had collapsed.

• The Candidates:     * Herbert Hoover (Republican incumbent): Blamed for the Depression and perceived as passive.     * Franklin Delano Roosevelt (Democratic Governor of New York): Promised a "New Deal," though specific policies remained vague during the campaign.

• Election Results:     * Roosevelt landslide: $472$ electoral votes to Hoover's $59$.     * Popular vote: $22.8$ million for Roosevelt; $15.8$ million for Hoover.     * Democrats gained substantial majorities in Congress.

• FDR’s Inaugural Address (March $4$, $1933$):     * Famous quote: "The only thing we have to fear is fear itself."     * Demanded broad executive power "as great as the power that would be given to me if we were in fact invaded by a foreign foe."

The Hundred Days and Banking Crisis Resolution

• Timeline: The first hundred days occurred between March $4$ and June $16$, $1933$.

• Bank Holiday: Roosevelt declared a four-day "bank holiday" immediately upon taking office to prevent further runs on banks.

• Emergency Banking Act (March $9$, $1933$): Allowed the Treasury to inspect banks; sound banks reopened while insolvent ones closed permanently.

• First Fireside Chat (March $12$, $1933$): A radio address explaining the banking measures. When banks reopened, deposits exceeded withdrawals, ending the immediate crisis.

• Glass-Steagall Banking Act (June $1933$):     * Created the Federal Deposit Insurance Corporation ($FDIC$) to insure bank deposits.     * Separated commercial banking from investment banking to stop speculation with depositors' money.

• Key Legislation of the Hundred Days:     * Civilian Conservation Corps ($CCC$).     * Tennessee Valley Authority ($TVA$).     * Federal Emergency Relief Administration ($FERA$).     * Agricultural Adjustment Act ($AAA$).     * National Industrial Recovery Act ($NIRA$).

The First New Deal: Industrial Recovery and Agriculture

• National Industrial Recovery Act ($NIRA$, June $1933$):     * Established the National Recovery Administration ($NRA$).     * Developed industry-wide "codes of fair competition" setting minimum wages, maximum hours, and prices.     * The "Blue Eagle" symbol indicated company compliance.     * Section $7(a)$ guaranteed workers' collective bargaining rights.

• NRA Failures and Overthrow:     * Large corporations dominated code-writing, disadvantaging small businesses and consumers.     * Codes often legalized racial wage differentials.     * Schechter Poultry Corp. v. United States ($1935$): The "sick chicken case" where the Supreme Court declared the $NIRA$ unconstitutional, ruling Congress improperly delegated power to the executive.

• Agricultural Adjustment Act ($AAA$, May $1933$):     * Paid farmers to reduce production and slaughter excess livestock to raise prices.     * Funded by a tax on agricultural processors.     * Farmers received approximately $700$ million in the first year.

• AAA Consequences:     * Disproportionately benefited large landowners.     * Tenant farmers and sharecroppers (many African American) were often evicted as less labor was needed.     * United States v. Butler ($1936$): Supreme Court declared the processing tax and the act unconstitutional. A new $AAA$ was passed in $1938$ with alternative financing.

Public Employment and Direct Job Creation

• Civilian Conservation Corps ($CCC$):     * Established March $1933$ for young men aged $18$-$25$.     * Employed approximately $3$ million men by $1942$.     * Planted nearly $3$ billion trees, built trails/roads, and maintained parks.     * Segregation: Black enrollment limited to $10\%$; camps were segregated.

• Federal Emergency Relief Administration ($FERA$):     * Established May $1933$; provided $3$ billion in cash grants to states for direct relief.

• Works Progress Administration ($WPA$, May $1935$):     * Largest New Deal employment program.     * Employed $8.5$ million Americans (peak of $3.3$ million in $1938$).     * Budget: $11$ billion spent on schools, libraries, hospitals, and roads.     * Cultural Programs: Federal Theater Project, Federal Writers' Project, and Federal Arts Project.

The Tennessee Valley Authority ($TVA$)

• Scope: Tasked with developing the poor Tennessee Valley region (covering parts of Tennessee, Alabama, Mississippi, Kentucky, North Carolina, and Virginia).

• Goals: Dam construction, hydroelectric power, navigation improvement, flood control, and soil conservation.

• Impact: Brought modern electricity to rural homes for the first time.

• Criticism: Private utility companies denounced it as "socialism" and unfair government competition.

• Limitations: Benefited white residents disproportionately and displaced communities.

Critics of the New Deal: Left, Right, and Populist

• Huey Long (The Left):     * Louisiana Senator who proposed the "Share Our Wealth" program.     * Called for limiting individual fortunes to $5$ million and annual incomes to $1$ million ($100\%$ tax above that).     * Guaranteed every family a $5,000$ minimum estate and $2,500$ annual income.

• Father Charles Coughlin:     * Detroit priest with $30$ million weekly radio listeners.     * Demanded bank nationalization and inflationary monetary policy; later turned toward anti-Semitism.

• Francis Townsend:     * California physician proposed $200$ monthly pensions for people over $60$ (Townsend Plan).

• American Liberty League (The Right):     * Formed in $1934$; viewed the New Deal as socialist and unconstitutional.     * Resented the Revenue Act of $1935$ (top income tax rate raised to $75\%$, later $90\%$).

• The Court-Packing Crisis ($1937$):     * Roosevelt proposed adding up to six new justices for every sitting member over $70$ who refused to retire.     * Faced massive Democratic and Republican opposition; viewed as executive overreach.     * Outcome: The plan failed, but the Supreme Court shifted direction (the "switch in time that saved nine").

The Second New Deal: Social Security and Labor Rights

• Social Security Act (August $1935$):     * Old-Age Insurance: Pensions for retired workers funded by payroll taxes.     * Unemployment Insurance: Joint federal-state income for laid-off workers.     * Aid to Dependent Children: Support for single mothers.     * Exclusions: Initially excluded agricultural and domestic workers, affecting approximately $2/3$ of Black workers.

• The Wagner Act ($National Labor Relations Act$, July $1935$):     * Guaranteed the right to form unions and collective bargaining.     * Established the National Labor Relations Board ($NLRB$).

• Congress of Industrial Organizations ($CIO$):     * Formed in $1935$ by John L. Lewis to organize mass production industries (steel, auto).     * Used sit-down strikes; General Motors Sit-Down Strike ($December$ $1936$-$February$ $1937$) lasted $44$ days and forced $UAW$ recognition.     * Union membership grew from $3$ million to $9$ million by $1940$.

• Fair Labor Standards Act ($FLSA$, June $1938$):     * Minimum wage: $25$ cents per hour (eventually $40$ cents).     * Maximum week: $40$-hour work week with overtime pay.     * Prohibited child labor in interstate commerce.

New Deal Impact on Women and Minorities

• Women:     * Eleanor Roosevelt was a prominent advocate for the marginalized.     * Frances Perkins: Secretary of Labor ($1933$-$1945$) and the first woman cabinet member.     * Inequality: $CCC$ was overwhelmingly male; $NRA$ codes allowed lower wages for women.

• African Americans:     * Experienced "redlining" via the Federal Housing Administration ($FHA$), which refused mortgages in Black neighborhoods.     * FDR refused to support anti-lynching legislation to avoid alienating southern Democrats.     * "Black Cabinet": Led by Mary McLeod Bethune to influence policy.     * Political Shift: By $1936$, most northern African Americans switched from Republican to Democratic voters.

• Mexican Americans:     * "Repatriation": $400,000$ to $500,000$ people were deported to Mexico (including citizens).

• Native Americans:     * John Collier championed the Indian Reorganization Act ($1934$).     * Ended the Dawes Act allotment policy and supported tribal self-governance.

Culture and the Popular Front

• Popular Front: A coalition of communists, socialists, and liberals against fascism ($mid-1930s$ to $early$ $1940s$).

• Photography: Dorothea Lange's "Migrant Mother" documented the human cost of the Depression for the Farm Security Administration ($FSA$).

• The Dust Bowl (Mid-$1930$s):     * Severe drought and poor farming in the Great Plains led to massive dust storms.     * Approximately $2.5$ million people migrated ("Okies").     * John Steinbeck's "The Grapes of Wrath" ($1939$) immortalized the Joad family's struggle.

• Soil Conservation Service ($1935$): Established to promote erosion-prevention farming.

The Limits and End of Reform

• Roosevelt Recession ($1937$-$1938$): Occurred when FDR reduced federal spending to curb deficits; industrial production collapsed and unemployment surged again.

• The Conservative Coalition: Formed in $1937$-$1938$ by Republicans and southern Democrats to block further reform.

• Election of $1940$: Roosevelt won a third term—the only president to serve more than two terms.

• The Shift to War: By $1940$, New Deal energy was redirected to military preparation for World War II.

• Conclusion: The New Deal stabilized capitalism through regulation and welfare but did not transform it; World War II ended the Depression by creating massive industrial demand.