knowt logo

Chapter 23: The Great Depression

The Origins of the Great Depression

  • On Thursday, October 24, 1929, stock market prices suddenly plummeted and ten billion dollars in investments disappeared in a matter of hours

    • Panicked selling set in, stock values sank to sudden lows, and stunned investors crowded the New York Stock Exchange demanding answers

    • Leading bankers were able to stabilize temporarily but fears spread over the weekend and the following week frightened investors dumped their portfolios to avoid further losses

    • On October 29, Black Tuesday, the stock market began its long precipitous fall

  • Although the crash stunned the nation, it exposed the deeper, underlying problems with the American economy in the 1920s

    • The stock market’s collapse did not by itself depress the American economy, the crash exposed a great number of factors that, when combined with the financial panic, sank the American economy into the greatest of all economic crises

      • Inequality, declining demand, rural collapse, overextended investors, and the bursting of speculative bubbles all conspired to plunge the nation into the Great Depression

      • The Great Depression was the confluence of many problems, most of which had begun during a time of unprecedented economic growth

Herbert Hoover and the Politics of the Depression

  • As the Depression spread, public blame settled on President Herbert Hoover and the conservative politics of the Republican Party

    • Hoover entered office on a wave of popular support, but by October 1929 the economic collapse had overwhelmed his presidency

    • Like all too many Americans, Hoover and his advisors assumed that the sharp financial and economic decline was a temporary downturn, another “bust” of the inevitable boom-bust cycles that stretched back through America’s commercial history

  • When suffering Americans looked to Hoover for help, Hoover could only answer with volunteerism

    • Hoover established the President’s Organization for Unemployment Relief, or POUR, to help organize the efforts of private agencies

      • But, POUR was overwhelmed by the growing needs of the many multiplying unemployed, underfed, and unhoused Americans

  • Although Hoover is sometimes categorized as a “business president” in line with his Republican predecessors, he also embraced a kind of business progressivism, a system of voluntary action called associationism that assumed Americans could maintain a web of voluntary cooperative organizations dedicated to providing economic assistance and services to those in need

    • To Hoover, direct government aid would discourage a healthy work ethic while associationism would encourage the self-control and self-initiative that fueled economic growth

  • As the crisis deepened, even bankers and business people and the president’s own advisors and appointees all pleaded with Hoover to use the government’s power to fight the Depression, but his conservative ideology wouldn’t allow him to

The Lived Experience of the Great Depression

  • Individuals, families, and communities faced the painful, frightening

  • The more fortunate were spared the worst effects, and a few even profited from it, but by the end of 1932, the crisis had become so deep and so widespread that most Americans had suffered

  • With rampant unemployment and declining wages, Americans slashed expenses

    • The fortunate could survive by simply deferring vacations and regular consumer purchases

    • Middle- and working-class Americans might rely on disappearing credit at neighborhood stores, default on utility bills, or skip meals

    • These most desperate Americans, the chronically unemployed, encamped on public or marginal lands in “Hoovervilles,” spontaneous shantytowns that dotted America’s cities, depending on bread lines and street-corner peddling

  • The idea of the “male breadwinner” was always a fiction for poor Americans, and, during the crisis, women and young children entered the labor force (as they always had)

    • But, in such a labor crisis, many employers, subscribing to traditional notions of male bread-winning, were less likely to hire married women and more likely to dismiss those they already employed

  • The Great Depression was particularly tough for nonwhite Americans

    • Black workers were generally the last hired when businesses expanded production and the first fired when businesses experienced downturns

Migration and the Great Depression

  • On the Great Plains, environmental catastrophe deepened America’s longstanding agricultural crisis and magnified the tragedy of the Depression

    • Beginning in 1932, severe droughts hit from Texas to the Dakotas and lasted until at least 1936

    • The droughts compounded years of agricultural mismanagement

  • There was a vast migration of families out of the southwestern Plains states in the mid-1930s

    • The Okies, as such westward migrants were disparagingly called by their new neighbors, were the most visible group who were on the move during the Depression, lured by news and rumors of jobs in far-flung regions of the country

    • These years witnessed the first significant reversal in the flow of people between rural and urban areas

      • Thousands of city dwellers fled the jobless cities and moved to the country looking for work

      • Some state legislatures made it a crime to bring poor migrants into the state and allowed local officials to deport migrants to neighboring states

        • In the winter of 1935–1936, California, Florida, and Colorado established “border blockades” to block poor migrants from their states and reduce competition with local residents for jobs

  • Americans meanwhile feared foreign workers willing to work for even lower wages

    • The crisis itself had stifled foreign immigration, but restrictive and exclusionary actions in the first years of the Depression intensified its effects

      • Exclusionary measures hit Mexican immigrants particularly hard

        • The State Department made a concerted effort to reduce immigration from Mexico as early as 1929, and Hoover’s executive actions arrived the following year

The Bonus Army

  • In the summer of 1932, more than fifteen thousand unemployed veterans and their families converged on Washington, D.C. to petition for a bill authorizing immediate payment of cash bonuses to veterans of World War I that were originally scheduled to be paid out in 1945

    • Given the economic hardships facing the country, the bonus came to symbolize government relief for the most deserving recipients

    • Calling themselves the Bonus Expeditionary Force, or the Bonus Army, they drilled and marched and demonstrated for their bonuses

  • Concerned about what immediate payment would do to the federal budget, Hoover opposed the bill, which was eventually voted down by the Senate

    • While most of the “Bonus Army” left Washington in defeat, many stayed to press their case

      • When thousands failed to heed the vacation order, General Douglas MacArthur, accompanied by local police, infantry, cavalry, tanks, and a machine gun squadron, stormed the tent city and routed the Bonus Army

        • Two marchers were shot and killed and a baby was killed by tear gas

  • The national media reported on the raid, newsreels showed footage, and Americans recoiled at Hoover’s insensitivity toward suffering Americans

    • His overall unwillingness to address widespread economic problems and his repeated platitudes about returning to prosperity condemned his presidency

FDR and the “First” New Deal

  • Few presidential elections in modern American history have been more consequential than that of 1932

    • The United States was struggling through the third year of the Depression, and exasperated voters overthrew Hoover in a landslide for the Democratic governor of New York, Franklin Delano Roosevelt

  • The “New Deal” was shorthand for Roosevelt’s program to address the Great Depression

    • Roosevelt proposed jobs programs, public work projects, higher wages, shorter hours, old-age pensions, unemployment insurance, farm subsidies, banking regulations, and lower tariffs

    • Hoover warned that such a program represented “the total abandonment of every principle upon which this government and the American system is founded”

    • In his first days in office, Roosevelt and his advisors prepared, submitted, and secured congressional enactment of numerous laws designed to arrest the worst of the Great Depression

      • Roosevelt declared a national “bank holiday” closing American banks and set to work pushing the Emergency Banking Act swiftly through Congress

      • On March 12, the night before select banks reopened under stricter federal guidelines, Roosevelt appeared on the radio in the first of his Fireside Chats

        • The addresses, which the president continued delivering through four terms, were informal and Roosevelt used his airtime to explain New Deal legislation, encourage confidence in government action, and mobilize the American people’s support

      • Congress passed the Glass-Steagall Banking Act, which instituted a federal deposit insurance system through the Federal Deposit Insurance Corporation (FDIC) and barred the mixing of commercial and investment banking

      • The Civilian Conservation Corps (CCC) employed young men on conservation and reforestation projects

      • The Federal Emergency Relief Administration (FERA) provided direct cash assistance to state relief agencies struggling to care for the unemployed

      • The Tennessee Valley Authority (TVA) built a series of hydroelectric dams along the Tennessee River as part of a comprehensive program to economically develop a chronically depressed region

  • The heart of Roosevelt’s early recovery program consisted of two massive efforts to stabilize and coordinate the American economy: the Agricultural Adjustment Administration (AAA) and the National Recovery Administration (NRA)

    • The AAA, created in May 1933, aimed to raise the prices of agricultural commodities by offering cash incentives to voluntarily limit farm production (decreasing supply, thereby raising prices)

    • The National Industrial Recovery Act (NIRA), which created the NRA in June 1933, suspended antitrust laws to allow businesses to establish “codes” that would coordinate prices, regulate production levels, and establish conditions of employment to curtail “cutthroat competition”

      • In exchange for these exemptions, businesses agreed to provide reasonable wages and hours, end child labor, and allow workers the right to unionize

  • The programs of the First Hundred Days stabilized the American economy and ushered in a robust though imperfect recovery

  • The Civil Works Administration (CWA) and, later, the Works Progress Administration (WPA) put unemployed men and women to work on projects designed and proposed by local governments

  • The Public Works Administration (PWA) provided grants-in-aid to local governments for large infrastructure projects, such as bridges, tunnels, schoolhouses, libraries, and America’s first federal public housing projects

The New Deal in the South

  • The impact of initial New Deal legislation was readily apparent in the South, a region of perpetual poverty especially plagued by the Depression

  • Major New Deal programs were designed with the South in mind

    • FDR hoped that by drastically decreasing the amount of land devoted to cotton, the AAA would arrest its long-plummeting price decline

      • But in an agricultural world of landowners and landless farmworkers (such as tenants and sharecroppers), the benefits of the AAA bypassed the southerners who needed them most

        • The government relied on landowners and local organizations to distribute money fairly to those most affected by production limits, but many owners simply kicked tenants and croppers off their land, kept the subsidy checks for keeping those acres fallow, and reinvested the profits in mechanical farming equipment that further suppressed the demand for labor

  • But Roosevelt’s assault on southern poverty took many forms

    • The NRA encouraged higher wages and better conditions

    • The 1938 Fair Labor Standards Act set a national minimum wage of $0.25/hour

    • The president’s support for unionization further impacted the South

      • In 1935 the National Labor Relations Act, also known as the Wagner Act, guaranteed the rights of most workers to unionize and bargain collectively

      • Unionized workers, backed by the support of the federal government and determined to enforce the reforms of the New Deal, pushed for higher wages, shorter hours, and better conditions

    • Perhaps the most successful New Deal program in the South was the TVA, an ambitious program to use hydroelectric power, agricultural and industrial reform, flood control, economic development, education, and healthcare to radically remake the impoverished watershed region of the Tennessee River

Voices of Protest

  • Many high-profile critics attacked Roosevelt for not going far enough, and, beginning in 1934, Roosevelt and his advisors were forced to respond

    • Senator Huey Long, a flamboyant Democrat from Louisiana, was perhaps the most important “voice of protest”

      • Long’s populist rhetoric appealed to those who saw deeply rooted but easily addressed injustice in the nation’s economic system

      • Long proposed a Share Our Wealth program in which the federal government would confiscate the assets of the extremely wealthy and redistribute them to the less well-off through guaranteed minimum incomes

  • If many Americans urged Roosevelt to go further in addressing the economic crisis, the president faced even greater opposition from conservative politicians and business leaders

    • By late 1934, complaints increased from business-friendly Republicans about Roosevelt’s willingness to regulate the industry and use federal spending for public works and employment programs

    • The greatest opposition came from the Supreme Court, filled with conservative appointments made during the long years of Republican presidents

      • By early 1935 the Court was reviewing programs of the New Deal

      • On May 27, a day Roosevelt’s supporters called Black Monday, the justices struck down one of the president’s signature reforms: the Court unanimously declared the NRA unconstitutional

      • In early 1936, the AAA fell

The “Second” New Deal (1935 - 1936)

  • Roosevelt rededicated himself to bold programs and more aggressive approaches, a set of legislation often termed the Second New Deal

    • It included a nearly five-billion dollar appropriation that in 1935 established the Works Progress Administration (WPA), a permanent version of the CWA, which would ultimately employ millions of Americans on public works projects

      • Not only did the program build much of America’s physical infrastructure, it came closer than any New Deal program to provide the federal jobs guarantee Roosevelt had promised in 1932

  • Also in 1935, hoping to reconstitute some of the protections afforded workers in the now-defunct NRA, Roosevelt worked with Congress to pass the National Labor Relations Act

    • It offered federal legal protection for workers to organize unions

    • The labor protections extended by Roosevelt’s New Deal were revolutionary

      • In 1935, the head of the United Mine Workers, John L. Lewis, took the lead in forming a new national workers’ organization, the Congress of Industrial Organizations (CIO), breaking with the more conservative, craft-oriented AFL

    • Three years after the NLRA, Congress passed the Fair Labor Standards Act, creating the modern minimum wage

  • The Second New Deal also:

    • Restored the highly progressive federal income tax

    • Mandated new reporting requirements for publicly traded companies

    • Refinanced long-term home mortgages for struggling homeowners

    • Attempted rural reconstruction projects to bring farm incomes in line with urban ones

  • Perhaps the signature piece of Roosevelt’s Second New Deal, however, was the Social Security Act

    • It provided the elderly and dependent children with:

      • Old-age pensions

      • Unemployment insurance

      • Economic aid

    • The president was careful to mitigate some of the criticism from what was, at the time, in the American context, a revolutionary concept

      • He specifically insisted that social security be financed from payroll, not the federal government

      • He thereby helped separate social security from the stigma of being an undeserved “welfare” entitlement

Equal Rights and the New Deal

  • Black Americans faced discrimination everywhere but suffered especially severe legal inequality in the Jim Crow South

  • Despite a concerted effort to appoint Black advisors to some New Deal programs, Franklin Roosevelt did little to specifically address the particular difficulties Black communities faced

    • To do so openly would provoke southern Democrats and put his New Deal coalition (the uneasy alliance of national liberals, urban laborers, farm workers, and southern whites) at risk

    • Roosevelt not only rejected such proposals as abolishing the poll tax and declaring lynching a federal crime, but he also refused to specifically target African American needs in any of his larger relief and reform packages

  • Many of the programs of the New Deal had made hard times more difficult

    • In the South, where African Americans had long suffered unequal pay, the new codes simply perpetuated that inequality

      • The codes also exempted those involved in farm work and domestic labor, the occupations of a majority of southern Black men and women

    • The AAA was equally problematic as owners displaced Black tenants and sharecroppers, many of whom were forced to return to their farms as low-paid day labor or to migrate to cities looking for wage work

  • Perhaps the most notorious failure of the New Deal to aid African Americans came with the passage of the Social Security Act

    • Southern politicians chafed at the prospect of African Americans benefiting from federally sponsored social welfare, afraid that economic security would allow Black southerners to escape the cycle of poverty that kept them tied to the land as cheap, exploitable farm laborers

      • Roosevelt agreed to remove domestic workers and farm laborers from the provisions of the bill, excluding many African Americans, already laboring under the strictures of legal racial discrimination, from the benefits of an expanding economic safety net

  • Women, too, failed to receive the full benefits of New Deal programs

    • Many New Deal programs were built on the assumption that men would serve as breadwinners and women as mothers, homemakers, and consumers

    • New Deal programs aimed to help both but usually by forcing such gendered assumptions, making it difficult for women to attain economic autonomy

    • New Deal social welfare programs tended to funnel women into means-tested, state-administered relief programs while reserving entitlement benefits for male workers, creating a kind of two-tiered social welfare state

The End of the New Deal (1937 - 1939)

  • By 1936, Roosevelt and his New Deal won record popularity and Roosevelt annihilated his Republican challenger, Governor Alf Landon of Kansas, who lost in every state save Maine and Vermont

  • The Great Depression had certainly not ended, but it appeared to be retreating, and Roosevelt, now safely reelected, appeared ready to take advantage of both his popularity and the improving economic climate to press for even more dramatic changes

    • But conservative barriers continued to limit the power of his popular support; the Supreme Court, for instance, continued to gut many of his programs

  • In 1937, concerned that the Court might overthrow social security in an upcoming case, Roosevelt called for legislation allowing him to expand the Court by appointing a new, younger justice for every sitting member over age seventy

    • Roosevelt’s “scheme” riled opposition and did not become law, but the chastened Court thereafter upheld social security and other pieces of New Deal legislation

      • Moreover, Roosevelt was slowly able to appoint more amenable justices as conservatives died or retired

    • The court-packing scheme damaged the Roosevelt administration and emboldened New Deal opponents

  • Compounding his problems, Roosevelt and his advisors made a costly economic misstep

    • Believing the United States had turned a corner, Roosevelt cut spending in 1937 and the American economy plunged nearly to the depths of 1932 - 1933

      • The Roosevelt Recession of 1937 became fodder for critics

    • Combined with the court-packing scheme, the recession allowed for significant gains by a conservative coalition of southern Democrats and Midwestern Republicans in the 1938 midterm elections

    • The growing threat of war in Europe stole the public’s attention and increasingly dominated Roosevelt’s interests

The Legacy of the New Deal

  • By the end of the 1930s, Roosevelt and his Democratic Congresses had presided over a transformation of the American government and a realignment in American party politics

    • Before World War I, the American national state, though powerful, had been a “government out of sight”

      • After the New Deal, Americans came to see the federal government as a potential ally in their daily struggles

  • Historians debate when the New Deal ended

    • Some identify the Fair Labor Standards Act of 1938 as the last major New Deal measure

    • Others see wartime measures such as price and rent control and the G.I. Bill (which afforded New Deal-style social benefits to veterans) as species of New Deal legislation

Chapter 23: The Great Depression

The Origins of the Great Depression

  • On Thursday, October 24, 1929, stock market prices suddenly plummeted and ten billion dollars in investments disappeared in a matter of hours

    • Panicked selling set in, stock values sank to sudden lows, and stunned investors crowded the New York Stock Exchange demanding answers

    • Leading bankers were able to stabilize temporarily but fears spread over the weekend and the following week frightened investors dumped their portfolios to avoid further losses

    • On October 29, Black Tuesday, the stock market began its long precipitous fall

  • Although the crash stunned the nation, it exposed the deeper, underlying problems with the American economy in the 1920s

    • The stock market’s collapse did not by itself depress the American economy, the crash exposed a great number of factors that, when combined with the financial panic, sank the American economy into the greatest of all economic crises

      • Inequality, declining demand, rural collapse, overextended investors, and the bursting of speculative bubbles all conspired to plunge the nation into the Great Depression

      • The Great Depression was the confluence of many problems, most of which had begun during a time of unprecedented economic growth

Herbert Hoover and the Politics of the Depression

  • As the Depression spread, public blame settled on President Herbert Hoover and the conservative politics of the Republican Party

    • Hoover entered office on a wave of popular support, but by October 1929 the economic collapse had overwhelmed his presidency

    • Like all too many Americans, Hoover and his advisors assumed that the sharp financial and economic decline was a temporary downturn, another “bust” of the inevitable boom-bust cycles that stretched back through America’s commercial history

  • When suffering Americans looked to Hoover for help, Hoover could only answer with volunteerism

    • Hoover established the President’s Organization for Unemployment Relief, or POUR, to help organize the efforts of private agencies

      • But, POUR was overwhelmed by the growing needs of the many multiplying unemployed, underfed, and unhoused Americans

  • Although Hoover is sometimes categorized as a “business president” in line with his Republican predecessors, he also embraced a kind of business progressivism, a system of voluntary action called associationism that assumed Americans could maintain a web of voluntary cooperative organizations dedicated to providing economic assistance and services to those in need

    • To Hoover, direct government aid would discourage a healthy work ethic while associationism would encourage the self-control and self-initiative that fueled economic growth

  • As the crisis deepened, even bankers and business people and the president’s own advisors and appointees all pleaded with Hoover to use the government’s power to fight the Depression, but his conservative ideology wouldn’t allow him to

The Lived Experience of the Great Depression

  • Individuals, families, and communities faced the painful, frightening

  • The more fortunate were spared the worst effects, and a few even profited from it, but by the end of 1932, the crisis had become so deep and so widespread that most Americans had suffered

  • With rampant unemployment and declining wages, Americans slashed expenses

    • The fortunate could survive by simply deferring vacations and regular consumer purchases

    • Middle- and working-class Americans might rely on disappearing credit at neighborhood stores, default on utility bills, or skip meals

    • These most desperate Americans, the chronically unemployed, encamped on public or marginal lands in “Hoovervilles,” spontaneous shantytowns that dotted America’s cities, depending on bread lines and street-corner peddling

  • The idea of the “male breadwinner” was always a fiction for poor Americans, and, during the crisis, women and young children entered the labor force (as they always had)

    • But, in such a labor crisis, many employers, subscribing to traditional notions of male bread-winning, were less likely to hire married women and more likely to dismiss those they already employed

  • The Great Depression was particularly tough for nonwhite Americans

    • Black workers were generally the last hired when businesses expanded production and the first fired when businesses experienced downturns

Migration and the Great Depression

  • On the Great Plains, environmental catastrophe deepened America’s longstanding agricultural crisis and magnified the tragedy of the Depression

    • Beginning in 1932, severe droughts hit from Texas to the Dakotas and lasted until at least 1936

    • The droughts compounded years of agricultural mismanagement

  • There was a vast migration of families out of the southwestern Plains states in the mid-1930s

    • The Okies, as such westward migrants were disparagingly called by their new neighbors, were the most visible group who were on the move during the Depression, lured by news and rumors of jobs in far-flung regions of the country

    • These years witnessed the first significant reversal in the flow of people between rural and urban areas

      • Thousands of city dwellers fled the jobless cities and moved to the country looking for work

      • Some state legislatures made it a crime to bring poor migrants into the state and allowed local officials to deport migrants to neighboring states

        • In the winter of 1935–1936, California, Florida, and Colorado established “border blockades” to block poor migrants from their states and reduce competition with local residents for jobs

  • Americans meanwhile feared foreign workers willing to work for even lower wages

    • The crisis itself had stifled foreign immigration, but restrictive and exclusionary actions in the first years of the Depression intensified its effects

      • Exclusionary measures hit Mexican immigrants particularly hard

        • The State Department made a concerted effort to reduce immigration from Mexico as early as 1929, and Hoover’s executive actions arrived the following year

The Bonus Army

  • In the summer of 1932, more than fifteen thousand unemployed veterans and their families converged on Washington, D.C. to petition for a bill authorizing immediate payment of cash bonuses to veterans of World War I that were originally scheduled to be paid out in 1945

    • Given the economic hardships facing the country, the bonus came to symbolize government relief for the most deserving recipients

    • Calling themselves the Bonus Expeditionary Force, or the Bonus Army, they drilled and marched and demonstrated for their bonuses

  • Concerned about what immediate payment would do to the federal budget, Hoover opposed the bill, which was eventually voted down by the Senate

    • While most of the “Bonus Army” left Washington in defeat, many stayed to press their case

      • When thousands failed to heed the vacation order, General Douglas MacArthur, accompanied by local police, infantry, cavalry, tanks, and a machine gun squadron, stormed the tent city and routed the Bonus Army

        • Two marchers were shot and killed and a baby was killed by tear gas

  • The national media reported on the raid, newsreels showed footage, and Americans recoiled at Hoover’s insensitivity toward suffering Americans

    • His overall unwillingness to address widespread economic problems and his repeated platitudes about returning to prosperity condemned his presidency

FDR and the “First” New Deal

  • Few presidential elections in modern American history have been more consequential than that of 1932

    • The United States was struggling through the third year of the Depression, and exasperated voters overthrew Hoover in a landslide for the Democratic governor of New York, Franklin Delano Roosevelt

  • The “New Deal” was shorthand for Roosevelt’s program to address the Great Depression

    • Roosevelt proposed jobs programs, public work projects, higher wages, shorter hours, old-age pensions, unemployment insurance, farm subsidies, banking regulations, and lower tariffs

    • Hoover warned that such a program represented “the total abandonment of every principle upon which this government and the American system is founded”

    • In his first days in office, Roosevelt and his advisors prepared, submitted, and secured congressional enactment of numerous laws designed to arrest the worst of the Great Depression

      • Roosevelt declared a national “bank holiday” closing American banks and set to work pushing the Emergency Banking Act swiftly through Congress

      • On March 12, the night before select banks reopened under stricter federal guidelines, Roosevelt appeared on the radio in the first of his Fireside Chats

        • The addresses, which the president continued delivering through four terms, were informal and Roosevelt used his airtime to explain New Deal legislation, encourage confidence in government action, and mobilize the American people’s support

      • Congress passed the Glass-Steagall Banking Act, which instituted a federal deposit insurance system through the Federal Deposit Insurance Corporation (FDIC) and barred the mixing of commercial and investment banking

      • The Civilian Conservation Corps (CCC) employed young men on conservation and reforestation projects

      • The Federal Emergency Relief Administration (FERA) provided direct cash assistance to state relief agencies struggling to care for the unemployed

      • The Tennessee Valley Authority (TVA) built a series of hydroelectric dams along the Tennessee River as part of a comprehensive program to economically develop a chronically depressed region

  • The heart of Roosevelt’s early recovery program consisted of two massive efforts to stabilize and coordinate the American economy: the Agricultural Adjustment Administration (AAA) and the National Recovery Administration (NRA)

    • The AAA, created in May 1933, aimed to raise the prices of agricultural commodities by offering cash incentives to voluntarily limit farm production (decreasing supply, thereby raising prices)

    • The National Industrial Recovery Act (NIRA), which created the NRA in June 1933, suspended antitrust laws to allow businesses to establish “codes” that would coordinate prices, regulate production levels, and establish conditions of employment to curtail “cutthroat competition”

      • In exchange for these exemptions, businesses agreed to provide reasonable wages and hours, end child labor, and allow workers the right to unionize

  • The programs of the First Hundred Days stabilized the American economy and ushered in a robust though imperfect recovery

  • The Civil Works Administration (CWA) and, later, the Works Progress Administration (WPA) put unemployed men and women to work on projects designed and proposed by local governments

  • The Public Works Administration (PWA) provided grants-in-aid to local governments for large infrastructure projects, such as bridges, tunnels, schoolhouses, libraries, and America’s first federal public housing projects

The New Deal in the South

  • The impact of initial New Deal legislation was readily apparent in the South, a region of perpetual poverty especially plagued by the Depression

  • Major New Deal programs were designed with the South in mind

    • FDR hoped that by drastically decreasing the amount of land devoted to cotton, the AAA would arrest its long-plummeting price decline

      • But in an agricultural world of landowners and landless farmworkers (such as tenants and sharecroppers), the benefits of the AAA bypassed the southerners who needed them most

        • The government relied on landowners and local organizations to distribute money fairly to those most affected by production limits, but many owners simply kicked tenants and croppers off their land, kept the subsidy checks for keeping those acres fallow, and reinvested the profits in mechanical farming equipment that further suppressed the demand for labor

  • But Roosevelt’s assault on southern poverty took many forms

    • The NRA encouraged higher wages and better conditions

    • The 1938 Fair Labor Standards Act set a national minimum wage of $0.25/hour

    • The president’s support for unionization further impacted the South

      • In 1935 the National Labor Relations Act, also known as the Wagner Act, guaranteed the rights of most workers to unionize and bargain collectively

      • Unionized workers, backed by the support of the federal government and determined to enforce the reforms of the New Deal, pushed for higher wages, shorter hours, and better conditions

    • Perhaps the most successful New Deal program in the South was the TVA, an ambitious program to use hydroelectric power, agricultural and industrial reform, flood control, economic development, education, and healthcare to radically remake the impoverished watershed region of the Tennessee River

Voices of Protest

  • Many high-profile critics attacked Roosevelt for not going far enough, and, beginning in 1934, Roosevelt and his advisors were forced to respond

    • Senator Huey Long, a flamboyant Democrat from Louisiana, was perhaps the most important “voice of protest”

      • Long’s populist rhetoric appealed to those who saw deeply rooted but easily addressed injustice in the nation’s economic system

      • Long proposed a Share Our Wealth program in which the federal government would confiscate the assets of the extremely wealthy and redistribute them to the less well-off through guaranteed minimum incomes

  • If many Americans urged Roosevelt to go further in addressing the economic crisis, the president faced even greater opposition from conservative politicians and business leaders

    • By late 1934, complaints increased from business-friendly Republicans about Roosevelt’s willingness to regulate the industry and use federal spending for public works and employment programs

    • The greatest opposition came from the Supreme Court, filled with conservative appointments made during the long years of Republican presidents

      • By early 1935 the Court was reviewing programs of the New Deal

      • On May 27, a day Roosevelt’s supporters called Black Monday, the justices struck down one of the president’s signature reforms: the Court unanimously declared the NRA unconstitutional

      • In early 1936, the AAA fell

The “Second” New Deal (1935 - 1936)

  • Roosevelt rededicated himself to bold programs and more aggressive approaches, a set of legislation often termed the Second New Deal

    • It included a nearly five-billion dollar appropriation that in 1935 established the Works Progress Administration (WPA), a permanent version of the CWA, which would ultimately employ millions of Americans on public works projects

      • Not only did the program build much of America’s physical infrastructure, it came closer than any New Deal program to provide the federal jobs guarantee Roosevelt had promised in 1932

  • Also in 1935, hoping to reconstitute some of the protections afforded workers in the now-defunct NRA, Roosevelt worked with Congress to pass the National Labor Relations Act

    • It offered federal legal protection for workers to organize unions

    • The labor protections extended by Roosevelt’s New Deal were revolutionary

      • In 1935, the head of the United Mine Workers, John L. Lewis, took the lead in forming a new national workers’ organization, the Congress of Industrial Organizations (CIO), breaking with the more conservative, craft-oriented AFL

    • Three years after the NLRA, Congress passed the Fair Labor Standards Act, creating the modern minimum wage

  • The Second New Deal also:

    • Restored the highly progressive federal income tax

    • Mandated new reporting requirements for publicly traded companies

    • Refinanced long-term home mortgages for struggling homeowners

    • Attempted rural reconstruction projects to bring farm incomes in line with urban ones

  • Perhaps the signature piece of Roosevelt’s Second New Deal, however, was the Social Security Act

    • It provided the elderly and dependent children with:

      • Old-age pensions

      • Unemployment insurance

      • Economic aid

    • The president was careful to mitigate some of the criticism from what was, at the time, in the American context, a revolutionary concept

      • He specifically insisted that social security be financed from payroll, not the federal government

      • He thereby helped separate social security from the stigma of being an undeserved “welfare” entitlement

Equal Rights and the New Deal

  • Black Americans faced discrimination everywhere but suffered especially severe legal inequality in the Jim Crow South

  • Despite a concerted effort to appoint Black advisors to some New Deal programs, Franklin Roosevelt did little to specifically address the particular difficulties Black communities faced

    • To do so openly would provoke southern Democrats and put his New Deal coalition (the uneasy alliance of national liberals, urban laborers, farm workers, and southern whites) at risk

    • Roosevelt not only rejected such proposals as abolishing the poll tax and declaring lynching a federal crime, but he also refused to specifically target African American needs in any of his larger relief and reform packages

  • Many of the programs of the New Deal had made hard times more difficult

    • In the South, where African Americans had long suffered unequal pay, the new codes simply perpetuated that inequality

      • The codes also exempted those involved in farm work and domestic labor, the occupations of a majority of southern Black men and women

    • The AAA was equally problematic as owners displaced Black tenants and sharecroppers, many of whom were forced to return to their farms as low-paid day labor or to migrate to cities looking for wage work

  • Perhaps the most notorious failure of the New Deal to aid African Americans came with the passage of the Social Security Act

    • Southern politicians chafed at the prospect of African Americans benefiting from federally sponsored social welfare, afraid that economic security would allow Black southerners to escape the cycle of poverty that kept them tied to the land as cheap, exploitable farm laborers

      • Roosevelt agreed to remove domestic workers and farm laborers from the provisions of the bill, excluding many African Americans, already laboring under the strictures of legal racial discrimination, from the benefits of an expanding economic safety net

  • Women, too, failed to receive the full benefits of New Deal programs

    • Many New Deal programs were built on the assumption that men would serve as breadwinners and women as mothers, homemakers, and consumers

    • New Deal programs aimed to help both but usually by forcing such gendered assumptions, making it difficult for women to attain economic autonomy

    • New Deal social welfare programs tended to funnel women into means-tested, state-administered relief programs while reserving entitlement benefits for male workers, creating a kind of two-tiered social welfare state

The End of the New Deal (1937 - 1939)

  • By 1936, Roosevelt and his New Deal won record popularity and Roosevelt annihilated his Republican challenger, Governor Alf Landon of Kansas, who lost in every state save Maine and Vermont

  • The Great Depression had certainly not ended, but it appeared to be retreating, and Roosevelt, now safely reelected, appeared ready to take advantage of both his popularity and the improving economic climate to press for even more dramatic changes

    • But conservative barriers continued to limit the power of his popular support; the Supreme Court, for instance, continued to gut many of his programs

  • In 1937, concerned that the Court might overthrow social security in an upcoming case, Roosevelt called for legislation allowing him to expand the Court by appointing a new, younger justice for every sitting member over age seventy

    • Roosevelt’s “scheme” riled opposition and did not become law, but the chastened Court thereafter upheld social security and other pieces of New Deal legislation

      • Moreover, Roosevelt was slowly able to appoint more amenable justices as conservatives died or retired

    • The court-packing scheme damaged the Roosevelt administration and emboldened New Deal opponents

  • Compounding his problems, Roosevelt and his advisors made a costly economic misstep

    • Believing the United States had turned a corner, Roosevelt cut spending in 1937 and the American economy plunged nearly to the depths of 1932 - 1933

      • The Roosevelt Recession of 1937 became fodder for critics

    • Combined with the court-packing scheme, the recession allowed for significant gains by a conservative coalition of southern Democrats and Midwestern Republicans in the 1938 midterm elections

    • The growing threat of war in Europe stole the public’s attention and increasingly dominated Roosevelt’s interests

The Legacy of the New Deal

  • By the end of the 1930s, Roosevelt and his Democratic Congresses had presided over a transformation of the American government and a realignment in American party politics

    • Before World War I, the American national state, though powerful, had been a “government out of sight”

      • After the New Deal, Americans came to see the federal government as a potential ally in their daily struggles

  • Historians debate when the New Deal ended

    • Some identify the Fair Labor Standards Act of 1938 as the last major New Deal measure

    • Others see wartime measures such as price and rent control and the G.I. Bill (which afforded New Deal-style social benefits to veterans) as species of New Deal legislation

robot