Chapter 26 Franklin Roosevelt and the New Deal (OpenStax US History) 

26.2 The First New Deal

Roosevelt did not have a specific strategy in mind when creating a relief program for the Depression. What was later known as The First New Deal brought in legislative activity that the country had not seen before Most bills could be grouped into issues of relief, recovery, and reform.

Reform: The Banking Crisis

• New York and Illinois ordered closure of their banks to prevent “bank runs”, people running to banks to withdraw all their savings
• The Emergency Banking Act of 1933 took the United States currency off of a fixed value, or a gold standard, which limited the circulation of paper money
  • Those who had gold were to sell it to the US Treasury
  • Dollars were no longer redeemable in gold
  • The law also reorganized all banks that could not get its debts repaid.
• Roosevelt had his first “fireside chat” where he told people over the radio that any bank open on March 13 would have a federal approval
• Consumer confidence returned and $1 billion dollars in cash and gold had been returned to the national banks
• In June 1933, Roosevelt replaced the Emergency Banking Act with the Glass-Steagall Banking Act, preventing banks from participating in investment banking
  • Also created the Federal Deposit Insurance Corporation (FDIC) which insures bank deposits up to 2,500$
• The Economy Act reduced government spending by reducing salaries
• The Securities Act required full disclosure to the federal government from all corporations and investment banks that wanted to market stocks and bonds
• The Beer Tax brought revenue to the government
• The 21st Amendment would repeal the 18th Amendment, authorizing the manufacture of 3.2 percent beer and a tax on it

The First Hundred Days

• A Democratic Congress helped Roosevelt fix the Depression through legislation

Relief: Employment for the Masses

• The Wagner-Peyser Act created the United States Employment Service, which promised states matching funds if they created local employment opportunities
• Roosevelt authorized $500 million in direct grants through the Federal Emergency Relief Act (FERA)
• Harry Hopkins, head of the Civil Works Administration (CWA) put millions of men and women to work
  • At its peak there were 4 million Americans preparing bridges, building roads, airports, and other public projects
• The Civilian Conservation Corps (CCC) provided government jobs for young men who came from relief families and would earn 30 dollars per month by planting trees, fighting forest fires, refurbishing historic sites, and building lasting infrastructure
• The CCC employed 250,000 men in the first 2 months

• The Home Owners Refinancing Act rescued homeowners from foreclosure by refinancing their mortgages
  • This saved homeowners and banks by relieving the financial burden from small banks

Rescuing Farms and Factories

• The Agricultural Adjustment Act (AAA) and the National Industry Recovery Act were designed to boost the prices of crops that would fix rural poverty and restore profit to agriculture in America
• The government butchered 6 million baby pigs and 200,000 sows to increase cotton from 6 cents per pound to 12, but the government was destroying food while citizens were starving in order to drive up prices
• Small family farms felt no relief
• Large farms cut production by laying off sharecroppers and evicting tenant farmers
• The frustration led to the creation of the Southern Tenant Farmers Union (STFU), an interracial organization that sought to gain government relief for disenfranchised farmers
• The STFU protested and won some member’s wages through the mid-1930s, but was overall ignored
  • Many of them followed the Dust Bowl refugees to California
• By 1934, farmers formed over four thousand local committees, with more than three million farmers agreeing to participate
• The Emergency Railroad Transportation Act created a national railroad office to encourage cooperation with railroad companies
• The NIRA suspended antitrust laws and allowed for businesses and industries to work together to establish fair competition, including setting minimum wages
• New Deal officials believed that allowing these collaborations would help industries stabilize prices and production levels
• The National Recovery Administration (NRA) mandated businesses to accept a code that included minimum wages and maximum working hours.
  • Every business had a “code of fair practice” that included workers’ rights to ensure that wages rose with prices
• The NIRA also created the Public Works Administration (PWA).
  • Set aside $3.3 billion to build highways, federal buildings, and military bases
  • They completed over 34,000 projects, including the Golden Gate bridge, and the Queens-Midtown Tunnel
• Previously ununionized groups such as oil, gas, and rubber workers started to create unions because they felt they had a safety net with the government
  • The Communist party used this to help create widespread protest against American industrial structure
  • The number of strikes doubled between 1932 and 1934
• The Auto-Lite strike in Toledo, Ohio resulted in 10,000 workers from other factories joining in
• In Minneapolis, a strike resulted in frequent, bloody confrontations with other workers and police
• The strikes represented a flaw in the presidents approach
  • Immediate relief did not address long lasting class inequality

Regional Planning

• The Tennessee Valley Authority (TVA) had the job of planning and developing areas through flood control, reforestation, and hydroelectric power
• Under the direction of David Lillenthal, the TVA workers put up dams in the Tenessee River
  • The electricity and machenery helped the lives of the people living there significantly
• TVA also taught farmers lessons about crop rotation, soil replenishment, fertilizing, and reforestation
• However 15,000 families were displaced because of TVA projects
• People were inherently distrustful of the “government agenda”
• With new electricity came textile mills, which employed women
• Roosevelt thought the TVA was one of the biggest acomplishments of the New Deal

26.3 The Second New Deal

Challenges From Critics On All Sides

• Conservatives believed that the New Deal was a radical agenda to ruin the country’s free enterprise
• The American Liberty Leauge labeled the AAA as facist and argued that it went against democracy
• The National Association of Manufacturers encouraged businessowners to ignore the NRA
• In 1935 the Supreme Court found that both the AAA and NIRA overreached federal authority, hurting Roosevelt’s campaign
• Dr. Francis E. Townsend, a retired dentist, proposed an expansive pension plan for the elderly known as the Townsend Plan
  • This would pay every citizen over 60 who retired from work $200 per month, as long as they spend it within 30 days
• Upton Sinclair called for progressive income tax, a pension program for the elderly, and state sezures of factories and farms where property taxes remain unpaid
  • The state would then offer jobs to the unemployed to work those farms and factories
• Huey Long stated that Roosevelt was not doing enough to help people and proposed his “Share Our Wealth” program
  • Under this plan, there would be liquidation of all large personal fortunes in order to fund direct payments to less fortunate Americans
  • Wanted to give 5,000 to every family, 2,500 to every worker, pensions, and education funds
• Despite the fact that this would not mathematically work, Long had the support of four million people
• If not for his assasination, he may have been a contender for the 1936 presidental election

Answering The Challenge

• Roosevelt recognized that some criticisms of the New Deal were valid, so he came up with the Second New Deal, giving congressional leaders a list of “must-pass” legislation
• The Banking Act of 1935 made so that under a new banking system, there would be a seven member board of governors to oversee regional banks
• The Emergency Relief Appropriation Act of 1935 invested into the Works Progress Administration (WPA)
  • The program provided employment relief to 8 million Americans
  • Funded construction of 2500 hospitals, 5900 schools, and 570,000 miles of road
  • Created Federal Project Number One, employed 40,000 artists in theatre, art, music, and writing
  • They produced murals, guidebooks, concerts, and drama preformances around the country
  • Also funded the collection of oral histories, which helped the nations understanding of slave life
  • Founded the National Youth Administation (NYA), provided work-study jobs to 500,000 college students and four million highschool students
• The Social Security Act established programs to help the elderly, unemployed, disabled, and the young
• The Wagner Act/National Labor Relations Act protected workers’ rights to unionize and bargain collectivley
  • Permanently established government secured workers rights and protections from employers and was the beginning of labor’s political support for the Democratic party

The Final Pieces

• Roosevelt created the Supreme Court Packing Plan, where he packed the Supreme Court of justices in his favor and who supported his views
• This was opposed by his own party, Congress, and the Supreme Court
• A recession hit America just when Roosevelt was wanting to cut government spending
• Harry Hopkins, Henry Wallace, and others urged Roosevelt to adopt an economic theory proposed by British economic John Maynard Keynes, who argued that deficit spending was neccecary in capitalist economies to maintain employment and stimulate consumer spending
• Roosevelt signed the Fair Labor Standards Act and established a federal minimum wage and prohibited child labor under the age of 16

In The Final Analysis

African Americans under the New Deal

• People criticized the CCC, CWA, and WPA as the “Negro run around” or “Negros Ruined Again” program
  • The AAA also left sharecroppers and tenant farmers with no support
• Roosevelt had a number of African American appointees in the White House, but many were minor roles
• Roosevelt could not ignore Southern Democrats who might get angry if he advocated for civil rights
  • When he spoke about anti-lynching, he never pushed Congress to make a law
• African American people remained at the back of employment lines
• Roosevelt signed in the Indian Reorganization Act in 1934, encouraging self government and preservation of heritage

Women and the New Deal

• Policies encouraged women to stay home and leave jobs for men
• Elenor Roosevelt influenced the presedent to push causes for women and African American people