New Deal Quiz

In the first three years of the Depression, 5100 banks failed. In the first three months before FDR’s inauguration, an additional 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.

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. 

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. 

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.

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.

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.  

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.

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.

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.)

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.

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.

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.) 

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. 

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.