new deal

introduction

  • FDR had emergency powers for first 100 days in office for passing laws

  • New deal 3 R’s — relief, recovery, reform

  • Emergency banking act reopened trusted banks, gave them loans and put regulations in place

  • Fireside chats to explain his decisions

3 R’s:

  • Relief — agencies for temporary, immediate relief

  • Recovery — help businesses, industry and agriculture to stabilise

  • Reform — measures to provide permanent stability so it never happens again

Roosevelt’s first 100 days were about moving towards an active gov to provide immediate relief to people and stability to the economy during great dep. Roosevelt had brain trust of experts to advise him on his policies. Pump-priming was used to stabilise the economy by funding alphabet agencies set up.

The new deal reduced unemployment but WW2 is the actual reason that the economy finally stabilised fully.

new deal alphabet agencies

Agricultural adjustment administration:

  • Designed to stop overproduction by reducing acres of farmland and introduced subsidies for farmers

  • Reduced surplus which drove up prices, meant farmers destroyed crops and slaughtered 6m piglets

  • Cotton prices per pound almost doubled between 1933, some animals fed to unemployed but people didn’t like unnecessary killing

  • Sharecroppers and the dustbowl fled the south because they didn’t benefit

  • Supreme court rules unconstitutional in 1936

Civilian conservation corps:

  • Works programmes for national forest and parks, mostly manual labour for young men 17-24 living on site for $1 mil a day

  • Gave people jobs and housing, built bridges, roads, planted trees etc (relief and infrastructure reform) but there was segregation on sites and paid very little with most of their pay automatically going to family

Civil works administration:

  • Led by Harry Hopkins, temporary administration helped 4.2 unemployed through harsh winter in 1933-4

  • $400 mil budget, built over 400 airports and 200,000 miles of roads

  • Temporary emergency relief, built infrastructure to encourage future economic growth

Federal emergency relief administration:

  • Led by Harry Hopkins, budget of $500 mil to provide relief benefits and public works that built 5000 buildings

  • Threat of withdrawing federal money for reluctant states like Georgia if they refused to take part

  • Immediate relief, improved infrastructure but budget was too small

National recovery administration:

  • Issued codes of practice for all industries, ensuring fair competition/wages/hours and banning child labour, plus allowing unions to collectively bargain

  • $3.3 bil budget, blue eagle sign for compliance, 557 codes of practice in total issued

  • Some codes were hard to follow, companies like Ford refused, declared unconstitutional by 1935

  • Considered to be low wages and no improvement to working conditions but claimed to put 2 mil back into work and regulation was necessary as a reform since great dep. happened largely due to lack of regulation

Public works administration:

  • Created due to NIRA, under control of Harold Ickles

  • Provided long-term solutions (recovery) with budget of $3.3 bil to aid pump-priming by creating public works

  • Jobs said to be of no real purpose and hardly any of budget was spent (only 110 million)

Tennessee valley authority:

  • Tennessee, North Carolina, Virginia etc. and other surrounding states were known for flooding, poor infrastructure and living standards

  • Network of 20 dams built to control flooding/erosion and increase agricultural production, plus generate electricity from 2% of farms to 75% by 1945

  • Model for federal and state cooperation

Federal housing administration / homeowners refinancing corporation:

  • HORC offered new loans/mortgages at low rate of interest for longer periods to help people keep their homes from repossession but only 50% of mortgages were covered

  • FHA offered small loans for home construction and federal insurance to protect ability to repay mortgages in order to stimulate housing industry

  • Relief form homelessness but didn’t cover all of mortgage, mainly benefitted white MC as FHA only covered newly bought homes, less than 25% of urban families could afford the avg. mortgage

banking reform

  • Banks closed for 6 days when FDR entered office

  • The banks that weren’t operating correctly were not allowed to reopen without making changes, only the ones that could be trusted by people were reopened

Emergency banking act:

  • National bank holiday 6-9th march in 1933

  • Used money from RFC to prevent banks collapsing

  • US treasury investigated and reopened 5000 trusted banks

  • People were willing to invest again (raised confidence) and solved the problems of the system

Glass-steagall banking act:

  • Separate commercial and investment banking (reforming what was said to be a major cause of depression)

  • Created federal deposit insurance corporation guaranteed all bank deposits up to $5000

  • Allowed people to put money into banks to help system get running again

Federal securities act:

  • Securities exchange commission regulated all shares transaction and stock exchanges in the US

  • All new share purchases had to be registered with the FTC

  • Provided regulation and protection for investors money, plus restored confidence in the stock market

Silver purchases act:

  • Government purchased all domestically produced silver at artificially high price

  • Raised prices by increased amount of silver in coinage and increased money supply to encourage economic activity

  • More money of higher worth and stimulation of economy

Gold reserve act:

  • This ended private holding and use of gold as money, control over money supply

  • Devalued US% against rate of gold to make exports cheaper to stimulate trade

opposition to the first new deal

Right-wing:

  • The rich — didn’t want heavy taxes

  • Republicans — laissez-faire policies

  • American liberty league — don’t want regulations on property and business, members including Du pont family

Left wing:

  • Trade unions — protection for workers (NIRA regulations ignored by employers)

  • Francis Townsend — 60+ get $200 a month, half a million club members by 1935

  • Huey Long — governor of Louisana, $5000 allowance for every family paid for by taxation of rich a confiscation of fortunes over $5 mil, 27,000 ‘share our wealth clubs 1935, assassinated in 1935

  • Father Coughlin — radio show with 35 mil listeners, wanted reforms for the monetary system, ran against Roosevelt but was unsuccessful

second new deal

Reasons why FDR decided to introduced the 2nd new deal:

  • Europe was recovering faster than USA from great depression

  • He needed to avoid radical opposition that could be supported by millions

    • Farmer-labour party that offered minimum hours, public works, taxes

  • Supreme court overturned new deal legislation and he needed to replace things

  • He was frustrated with US chamber of commerce for not supporting him in 1935, FDR needed to have small businesses in mind when thinking about recovery

Wagner act 1935 — trade unions:

  • Right to collective bargain for unions

  • Individual workplaces given right to join unions

  • National labour relations board

  • Excluded agricultural and service workers

  • Black and Hispanic Americans and women had little benefit

Guffey Synder act 1935 — trade unions:

  • Set price of coal and banned unfair competition/ practices

  • Regulated max hours and minimum wage

  • Declared unconstitutional

  • Only affected coal industry

Guffey Vinson act 1935 — trade unions:

  • Kept changes relating to industry (prices, competition, practices) and was consitutional

  • No labour provisions so unpopular with businesses

  • Considered socialist

Fair labour standarsd act 1938 — Father Coughlin:

  • Created min wage and introduced overtime

  • Prohibits child labour

  • Increased profits and wages, reduced strikes

  • 700,000 wages increased

  • Had to work 40+ hours for act to apply and did not cover executives or seasonal workers

  • Interstate commerce had to be $500,000

Social security act 1935 — Townsend:

  • Equal contributions from employers and workers to pay for unemployed and elderly benefits

  • Pensions — $10 to $85 per month

  • Unemployment — $18 for 16 week

  • Not comprehensive, excluded those who needed it most (farm workers, domestic servants, self-employed

The revenue act 1935 — Huey Long:

  • Increased income tax 63-79% on incomes over $5 mil

  • Increased tax on property and undistributed profits tax to force large companies into stock market to raise investment

  • Criticisms from rich, incl. William Hearse who was a newspaper owner — FDR called ‘clss traitor’

  • Raised only $250 mil more a year, not enough in comparison to money spent on new deal projects

Works progress administration 1935:

  • Public works

  • 2 mil employees 1941 (20% of the w.f)

  • $52 per month, relief but less than usual

  • 1000 airports, 8000 schools and hospitals built

  • Not allowed to compete for contracts with private firms or build private houses

  • Wages greater than other relief schemes but still low

The revenue act 1935:

  • Relocate 45,000 farming families to Oklahoma, Texas etc (affected by dust bowl)

  • REA 1935 low interest loans to provdie electricity

  • 1930, 10% of rural communities had electricity, by 1945 it was 40%

roosevelt recession

1936 election made democratic party the majority party. It created new democratic coalition with traditional and new elements of the party as Americans rejected radical solutions to the depression.

  • Republicans relying on traditional base of support — big business, big farmers, conservatives etc.

  • Democrats broadened constituency, appealed to small farmers, ethnic blue collar workers, Jews, intellectuals, African Americans

  • Significant opposition to new deal from socialists

opposition to the second new deal

supreme court

Judiciary reform bill 1937:

  • FDR wanted to pack the supreme court with nominees that would favour new deal legislation

  • He wanted 70+ judges to retire

    • Justice Brandeis, 79, was the most liberal member, so plan backfired

  • Congressmen feared replacement/retirement and Roosevelt underestimated support of the court — he was seen as dictator

  • Bill rejected 70-20

  • However, later on, Justice Van Devanter announced his retirement and court vegan to uphold legislation

  • More judges retired and FDR replaced with supporters like Felix Frankfurter

other opposition

  • Wealth inequality:

    • Wealth and economic power concentrated to small number

    • Government ownership and sharing out all of USA’s wealth

    • 1937 inauguration — FDR claims ⅓ of USA was still poor

    • Henry Ford, Rockefellers and Du Ponts

  • Political competition:

    • 1936 election, socialist candidate Norman Thomas gets 187,000 votes

    • 1936 election, communist candidate Earl Browder receives 79,000

    • Other parties were not a threat to FDR

  • Union threat:

    • 1936, 2,000 strikes involving 788,000 workers

    • 1937, 4,470 strikes involving 1.9 mil workers

    • Dec 1936: autoworkers occupied Cleveland Fisher company factory for 1 month to prevent it opening

    • Unions led by CIO organised strikes incl. united automobile workers’ union

  • Anti-capitalism

    • Socialists and communists wanted to destroy current system that allowed private ownership of property, business, agriculture and industry

how successful was the new deal?

introduction

New deal recovery needed to deal with lowering GDP and rising unemployment levels. It was successful in relief (supporting starving and unemployed) but not in recovery because economy was not the same as in 1929.

  • Unemployment

    • 1933, 24.9%

    • 1937, 14.3%

  • ND budget cut in 1937 —> unemployment to 19% (proved it was providing temporary jobs)

  • 200,000 black Americans working under CCC

  • Roosevelt’s black cabinet to discuss issues, but discrimination still prevalent

  • Memorial day massacre 1937 — march broken up, left 10 killed

    • Companies saw trade unions as enemies

Positives of the new deal:

  • Rural electrification administration bought electricity to 40% of farms (90% by 1950)

  • Trade union membership increases (1930, 3.4 mil and by 1940, 8.7 mil which was over a quarter of the w.f) and social security act 1935 meant workers were more protected than ever before

  • WPA helped transform USA by building 2,500 hospitals, 350 and 8,000 parks

  • 1940: 17 year olds graduating high school went from 29% in 1930 to 50% and universities went from 1,400 to 1,7000 due to federal funding

  • TVA developed infrastructure, provided hydroelectric power for domestic and industrial use

  • CCC environmental impact, national parks like Yellowstone, planting trees and roads etc.

Negatives of the new deal:

  • FDR’s decision to focus solutions prolonged global depression and depressed exports

  • Combined personal income of USA was $72.9 bil in 1939, it had been $85.8 bil in 1929 when the population was 9 mil less

  • 1939: only 1/5 of Americans received gov relief when ¾ of them were out of work in 1933

  • Roosevelt made sharp cuts to federal expenditure, contribution purchasing power falling from $4.1 bil in 1936 to under $1 bil in 1937

  • Boondoggle jobs like scaring pigeons offered dubious economic value

  • Roosevelt recession, industrial production fell 33% and 4 mil lost jobs

  • Unemployment was never below 14% after 1933, 17.2% in 1939

  • Farm acreage didn’t increase, only went from 1 bil to 1.05 bil in 10 years

  • 1939: top 5 corporations controlled 84.5% of all income generated by businesses as in 1929

ethnic minorities

Before the new deal:

  • Native Americans

    • Dawes severalty act 1887 — assimilation and allotment (tribal units broken up and reservations divided into family sized farms)

      • Failure for those who weren’t farmers

      • Allocated land wasn’t suitable for productive farming

      • 138m acres owned in 1887 —> 90m by 1932

    • 1926 department of interior inquiry allotment should be reserved

    • Difficult to leave poverty-sicken reservations to search for work

    • Indian reorganisation act 1934 to address problems

  • Hispanic Americans

    • Many living in southwest before white Americans had arrived, also widely recruited as seasonal workers to help agriculture

    • Poorly paid already, during great dep. Hispanic Americans lost their jobs and got deported (so white Americans could take their jobs)

    • 400,000 repatriated

New deal for Native Americans:   

  • Indian reorganisation act 1934:

    • Tribes reorganise into self-governing bodies with own constitutions, police and legal systems

    • 75 out of 245 tribes vetoed the measures

  • CCC and PWA available to find jobs but limited effect due to level of poverty

  • 1943 senate enquiry found widespread poverty on reservations

  • During ww2: 25,000 in fighting forces, Navajo language used to transmit messages and many left reservations to work in war industries

New deal for African Americans:

  • Positives

    • Some benefitted from housing provision and job creation schemes

    • 200,000 gained benefits from the CCC

    • Some sharecroppers were able to own their own land as a result of AAA

    • New deal boosted trade union movement and black Americans got involved (empowerment)

    • 1936: Gallup poll found 76% of black Americans intended to vote for FDR

  • Negatives

    • 1931: 31% of black Americans in southern cities unemployed

    • 1940 census: 1 in 20 males employed in a white-collar occupation compared to 1 in 3 white

    • New deal agencies discriminating against black people, they got no work and received bad treatment/wages (allowed by NRA)

    • FDR failed to pass laws against lynching

    • FDR didn’t stop problems or segregation and disenfranchisement

    • NRA forced many small black-run businesses to shut down

    • AAA meant 1 mil tenant farmers were evicted

    • CCC segregated

women

  • Eleanor Roosevelt

    • Advised her husband on federal policy and the position of women + ethnic minorities

    • 2 days after inauguration: held a press conference (348 during new deal years)

    • Received 300,000 letters from the public

    • ‘My day’ newspaper article

    • 300,000 miles across the USA to support the new deal

    • Asked for more women in gov and female CCC ‘she she she’ camps 1936 that employed 5,000 women

    • Supported appointment of Mary Bethune, met with NAACP leaders

    • 67% approval rating Gallup poll

  • Frances Perkins

    • 1933, first woman cabinet member (secretary of labour) until 1945

    • Established CCC with other departments

    • Social security act 1935 gave federal aid to elderly and unemployed

    • Passed federal minimum wage in fair labour standards act 1938

  • Mary Mcleod Bethune

    • FDR’s special advisors on minority affairs in 1935

    • Founded national council of negro women

    • Chairperson of informal ‘black cabinet’

    • 1936, appointment to director of negro affairs division of NYA until 1944

    • Campaigned the rights of black Americans to get equal federal aid and pay as white Americans

New deal for women:

  • Positives

    • ‘She she she’ camps

    • Distinguished women in politics showed that there were opportunities for some women

    • Frances Perkins, first female cabinet member

    • Mary Bethune as representation of black women in gov

    • Eleanor Roosevelt, successful woman that championed minority rights

  • Negatives

    • Women only made up a small percentage of CCC scheme

    • Bethune and Perkins are isolated examples and do not represnt all women

    • Women’s lives remained the same in rural areas and receieved little federal help

    • Eleanor Roosevelt was a rare example, has the fact she came from a wealthy background and was married to the president

    • 1940: 90% of jobs filled by men