Herbert Hoover, FDR, and the New Deal

  • Herbert Hoover, Republican President 1929-33
    • Believed government shouldn’t get involved in private economy, so he didn’t do anything to fight the Great Depression
    • Became despised as the Great Depression intensified
    • Hoovervilles, Hoover blankets, etc.
    • 1930 - raised tariffs
    • Thought it would help American companies
    • Raised prices for Americans
    • 1932 - Reconstruction Finance Corporation (RFC)
    • Government owned program
    • Wanted to get $1 billion in hands of corporations
    • Goal: boost corporations ➝ boost economy
    • Stopped after $600 million
    • Democrats wanted to give government money to the people
    • Republicans can give to corporations, why can’t we give to the people?
  • Franklin D Roosevelt, Democrat President 1933-45
    • Governor of NY @ start of Great Depression
    • Experimental: willing to try all sorts of programs to help the people of NY. if there’s a possibility, he tried it
    • 1932 election: FDR won in a landslide
    • Inaugurated in March 1933. In the first two weeks:
  1. Closes all banks for three days. Bank holiday
    • Got people to stop pulling money from the banks
    • Bank closures decreased after the bank holiday
  2. Fireside chats: sat by a fireplace and spoke casually with the American people.
    • Reassured the people
    • Inspires many Americans before doing anything

  • New Deal: FDR’s political response to the Great Depression

  • Lasted from 1933-1938

  • Willing to try anything and everything

  • Got money from taxes and created debt

  1. Public Works
    • Public works: government creates a project and uses government money to pay people to do it
      • Project doesn’t matter - government pays the people
      • Created jobs for the unemployed
  • Breadwinner ideal ➝ it was expected that men provide for the family
    • Wanted men out of the house so they wouldn't be depressed for not providing
  • Brings money into the economy
    • If people have money, they spend money
    • Mini theme of the New Deal
  • Three programs:

  1. Civilian Conservation Corps

    • Started 1933
    • Referred to as summer camp
    • Hired 18-20 yr old men to work in National Parks and Forests and build trails

  2. Public Works Administration

    • Construction works - bridges, roads, etc.
    • Infrastructure
    • All ages - hired 2-3 million people
    • Also started 1933

  3. Works Progress Administration

    • Paid for people to do murals
    • More arts focused orientation
    • Hired African Americans (only program to do so)
    • Gave jobs not focused on construction

  4. Relief

    • Federal Emergency Relief Act
  • Government gave people money when they were unemployed
  • Started 1933
  • Another way to pump money into the economy
  • FDR didn’t like to just give people checks
  1. Regulation (Progressivism)
    • Maybe if we keep corporations in check, we can prevent another Depression
    • Glass-Steagall Act

  • Passed in 1933

  • Made banks separate consumer’s deposits from their investments

    • Couldn’t invest the money of the people

  • Lasted until 1999

  • Federal Deposit Insurance Corporation

    • If the banks mess up, this is how the government will protect you
    • If your bank goes under, the government will write you a check for your money up to $125,000
    • Downside: this costs a lot of money
    • If there is a quick succession of bank failures, the FDIC can run out of money

  • Securities and Exchange Commission

    • Started in 1934
    • Meant to regulate wall street, the stock market, and trading in general
    • Goal: prevent another crash
    • Perhaps there was some corruption in wall street that exacerbated the crash
    • Let’s make sure that doesn’t happen again
  1. Strengthen labor unions
    • Political component: FDR is building a coalition of black voters
    • National Industrial Recovery Act
      • Section 7(a): labor unions are given the right to go on strike
      • Federally recognised
    • Limits corporations
  2. Help out farmers
    • Agricultural Adjustment Act
      • Paid farmers to not farm a portion of their land
      • Farmers were TOO successful ➝ this was meant to reduce the surplus of food and raise prices
      • 1933
      • Administered at the county level
      • Wealthiest farmers got the most money
      • County crooks, not government fault
    • Supreme Court said Agricultural Adjustment Act and Section 7a were unconstitutional
      • National Industrial Recovery Act ➝ Wagner Act (1935) which gave labor unions the right to strike
      • Soil Conservation Act (1935) ➝ previously AAA. Paid farmers to ot farm a part of that land in order to preserve the soil
  3. The South was poor
    • Poverty of the South was pulling the rest of the country down
    • Let’s give the South more money so they don’t suck so much
    • Tennessee Valley Authority, 1933
      • Built dams to produce electricity and sold it at much lower rates
      • South had lowest levels of electrical use because it was too poor
      • Electricity ➝ modernization ➝ AC (50s and 60s)
      • Didn’t help right away but helped over time
      • Northern businesses came to South bc of AC
      • Republicans hated this program because it was an example of socialism in their eyes
  4. Social Security
    • 1935
    • Most political of New Deal programs
    • FDR made this plan to compete with political oppenents who might have run against him in 1936
    • Check from the government for those over the age of 65
    • First checks went out in 1938
    • Much smaller in benefits + who got it
    • Didn’t have a large impact

  •  Court Packing

  • FDR was sick of the Supreme Court shutting down his new deal ideas

  • FDR tried to alter the court composition to protect the New Deal

  • Supreme Court Justices: 9➝ 15

  • FDR could pick the extra 6 justices so they could support the New Deal

  • At age 70, Justices were forced to retire

    • Most opponents of the New Deal were over 70

  • Didn’t go anywhere ➝ not even the Democratic party supported it

  • After these proposals, the justices didn’t oppose the New Deal

    • Although it didn’t physically change anything, it changed his mind

  • Roosevelt Recession

    • New Deal lowered unemployment rate from 25% in early 1930s to 12% in 1937
    • Roosevelt cut some of the budget on New Deal programs so the budget was balanced
    • When he did that, unemployment started to go back up again
    • Roosevelt realized this and gave full budget again

  • 1938: No additions made to the New eal. End of expansion of New Deal after 1938

    • Southern Democrats had had enough - FDR didn’t have enough of the majority to pass things in Congress
    • Would have ended anyway - FDR’s attention was on the second world war