The New Deal

CHAPTER 21
 The Coming of Depression
Long-term causes: real-estate speculation and busts,
unequal distribution income, depression in farm
regions, stagnation of autos/consumer goods after
1926
Black Tuesday: 9/29/29…stock market crashes
Global financial system unequipped, Germany
defaulted on reparations and B&F stopped paying
debts to U.S.
Banks failed, families lost everything, foreclosures
Unemployment 25%, GDP fell by 1/3, prices by 40%
New lifestyle: itinerancy, despair, Hoovervilles,
breadlines and soup kitchens, people tried moving
back to farms, suicides, disillusionment with business
and banks
Hoover’s Response
Inadequate and uncaring?
Hoover believed federal aid
weakened American character
Volunteerism did not work
Hawley-Smoot Tariff of 1930
made things worse internationally
Reconstruction Finance
Corporation of 1932 loaned
money to banks, railroads, and
business, but none for direct aid
1932 Bonus Army debacle
The Depression and New Deal
Public works revolution
New Democratic coalition (farmers,
industrial workers, reform-minded urban
middle class, intellectual liberals,
northern African Americans, white
supremacist South to an extent)
Activist government w/new focus on
public guarantee of economic security
Era of dramatic social upheaval
Did not erase all of freedom’s
boundaries, though it expanded them
(little help for tenant farmers, women,
black Americans)
The First New Deal: Election of 1932
A new national hero –Franklin Delano
Roosevelt, son of privilege but hero of the
masses
Democratic nominee in 1932; calls for “new
deal”
Landslide victory and Democrats in Congress
FDR tried to reassure public in 1933: “the
only thing we have to fear is fear itself”
Militarism and totalitarianism in Europe, but
in America, an alternative
3 R’s –reform, recovery, relief!
100 Days and ABC Congress
The Dust Bowl
Dust Bowl: region affected by horrible dust
storms, exacerbated by mechanized farming
1 million farmers displaced
John Steinbeck, Grapes of Wrath, and Okies
Agriculture and the Native Americans
Agricultural Adjustment Act (AAA):
try to raise farm prices by setting
production quotas and paying farmers
not to farm; some livestock and land
destroyed; mostly successful but not
tenant/sharecropper
Native Americans: “Indian New Deal”
ended forced assimilation and allowed
cultural autonomy, schools on
reservations, Indian Reorganization Act
of 1934 ended selling off of parcels of
their land; still had to adhere to federal
laws; marked shift but reservations
poor and New Deal programs
harmful/irrelevant
Banking and the NRA
First action: declare a “bank holiday” –closed banks, Congress
passed Emergency Banking Relief Act to help threatened banks
Glass-Steagall Act: banks couldn’t buy or sell stocks, created
Federal Deposit Insurance Corporation (FDIC)
FDR took country off the gold standard, could now issue $$ to
stimulate activity
National Industrial Recovery Act (NIRA): est. National Recovery
Administration (NRA) to work with businesses to set industry codes
for prices and output and working conditions; also protected right
of unions
Initial enthusiasm led to controversy –large companies dominated
code-writing process, prices up and production low and workers laid
off, little enforcement
 Some hesitation about direct relief, but was
inevitable
Federal Emergency Relief Administration
(FERA): grants to local agencies to help the
poor
Civilian Conservation Corps (CCC): men 18-
25 small projects like flood control and
reforestation, wages of $30 a month and
lodging
Improvements to morale
Jobs and Public-Works Public Works Administration (PWA): built
schools, bridges, hospitals
Civil Works administration (CWA):
highways, tunnels, airports…than 4 million
jobs but too much dependency?
Tennessee Valley Authority (TVA): series of
dams for flood control and electricity, made
gov into a corporation
Housing Etc.
Houses part of American dream, but Depression
devastated housing industry
New Deal brings gov into the housing market: Home
Owners Loan Corporation and Federal Housing
Administration insured mortgages from private banks
and made home-ownership possible
Repeal of Prohibition -21st Amendment
Federal Communications Commission est. to oversee
broadcast airwaves and telephone communications
Securities and Exchange Commission to regulate stock
and bond markets
Transformed role of federal government but did not
end Depression
Conservative Court began to overturn acts, starting
with NRA (not president’s job to have legislative
powers), then AAA and minimum wage
 Focus now was economic security, not
recovery
People advocating for redistributing national
income to up purchasing power and stimulate
economy
Tax on large fortunes and corporate profits
Rural Electrification Act: popular and
This mural depicting agricultural workers was painted by Carl Morris in 1942
successful, by 1950 90% of farms wired for
after he won a WPA Federal Arts Project mural competition in 1941. It was electricity
installed in the lobby of the Eugene Post Office in 1943.
Soil conservation efforts and family farming
New national parks and grasslands
Works Progress Administration (WPA) of 1934
–millions of jobs, bridges and buildings and
white-collar work
Federal Art Project, Federal Writers Project
National Youth Administration
The Second New Deal Wagner Act: NLRB supervise union elections,
outlawed “unfair labor practices” like firing and
Joshua Tree
National Park,
made a National
Monument in 1936
 Ida May Fuller, the

Welfare and Labor first American to receive

w/dependent children
Not original ideas, but important for America
The launch of the welfare state –extent and limits of
changes brought by New Deal (radical departure, but more
decentralized, less spending, and fewer covered than Europe)
No health insurance yet
“Social Security emerged as a hybrid of national and local
funding, control, and eligibility standards”
Second New Deal transformed relationship between federal
gov and citizens
Not IF the gov should intervene, but HOW
Last major law of New Deal was Fair Labor Standards
Act of 1938 (no child labor, minimum wage, overtime
pay; a radical departure)
Grassroots Revolt: Labor
Federal gov now seemed on side of labor –supported unions, less immigration meant fewer ethnic differences,
dynamic labor leaders survived repression
Demands included wages, civil liberties, and working conditions
People believed Roosevelt would help
Upheaval exploded in 1934 with 2000+ strikes and walkouts
Bad for AFL’s organization-by-craft…John Lewis, head of United Mine Workers, walked out of a convention and
formed Congress of Industrial Organizations (CIO)
Wanted economic freedom and industrial democracy, a voice, fair share of wealth
United Auto Workers (UAW) pioneered sit-down in 1936…GM workers seized Fisher Body Plant in Cleveland,
Democratic governor refused to dislodge, workers unified, strike negotiated (took a long time)
Other sit-downs, 9 million union members by 1940 (double! Of 1930!); began to win more of a say
Altered balance of economic power and brought labor’s demands of a more equal and freer America to
political discourse
CIO leaders said Depression result of disparities of wealth, and unionism would help procure a higher standard
of living and stimulate economy through consumer demand
 FDR and the Idea of Freedom
Large majority of writers believed a new definition of freedom
was needed; now linked to expanding power of national state
(gov needed to guarantee decent livelihood and security)
Roosevelt, through fireside chats, spoke directly to people –
gave liberalism modern meaning of a large, activist state that
gave security to average man
Critics used liberty too, railing against reckless spending and
gov regulations, or saying FDR was “Sovietizing” America
Repeal of 21st amendment in 1933
Voices of Protest
Upton Sinclair ran for governor in California
calling for cooperative ventures
Huey Long, who was influenced by Socialism
and Populism, became governor of Louisiana
and was in the U.S. Senate; dominated state
politics; nicknamed the “Kingfish” and
launched the Share Our Wealth movement;
popular but assassinated
Father Charles E. Coughlin had weekly radio
broadcasts attacking Wall Street and capitalist,
called for gov ownership of key industries; later
became critical of FDR and anti-Semitic
Dr. Francis Townsend called for $200/month
payments to elderly to boost economy
Election of 1936 and the Courts
People argued about two ideas of freedom – “freedom for private
enterprise” and “socialized liberty” based on “equitably shared
abundance”
Central issue of election of 1936
Republican Alfred Landon wanted free market upheld, end New
Deal
Roosevelt wins in a landslide (southern white and northern black
voters, Protestant farmers, urban Catholics and Jews, industrial
workers, middle-class homeowners)
Roosevelt's gaffe –the court-packing scheme (new justice for each
over 70, would be 6) to stop Court from striking down ND
Court reverses, starts supporting economic regulation and social
welfare
1937 downtown of economy after FDR lessens gov spending;
focuses more on Keynesian economics (i.e., big spending)
 The Limits of Change
Different groups experienced New Deal in different ways
Women: more in gov, Eleanor Roosevelt important
Organized feminism disappears as political force, limits
on women in workplace, man as head of household,
some women excluded from benefits
In South, welfare state was an entitlement of whites
only
Social Security excluded agricultural and domestic
workers
Public assistance programs let states determine
eligibility, which included “moral behavior”; stigma of
dependency and laziness
Mexican-Americans: grim working conditions; no
unions, low wages, political repression; tried to be
part of white America but had ties to Mexican
heritage –la raza
African-Americans hardest hit – “last hired, first
fired”; more public assistance; survival replaced
political activism
Roosevelt not an advocate but had a special
adviser on black affairs, listened to the issues
Blacks turned to the Democratic party, but did
not see broad changes –left out of programs, no
federal anti-lynching law, segregated housing,
federal employment also discriminated by race
A New Conception of America
Ethnic pluralism a reality of living in America; 1930s a period of accelerated cultural assimilation due to
mass culture, labor, and political activism (not forced or punitive)
Catholics, Jews, Italian-Americans occupied prominent positions
“In this broad left-wing culture, social and economic radicalism, not support for the status quo, defined
true Americanism, ethnic and racial diversity was the glory of American society, and the “American way of
life” meant unionism and social citizenship, not the unbridled pursuit of wealth”
Common man revered as heart and soul of country, and art and literature celebrated regular,
hardworking people (usually white, small-town)
Popular Front (Communists, socialists, New Deal-ers) was open about resisting discrimination, CIO was
racially/ethnically inclusive, Communist Party only predominately white organization that sought to fight
racism
Gov now involved in protecting freedom of expression and workers’ civil
liberties; Civil liberties replaced liberty of contract as the judicial foundation of
freedom
(Not universal though…HUAC formed in 1938 to investigate “un-American
activities” and Smith Act said it was a crime to teach, advocate, or encourage
overthrow of government)
End of New Deal: Southerners starting to pull back, stalemate in political
scene after 1938, gathering storm in Europe
Results: limited but substantial
New role of federal gov in economy, especially w/industry and labor
Faith in democracy
Redrew map of American politics
New idea of freedom
Did not end Depression!