“Stock Markets Crash/Now I’m Just a Bill:” The Great Depression and the New Deal. 1932-1940

The Election of 1932

FDR vs. Hoover: desperate for new leadership, FDR wins 57% of the popular vote.

Promises the American people a “new deal,” but does not enter office with any one blueprint.

Relies heavily on group of advisors known as the “brains trust.”

Election of 1932

Hoover and FDR

The Banking Crisis

FDR enters office with banking system on the verge of collapse.

Calls for a national bank holiday, and an emergency session of Congress, which passes the Emergency Banking Act on March 9th.

Additional measures: Glass-Steagall, Federal Deposit Insurance Corporation.

The 100 Days

Centerpiece is the National Industrial Recovery Act, which creates the National Recovery Administration.

National Recovery Administration (NRA) aims to set industry codes with groups of business leaders that would be guidelines for output, prices, and working conditions.

Section 7a included to win support from labor.

The NRA soon adopted codes that set standards for production, prices, and wages in the textile, steel, mining, and auto industries.

The Spirit of the New Deal

Alphabet Soup

Federal Emergency Relief Administration to make grants to local relief agencies.

Civilian Conservation Corps (CCC): set unemployed young men to work on projects like forest preservation and the improvement of national parks and wildlife preserves. By 1942, the CCC had employed more than 3 million people.

PWA, CWA, TVA (where can I find some dam

beer?)The NIRA also created the Public Works Administration (PWA) The PWA built roads, schools, hospitals, and other public facilities.Civil Works Admin: built highways, tunnels, and airports, but costs alarm many.Tennessee Valley Authority (TVA), which built dams to prevent floods along the Tennessee River valley and provide cheap electricity in a region with many isolated households. Gov. now in competition w/private companies.

AAA

The Agricultural Adjustment Administration (AAA) let the government try to raise farm prices by establishing production quotas for major crops and paying farmers not to plant more.

large farmers benefitted the most, and few small farmers, tenant farmers, and agricultural laborers received assistance.

By the mid-1930s, the most severe drought in the nation’s history caused soil that had deteriorated to simply blow away in the wind, creating the Dust Bowl.

The House of Pain

The Home Owners Loan Corporation and Federal Housing Administration (FHA) insured millions of long-term mortgages issued by private banks. The government also built thousands of units of low-rent housing

Securities Exchange Commission to regulate stocks and bonds, Federal Communications Commission supervises radio and telephone communications.

The Court

In 1935, the Supreme Court declared the NRA unconstitutional (Schechter Poultry v. US).

In January 1936, the Court killed the AAA (Butler), which it declared an unconstitutional use of congressional power over local economic activity. In June 1936, the Court ruled that New York could not set a minimum wage for women and children.

The Illegal Act

The workers are revolting! Yes, they’re disgusting…

In 1934, labor revolted; 2,000 strikes broke out, including violent, massive strikes in Toledo, Minneapolis, and San Francisco. John L. Lewis, head of the United Mine Workers, forced a split w/AFL that led to the creation of the Congress of Industrial Organizations (CIO).In December 1936, the United Auto Workers, a small CIO union, conducted a sit-down strike, occupying a General Motors plant in Cleveland. In February, 1937, GM capitulated and recognized the UAW.

Sit-down strike, General Motors, 1937

CIO continued

CIO presented a program for federal economic and social policy, including public housing, universal health care, and unemployment and old age insurance.

Also built on the increasingly popular idea that prosperity would rise from mass consumption.

Voices of ProtestHuey Long of Louisiana: in 1934 launched the “Share Our Wealth” movement, which called for confiscating the wealth of the richest Americans in order to finance an immediate grant of $5,000 and a guaranteed job and annual income for all citizens. Dr. Francis Townsend: plan for the government to make monthly payments of $200 to older Americans, with the requirement that they spend it immediately to boost the economy. Father Charles E. Coughlin, attached millions each week with broadcasts attacking Wall Street bankers and greedy capitalists. Initially a supporter of FDR, Coughlin soon became increasingly critical of what he saw as a failed New Deal.

Huey Long

The Second New Deal By 1935, many New Dealers believed government should redistribute income in order to sustain mass purchasing power in the consumer economy.

Works Progress Administration: built thousands of public buildings, bridges, roads, airports, stadiums, swimming pools, and sewage treatment plants.

The most famous WPA projects were the arts and included the Federal Theatre and Dance Projects.

The Wagner Act: empowered a National Labor Relations Board to supervise elections in which employees voted on union representation.

Made illegal unfair labor practices: firing and blacklisting union organizers.

Social Securityestablished a system of unemployment insurance, old age pensions, and aid to the disabled, elderly poor, and families with dependent children. Although unprecedented in American history, the American welfare state, as compared to welfare states in Europe, was more decentralized, spent less, and covered fewer citizens.

Before the 1930s, Americans asked whether the government should intervene in the economy. After the New Deal, Americans asked only how the government should intervene.

The Election of 1936

FDR faced Republican nominee and former Kansas governor Alfred Landon.

Roosevelt carries every state except for Maine and Vermont. Strong support from organized labor, and his ability to unite southern white and northern black voters, Protestant farmers and urban Catholic and Jewish ethnics, and industrial workers and middle-class home owners won him the election.

Of Courts and Keynes FDR proposed that the president be allowed to appoint a new justice for each who remained on the Court past age seventy (six at that time). FDR’s goal was to change the balance of power on a Court that might invalidate Social Security, the Wagner Act, and other parts of the Second New Deal.

The Second New Deal slowed after the court-packing fight. In 1937, the economy slumped sharply, after FDR, who saw economic improvements in 1936, had decreased federal farm and WPA work relief. This caused business investment, production, and stocks to also fall and unemployment to rise.

In 1936, John Maynard Keynes argued that massive government spending was needed, even at the cost of deficits, to sustain purchasing power and stimulate economic activity during downturns.

Women

Secretary of Labor Frances Perkins and first lady Eleanor Roosevelt were two of the most influential women who had an unprecedented impact on policy.

The Depression actually provoked calls for women to leave the labor market, in order to open up jobs for unemployed men.

Because paying taxes on wages made one eligible for the most generous Social Security programs—old age pensions and unemployment insurance—they did not cover most women because they did not work outside the home.

The Solid South Southern Democratic members of Congress were elected by tiny white electorates. Southerners, once the Democrats took control of Congress in 1933, took the key leadership positions.

Roosevelt believed he could not challenge the southern Democrats if he wanted New Deal laws passed. Southern Democrats excluded from Social Security agricultural and domestic workers.

most black workers were limited to the least generous and must vulnerable parts of the new welfare state. Direct public assistance programs were ostensibly open to all poor seniors and families with dependent children who demonstrated financial need, but benefits were set low and eligibility was determined by state and local officials.

African Americans and the New Deal

Blacks generally supported the New Deal and started voting for the Democratic Party, shifting away from their traditional support for Republicans. Their hopes for broader changes were stymied by white southern Democrats’ influence in the party.

Federal housing policy powerfully reinforced residential segregations and showed the limitations of New Deal freedom. Local officials implemented national housing policy in ways that reinforced existing racial discrimination. Nearly all municipalities insisted that housing sponsored by the federal government be racially segregated. The Federal Housing Administration also insured mortgages that contained clauses barring future sale to non-whites.

HOLC map of Charlotte, NC

Communists

In the mid-1930s, the Communist Party grew from a very small and isolated organization into a mass organization. Although it never had more than 100,000 members at any one time in the 1930s, several times that number passed through its ranks.

Communist groups mobilized popular support for black defendants victimized by a racist criminal justice system, which made the Scottsboro case (Nine young black men in Scottsboro, Alabama, were arrested in 1931 for raping two white women) an international cause.

What The New Deal DidRoosevelt exposed the poverty and lack of economic development in the South, and a new generation of homegrown southern radicals—southern New Dealers, black activists, labor leaders, communists, and a few elected officials—were organizing for unions, unemployment relief, and racial justice. Instead of simply shaping New Deal measures to accommodate their racial and economic preferences, southern Democrats, who feared that federal intervention in the region would lead to more unions and racial conflict, started to oppose Roosevelt’s proposals altogether.

The New Deal seems limited, given the enormous catastrophe it confronted. Compared to European welfare states, Social Security was confined to fewer functions and not as funded. The New Deal had not improved race or gender relations, but actually worsened them in many ways. But the New Deal accomplished many things, most importantly making the federal government an active force in regulating and shaping economic life..