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FDR and the New Deal
The Depression
• Collapse of US economy between 1929 and 1932
1929 GNP=103.9 B, Exports 7.1 B
1933GNP= 56.0 B, Exports 2.4 B
1932, 25% unemployment
• Dust Bowl compounded economic collapse and unemployment
• Hoover’s Rugged Individualism and Welfare Capitalism limited government role in fighting depression
• Hoovervilles
FDR Takes Office
• FDR Took office in March 1933
• Known as a domestic president; concerned with the lower and middle classes rather than with foreign policy
• Democratically controlled Congress passed his bills
• Labeled his philosophy towards change as The New Deal
• 100 Days: flurry of legislation to combat Depression
3 R’s
• FDR had no set policy when he started his term: experimentation
• “Relief, Recovery, Reform”• Relief: immediate remedy
to the human suffering, in handouts, make-work projects
• Recovery: longer-lasting remedies to get people back on their feet and return economy to prosperity
• Reform: government regulation and programs to prevent a similar depression from recuring
FDR’s First Actions
• By executive order, closed all banks immediately.
• Emergency Banking Act: supported and re-organized banks
• Economy Act: slashed 500 million from government spending (later, economists would criticize this policy)
• Beer Act: ended prohibition by legalizing beer and wine, provided revenue through taxes
100 Days: Alphabet Soup
• CCC (Civilian Conservation Corps): forestry, parks, wildlife
• AAA (Agriculture Adjustment Admin): quotas, planning (later declared unconstitutional)
• FERA (Federal Emergency Relief Act): money to states
• TVA (Tennessee Valley Authority): development of Tenn. area, anti-flood, hydroelectric
• HOLC (Homeowner's Loan Corporation) and FCA (Farm Credit Admin): refinance home and farm mortgages
• PWA (Public Works Admin): public building programs
Later in the 1930s
• WPA (Works Progress Administration): make-work projects
• “Wagner Act”: create National Labor Relations Board to help labor and management negotiate; replaced idea of National Recovery Act
• Securities Exchange Commission to regulate stock market and investigate fraud
• Social Security Act: pensions– Tax populace today– Pay pensions at retirement– Unintended effect: “Roosevelt
Recession” of 1937 because of money removed from economy
Results of New Deal
• Tremendous popular support for FDR; a president who understood the common man.
• Public sense that the government was trying to end the depression.
• Significant, but not dramatic, drop in unemployment; true recovery came due to WW2
• Unemployment1933 12,830,000 24.9%1934 11,340,000 21.7%1935 10,610,000 20.1%1936 9,030,000 16.9%
Results of the New Deal• Increase in federal gov’t spending
(but total fed, state, local fell)Federal Taxes, Expenses, Balance1929 3.9 billion 3.1 billion +.81933 2.0 billion 4.6 billion -2.61939 6.3 billion 9.1 billion -2.8
• FDR accused of dictatorial and socialist methods
• Federal government became competitor in economy
• Several bills declared unconstitutional
• Accused of trying to stack supreme court
• FDR used expanded presidential powers to influence society directly
• New governmental programs became permanent as gov’t increased role in the national economy
Debate over FDR’s New Deal Legacy
• Proponents praise FDR for his courage and flexibility in combating the Great Depression, his sympathy for the working man, and attempt to safeguard common man against unchecked capitalism.
• Opponents of FDR claim he operated beyond the limits of the constitution, unfairly erected barriers to free-market capitalism, and created an overly large federal government whose continually rising expenses have seriously threatened the contemporary economic health of the nation.