Key Points: Details: Summary: Chapter: Unit/Era: Page: 1. Ferguson s Notes. The New Deal

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1 Section 1: Fights the Depression President Herbert Hoover was directly blamed for the Great Depression and for not doing enough to end the Depression - The Republicans re-nominated Hoover as their presidential hopeful for the 1932 election Republicans knew they were doomed, but no one else would represent their party - The Democrats placed their faith in Franklin Delano Roosevelt, a two-term governor of New York and distant cousin of Theodore Roosevelt FDR was a reformer and focused on what could be done, not what couldn t be accomplished The Democrats also controlled 2/3 rds of the seats in the House of Representatives and almost 3/4 ths of the seats in the Senate (this hadn t happened since the Civil War) Four months passed b/w Roosevelt s victory in November 1932 to his inauguration in March Brain Trust: team of professors, lawyers, and journalists that were selected to advise him in the White House - New Deal: relief for the needy, economic recovery, and financial reform Fireside Chats: radio broadcasts from the White House related to issues of public concern - Urged people to reinvest in banks and assured people banks were safe - Gave a total of 30 fireside chats and began each with the greeting My friends. Page: 1

2 Section 1: Fights the Depression (con t) Hundred Days: intense activity b/w March 9 and June 16, 1933 in which Congress passed more than major pieces of New Deal legislation (expanded the federal gov ts role in the nation s economy) Bank Holiday (1933): FDR closed every bank for a few days Designed to stop withdrawals Emergency Banking Relief Act (1933): Treasury Department examined all banks to determine which ones were financially sound and then could reopen Banks that were not stable could receive loans Designed to restore public confidence in banks Glass-Steagall Act (1933): est the Federal Deposit Insurance Corporation (FDIC) FDIC: provided federal insurance for each individual bank deposit up to $5000 Also, required banks to me cautious with depositors money Federal Securities Act (1933): required corporations to provided complete info on all stock offerings and made them liable for any misrepresentation Securities and Exchange Commission (SEC-1933): regulate the stock market to prevent people with inside info about companies from rigging the stock market for their own profit Martha Stewart, Joseph Kennedy. Enron, etc. Roosevelt also convinced Congress to allow the production and sale of some alcoholic beverages so the gov t could increase revenue by taxing alcohol Prohibition was repealed soon after by the 21 st Amendment at the end of 1933 Page: 2

3 Helping the American People Agricultural Adjustment Act (AAA) and the Agricultural Adjustment Administration (AAA): gov r would pay farmers to leave a certain amount of every acre of land unseeded Theory: reducing the supply will increase the price, which will give farmers more money to spend The gov t paid cotton growers $200 million to plow under 10 million acres of crops Paid hog farmers to slaughter 6 million pigs Problem: Increased taxes on food processors only increased the costs on consumers, thus decreasing the purchasing power of city dwellers The money for these payments or subsidies came from taxes on food processors People were upset that crops and food was destroyed while many starved AAA ruled unconstitutional in 1936 Tennessee Valley Authority (TVA-1933): sought to revitalize the seven-state region drained by the Tennessee River and its tributaries Operated a system of 38 dams that drained 40,000 square miles Provided electricity, flood control, recreation, combated malaria, illiteracy, soil erosion, and improve the region's standard of living Opposition to the TVA: Shareholders in private utilities brought court cases against the TVA because they were worried about losing money Best known alphabet soup program FDR came up with in his first hundred days Page: 3

4 Helping the American People (Con t) Roosevelt s administration also est. programs to provide relief through work projects and cash payments Civilian Conservation Corps (CCC-1933): employed young men and women between the ages of 18 and 25 to work building roads, developing parks, planting trees, and helping in soil-erosion and flood-control projects From , almost 3 million young men and women were employed by the CCC at some point in their life Earned $30 a month and $25 of that was sent home automatically Many of the CCC camps were located in the Great Plains were 200 million trees were planted in an effort to stop another Dust Bowl National Industrial Recovery Act (NIRA-1933): law enacted to allow the president and the National Recovery Administration (NRA) to establish codes of fair practice for industries and to promote industrial growth Designed to stimulate industrial and business activity, reduce unemployment by stabilizing prices, raising wages, limiting workers hours, and providing/creating jobs NIRA and NRA ruled unconstitutional in 1935 National Recovery Administration (NRA-1933): administered the provisions of the NIRA by promoting recovery based on encouraging businesses to draw up codes of fair competition. (controlled by Hugh S. Johnson) Set prices on many products to ensure fair competition, established standard working hours, and banned child labor Congress created a section in the NIRA that guaranteed workers right to unionize and bargain collectively (some businessmen and politicians criticized the NRA) Public Works Administration (PWA-1933): provided jobs and stimulated business activity by contracting with private firms to construct roads, public buildings (schools), and other public-works projects (controlled by Harold Ickes) Created under title II of the NIRA Built the Golden Gate Bridge, Boulder/Hoover Dam, tunnels in New York City, schools, etc. Page: 4

5 Helping the American People (con t) Comes Under Attack Civil Works Administration (CWA-1933): created more jobs for the unemployed (created b/c Roosevelt felt the other programs weren t making large dents in the unemployment problem) Many of the jobs were called make-work jobs (paid people to mow lawns) In one year, $750 million was paid to some 4 million workers Many New Deal programs dealt with housing and home mortgage problems Home Owners Loan Corporation (HOLC): provided low-interest, long-term gov t loans to homeowners who faced foreclosures b/c they couldn t meet their loan payments National Housing Act (1934) created the Federal Housing Administration: still today it continues to furnish loans for home mortgages and repairs Federal Emergency Relief Administration (FERA): funneled relief aid directly to state and local agencies (controlled by Harry L. Hopkins) $500 million, total, was used to provide direct relief to the needy with over 8 million families relying on FERA for survival ½ was used at direct grant-in-aid to furnish food and clothes to those in need ½ was distributed to states to support work relief programs President Roosevelt agreed to engage in deficit spending: spending more money than the gov t receives in revenue/taxes (deficit spending was a necessary evil) Liberals believed the New Deal had not gone far enough to help those in need Conservatives argued to much direct relief (handouts) were being distributed and too much direct federal control was stifling capitalism/free-market economy The conservative Supreme Court ruled on the argument(s) Page: 5

6 Comes Under Attack (con t) Schechter Poultry Corp. v. United States (May 27, 1935): Facts of the Case: Section 3 of the National Industrial Recovery Act empowered the President to implement industrial codes to regulate weekly employment hours, wages, and minimum ages of employees. The codes had standing as penal statutes. Question: Did Congress unconstitutionally delegate legislative power to the President? Conclusion: The Court held that Section 3 was "without precedent" and violated the Constitution. The law did not establish rules or standards to evaluate industrial activity. In other words, it did not make codes, but simply empowered the President to do so. A unanimous Court found this to be an unconstitutional delegation of legislative authority. United States V. Butler (Jan 6, 1936): Facts of the Case: As part of the 1933 Agricultural Adjustment Act, Congress implemented a processing tax on agricultural commodities, from which funds would be redistributed to farmers who promised to reduce their acreage. The Act intended to solve the crisis in agricultural commodity prices which was causing many farmers to go under. Question: Did Congress exceeded its constitutional taxing and spending powers with the Act? Conclusion: The Court found the Act unconstitutional because it attempted to regulate and control agricultural production, an arena reserved to the states. Even though Congress does have the power to tax and appropriate funds, argued Justice Roberts, in this case those activities were "but means to an unconstitutional end," and violated the Tenth Amendment. Page: 6

7 Comes Under Attack (con t) Roosevelt and the Supreme Court (1937) Court Packing Bill: Roosevelt asked Congress to grant him the power to appoint one new justice for each of those 70 or older (he would have been able to appoint six new Supreme Court justices) Many Republicans and Democrats did not like the idea of court packing Congress denied FDR s request (upset the checks and balance and separation of powers system est. by the founding fathers) FDR lost a small battle, but he won the war By 1945 eight of the nine justices were Roosevelt appointees b/c of death or retirements by the justices The American Liberty League (1934): opposed New Deal measures that it believed violated respect for the rights of individuals and property (those that supported big business and the wealthy) Father Charles Coughlin: Roman Catholic priest who broadcast radio sermons that combined economic, political, and religious ideas Initially favored the New Deal, but later favored a guaranteed annual income and the nationalization of banks (40-45 million listeners) Dr. Francis Townsend: physician and health officer in Long Beach, California Wanted the gov t to pay a $200 monthly pension to every American over 60 They had 30 days to spend their pension, thus pumping money into the economy (prime the pump) Huey Long the Kingfish : corrupt senator from Louisiana Share-Our Wealth/Every Man a King program: gov t could take money from the rich through taxation (money used to provide a minimum income and home to all Americans) Communist and Socialist parties denounced Long even though he wanted to redistribute wealth (assassinated in 1935) END OF SECTION ONE Page: 7

8 Section 2: The Second New Deal Takes Hold The Second Hundred Days The Second Hundred Days FDR felt the gains in the economy were not significant enough in his first two years Second New Deal/Second Hundred Days: the president called on Congress to provide more extensive relief for both farmers and workers Eleanor Roosevelt: FDR s wife was, a social reformer who combined her deep humanitarian impulses with great political skill Urged her husband to appoint women to gov t positions FDR s (Democrat) overwhelming victory against Alfred Landon (Republican and governor of Kansas) in the 1936 presidential election, also aided in extending Democrat majorities in Congress First time most African Americans voted for a Democrat instead of a Republican Helping Farmers Abraham Lincoln (Republican) was the President of the North during the Civil War and was given credit for freeing African Americans First time labor unions gave united support to a presidential candidate After the Supreme Court struck down the AAA, in 1936, Congress took action Soil Conservation and Domestic Allotment Act (1936): paid farmers for cutting production of soil-depleted crops and rewarded farmers for practicing good soil conservation methods Second Agricultural Adjustment Act (AAA-1938): similar to the first AAA struck down by the Supreme Court, but it didn t include the processing tax to pay for farm subsidies Resettlement Administration (1935): created by an executive order, it provided monetary loans to small farmers to buy land Farm Security Administration (FSA-1937): replaced the Resettlement Administration, which loaned more than $1 billion to help tenant farmers become landholders and est. camps for migrant farm workers, who traditionally lived in squalid housing FSA hired photographers such as Dorothea Lange to take pictures of rural life Page: 8

9 Roosevelt Extends Relief Improving Labor and Other Programs Works Progress Administration (WPA): developed in 1935 to create jobs for the unemployed (replaced the CWA, which ended in 1934) Spent $11 billion b/w to give jobs to more than 8 million workers, most of them unskilled (women earned $3 a day while men earned $5 a day) Male blue-collar workers built airports, constructed and repaired roads, and built public buildings Male white-collar workers conducted research projects, wrote guides to cities, collected slave narratives, etc. Women formed sewing groups making millions of garments WPA programs: Federal Project No. 1: tried to encourage pride in American culture by aiding unemployed artists in the fields of writing, theater, music, and visual arts Federal Writers Project (FWP): hired unemployed writers to produce travel guides and histories of various ethnic groups Some conducted oral interviews with former elderly slaves Historians still use these sources to study slave life today Federal Theatre Project: hired unemployed actors, directors, etc to encourage theatrical productions Federal Music Project: hired musicians and orchestras to perform across the country Federal Arts Project: employed artists and designers to produce posters for New Deal programs and to teach art in public schools The WPA created the National Youth Administration (NYA): gave young people part-time jobs, an education, counseling, and recreation, which provided money/aid to help them stay in school National Labor Relations Act/Wagner Act: reestablished the NIRA provision of collective bargaining (named after Senator Robert F. Wagner of New York) Federal gov t protected the right of workers to join unions and engage in collective bargaining with employers Also prohibited unfair labor practices and interference with unions It was challenged in Supreme Court but upheld National Labor Relations Board (NLRB): hear testimony about unfair practices and to hold elections to find out if workers wanted union representation Fair Labor Standards Act (1938): set maximum hours at 44 hours per week, decreasing to 40 hours after two years set minimum wages at $.25 an hour, increasing to $.40 an hour by 1945 Created rules for the employment of 16 year-olds, and banned hazardous work for those under 18 Page: 9

10 Improving Labor and Other Programs (con t) NLRB v. Jones and Laughlin Steel Corp (1937): Facts of the Case: With the National Labor Relations Act of 1935, Congress determined that labor-management disputes were directly related to the flow of interstate commerce and, thus, could be regulated by the national government. In this case, the National Labor Relations Board charged the Jones & Laughlin Steel Co. with discriminating against employees who were union members. Question: Was the Act consistent with the Commerce Clause? Conclusion: Yes. The Court held that the Act was narrowly constructed so as to regulate industrial activities which had the potential to restrict interstate commerce. The justices abandoned their claim that labor relations had only an indirect effect on commerce. Since the ability of employees to engage in collective bargaining (one activity protected by the Act) is "an essential condition of industrial peace," the national government was justified in penalizing corporations engaging in interstate commerce which "refuse to confer and negotiate" with their workers. Social Security Act (1935): created by a committee chaired by Secretary of Labor Frances Perkins (three major parts to the Act) Old-age insurance for retirees 65 (today it s 67) or older and their spouses Half the funds came from the worker and half from the employer Unemployment compensation system Funded by a federal tax on employers and administered at the state level (payments ranges from $ to $18 per week) Aid to families with dependent children and the disabled Paid for by federal funds made available to the states Provided payments to the blind, disabled, elderly, and to the wives and children of male workers who had died Problems with the Social Security Act, which is an entitlement program Farmers, the self-employed, and domestic servants were excluded from coverage (60% of domestic servants were black) Benefits paid 1937 = $1.3 million vs. 20 = $845 billion in Social Security (Medicaid and Medicare est. in 1965) Life expectancy 1935 = 61.7 years vs. 20 = 78.8 years SS worker-benefit ratio 1960 = 5 to 1, 2009 = 3 to 1 Currently Social Security, Medicaid, and Medicare consume 48% of the U.S. budget = $1.7 trillion in 2014 (total budget 3.02 trillion/total spent 3.5 trillion in 2014) Page: 10

11 Improving Labor and Other Programs (con t) created laws to promote rural electrification and to regulate public utilities Rural Electrification Administration (REA): extended power lines into isolated rural areas In 1935 only 12.6% of American farms had electricity Public Utility Holding Company Act (1935): outlawed the ownership of utilities by multiple holding companies Holding Company/Parent company: a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors Gov t had the power to regulate interstate production, transmission, and sale of gas and electricity END OF SECTION TWO Page: 11

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