Chapter 26: Franklin D. Roosevelt and the New Deal AP United States History Week of April 18, 2016
The Great Depression: The Crash Although the stock market crash in 1929 is seen as the start of the Great Depression, the underlying causes were rooted in the prosperity of the 1920s. Unfortunately, no one heeded the warning signs of the troubled economy Warning signs were present: construction starts, durable goods sales, rate of sales growth slowing Individuals with excess cash invested in stock market, often buying on margin October 24 (Black Thursday): Investors began to sell, triggering margin calls. Great Crash happened on October 29 How did the crisis spread? Banks made risky loans: to businesses that failed, to customers who defaulted, to investors whose stocks dropped in price Bank runs: people withdrew money from banks quickly. Banks then failed, people lost savings Production cuts: businesses could not borrow money, so production dropped. Consumer lending tightened, so consumers could not buy either Led to increased unemployment, and even less consumer spending
The Great Depression: The Effects The psychological burden of the Great Depression was crippling, and it affected nearly everyone in the nation Pictured: Florence Owens Thompson (by Dorothea Lange) African Americans and Mexicans were laid off Racial tensions increased The poor tended to fare better than the middle class Health care declined Men, boys, and some women rode railroads out west
Fighting the Depression: Hoover The inability of the Republicans to overcome the economic catastrophe that was the Great Depression gave the Democrats the opportunity to regain political power Hoover rejected proposals for bold government action Believed voluntary efforts would relieve human suffering and halt businesses slide Later, Congress cut taxes and adopted federal public works projects Example: Boulder, or Hoover Dam Proposed Reconstruction Finance Corporation (RFC), established 1932 Loaned government money to financial institutions Hoover cleared out bonus army World War I veterans went to Washington, D.C. to request military bonus due in 1945 Bank failures increased in 1931 and 1932 Would Hoover win the 1932 presidential election? Could another Republican even win? What about that new Democratic voter coalition that was brewing in the 1920s?
Fighting the Depression, Part II: Franklin Delano Roosevelt Democrat Franklin Delano Roosevelt won the presidential election in 1932 Roosevelt appealed to both wings of the Democratic party Winning coalition included farmers, workers, Protestants, Catholics, immigrants, native-born, African Americans Republicans only served 3.5 terms from 1932 to 1980 I pledge myself a new deal for the American people The only thing we have to fear is fear itself Began by offering federal support to save banks Communicated via fireside chats
Fighting the Depression, Part III: FDR s 100 Days and Recovery Programs Roosevelt s first Hundred Days in office were filled with major requests to Congress, all resulting in new legislation to save the economy Tennessee Valley Authority (TVA) resulted in dams in seven states to control floods, ease navigation, provide electricity Brought underdeveloped region into modern era Critics lamented the environmental impact National Recovery Administration (NRA) aimed to have government, business and labour cooperate for economic recovery Section 7a: maximum hours, minimum wages, guarantee of collective bargaining Supreme Court invalidated NRA in 1935 Agricultural Adjustment Administration (AAA) sought to deliver farm recovery Removed land from production, leading to smaller harvests and rising prices Benefited large farms more; ushered in era of efficiency in farming Effectively, the New Deal transformed American farming into a business for the efficient and well-capitalized
Fighting the Depression, Part IV: Relief Programs The New Deal was more successful in granting relief to the millions of unemployed in the nation, often in the form of direct aid, in sharp contrast to Hoover s programs Congress authorised RFC to distribute $500 million to states to help those in need Civilian Conservation Corps (CCC) enrolled young males to work on nation s public lands Also created Civil Works Administration (CWA), but shut it down in 1934 Works Progress Administration (WPA) funded construction, conservation projects, preserved skills of artists, actors Eased burden, but did not sufficiently increase Americans purchasing power By this point the depression was bearable, but the failure so far to go from relief to prosperity led to more radical alternatives
Fighting the Depression, Part V: Reform As the continuing depression built pressure for more sweeping structural changes, in 1935, FDR shifted the focus of the New Deal from recovery to reform Signs of discontent surfaced in 1935 Ideas: raise farm and labour income (MN Governor Olson), monetary inflation, nationalization of banking (Fr. Coughlin), assistance to elderly (Townsend), heavy tax on wealthy (Huey Long) In 1935, FDR enacted the Social Security Act Act provided Old-age pensions by tax on both workers and employers Funds to states for pensions Unemployment compensation Direct grants for the disabled, elderly, and dependent children Oddly enough, objections were that it didn t go far enough Also: paltry pensions, inadequate benefits, did not cover all employees, no aid to currently unemployed
Fighting the Depression, Part V: Reform, continued As the continuing depression built pressure for more sweeping structural changes, in 1935, FDR shifted the focus of the New Deal from recovery to reform National Labor Relations Act (1935), or, Wagner Act Created National Labor Relations Board (NLRB), which presided over labour-management relations and enabled unions to engage in collective bargaining NLRB revitalized the labour movement, and it even exists to this day Also passed Fair Labor Standards Act, which established minimum wages, maximum hours for the week
Impact of the New Deal While the New Deal had a huge impact on quality of life in the United States, what effect did it have on women and minorities in non-unionized industries? Answer: little to none Organized labour experienced gains John Welsh formed Congress of Industrial Organizations (CIO) in 1935, to extend collective bargaining to other industries Gradually, steel and auto industries recognized unions CIO had more workers than AFL, but by 1940, only 28% of Americans were union members Still, restaurant, retail and service trades were not unionized Minorities benefitted little from New Deal African-Americans faced increased prejudice, and New Deal programs did not improve their industries WPA did help agricultural labour, but Dust Bowl and immigration restrictions hurt Mexicans Native Americans: Indian Reorganisation Act (1934) stressed tribal unity and autonomy, but natives remained poor
Impact of the New Deal, Part II: Women While the New Deal had a huge impact on quality of life in the United States, what effect did it have on women and minorities in non-unionized industries? Answer: little to none Women made no significant gains during the decade Wages remained low, unemployment remained high Women also tended to work in industries unaffected by minimum wage laws One area where women did make advancements was in government Eleanor Roosevelt as First Lady, Frances Perkins as Secretary of Labour
End of the New Deal After Roosevelt s overwhelming victory in the 1936 presidential election, he was dealt a series of defeats by Congress Roosevelt won by a landslide, and Democrats held a supermajority in both House and Senate New Democratic coalition: poor and oppressed, Catholics, Italians, Jews, Poles, Slavs FDR asked Congress to appoint a new justice for each over 70 court-packing scheme Many justices blocked some of FDR s New Deal proposals Senate resistance blocked his proposal Justices did retire, allowing FDR to appoint new ones, but the scandal eroded his relations with Congress In FDR s second term, New Deal was not extended beyond minimum wage and maximin-hour laws National health insurance, anti-lynching legislation not accomplished Recession hit in 1937