Readiness standards comprise 65% of the U. S. History Test Economics 19 A.

Readiness standards comprise 65% of the U. S. History Test

Economics 19 A

Readiness Standard (19)The Student understands changes over time in the role

of government

The Student is expected to:(A) Evaluate the impact of New Deal legislation on the historical roles of

state & federal government

Searching for a Solution

• Federal Farm Board loaned money to • Aid cooperatives• Buy surplus crops on open market

• Reconstruction Finance Committee (RFC)– Congressional creation of early-1932– Given power to loan money to banks, railroads,

and insurance companies (and later granted power to lend money to local communities for public works projects) to save them from bankruptcy

– Congress gave the RFC the right to lend money to communities for public works programs

“As the Depression deepened, Hoover reluctantly began to move beyond voluntarism to undertake more sweeping

governmental measures.”

Actions President Hoover Thought He Should Take at Beginning of Depression

• Voluntarism—essentially inaction—Hoover believed the government should not get involved in helping the economy

• Received wisdom of the day suggested that handouts from the federal government (or elsewhere) would undermine the proud spirit and penchant for hard work that had made America great in the first place.

• Rather, private businesses and charities should step in to feed and clothe those in need

• Bold forecasts of “better days” ahead, of recovery “just around the corner”

• The Republican promise that things would work out in the long run prompted the Democrats’ rejoinder, “People don’t eat in the long run.”

• Hoover invited business leaders to the White House for an economic conference

• He agreed to federal public works projects that used only cash

Franklin Delano Roosevelt—Democratic governor of New York State

FDR AND THE NEW DEAL1932-1935

Dorothea Lange's "Migrant Mother"

The Dust Bowl. . . and Migration West

The election of 1932 brought Franklin D. Roosevelt to office and in so doing, drastically reshaped American attitudes about the role and rights of government in

relationship to the people.

THE EARLY NEW DEAL

FDR: Savior or Satan?

Main principles underlying the New Deal

• Provide immediate relief to unemployed

• Bring about economic recovery

• Reform conditions causing the Depression

When he accepted the Democratic presidential nomination in 1932, he

spoke to party delegates in Chicago declaring, “I pledge

you—I pledge myself to a new deal for the American people.” From this point of

origin, the Roosevelt administration came to be

known as:THE NEW DEAL

“Fireside Chat”—FDR nationwide broadcasts or informal talks in

conversational tones to the American people

FDR calmed American uncertainties via the “fireside chat,” an informal report direct to the man on the

street, an innovative & popular new use of the media (radio)

“His warmth and steadiness reassured millions of listeners. . . . The Roosevelt ‘magic,’ unfeigned and

inexhaustible, amazed his associates.”

Initiated March 5, 1933

The Blue Eagle The emblem of the National Recovery Administration

The WPA slogan “We Do Our Part” became a

rallying cry for Americans

How FDR Tried to Solve the Bank Crisis

• Declared a bank holiday • Proposed Emergency

Banking Relief Act (put banks under federal supervision) Permitted sound banks to borrow federal funds

• Closed unsound banks FDR declares Bank Holiday Proclamation

The Hundred Days

This was the appellation given to FDR’s presidential initiatives to aid industrial and agricultural recovery upon FDR’s taking office. His fifteen major requests to Congress

for action yielded fifteen major pieces of legislation. Over the long haul, many New Deal creations were temporary in

nature—“designed to meet specific economic problems of the Depression.” Moreover, none were uniformly successful.

“Psychologically, the nation turned the corner in the spring of 1933. Under FDR, the government seemed to be

responding to the economic crisis, enabling people for the first time since 19209 to look to the future with hope.”

The Hundred Days

• Purpose of Federal Emergency Relief Act (FERA)—gave money to local governments to give to the unemployed

• Purpose of Civil Works Administration (CWA)—gave people jobs instead of relief payments

• How the Agricultural Adjustment Administration (AAA) helped farmers

Agricultural Adjustment Administration (AAA)

The AAA limited production to prevent surpluses. Consequently, prices rose for farm products. The government offered subsidies to farmers who took some land

out of production, and in other instances, actually paid farmers to plow

under crops and kill livestock, all to boost farm prices. In 1936, the Supreme

Court found the AAA to be unconstitutional.

The “Dust Bowl”Farmer woes were complicated by the extended drought and dust storms that pummeled areas of Nebraska, Kansas,

Oklahoma, and the panhandle of Texas. Scores of rural families were forced to abandon their homes and seek greener

pastures in other areas of the nation. The so-called “Dust Bowl” experience was the backdrop of John Steinbeck’s heralded

novel, Grapes of Wrath.

Main provisions of National Industrial Recovery Act (NIRA)

The NRA permitted trade associations to draft codes to regulate production, prices, and working conditions. It

was “FDR’s attempt to achieve economic advance through planning and cooperation between government, business and labor.” Use of the blue eagle was aimed at tying patriotism to support of NRA programs. Section

7A of the NIRA ostensibly protected labor by establishing maximum hours and minimum wages. In fact, it favored big business over small competitors. In

1935, the Supreme Court judged the NRA unconstitutional.

Main purpose of Public Works Administration (PWA)

Stimulate employment by spending money on public works projects

A future president—LBJ—with FDR during the heyday of public projects

Tennessee Valley Authority (TVA)

• Build Dams• Construct hydroelectric dams• Plant trees to stop erosion• Introduce educational and health

facilities

The most successful and enduring of all New Deal legislation

Voices of Protest—The Scorecard

The Anti-Roosevelt Triumvirate

Dr. Francis Townsend

A “Second” New Deal—The Scorecard

• The Wagner Act—1935 • Public Utilities Holding Company Act—1935,

empowered government to prohibit holding companies from owning more than one utility company in any one part of the U. S.

• Utility Company—distributors of gas and electricity

• Unemployment Compensation—temporary income for people who had lost their jobs

The Wagner Act

• Outlawed company unions• Outlawed other unfair labor

practices• Ensured collective

bargaining for unions• Created National Labor

Relations Board to preside over labor-management relations

“The Wagner [National Labor Relations] Act, the most far reaching of all New Deal measures, led to the revitalization of t

he American labor movement and a permanent change in labor-management relations.”

Rights the Wagner Act guaranteed for workers

• Right to organize

• Right to bargain collectively

Major provisions of the Social Security Act of 1935

• Old-age pensions financed by tax on both employers and workers (in equal amounts)

• States given federal matching funds for pensions to aid the destitute and elderly

• System of unemployment compensation set up on a federal-state basis

• Direct federal grants given to states on matching basis for welfare to blind, handicapped, needy elderly and dependent children.

FDR & THE “SECOND” NEW DEAL

1936-1941

Course of the American economy in fall and winter of 1937-1938

• Cuts in government spending

• Cuts in private spending

A recession developed due to:

Reforms passed during FDR’s 2nd term

• Fair Labor Standards Act• Farm Security Administration Rural

Electrification Administration– Lent money to for building power lines in

rural areas– Brought electric power to 90% of U.S. farms

that did not have electricity in the 1930s

“The legislative record during Roosevelt’s second term was meager.”

• Soil Conservation and Domestic Allotment Act—encouraged planting of soil-enriching land cover

• Agricultural Adjustment Act• National Housing Act—gave loans to public

agencies to build low-income housing; created the U. S. Housing Authority

• Food, Drug, and Cosmetic Act—required manufacturers to list ingredients and test new drugs before legal sale

• Hatch Act—barred use of official favors to influence elections; forbade most federal employees from taking active part in political campaigns

Women—Appointed to Important Government Posts

The impact of the First Lady, Eleanor Roosevelt, was central to these developments. She had a keen sense of social justice and deplored the existence of poverty and

inequality. She became a kind of self-appointed conscience for her husband’s administration. “She exposed the areas

where the New Deal had not been realized. Her accessibility to the public and her willingness to serve its interests gave encouragement to those who had lost all hope. Her courage

and vitality in the pursuit of human rights and equality made her the embodiment of reform and social justice in

the New Deal.”

Effects of the New Deal

• The economic recovery problem was not solved in 1937 and the economy entered another mini-depression in 1938-39. The hostilities of World War II brought the country out of the Depression.

• The Federal Government increased its involvement to unheard of levels in American society.

• The size of the government grew and a huge bureaucracy was built.

• America identified with the New Deal and the Democratic Party. The Democrats dominated Congress.

Appendix

New Deal Legislation

Sources:Robert A. Divine et al, America, Past

and Present, (New York: HarperCollins, 1994), pp 456-7.Gary B. Nash Ed. et al, The American People—

Creating a Nation and a Society, (New York: Harper Collins, 1994), pp 842.

Year CreatedLegislation

Provisions

1932 Reconstruction Finance Corporation (RFC)

Passed during the Hoover administration, it granted emergency loans to banks, life insurance companies and railroads.

1933 Agricultural Adjustments Administration (AAA)

Attempted to regulate the production of certain products through farm subsidies. Funding was provided by a processing tax, which the Supreme court ruled unconstitutional in 1936. It helped coordinate agricultural production during World War II, after which it was disbanded.

  Banking Act of 1933 (Glass-Steagall Act)

Prohibited banks from selling stock or financing corporations; also created the FDIC.

  Civilian Conservation Corps (CCC) Employed young men (and a few women) ages 18 to 25 on regional environmental projects, such as reforestation, road construction and flood control projects, mainly west of the Mississippi; they received $30 a month of which $25 was sent home; disbanded during World War II.

  Civil Works Administration (CWA) An emergency work relief program which, during the extremely cold winter of 1933-34, placed over 4 million people to work, after which it was disbanded.

  Federal Deposit Insurance Corporation (FDIC)

Provided a federal guarantee of savings bank deposits up to $2,500 initially, and continued to grow; continues today with a limit of $100,000.

Year Created Legislation

Provisions

 1933 ctd. Federal Emergency Relief Administration (FERA)

Supplied a combination of cash relief and work relief to needy families; superseded in 1935 by work relief of WPA and unemployment insurance of Social Security.

  National Industrial Recovery Act (NIRA)

Attempted to revive business through national economic planning which controlled production, pricing and labor relations among leading business interests; ruled unconstitutional in 1935.

  Public Works Administration (PWA)

Provided funding for over 34,000 construction projects such as roads, public housing, power, and conservation of natural resources; it made the federal government the nation's leading producer of power, and advanced conservation of the country's natural resources; discontinued in 1939 due to a lack of reduction of unemployment and lack of private investment.

  Tennessee Valley Authority (TVA) A regional planning project to construct dams and power projects, and to develop the economy of the nine states of the Tennessee valley area. Continues today to meet the valley's energy and flood control needs.

1934 Federal Communications Commission (FCC)

A regulatory agency established to oversee the wired and wireless broadcasts; showed the growing importance of radio in America during the depression; continues today to control both television and radio.

  National Housing Act - Federal Housing Administration (FHA)

Allowed banks to make loans, for construction and repair of homes, which would be guaranteed by the Government. The reduction of down payments, from 30 to 10%, and the extension of repayment terms, from 20 to 30 years, continues today.

Year Created Legislation

Provisions

1933 ctd. Securities and Exchange Commission (SEC)

Continues today to regulate the trading practices in stocks and bonds.

1935 Social Security Act A program which continues today guaranteeing retirement payments after age 65, providing unemployment insurance and care for dependant mothers and children, and the handicapped as well as public health; the program is paid for jointly by taxes on employers and employees.

  Rural Electrification Administration (REA)

Provided electrification to rural areas which private power companies refused to serve thereby closing the cultural gap by providing modern amenities to rural communities.

  National Labor Relations Act (Wagner-Connery Act)

Enhanced the power of labor by reinforcing the right of workers to join labor unions and to bargain collectively; established the National Labor Relations Board to oversee elections and prevent unfair labor practices. It continues to arbitrate labor-management disputes today.

  Emergency Relief Appropriation Act - created Works Progress Administration (WPA)

Provided massive relief by employing over 8 million people in public works programs ranging from construction to acting; disbanded by President Roosevelt during World War II.

  National Youth Administration (NYA)

Established by the WPA, it supported the education and training of young people in order to reduce the competition for employment; it provided grants for students for work done in schools as well as providing training towards skilled labor for out-of-school youths; disbanded during World War II.

Year Created Legislation

Provisions

 1935 ctd. Public Utility Holding Company Act

Created holding companies to control gas and electrical provisions within restricted areas; forced companies to provide efficient, useful service to local areas within 5 years or be dissolved.

1937 Farm Security Administration (FSA)

Provided loans to small farmers for purchase and upgrading of small-sized farms; it budget was greatly reduced by Congress during World War II when many farmers went into the armed forces or migrated to urban areas.

  National Housing Act (Wagner-Steagall Act)

Allowed for low-rent public housing projects.

1938 Agricultural Adjustments Act (AAA)

Similar to the 1933 act in that it continued to provide price supports and payments to farmers in order to limit production, however the processing tax which had funded it was replaced by direct federal payment.

  Fair Labor Standards Act Set a standard minimum wage of 40 cents and hour and created the standard work week of 40 hours for business engaged in interstate commerce.

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