Franklin D.

Roosevelt
and the New Deal

Redefined Democracy:
Political Rights Economic
Security Social Justice

Causes of the Great Depression

Agricultural overproduction
Industrial overproduction
Unequal distribution of
wealth
Over-extension of credit
International economic
situation

How Herbert Hoover Dealt with the Crisis

He played the game of
confidence economics
and just kept saying:
Prosperity is right
around the corner.

Voluntary Measures
Hoover eventually established two
privately-funded organizations:
The National Credit Association
provided $1/2 billion to businesses
for emergency loans, but it was too
under-funded to do much good.
The Organization for Unemployment
Relief was a clearing house for relief
agencies. However, state and local
governments were already in too
much debt to benefit from it.

Limited Government Intervention

In the end, Hoover resorted to
government intervention:
The Reconstruction Finance Corp
gave $1-1/2 billion in federal loans to
banks, insurance companies, and
industry to prevent bankruptcies, but
it was too little, too late.
The Home Loan Bank Act provided
federal loans to homeowners to
prevent foreclosures, but got bogged
down in red tape.

Reasons for Ineffectiveness

Hoover thought
business should be
self-regulating.
He had a mania for
a balanced budget.
He lacked political
finesse.

Franklin D. Roosevelts Appeal

In 1932 presidential
election, FDR was
perceived as a man of
action.
Hoover was viewed as a
do-nothing president.
Norman Thomas, the
Socialist candidate, was
viewed as a radical.
Results: a landslide for
Democrats and a mandate
to use government as an
agency for human welfare.

Situation When FDR Entered Office

In March 1933, the
country was virtually
leaderless and the
banking system had
collapsed.

FDR Restored Confidence

In his inaugural address,
he said The only thing
we have to fear is fear
itself.
He promised vigorous
leadership and bold
action, called for
discipline and
cooperation, expressed
his faith in democracy,
and asked for divine
protection and guidance.

FDRs Personal Qualities

He was a practical politician
who practiced the art of the
possible.
He was a charismatic person
who exhibited a warmth and
understanding of people.
He knew how to handle press
by focusing attention on
Washington.
He provided dynamic
leadership in a time of crisis.
He was willing to experiment

Purposes of the New Deal

Relief: to provide jobs for the
unemployed and to protect
farmers from foreclosure
Recovery: to get the economy
back into high gear, priming
the pump
Reform: To regulate banks, to
abolish child labor, and to
conserve farm lands
Overall objective: to save
capitalism

Sources of New Deal Ideas

Brains Trust: specialists and
experts, mostly college professors,
idea men
New Economists: government
spending, deficit spending and
public works, government should
prime economic pump
Roosevelt Cabinet: included
conservatives, liberals, Democrats,
Republicans, inflationists, antiinflationists -- often conflicting,
compromising, blending ideas

First New Deal (1933-1934)

Emphasis: reform
Political Position: conservative
Primary aim: economic recovery
Philosophy: economic
nationalism and economic
scarcity (i.e., raise prices by
creating the illusion of scarcity)
Objectives: higher prices for
agriculture and business
Beneficiaries: big business and
agricultural business

National Recovery Act (NRA)

Purpose: recovery of
industry
Created a partnership
of business, labor,
and government to
attack the depression
with such measures
as price controls, high
wages, and codes of
fair competition

First Agricultural Adjustment Act (AAA)

Purpose: the recovery of
agriculture
Paid farmers who agreed
to reduce production of
basic crops such as cotton,
wheat, tobacco, hogs, and
corn
Money came from a tax on
processors such as flour
millers and meat packers
who passed the cost on to
the consumer

Federal Emergency Relief Admin (FERA)

Purpose: relief
Gave money to states
and municipalities so
they could distribute
money, clothing, and
food to the
unemployed

Civilian Conservation Corp (CCC)

Purpose: relief
Gave outdoor work
to unemployed men
between the ages of
17 and 29
They received $30
per month, but $22
went back to the
family

Second New Deal (1934-1941)

Emphasis: reform
Political Position: liberal
Primary aim: permanent reform
Philosophy: international economic
cooperation and economic
abundance
Objectives: increased purchasing
power and social security for public
Beneficiaries: small farmers and
labor

Social Security Act

Purpose: reform
Gave money to states for
aid to dependent
children, established
unemployment insurance
through payroll
deduction, set up old-age
pensions for retirees.

National Labor Relations Act

Purpose: reform
Put restraints on
employers and set up
a National Labor
Relations Board to
protect the rights of
organized labor to
bargain collectively
with employers.

Second Agricultural Adjustment Act

Purpose: recovery
for agriculture
Paid farmers for
conservation
practices, but only
if they restricted
production of staple
crops.

U.S. Housing Authority

Purpose: recovery
and reform
Used federal funds
to tear down slums
and construct better
housing.

The New Deal on Trial

By 1935, political
disunity was
evident. There were
critics on the right
and the left.

NE
W
DE
AL

Criticisms of Conservative Opponents

Conservative opponents said the New Deal went too far:
It was socialism (killed individualism)
It added to the national debt ($35 billion)
It wasted money on relief and encouraged idleness
It violated the constitution & states rights
It increased the power of the
Presidency (FDR was reaching
toward dictatorship, Congress a
rubber stamp, independence
of judiciary threatened,
separation of powers shattered)

Anti-New Deal Organization

Conservative opponents
to the New Deal had an
organization called the
American Liberty
League. They had
money but were small in
numbers, so FDR was
not worried.

Criticisms of Radical Opponents

Radical opponents
said the New Deal did
not go far enough.
They were
demagogues (rabblerousers) and had
popular followings, so
FDR was concerned.

Senator Huey Long (LA)

Senator Huey Long said New
Deal relief measures were
mere crumbs and advocated
a share the wealth plan (i.e.,
a guaranteed annual income
of at least $5,000 for every
American, financed by
confiscating wealth of people
who made over $5 million
per year).

Father Charles E. Coughlin

Father Charles Coughlin was
a rabble-rousing radio priest
from Detroit. His broadcasts
were called the Golden Hour
of the Little Flower. He
claimed there was an
international bankers
conspiracy and Jews were
responsible. He advocated
nationalization of banking and
currency and national
resources and demanded a
living wage.

Dr. Francis E. Townsend

Dr. Francis E. Townsend was
an elderly physician from CA.
He had a plan for the federal
government to pay $200 per
month to unemployed people
over 60. The program would
be financed by a 2% national
sales tax and each pensioner
would be required to spend the
money in 30 days. This would
stimulate the economy.

Moderate Legislation
FDR sponsored moderate legislation to silence radical
opposition:
Revenue Act of 1935 Response to Huey Long.
Increased taxes on large incomes and corporations.
Banking Act of 1935 Response to Coughlin. Extended
federal control
over private banking practices.
Social Security Act of 1935
Response to Townsend.
Included provisions for
unemployables (dependent children, the disabled,
blind), unemployment insurance, and old-age pensions.

The Election of 1936

The Election of 1936:
Made the Democratic party
the majority party
Created a new Democratic
coalition composed of both
traditional elements and
new elements
Showed that the American
people rejected radical
solutions to depression

The Election of 1936

% Popular
Vote

Electoral
Votes

60.3%

523

Alfred E. Landon Republican

36.56%

William Lemke

Radical

1.93%

Norman Thomas

Socialist

Earl Browder

Communist

Candidate
FDR

Party
Democratic

0.41%
(2.21 in 1932)
0.17 (0.25 in
1932)

The Roosevelt Coalition

While Republicans were still
relying on their traditional
base of political support (big
business, big farmers, and
conservatives), Democrats
broadened their constituency
by appealing to small farmers
in the Midwest, urban political
bosses, ethnic blue collar
workers, Jews, intellectuals,
and African Americans.

Protection of New Deal Accomplishments

Steps FDR took to protect New Deal
accomplishments (both failed):
Court-Packing Plan (proposed
increasing Supreme Court from 9 to
15 members, caused in revolt in
Dem. Party)
Purge of the Democratic Party in the
Election of 1938 (came out strongly
in favor of liberal Dem. Candidates,
evidence that he interfered in a state
campaign, Republicans gained
strength in both houses of Congress)

Decline of New Deal Reform after 1937

Reasons for decline of New Deal reform after 1937:
Court-packing plan made Congress irritable.
Recession of 1937-38 weakened confidence in New
Deal measures. Republicans gained strength in both
houses.
Attempted purge of Democratic party failed.
Conservative Democrats were elected to office.
Resentful of attempted party purge, they joined ranks
with Republicans to block New Deal legislation.
Increasing focus on foreign affairs.

The Significance of
the New Deal

Physical Rehabilitation of Country

Attacked soil erosion
Built dams and planted trees
to prevent floods
Reclaimed the grasslands of
the Great Plains
Developed water power
resources
Encouraged regional
reconstruction projects like
the TVA and Columbia River
project

Human Rehabilitation
Established the principle
that government has
responsibility for the health,
welfare, and security, as
well as the protection and
education of its citizens
Embraced social security,
public health, housing
Entered the domain of
agriculture and labor

Revitalization of Politics
Strengthened executive
branch
Reasserted presidential
leadership
Revitalized political party
as a vehicle for the popular
will and as an instrument
for effective action.

Extension of Democracy
Redefined the concept
of democracy so that it
included not only
political rights but
economic security and
social justice as well.

Maintenance of a Democratic System

The New Deal maintained a
democratic system of government
and society in a world threatened by
totalitarianism.
Increased size and scope of
government to meet needs of the
depression
Provided the leadership that
enabled Congress to put through
the necessary relief, recovery, and
reform measures.
Sponsored moderate legislation to
neutralize the popularity of radical
opponents

Government Expenditures
The total cost of the current bailout now exceeds $4.6 trillion dollars.
It has cost more than all of these government expenditures
combined. Figures in parentheses have been adjusted for inflation:
Marshall Plan: Cost: $12.7 billion ($115.3 billion)
Louisiana Purchase: Cost: $15 million ($217 billion)
Race to the Moon: Cost: $36.4 billion ($237 billion)
S&L Crisis: Cost: $153 billion ($256 billion)
Korean War: Cost: $54 billion ($454 billion)
The New Deal: Cost: $32 billion est.($500 billion est.)
Invasion of Iraq: Cost: $551billion ($597 billion)
Vietnam War: Cost: $111 billion ($698 billion)
NASA: Cost: $416.7 billion ($851.2 billion)
TOTAL: $3.92 trillion