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The New Deal: 1933-1941
Franklin Delano Roosevelt won the presidency from Herbert Hoover. By the
time he took office 80% of state banks had shut their doors, with many declaring
bank holidays, to prevent citizens from getting their money from the banks.
The Hundred Days after inauguration was a time of great action. Congress
had already submitted to the states and repealed Prohibition. FDR announced
he would execute broad executive power to overcome the crisis. Congress would
not argue against any of the Presidents plan. The president cut federal salaries
15%, cut veterans benefits, thus worsening the problem. On March 5 he declared
a bank holiday, took to the airways and made a fireside chat explaining the
banking crisis to the country. A plan for reopening the banks under Treasury
Department licenses was developed. The Federal Deposit Insurance Corporation
(FDIC) was formed to insure depositors money. FDR forced the separation of
investment banking and commercial banking and created the Home Owners Loan
Corporation (HOLC) to refinance mortgages and prevent foreclosures. The Federal
Securities Act gave the Federal Trade Commission the right to demand full
disclosure about new stock issues. The National Recovery Administration (NRA)
was formed by the National Industrial Recovery Act, to allow manufacturers
-- supervised by the NIRA government intelligentsia -- to get together and
fix prices and other fair business practices. It was mandatory for American
business men to live with the fixed prices and fixed fair business practices,
somewhat like more compulsory plans developed by Adolf Hitler and Benito
Mussolini. Those businesses who followed the government dictates got to fly
the "We Do Our Part" Blue Eagle symbol. Of course, business used their NIRA
monopolistic powers to raise power and limit production, rather than hire
new workers. The NIRA also set up the Public Works Administration (PWA)
authorized to spend $3.3 billion. The Civilian Conservation Corps got $500
million to hire people to do reforestation and other conservation projects.
The Civil Works Administration (CWA) provided make work projects for cities.
The NIRA did help unions organize, especially John L. Lewis' Committee for
Industrial Organizations (CIO). The Agricultural Adjustment Administration
(AAA) was setup in May 1933 to aid the farmers. It required farmers to limit
production and gave subsidies to growers of wheat, cotton, tobacco, pork
and other staples, by taxing those who got the products to market. The idea
was to return nature and progress to its 1910-1914 years when there was more
parity between industrial and farm prices. Farmers were paid for what they
did not grow. Farmers and politicians became so mutually dependent on these
payments that they continued for another 60 years, maintaining a long term
unrealistic market for farmers' products. Henry A. Wallace, FDR's Agricultural
Secretary decided to pay farmers to destroy crops; the food that city dwellers
needed, the food that share croppers grew and the products that the railroads
shipped. The Tennessee Valley Administration (TVA) was set up to expand upon
the damn building started during The Great War, at Muscle Shoals on the Tennessee
River, just north of the Georgia Border on the Tennessee River. Senator George
W. Norris of Nebraska and other cheap power enthusiasts had believed the
government could operate the power site better than capitalists. They were
successful in preventing the government turnover of the plant. Now, FDR expanded
the concept with the TVA Act in May 1933 — opposed by Wendell Wilkie
of the Commonwealth and Southern Corporation. The TVA built dams, power lines
and transmission lines. They produced and sold nitrates (fertilizers) and
undertook flood control, soil conservation, and reforestation projects while
improving river navigation. It eradicated malaria and educated the public
in the use of electricity and fertilizers. This authority, perhaps born of
need, lingered for years, even after the need was long gone. The New Deal
Spirit soared. Bureaucrats were hired and given free reign to experiment.
Washington DC had become -- in 1000 days -- the ultimate do-good paradise.
Roosevelt had few ideas, himself, but his Brain Trust worked overtime. The
Brain Trust was lead by Raymond Moley and included Rexford G. Tugwell and
Adolph A. Berle Jr, all from Columbia University. The New Deal was anti-banker
and pro-inflation (populist) and disliked competition and weakened anti-trust
enforcement (TR's New Nationalism). Louis D. Brandeis held considerable
persuasive power with FDR and New Deal labor policies were based upon Wilson's
Great War's War Labor Board. There was a clash between Roosevelt's big spenders,
led by Tugswell, against those led by Lewis Douglas, director of the budget.
Special interest groups swarmed into Washington to make sure they could get
the most from Roosevelt and his bureaucrats. The special interest groups
were so successful that William E. Leuchtenburg invented the phrase "interest
group democracy" to legitimize the new special interest dictatorship. Ellis
W. Hawley, another historian coined the word "counterorganization" to define
the monopoly power, previously given to industry, now being given to farm
and labor groups. Whatever words were used it remained then — as it
does now — a political system in which the unorganized majority had
no serious voice in government. The NRA and the AAA got their operating money
from the disorganized majority. The Unemployed were at 9 million in 1934,
despite the big spending. Malcolm X believed 1934 was the worst year. Still,
Americans liked to see action, and the mid term elections saw the Democrats
increase their majority in both houses. In May 1933 the Federal Emergency
Relief Administration (FERA), headed by Harry L. Hopkins, got $500 million
to be dispensed through state relief programs. Mr. Hopkins went for more
money, championing a Civil Works Administration (CWA) to put 4 million of
the unemployed into business building and repairing roads and public buildings,
teaching, decorating, writing and recording (for example, the Gullah language).
Hopkins was a great spender. In five months he spent $1 billion and Roosevelt
canceled the program. Literature in the Depression included John Dos Passos
USA (1930-1936), describing famous people like Carnegie, Rudolp Valentino,
Frank Lloyd Wright and William Jennings Bryan. John Steinbeck's Grapes of
Wrath (1939) described the Joads, driven from their farm by the drought and
on the road looking for a laborer jobs. He also wrote Tortilla Flats (1935)
and The Long Valley (1938).
John Steinbeck Thomas Wolfe wrote Look
Homeward Angel (1929), Of Time and the River (1939), The Web and the Rock
(1939) and You Can't Go Home Again (1940). William Faulkner wrote The Sound
and the Fury, As I Lay Dying, Sanctuary and Light in August. He wrote about
Yoknapatawpha county and the Sartoris and Snopes family.
The Extremists is the word Garraty uses to describe Senator Huey Long, the "Kingfish," Father Charles E. Coughlin, the "Radio Priest," and Dr. Francis E. Townshend who campaigned for "old age pensions."
. Senator Huey Long, the "Kingfish," Louisiana's Senator in 1930 was disdainful of white supremacists like Hiram W. Evans, the Ku Klux Klan leader. He believed poor people, regardless of color, should have a chance to earn a decent wage. His "Share Our Wealth" movement had 4.6 million people advocating confiscation of family fortunes over $5 million and any income over $1 million and use the money to buy every family a home, a car and other necessities with an annual income of $2,000 to $3,000, old age benefits, educational benefits and veterans' pensions.
" Father Charles E. Coughlin, the "Radio Priest," headed the National Union for Social Justice, which had many members among the lower-middle class. He called Roosevelt "a great betrayer and liar," and wanted even more inflated currency. He posed a threat to the Democrats, along with Huey Long and Townshend. All wanted Roosevelt to do more for the poorer Americans.
Dr. Francis E. Townshend who campaigned for "old age pensions" of $200 a month for people over 60 years of age. Economists claimed that there were 10 million people who would get this at an annual cost of $24 billion.
Brandeis and Felix Frankfurter urged Roosevelt to stop coddling businesses with the NIRA, raise corporation taxes and restore competition. When Schecter v. United States (May 1935), involving the Live Poultry Code, declared the NIRA unconstitutional, Roosevelt agreed. When the Court declared the Agricultural Administration Act unconstitutional, (USA v. Butler, 1936) he simply reinvented the program as the Soil Conservation and Domestic Allotment Act.
The Second New Deal was after the midterm elections and intended to combat the challenges of Long and others, as well as the courts finding part of the New Deal unconstitutional. The National Labor Relations (or Wagner) Act restored labor guarantees wiped out by the Schecter decision. It established a National Labor Relations Board (NLRB) to help unions. The Social Security Act in August 1935 provided old age pensions for those over 65 based upon the amount of money workers had earned, but did not cover farmers or self employed people. A new banking act renamed the Federal Reserve Board to The Board of Governors and gave the big banks more power. The Public Utility Holding Act outlawed groups of investors forming holding companies consisting of electric and gas companies with its "death penalty" clause and allowed the federal government's commissions to set rates. The Rural Electrification Administration (REA) lent money at low interest rates to utility companies and farmers who wanted to electrify rural areas. The Wealth Tax Act raised taxes on large incomes and large corporations. The first new deal told corporations what to do. The second told them what NOT to do and raised the costs of doing business. John Maynard Keynes, a British economist argued that worldwide depression could be overcome if governments unbalanced their budgets by reducing interest rates and taxes and by increasing government spending. Without embracing Keynes, Roosevelt did unbalance the budget. This angered big business — especially the powerful banks who would lose money if inflation occurred. The Election of 1936 was run against Republican Kansas governor Alfred M. Landon, who ran on a platform that said "America is in peril." A third Union Party put up Congressman William Lemke (ND) who was supported by Townshend and Coughlin. But, rumors arose about both of these men, and Long was killed by an assasin. Roosevelt and the Democrats won, with Roosevelt getting more than 60% of the popular vote. People were grateful for the SSA, the HOLC and the Federal Housing Administration.
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American History, Free College Level Course and Resources
New Deal books
The New Deal 1931 to 1941 and the Grapes of Wrath
The New Deal from1931to1941 and John Steinbeck
Dicks Guide to the Grapes of Wrath by John Steinbeck
The New Deal and the election of 1936
Supreme Court's disapproval of much of FDR's New Deal legislation led him to try and pack the Supreme Court with his own judges.
FDR met Keynes for help on his New Deal
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