New Deal

The Great Depression began when the stock market crashed on October 24, 1929. What were some of the effects of the Great Depression?

• People were afraid to spend money or put it in banks.

• Many people lost their jobs.

• Many banks and businesses shut down.

• Many people lost the money they had saved.

How did people lose their savings?

When people deposit money in a bank, it doesn't stay in the bank. The bank invests that money. The bank lends the money to people and businesses as loans.

When the Depression hit, many of those people and businesses couldn't repay their loans. In turn, when people came to the bank to get their money back, they couldn't. The money was gone.

What is a "bank run"?

A bank run is when many people try to take their money out of the bank at the same time. When people realized that the banks wouldn't have enough money to pay everyone back, they panicked. They tried to take their money out of the banks as fast as they could.

Herbert Hoover was president from 1929 to 1933.

Before Herbert Hoover started working in politics, he became well known for helping Europeans recover from the destruction of World War I.

Herbert Hoover had only been president for seven months when the Great Depression began. He was not elected to a second term.

Franklin D. Roosevelt was president from 1933 until his death in 1945.

Before he was president, Franklin D. Roosevelt was the governor of New York. Franklin D. Roosevelt was elected president four times! No other American president has been elected more than twice. In 1951, the Constitution was changed so that a president cannot be elected to more than two terms.

President Roosevelt would have agreed with the following statement:

The federal government should take big steps to end the Depression.

President Roosevelt thought quite differently from President Hoover, who served before him. President Hoover believed that the government should help a little, but the Depression would end naturally.

What did President Roosevelt say?

When Franklin D. Roosevelt was officially chosen to run for president, he said these words in his speech:

We must lay hold of the fact that economic laws are not made by nature. They are made by human beings.

Franklin Roosevelt didn't want the United States to keep waiting for the Depression to end. He didn't think the Depression was like a storm that would pass on its own. He believed that people had helped to create the Great Depression and that people could take action to end it.

The New Deal was introduced in 1933, during the Great Depression. It was a set of plans to help the American economy.

The New Deal was a set of plans. But people also think of the New Deal as a period of time in American history.

The Three Rs

The New Deal had three main goals. These goals are sometimes known as "the three Rs":

• • Relief: providing immediate help for those who were suffering

  • Recovery: working to return the economy to the way it was before the stock market crashed

  • Reform: creating laws to prevent future extreme depressions

Why was it called the "New Deal"?

Franklin D. Roosevelt used the phrase "new deal" when he ran for president in 1932.

For three years, life had been hard for most Americans. Franklin D. Roosevelt wanted to convince people that things would change if he became president. When his party chose him to run, he gave a speech in front of thousands of people. He said, "I pledge you, I pledge myself, to a new deal for the American people."

The New Deal was going to help:

• People get new jobs

• Help those that did not have a job

• Save banks

The Great Depression was a scary time for people in the United States. Many people worried about what might happen if things didn't get better. Many people worried about President Roosevelt's New Deal. Some people thought that the New Deal gave too much power to the government. Some people thought that it might not work. When President Roosevelt was sworn in as president in 1933, he gave a famous speech. In it, he told the country, " . . . the only thing we have to fear is fear itself."

President Roosevelt wanted people to feel encouraged after hearing these words?

President Roosevelt's famous words

Here is more of what President Roosevelt said in his speech:

So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.

President Roosevelt's words "convert retreat into advance" mean that he wanted things in the United States to stop getting worse and start getting better. He thought that fear could paralyze, or stop, that progress. He thought that doing nothing about the Great Depression was scarier than trying to find a solution.

During the Great Depression, many Americans were worried about the future. But President Roosevelt encouraged people to be hopeful. The main way that President Roosevelt reached out to the American people is he spoke to them over the radio.

The fireside chats

President Roosevelt used the radio to explain his plans to the American people. He spoke calmly and without fancy language. He wanted everyone to be able to understand what the government was doing and why.

People called these talks the president's "fireside chats." It felt like the president was sitting in front of the fireplace with them and having a friendly conversation.

In his first fireside chat, President Roosevelt explained what the government planned to do to fix the banks. He asked all Americans to help make the plan a success by putting their money back in the banks.

When the Great Depression began, many banks suddenly closed. People lost all the money they had placed in those banks. As a result, millions of Americans stopped trusting banks.

But as part of the New Deal, the federal government made a deal with the banks. The banks had to promise to be more careful with people's money. For example, the banks had to promise to keep a certain amount of money in the bank in case a lot of people ever wanted to take out their savings. In exchange, the federal government promised to pay people back if the banks ever lost their money again.

One way that the New Deal helped people trust banks again is the government promised to protect the money that people put in banks.

The New Deal had many programs. One New Deal program was the Works Progress Administration, or WPA. The WPA organized many projects such as building dams, roads, and public buildings. This program help people during the Great Depression by putting a large numbers of people back to work.

Have you visited any places built by the WPA?

The WPA put 8.5 million Americans to work. The workers built roads, bridges, hospitals, libraries, parks, and many other things that entire communities could use. Many of these structures are still in use today! Here are a few:

LaGuardia Airport in New York City

Griffith Observatory in Los Angeles, California

Grand Coulee Dam in Columbia River, Washington

One goal of the Civilian Conservation Corps, or CCC, was to provide jobs. The other was to care for the environment.

To conserve something means to protect or guard it.

CCC workers planted trees, fought forest fires, and worked on roads and paths in natural areas. They also built bridges and campgrounds. These facilities made it easier for Americans to get out and enjoy nature.

Problems with farming made the Great Depression worse.

Farmers were producing too much of certain crops. They couldn't make a living because prices were so low.

Generally, when a lot of a crop is available, prices for that crop are low. When many farmers all tried to sell the same crops, people could pay very low prices for them. The prices became so low that farmers couldn't make any money by growing those crops.

The federal government tried to solve this problem. It created the Agricultural Adjustment Administration (AAA). The government paid farmers to grow less of the crops that were too cheap. President Roosevelt believed that if there were fewer of those crops to buy, prices would go back up.

The Supreme Court decided that two New Deal laws were unconstitutional, or against the Constitution. One of these laws was the National Industrial Recovery Act (NIRA).

The act allowed different industries to come up with rules for themselves. These rules controlled things like the prices of goods and wages for workers. The president was able to approve these rules. Once they were approved, these rules were treated like laws.

However, according to the Constitution, only the legislative branch is allowed to make laws. The executive branch is not allowed to do that. So, the act was ruled unconstitutional.

The National Industrial Recovery Act ruled unconstitutional because it went against the separation of powers.

During the New Deal, many workers belonged to groups called unions. Usually, unions were made up of workers who did the same job or worked at the same place.

Union members worked together to ask for better pay or better working conditions. However, employers weren't always interested in listening. Sometimes employers would refuse to meet with union leaders.

In 1935, Congress passed a law that made it illegal for employers to ignore elected union leaders. It was called the National Labor Relations Act, or the Wagner Act. The act required employers to meet with union leaders.

How did life for workers change during the New Deal?

In addition to the Wagner Act, Congress passed a law in 1938 called the Fair Labor Standards Act. The act created new rules to protect workers. The rules only applied to certain industries at first. But later on, workers in other fields successfully fought to create similar rules.

Here are some of the rules that the Fair Labor Standards Act set up:

• Employers had to pay their workers a minimum wage. In 1938, that wage was 25 cents per hour! That would be like making about 4 dollars per hour today.

• Employers could not hire children under 14 years old. Those children could still work at some farms and family businesses. Children under 18 years old were no longer allowed to work in certain dangerous jobs.

• Employees who worked more than 44 hours per week had to receive overtime pay. Overtime pay is more money per hour than regular pay.

During the New Deal, the government created an organization that became known as the Social Security Administration. It was created to help older people and people who were unable to work.

Is Social Security still around today?

Yes. The Social Security program provides money to older people who have retired and people who cannot work.

The program is paid for by taxing workers and employers. When people are working, they put money into the Social Security program. Later, when they are no longer working, they can get money from the program.

Have you seen this card?

Each United States citizen has a Social Security card. Some non-citizens who work in the United States can get one, too.

Each card has a unique number. No two people in the country have the same Social Security number.

If you have a Social Security card, it is important to protect it. Social Security numbers are private information.

How did American government change during the New Deal? The federal government became bigger and more powerful.

In what ways did the New Deal make the federal government "bigger"?

• The federal government created more rules for banks and businesses.

• The federal government hired more people to work for the government.

• The federal government created new programs that were paid for with taxes and loans.

How did the war change work in America?

When the United States joined World War II in 1941, millions of young men went to fight in Europe and the Pacific.

Back in the United States, people worked to make supplies for the war effort. Some people made airplanes, cars, and weapons. Others grew food and made clothing.

The people in this photo are helping to build a ship.

Women at work

When thousands of American men left to fight in the war, the United States needed women to work. Women were needed to make the supplies and weapons that the soldiers would use.

The woman in this photo is helping to build a ship.