Topic 13 - Prosperity and Depression (1919 - 1939)

Lesson 6 - Roosevelt's New Deal

By the time of the presidential election of 1932, any optimism about a quick end to the economic downturn had melted away. The unemployment rate continued to climb, banks were failing, and Americans demanded action. Franklin Roosevelt promised bold new policies to beat back the Great Depression.

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Look at the poster. Why would the government pay artists to create beautiful images during the Great Depression?

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Guiding Questions

Why did Franklin D. Roosevelt win the election of 1932?
How did Roosevelt’s New Deal change government’s relationship to the economy?
What did critics have to say about New Deal policies?
What was the impact of the New Deal?

Vocabulary

Academic Vocabulary

Roosevelt Becomes President

Franklin Delano Roosevelt, known as FDR, came from a wealthy, influential family. He attended Harvard University and Columbia Law School. In 1905, he married a distant cousin, Anna Eleanor Roosevelt.

During World War I, Roosevelt served as assistant secretary of the navy. In 1920, he was the Democratic candidate for Vice President, but lost in the Harding landslide.

Physical Challenges

Then, in the summer of 1921, Roosevelt was stricken with a severe case of polio, which left his legs paralyzed. He spent years building up his strength.

In time, Roosevelt returned to public life. In 1928, he won election as governor of New York. Then, in 1932, the Democrats made him their presidential candidate.

The Republicans again nominated Herbert Hoover, even though many believed he had little chance of winning after his struggles to cope with the Great Depression and his treatment of the Bonus Army.

Winning the Election

Roosevelt set a new tone right from the start. He broke with tradition by flying to the Democratic convention to accept the nomination in person. Standing before the delegates, he declared: “I pledge myself to a new deal for the American people.”

Roosevelt did not spell out what he meant by “a new deal.” Still, he sounded a hopeful note. In campaign speeches, he promised to help the jobless, poor farmers, and the elderly.

Voters responded to Roosevelt’s confident manner and personal charm. On election day, he won a landslide victory. Democrats also gained many seats in Congress. On inauguration day, the new President addressed the American people with optimism:

Primary Source

This great nation will endure as it has endured, will revive and will prosper. 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.

—Franklin D. Roosevelt, Inaugural Address, March 4, 1933.

President Roosevelt then issued a call to action. “This nation asks for action and action now,” he said. Many Americans welcomed this energetic new President, especially since Hoover’s more cautious approach had failed to end the nation’s economic crisis.

Analyze Images Franklin Roosevelt takes the oath of office March 4, 1933.

Sequence Trace the political path that Roosevelt followed to the White House.

READING CHECK

Summarize the major steps in Roosevelt’s path to the presidency.

How Did FDR Fight the Depression?

During his campaign for the presidency, Roosevelt had sought advice on how to fight the Depression. He turned to a number of college professors who were experts on economic issues. These experts, nicknamed the Brain Trust, helped Roosevelt to plan bold new programs.

Once in office, President Roosevelt chose able advisers. Harold Ickes (ik eez), a Republican reformer from Chicago, became secretary of the interior. The President named social worker Frances Perkins the secretary of labor. Perkins was the first woman to hold a cabinet post.

The new President moved forward on many fronts. He urged his staff to “take a method and try it. If it fails, admit it and try another. But above all try something.”

Analyze Images A key member of President Roosevelt’s Brain Trust, Secretary of Labor Frances Perkins—the woman in black directly behind the President—looks on as he signs a bill into law in 1935.

Infer How do you think people reacted to Perkins being named to the cabinet?

Strengthening Banks

Roosevelt’s first challenge was the nation’s crumbling banking system. Many banks had closed. Fearful depositors had withdrawn their savings from other banks. People hid their money under mattresses or buried it in their yards.

The President knew he had to stabilize the banking system; without sound banks, the economy could not recover. On his second day in office, he declared a bank holiday. He closed every bank in the country for four days. He then asked Congress to pass the Emergency Banking Relief Act. Under this act, only those banks with enough funds to meet depositors’ demands could reopen. Others had to stay closed.

A week after taking office, President Roosevelt spoke to Americans by radio. Under the new law, the President told the people, “it is safer to keep your money in a reopened bank than under your mattress.”

The radio broadcast worked. Roosevelt explained things so clearly, said humorist Will Rogers, that even the bankers understood the situation. Reassured by the President, depositors returned their money to banks, and the banking system grew stronger.

Roosevelt gave 30 radio talks while in office. They became known as fireside chats. The President liked to imagine that his listeners were sitting around a fireplace with him. In fact, all across the nation, families gathered around their radios to listen to Roosevelt. Many believed the President understood their problems.

Laws for Recovery

The bank bill was the first of many bills that Roosevelt sent to Congress during his first three months in office. Between March 9 and June 16, 1933, Congress passed a record 15 major new laws. Even the President admitted he was “a bit shellshocked” by the Hundred Days, as this period was called.

The bills covered programs from job relief to planning for economic recovery. Together, they made up Roosevelt’s New Deal. The New Deal laid out three main goals: relief for the jobless, plans for economic recovery, and reforms to prevent another Depression.

Analyze Charts This table lists examples of the laws put into place during Roosevelt’s first hundred days in office.

Cite Evidence Which do you think was the most important to aid the struggling nation? Explain your answer.

Early Relief Programs

In 1933, when Roosevelt took office, 13 million Americans were out of work. The President asked Congress for a variety of programs to help the jobless.

Among the earliest New Deal programs was the Civilian Conservation Corps (CCC). The CCC hired unemployed single men between the ages of 18 and 25. For $1 a day, they planted trees, built bridges, worked on flood-control projects, and developed new parks. The Federal Emergency Relief Administration (FERA) gave federal money to state and local agencies, which distributed it to the unemployed.

The WPA

The Works Progress Administration (WPA) came into existence in 1935. The WPA put the jobless to work making clothes and building hospitals, schools, parks, playgrounds, and airports.

The WPA also hired artists, photographers, actors, writers, and composers. Artists painted murals on public buildings.

WPA writers collected information about American life, folklore, and traditions. Some WPA writers interviewed African Americans who had lived under slavery. Today, scholars still use these interviews to learn firsthand about slave life.

Critics accused the WPA of creating make-work projects that did little to benefit the nation in the long run. “People don’t eat in the long run,” replied a New Dealer. “They eat every day.”

Analyze Images This poster promoting the National Park Service was one of many created by the Works Progress Administration (WPA) during the Depression.

Infer Why did the government invest in the arts during this time?

READING CHECK

Define What happened during the Hundred Days?

Making Economic Reforms

To bring about recovery, the President had to boost both industry and farming. He developed programs that greatly expanded the government’s role in the economy. With these and other programs, he hoped to prevent another Depression.

Regulating Industry

Overproduction and declining prices had been a major cause of the Depression. Low prices during the Depression had caused businesses to fail and created widespread unemployment. Aiming to boost the economy, New Dealers drew up plans to control production, stabilize prices, and keep workers on the job.

A key new law was the National Industrial Recovery Act (NIRA). Under this law, each industry wrote a code, or set of rules and standards, for production, wages, prices, and working conditions. The NIRA tried to end price cutting and worker layoffs.

To enforce the new codes, Congress set up the National Recovery Administration (NRA). Companies that followed the NRA codes stamped a blue eagle on their products.

The government encouraged people to do business only with companies displaying the NRA eagle. The NRA soon ran into trouble, however. Many companies ignored the codes. Also, small businesses believed that the codes favored the biggest firms.

The NIRA also set up the Public Works Administration (PWA). It promoted recovery by hiring workers for thousands of public works projects. PWA workers built projects such as the Grand Coulee Dam in Washington, public schools in Los Angeles, two aircraft carriers for the navy, and a deep-water port in Brownsville, Texas. Despite these efforts, the PWA did little to bring about recovery.

Subsidizing Farms

On farms, overproduction remained the main problem. Surpluses kept prices and farmers’ incomes low. A surplus occurs when farmers produce more than they can sell.

To help farmers, the President asked Congress to pass the Agricultural Adjustment Act (AAA). Under the AAA, the government paid farmers not to grow certain crops. Roosevelt hoped this action would increase prices.

The government also paid farmers to plow surplus crops under the soil and to destroy surplus cows and pigs. Many Americans were outraged that crops and livestock were being destroyed when people in the cities were going hungry. Yet, the plan seemed necessary to help farmers recover and keep them growing food.

The Rural Electrification Administration (REA) was created to help people in rural areas get the same electrical service as people in urban areas. The REA provided money to extend electric lines to rural areas. As a result, the number of farms with electricity rose from 10 percent to 25 percent.

Electricity helped save many farms from ruin. For example, with refrigeration, dairy farmers did not have to worry about milk going sour before it could be sent to market.

Analyze Images This 1936 photograph, “Migrant Mother” by Dorothea Lange, came to symbolize the struggles of migrant farm worker families during the Depression.

Use Visual Information How does this photograph express the struggles of families during the Great Depression?

Tennessee Valley Authority

Perhaps the boldest program of the Hundred Days was the Tennessee Valley Authority (TVA). It set out to remake the Tennessee River Valley. This vast region often suffered from terrible floods. Because the farmland was so poor, more than half the region’s families were on relief.

The TVA was a daring experiment in regional planning. To control flooding, TVA engineers built 49 dams in seven states. The dams also produced cheap electric power. In addition to building dams, the TVA deepened river channels for shipping. It planted new forests to conserve soil and developed new fertilizers to improve farmland. The agency also set up schools and health centers.

The TVA sparked a furious debate. Critics argued that the government had no right to take business away from private companies in the region. Power companies in the Tennessee River Valley were especially outraged. They pointed out that the government, which did not have to make a profit for shareholders, could supply electrical power more cheaply than a private company could. Having to compete with the government, they said, might force them out of business.

Supporters replied that the TVA showed how the government could use its resources to help private enterprise. In the end, the program helped transform a region of desperate poverty into a prosperous and productive area.

GEOGRAPHY SKILLS

The Tennessee Valley Authority was an ambitious project.

Location What land features made this location ideal for the TVA?
Use Visual Information How many dams were constructed in Tennessee by the TVA?

Reforming the Economic System

The third New Deal goal was to prevent another depression by reforming the economic system. During the Hundred Days, Congress passed laws regulating the stock market and the banking system. The Truth-in-Securities Act was designed to end the risky buying and selling of stocks in the hope of making a quick profit. Experts agreed that uncontrolled buying and selling was a leading cause of the 1929 crash.

Another law set up the Federal Deposit Insurance Corporation (FDIC). It insured depositors’ accounts in banks approved by the government. If a bank insured by the FDIC failed, the government would make sure depositors received their money.

Later New Deal laws brought about other kinds of reforms. Laws regulated gas and electric companies. In 1938, a new law extended the Pure Food and Drug Act of 1906. It protected consumers by requiring manufacturers to list the ingredients in certain products. It also made sure that new medicines passed strict tests before they were put on the market.

READING CHECK

Understand Effects How did the Rural Electrification Act benefit farmers?

New Programs to Help Workers and the Elderly

During the years of the New Deal, Roosevelt supported programs to help workers and the elderly. Both groups faced particular hardship during the Great Depression.

Strengthening Unions

In 1935, Congress passed the National Labor Relations Act, or Wagner Act. Senator Robert Wagner of New York, the act’s sponsor, was a strong supporter of labor. The Wagner Act protected American workers from hostile management practices, such as firing a worker for joining a union. It also guaranteed workers the right to collective bargaining. Collective bargaining is the process by which a union representing a group of workers negotiates with management for a contract. Workers had fought for this right since the late 1800s.

The Wagner Act helped union membership grow from 3 million to 9 million during the 1930s. Union membership got a further boost when John L. Lewis set up the Congress of Industrial Organizations (CIO). The CIO represented workers in whole industries, such as steel, automobiles, and textiles.

With more members, unions increased their bargaining power. They also became a powerful force in politics.

A New Labor Strategy

Despite the Wagner Act, employers tried to stop workers from joining unions. Violent confrontations often resulted. Workers then tried a new strategy. At the Goodyear Tire Factory in Akron, Ohio, workers staged a sit-down strike. They stopped all machines and refused to leave the factory until Goodyear recognized their union.

The tactic worked. Workers at other factories made use of sit-down strikes until the Supreme Court outlawed them in 1939.

Analyze Images Workers at a General Motors plant staged a sit-down strike when company owners refused to recognize the United Auto Workers (UAW) union in 1936.

Infer Why do you think this sit-down strike worked?

Social Security

Meanwhile, the President sought to help the elderly. In the 1930s, the United States was the only major industrial nation that did not have a formal pension program. A pension is a sum of money paid to people on a regular basis after they retire. Roosevelt and Secretary of Labor Perkins pushed to enact an old-age pension program.

Second, the new act set up the nation’s first system of unemployment insurance. People who lost their jobs received small payments until they found work again.

Third, the act gave states money to support dependent children and people with disabilities.

Criticism of Social Security

Critics condemned the Social Security law. Some liberals pointed out that it did not include farm workers, domestic servants, or the self-employed—many of whom were women or members of minority groups. Some conservatives, on the other hand, saw Social Security as another way for the government to take money away from people who had jobs. Others saw it as an unacceptable expansion of the role of government.

Despite these attacks, the Social Security system survived and expanded over the years. Today, it provides medical benefits and pensions to older Americans, as well as unemployment insurance to workers.

READING CHECK

Identify Supporting Details What were the three parts of Social Security?

Why Did Critics Attack the New Deal?

Some of Roosevelt’s most severe critics were people who had supported him in 1932. Among the most outspoken of these was Senator Huey Long of Louisiana. Long believed that the New Deal had not gone far enough to help the poor. Adopting the motto “Share Our Wealth,” Long called for heavy taxes on the rich.

Reformer Francis Townsend, a California doctor, claimed the government had turned its back on older citizens. Townsend wanted everyone over age 60 to get a pension of $200 a month. People receiving the pension would have to retire, thus freeing up a job for someone else. They would also agree to spend the pension money at once to boost the economy.

On the other hand, many conservatives opposed the programs that were part of the New Deal.

They did not like the government intervention in business or in the lives of individuals. Big names in industry and finance, including the DuPont family and Alfred P. Sloan of General Motors, formed the Liberty League in an effort to combat the New Deal.

The League accused Roosevelt of abusing power and suggested that the New Deal was based on a socialist agenda. The government, they warned, was taking away basic American freedoms. In the end, the Liberty League lacked political savvy and ended up angering many Americans, while alienating many of Roosevelt’s other critics.

Analyze Images The Trojan Horse refers to an ancient incident in which Greek soldiers hid inside a huge wooden horse given to Troy as a gift. Once inside Troy, the Greeks let the rest of their army into the kingdom.

Analyze Political Cartoons Why do you think the New Deal is portrayed as a Trojan Horse?

The Supreme Court Strikes Down Key Programs

In 1935, members of the Supreme Court began to attack the New Deal. In that year, the Supreme Court ruled that the National Industrial Recovery Act was unconstitutional. A year later, the Court struck down the Agricultural Adjustment Act. Then it overturned eight other New Deal laws on constitutional grounds. To Roosevelt, the Supreme Court rulings threatened not only the New Deal, but also his ability to lead the nation.

Roosevelt waited until after the 1936 election to take action. In that election, he easily beat his Republican opponent, Alf Landon of Kansas. Soon after his inauguration in January 1937, Roosevelt put forward a plan to enlarge the federal courts. He called for raising the number of Justices on the Supreme Court from 9 to 15. The change would make it possible for him to appoint six new Justices who supported his programs.

“Court Packing”

The President’s move raised a loud outcry. Both supporters and critics of the New Deal accused him of trying to “pack” the Court with Justices who supported his views. They saw his move as a threat to the principle of separation of powers. For six months, the President fought for his plan. Even his allies in Congress deserted him. Finally, he withdrew his proposal.

Still, in the end, Roosevelt got the Supreme Court majority he wanted without a battle. One Justice who had voted against many New Deal laws changed his views. Another retired. Roosevelt filled his place with a new Justice who was favorable to his programs.

Analyze Images In 1937, Roosevelt sought the ability to appoint more justices to the Supreme Court to assure support of his programs.

Analyze Political Cartoons Explain how this cartoonist represents Roosevelt’s attitude toward the Supreme Court.

READING CHECK

Draw Conclusions Why was the “Court Packing” plan a threat to the principle of separation of powers?

Debating the New Deal

The New Deal changed American government forever. Ever since, Americans have debated whether the change was good or bad for the country. Many of the programs that Franklin Roosevelt instituted during this difficult time in the nation’s history still impact the lives of Americans today. One example is Social Security, which provides support to the elderly and the disabled.

Criticism of the New Deal

Before the 1930s, most Americans had little contact with the federal government. New Deal programs, however, touched almost every citizen. The federal government grew in size and power.

Many people worried about the increased power of government. They complained that the government was intruding in people’s lives, threatening both individual freedoms and private property. These critics called for a return to the traditional policy of laissez faire—the idea that government should play as small a role as possible in the functioning of the nation’s economy.

Critics also expressed alarm because the government was spending more than it took in. This practice of deficit spending was creating a huge increase in the national debt, or the total sum of money the government owes.

Finally, despite its vast spending, the New Deal had not achieved its major goal—ending the Depression. In fact, full economic recovery did not come until 1941. This recovery was partly the result of increased U.S. production for nations fighting in World War II.

This 1935 poster promoted the newly established Social Security system, which gave financial assistance to the elderly, the unemployed, and the disabled.

Support for the New Deal

Supporters of the New Deal noted that FDR had steered the nation through the worst days of the Depression. New Deal legislation had ended the banking crisis, protected farmers, and created work for millions of unemployed.

Supporters also argued that the government had a responsibility to use its power to help all of its citizens, not just businesses and the wealthy. Programs such as Social Security, New Dealers said, were necessary for national survival.

Most important of all, supporters argued, the New Deal had saved the nation’s democratic system. Elsewhere in the world, people were turning to dictators to lead them out of hard times. President Roosevelt, on the other hand, restored the nation to economic health while preserving its democracy.

Over the years, Americans have continued to debate the expanded role of government that began during the New Deal. The question whether government intervention in the economy helps or harms Americans’ well-being remains a lively one today.

Analyze Graphs The New Deal affected the economy in various ways.

Use Visual Information Based on the information provided about gross domestic product (GDP), which is a measure of an economy’s size, describe the New Deal’s impact on the economy.

READING CHECK

Identify Supporting Details What is one argument for and one against the New Deal?

Lesson Check

Why had workers long sought the right of collective bargaining?
Why does deficit spending increase the national debt?
Understand Effects Why did President Roosevelt’s fireside chats have a positive effect on Americans?
Infer How was life for families different after the Social Security Act was passed?
Revisit the Essential Question Why did some Americans criticize the New Deal?
Writing Workshop: Cite Sources Write the source of each note you have taken. In your research paper, any direct quotes from a source must be cited. Also cite the sources of someone else’s ideas that you have paraphrased or summarized.

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