THE GREAT DEPRESSION AND THE NEW DEAL

Highlights of the New Deal

Background

Following the Great War, as the only major western nation not devastated by that conflict, Americans felt pretty good about themselves.  The continued economic growth, political conservatism and general absence of concerns over foreign affairs led Americans  to think of  themselves as “having it made.”  Proof of America's spirit and achievements seemed to be personified by Charles Lindberg's historic flight from New York to Paris in 1927.  But the 1920s also saw deep divisions in the country despite the “roaring” atmosphere brought about by bathtub gin, speakeasies, flappers, women voting, jazz, sports and all the rest.  The KKK re-emerged, Sacco and Vanzetti were executed, and town and country found themselves at odds over issues big and small.  Then at the end of that self-satisfied, raucous and somewhat grumpy decade, when the expectations of many Americans knew no bounds, the stock market crashed and the  Great Depression hit. 

The depth of the Great Depression is difficult for us to fathom in these times of prosperity in the early 21st century. Recent recessions, upheavals in various sectors of the economy, layoffs, bankruptcies and other casualties, as trying as they may be for those who suffer them, cannot compare with the massive losses of the 1930s, not just in terms of wealth, but in terms of human dignity, hope, promise and a sense that “this too shall pass.” It did not pass for a long time, and for some there seemed no way out but suicide. So frequent were the suicides that newspapers actually ran cartoons or comments on the phenomenon, perhaps in an attempt to cheer people up. It did not work—the depression went on, and on, and on. Many Americans never got over the shock.

Into that troubled world came Franklin Delano Roosevelt—to this day one of the most controversial Presidents in our history and yet by almost any definition one of our greatest.  Like his predecessors in office—his cousin Theodore, and Woodrow Wilson, whom he served as Assistant Secretary of the Navy for eight years—FDR saw government as an instrument for helping people.  In 1914-1918 government organized the economy to meet the emergency of World War I; in 1933 Franklin Roosevelt came to Washington determined to use government to organize the economy again—this time against the enemies caused by the Great Depression: unemployment, poverty and hopelessness.  His goal of easing suffering is for most unquestioned; his methods remain the source of controversy.  Whatever one decides, it is clear that the legacy of the New Deal is still with us in a powerful way. 

FDR and the New Deal

Franklin Delano was the only child of James and Sara Delano Roosevelt, and he was raised with an abundance of materials things and the unstinting love of a doting mother. Young Franklin was charming, handsome, intelligent, athletic and likeable, but not all who met him were impressed with his depth.  One of the most famous quotations about his character came from Supreme Court Justice Louis D. Brandeis: “A seond-class intellect, but a first class temperament.” At Harvard he did not shine in academics, though he did become managing editor of the Harvard Crimson, probably the most famous college newspaper anywhere.  He also played sports and enjoyed an active social life. While at Harvrad FDR met and fell in love with his cousin Eleanor, daughter of Elliot Roosevelt and niece of President Theodore Roosevelt. What seemed to some a strange romance blossomed, however, and the two were wed. Those close to them felt they were very well suited to each other, at least intellectually.  The bride was given away by her uncle, TR himself, with the result that poor Eleanor played second fiddle in terms of attention even at her own wedding. Franklin dabbled in the law but found his calling in politics: He followed in his cousin’s footsteps through the New York legislature to the post of Assistant Secretary of the Navy and eventually to the statehouse in Albany.

The Election of 1932: The dispirited Republicans renominated Hoover, but it was hopeless. FDR had used the governorship of New York to experiment with anti-depression programs, but regardless of his record, he was almost sure to win. FDR got 22,809,000 votes and 472 electoral votes to Hoover’s 15,758,000 million popular and 59 electoral votes. President Hoover was humiliated and the landslide of 1928 was reversed.

Read the sources and decide what you think about FDR.

Documents on the Great Depression and the New Deal

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Highlights of the New Deal

THE HUNDRED DAYS, 9 March - 16 June, 1933

Immediately following Roosevelt's inauguration on March 4, 1933, a special session of Congress met to deal with the banking crisis.  FDR held them in session to meet with other crises as well.  FDR's main goals included relief, recovery and reform:

  • Relief for individuals who through no fault of their own were unable to provide for themselves;
  • Recovery of the economy so that business would be able to start hiring people again;
  • Reform of the government and the economy to avoid the recurrence of problems that had risen persistently during the industrial age.  

These three months constituted one of the most extraordinary outpourings of legislation in the history of Congress. Here are the major accomplishments of the hundred days:

  • March 4 FDR inaugurated, calls special session of Congress to deal with banking crisis, then holds them in session to meet with other crises. Goals are relief, recovery and reform.
  • March 9 EMERGENCY BANKING ACT is introduced, passed, approved in one day. Gives President broad discretionary power to regulate financial transactions. Treasury Department grants licenses for bank reopenings; gold hoarding prohibited, etc. Checked money panic.
  • March 20 ECONOMY ACT. Sought to balance budget by reducing government salaries 15%; cut pensions, reorganized government agencies for greater economy. Saved about $243 million against FDR estimate of $500 million.
  • March 22 BEER-WINE REVENUE ACT. 3.2 beer, wine, etc., taxed to enhance federal revenue.
  • March 31 The CIVILIAN CONSERVATION CORPS REFORESTATION ACT establishes the Civilian Conservation Corps and provides 250,000 jobs for males ages 18-25 with wages of $30 per month, part to go to dependents. Work camps built, run, by different departments. Two million young men serve by 1941.
  • April 19 U.S. officially abandons gold standard—the “most revolutionary act of the New Deal.” Dollar declines abroad; stopped drain of gold to Europe. Value of gold fixed at $35 per ounce. Ii becomes illegal for citizens to own gold, except in jewelry, etc.
  • May 12 FEDERAL EMERGENCY RELIEF ACT creates FERA. $500 million, 1/2 for direct relief to states, rest to match state funds for relief $1 for 3. Later increased to $% billion. Harry Hopkins appointed relief administrator. For unemployment.
  • AGRICULTURAL ADJUSTMENT ACT; EMERGENCY FARM MORTGAGE ACT. Every major device applicable to farm relief. Elimination of surplus crops. Establishment of parity prices. For reducing crops, allowing land to lie fallow, farmers paid "rental." Slaughtered 6 million pigs, authorized cotton plow under, etc. Cleaning up the wreckage of unbalanced production. Destroying crops; called by Henry Wallace “a shocking commentary on our civilization.” AAA established, run by Wallace. Refinancing farm mortgages. Amendment to the act also provided for currency inflation through silver coinage, paper, etc.
  • May 18 TENNESSEE VALLEY AUTHORITY. “Experiment” in social planning. Government had previously built power plants at Muscle Shoals, Ala., but unable to dispose of. Bills for government operation vetoed. FDR has big plans, visits site. TVA has authority to build dams, power plants, develop region economically, sell power, fertilizer. “Yardstick” for fair operation of power companies, rates, etc. 9 dams built. WWII power for munitions, Oak Ridge, etc. Humane (graves, etc.)
  • May 27 FEDERAL SECURITIES ACT. Full disclosure of all information on new securities being offered. Registration with FTC.
  • June 5 GOLD REPEAL JOINT RESOLUTION. Cancels gold transactions, makes paper legal tender.
  • June 6 NATIONAL EMPLOYMENT SYSTEM ACT. U.S. Employment Service. Works with states to place people in jobs.
  • June 13 HOME OWNERS REFINANCING ACT. HOLC can makes loans, advance cash for taxes, repairs, etc. Refinance mortgages.
  • June 16 BANKING ACT OF 1933 (GLASS-STEAGALL ACT) Creates FDIC. Deposits up to $5000 covered. Strengthened, widened power of FRB over banks. Separates commercial and investment banking, makes banks get out of the investment business, restricts use of bank deposits for speculative ventures. Fixed situation that went back to wildcat days of Jackson era.
  • FARM CREDIT ACT. Refinancing based on credits for production.
  • EMERGENCY RAILROAD TRANSPORTATION ACT. Sought to improve efficiency by reorganization, etc. Reduced overlapping services, etc. Federal Coordinator of Transportation created.
  • THE NATIONAL INDUSTRIAL RECOVERY ACT. Creates NRA. Fair trade codes—industrial self-regulation with government supervision. Plant operation restrictions, minimum wages $12-13 per week, no child labor, limited week to 40 hours, etc. Blue Eagle—“Signing the pledge.” The Act
  • PUBLIC WORKS ADMINISTRATION established to build roads, public buildings, etc. Also included white collar jobs—writers, artists, etc.

    End of the 100 Days:  The New Deal Continues, 1933

  • October 18 COMMODITY CREDIT CORPORATION. More relief for farmers; support for farm prices.
  • November 8 CIVIL WORKS ADMINISTRATION. Outgrowth of FERA. Provides emergency unemployment relief. Creates 4 million federal, state, local make-work projects.

1934

  • January 30 GOLD RESERVE ACT OF 1934. President controls value of dollar, impound gold stocks, etc. Fixed gold value of dollar at 60 cents
  • January 31 FARM MORTGAGE REFINANCING ACT. Established Federal Farm Mortgage Corporation.
  • February 2 EXPORT-IMPORT BANK. Encourage overseas commerce.
  • February 15 CIVIL WORKS EMERGENCY RELIEF ACT. $950 million for use by FERA for relief—leads to WPA.
  • June 6 SECURITIES EXCHANGE ACT. Established Securities and Exchange Commission.
  • June 19 FEDERAL COMMUNICATIONS ACT creates FCC.
  • June 28 National Housing Act establishes FHA. Covers mortgages, farms, small business properties, etc.

1935: The Second New Deal

  • April 8 EMERGENCY RELIEF APPROPRIATION ACT establishes WPA—over 3 million by June 1936.
  • May 1 Resettlement Administration. Moves poor families to “Greenbelt” towns.
  • May 11 Rural Electrification Administration (REA) established. Electrifies the rural South.
  • June 26 National Youth Administration created under WPA. Relief work for youths 16-25 from relief families.
  • July 5 NATIONAL LABOR RELATIONS ACT (“Wagner-Connery Act”) made labor more powerful; guaranteed collective bargaining rights. Created NATIONAL LABOR RELATIONS BOARD. Salvaged some of NLRA.
  • August 14 SOCIAL SECURITY ACT. Partial response to Townsend-Long coalition. Unemployment compensation; old age and survivors’ insurance; old-age pensions; relief for blind, homeless, crippled, etc. Payments very low ($10-40/month.)
  • August 30 REVENUE ACT OF 1935 (WEALTH TAX ACT). FDR: “Unjust concentration of wealth and power.” Called “Soak the rich act.” 75% on highest incomes—estates, gift taxes, excess profits. More graduated rates established for business.

The following points are relevant:

  • FDR had no coherent blueprint for what he wanted to do. He was willing to experiment, to bend his own Constitutional authority, to wheedle and cajole Congress, to send apparently conflicting messages. Assaulted from both left and right, he was probably more conservative and more radically liberal than his opponents on either side would have admitted.
  • The New Deal did not end the Depression. FDR’s programs improved life for millions and gave hope to may others, but it did not end or repair the underlying causes of economic problems. The massive government spending during World War II was what finally revived the economy.
  • During FDR’s Administration American voting patterns shifted dramatically. African Americans began to feel the hand of government lifting them up rather than pushing them down, and they shifted from voting about 80% Republican to 80% Democratic.
  • The Democratic Party become the majority Party and dominated the White House, Congress or both down to the present. For only a handful of years since 1933 have Republicans controlled the White House and Congress at the same time.
Most historians believe that the New Deal measures, however bold and innovative, did not end the Depression, which lingered on through the 1930s.  It was not until the government spent huge amounts of money financing World War II that the last lingering effects of the Depression disappeared and created unprecedented prosperity for millions of Americans.  But regardless of its successes or failures, Franklin Roosevelt's New Deal Administration changed the nature of American government permanently.

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Updated March 16, 2003