Franklin Roosevelt instituted the New Deal to implement innovative economic ideas in
an effort to end the Great Depression. First, you need to define the new economic
ideas, and then go on to discuss at least at least three New Deal programs to show how
they embodied those new economic ideas you have identified.
1. Economic idea
a. “Unlike some European nations where similar challenges caused
democratic constitutions to crumble and give way to radical
ideologies and authoritarian governments, the Roosevelt
administration changed the nation’s economic fortunes with
reforms, preserved the constitution, and expanded rather than
limited the reach of democratic principles into the market economy.
As a result, radical alternatives, such as the Fascist movement or
Communist Party, remained on the margins of the nation’s political
culture.” (26.1)
2. Reform: the banking crisis
a. “The resulting Emergency Banking Act of 1933 was signed into law
on March 9, 1933, a scant eight hours after Congress first saw it.
The law officially took the country off the gold standard, a restrictive
practice that, although conservative and traditionally viewed as
safe, severely limited the circulation of paper money.” (26.2)
b. “In June 1933, Roosevelt replaced the Emergency Banking Act with
the more permanent Glass-Steagall Banking Act. This law
prohibited commercial banks from engaging in investment banking,
therefore stopping the practice of banks speculating in the stock
market with deposits. This law also created the Federal Deposit
Insurance Corporation, or FDIC, which insured personal bank
deposits up to $2,500.” (26.2)
3. Relief: Employment for the Masses
a. “In a push to create new jobs, Roosevelt signed the Wagner-Peyser
Act, creating the United States Employment Service, which
promised states matching funds if they created local employment
opportunities. He also authorized $500 million in direct grants
through the Federal Emergency Relief Act (FERA).This money
went directly to states to infuse relief agencies with the muchneeded resources to help the nearly fifteen million unemployed.”
(26.2)
b.
“Another work program was the Civilian Conservation Corps
Relief Act (CCC). The CCC provided government jobs for young
men aged fourteen to twenty-four who came from relief families.
They would earn thirty dollars per month planting trees, fighting
forest fires, and refurbishing historic sites and parks, building an
infrastructure that families would continue to enjoy for generations
to come. Within the first two months, the CCC employed its first
250,000 men and eventually established about twenty-five hundred
camps.” (26.2)
4. Rescuing Farms and Factories
a. “The AAA offered some direct relief: Farmers received $4.5 million
through relief payments. But the larger part of the program paid
southern farmers to reduce their production: Wheat, cotton, corn,
hogs, tobacco, rice, and milk farmers were all eligible. Passed into
law on May 12, 1933, it was designed to boost prices to a level that
would alleviate rural poverty and restore profitability to American
agriculture.” (26.1)
Franklin Roosevelt instituted the New Deal to implement innovative economic ideas in
an effort to end the Great Depression. First, you need to define the new economic
ideas, and then go on to discuss at least at least three New Deal programs to show how
they embodied those new economic ideas you have identified.
1. Economic idea
a. “Unlike some European nations where similar challenges caused
democratic constitutions to crumble and give way to radical
ideologies and authoritarian governments, the Roosevelt
administration changed the nation’s economic fortunes with
reforms, preserved the constitution, and expanded rather than
limited the reach of democratic principles into the market economy.
As a result, radical alternatives, such as the Fascist movement or
Communist Party, remained on the margins of the nation’s political
culture.” (26.1)
2. Reform: the banking crisis
a. “The resulting Emergency Banking Act of 1933 was signed into law
on March 9, 1933, a scant eight hours after Congress first saw it.
The law officially took the country off the gold standard, a restrictive
practice that, although conservative and traditionally viewed as
safe, severely limited the circulation of paper money.” (26.2)
b. “In June 1933, Roosevelt replaced the Emergency Banking Act with
the more permanent Glass-Steagall Banking Act. This law
prohibited commercial banks from engaging in investment banking,
therefore stopping the practice of banks speculating in the stock
market with deposits. This law also created the Federal Deposit
Insurance Corporation, or FDIC, which insured personal bank
deposits up to $2,500.” (26.2)
3. Relief: Employment for the Masses
a. “In a push to create new jobs, Roosevelt signed the Wagner-Peyser
Act, creating the United States Employment Service, which
promised states matching funds if they created local employment
opportunities. He also authorized $500 million in direct grants
through the Federal Emergency Relief Act (FERA).This money
went directly to states to infuse relief agencies with the muchneeded resources to help the nearly fifteen million unemployed.”
(26.2)
b.
“Another work program was the Civilian Conservation Corps
Relief Act (CCC). The CCC provided government jobs for young
men aged fourteen to twenty-four who came from relief families.
They would earn thirty dollars per month planting trees, fighting
forest fires, and refurbishing historic sites and parks, building an
infrastructure that families would continue to enjoy for generations
to come. Within the first two months, the CCC employed its first
250,000 men and eventually established about twenty-five hundred
camps.” (26.2)
4. Rescuing Farms and Factories
a. “The AAA offered some direct relief: Farmers received $4.5 million
through relief payments. But the larger part of the program paid
southern farmers to reduce their production: Wheat, cotton, corn,
hogs, tobacco, rice, and milk farmers were all eligible. Passed into
law on May 12, 1933, it was designed to boost prices to a level that
would alleviate rural poverty and restore profitability to American
agriculture.” (26.1)
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26.1 The Rise of Franklin Roosevelt (/contents/a7ba2fb8-8925-4987-b182-5f4429d48daa@9.5:f9a8ea213b9d-4d64-819b-1f7e2d087ede#53894)
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26.3 The Second New Deal (/contents/a7ba2fb8-8925-4987-b182-5f4429d48daa@9.5:d64b9b46-302a449b-8ea6-4916ae9c5f42@7#77003)
Figure 26.1 President Roosevelt’s Federal One Project allowed thousands of
artists to create public art. This initiative was a response to the Great
Depression as part of the Works Project Administration, and much of the
public art in cities today date from this era. New Deal by Charles Wells can be
found in the Clarkson S. Fisher Federal Building and U.S. Courthouse in
Trenton, New Jersey. (credit: modification of work by Library of Congress)
The election of President Franklin Delano Roosevelt signaled both immediate relief for the American public
as well as a permanent shift in the role of the federal government in guiding the economy and providing
direct assistance to the people, albeit through expensive programs that made extensive budget deficits
commonplace. For many, the immediate relief was, at a minimum, psychological: Herbert Hoover was gone,
and the situation could not grow worse under Roosevelt. But as his New Deal unfolded, Americans learned
more about the fundamental changes their new president brought with him to the Oval Office. In the span of
little more than one hundred days, the country witnessed a wave of legislation never seen before or since.
Roosevelt understood the need to “save the patient,” to borrow a medical phrase he often employed, as well
as to “cure the ill.” This meant both creating jobs, through such programs as the Works Progress
Administration, which provided employment to over eight million Americans (Figure 26.1), as well as
reconfiguring the structure of the American economy. In pursuit of these two goals, Americans re-elected
Roosevelt for three additional terms in the White House and became full partners in the reshaping of their
country.
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26.1 The Rise of Franklin Roosevelt
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Learning Objectives
By the end of this section, you should be able to:
Describe the events of the 1932 presidential election and identify the characteristics that made
Franklin Roosevelt a desirable candidate
Explain why Congress amended the U.S. Constitution to reduce the period of time between
presidential elections and inaugurations
Figure 26.2
Franklin Roosevelt was part of the political establishment and the wealthy elite, but in the 1932 presidential
campaign, he did not want to be perceived that way. Roosevelt felt that the country needed sweeping
change, and he ran a campaign intended to convince the American people that he could deliver that change.
It was not the specifics of his campaign promises that were different; in fact, he gave very few details and
likely did not yet have a clear idea of how he would raise the country out of the Great Depression. But he
campaigned tirelessly, talking to thousands of people, appearing at his party’s national convention, and
striving to show the public that he was a different breed of politician. As Hoover grew more morose and
physically unwell in the face of the campaign, Roosevelt thrived. He was elected in a landslide by a country
ready for the change he had promised.
THE ELECTION OF FRANKLIN ROOSEVELT
By the 1932 presidential election, Hoover’s popularity was at an all-time low. Despite his efforts to address
the hardships that many Americans faced, his ineffectual response to the Great Depression left Americans
angry and ready for change. Franklin Roosevelt, though born to wealth and educated at the best schools,
offered the change people sought. His experience in politics had previously included a seat in the New York
State legislature, a vice-presidential nomination, and a stint as governor of New York. During the latter, he
introduced many state-level reforms that later formed the basis of his New Deal as well as worked with
several advisors who later formed the Brains Trust that advised his federal agenda.
Roosevelt exuded confidence, which the American public desperately wished to see in their leader (Figure
26.3). And, despite his affluence, Americans felt that he could relate to their suffering due to his own physical
hardships; he had been struck with polio a decade earlier and was essentially paralyzed from the waist down
for the remainder of his life. Roosevelt understood that the public sympathized with his ailment; he likewise
developed a genuine empathy for public suffering as a result of his illness. However, he never wanted to be
photographed in his wheelchair or appear infirm in any way, for fear that the public’s sympathy would
transform into concern over his physical ability to discharge the duties of the Oval Office.
Figure 26.3 Franklin Roosevelt brought a new feeling of optimism and
possibility to a country that was beaten down by hardship. His
enthusiasm was in counterpoint to Herbert Hoover’s discouraging last
year in office.
Roosevelt also recognized the need to convey to the voting public that he was not simply another member
of the political aristocracy. At a time when the country not only faced its most severe economic challenges to
date, but Americans began to question some of the fundamental principles of capitalism and democracy,
Roosevelt sought to show that he was different—that he could defy expectations—and through his actions
could find creative solutions to address the nation’s problems while restoring public confidence in
fundamental American values. As a result, he not only was the first presidential candidate to appear in
person at a national political convention to accept his party’s nomination but also flew there through terrible
weather from New York to Chicago in order to do so—a risky venture in what was still the early stages of
flight as public transportation. At the Democratic National Convention in 1932, he coined the famous phrase:
“I pledge myself to a new deal for the American people.” The New Deal did not yet exist, but to the American
people, any positive and optimistic response to the Great Depression was a welcome one.
Hoover assumed at first that Roosevelt would be easy to defeat, confident that he could never carry the
eastern states and the business vote. He was sorely mistaken. Everywhere he went, Hoover was met with
antagonism; anti-Hoover signs and protests were the norm. Hoover’s public persona declined rapidly. Many
news accounts reported that he seemed physically unwell, with an ashen face and shaking hands. Often, he
seemed as though he would faint, and an aide constantly remained nearby with a chair in case he fell. In
contrast, Roosevelt thrived on the campaign. He commented, “I have looked into the faces of thousands of
Americans, and they have the frightened look of lost children.”
The election results that November were never really in question: With three million more people voting than
in 1928, Roosevelt won by a popular count of twenty-three million to fifteen million. He carried all but six
states while winning over 57 percent of the popular vote. Whether they voted due to animosity towards
Hoover for his relative inactivity, or out of hope for what Roosevelt would accomplish, the American public
committed themselves to a new vision. Historians identify this election as the beginning of a new Democratic
coalition, bringing together African Americans, other ethnic minorities, and organized labor as a voting bloc
upon whom the party would rely for many of its electoral victories over the next fifty years. Unlike some
European nations where similar challenges caused democratic constitutions to crumble and give way to
radical ideologies and authoritarian governments, the Roosevelt administration changed the nation’s
economic fortunes with reforms, preserved the constitution, and expanded rather than limited the reach of
democratic principles into the market economy. As a result, radical alternatives, such as the Fascist
movement or Communist Party, remained on the margins of the nation’s political culture.
THE INTERREGNUM
After the landslide election, the country—and Hoover—had to endure the interregnum, the difficult four
months between the election and President Roosevelt’s inauguration in March 1933. Congress did not pass
a single significant piece of legislation during this period, although Hoover spent much of the time trying to
get Roosevelt to commit publicly to a legislative agenda of Hoover’s choosing. Roosevelt remained gracious
but refused to begin his administration as the incumbent’s advisor without any legal authority necessary to
change policy. Unwilling to tie himself to Hoover’s legacy of failed policies, Roosevelt kept quiet when
Hoover supported the passage of a national sales tax. Meanwhile, the country suffered from Hoover’s
inability to further drive a legislative agenda through Congress. It was the worst winter since the beginning of
the Great Depression, and the banking sector once again suffered another round of panics. While Roosevelt
kept his distance from the final tremors of the Hoover administration, the country continued to suffer in wait.
In part as a response to the challenges of this time, the U.S. Constitution was subsequently amended to
reduce the period from election to inauguration to the now-commonplace two months.
Any ideas that Roosevelt held almost did not come to fruition, thanks to a would-be assassin’s bullet. On
February 15, 1933, after delivering a speech from his open car in Miami’s Bayfront Park, local Italian
bricklayer Giuseppe Zangara emerged from a crowd of well-wishers to fire six shots from his revolver.
Although Roosevelt emerged from the assassination attempt unscathed, Zangara wounded five individuals
that day, including Chicago Mayor Tony Cermak, who attended the speech in the hopes of resolving any
long-standing differences with the president-elect. Roosevelt and his driver immediately rushed Cermak to
the hospital where he died 19 days later. Roosevelt’s calm and collected response to the event reassured
many Americans of his ability to lead the nation through the challenges they faced. All that awaited was
Roosevelt’s inauguration before his ideas would unfold to the expectant public.
So what was Roosevelt’s plan? Before he took office, it seems likely that he was not entirely sure. Certain
elements were known: He believed in positive government action to solve the Depression; he believed in
federal relief, public works, social security, and unemployment insurance; he wanted to restore public
confidence in banks; he wanted stronger government regulation of the economy; and he wanted to directly
help farmers. But how to take action on these beliefs was more in question. A month before his inauguration,
he said to his advisors, “Let’s concentrate upon one thing: Save the people and the nation, and if we have to
change our minds twice every day to accomplish that end, we should do it.”
Unlike Hoover, who professed an ideology of “American individualism,” an adherence that rendered him
largely incapable of widespread action, Roosevelt remained pragmatic and open-minded to possible
solutions. To assist in formulating a variety of relief and recovery programs, Roosevelt turned to a group of
men who had previously orchestrated his election campaign and victory. Collectively known as the “Brains
Trust” (a phrase coined by a New York Times reporter to describe the multiple “brains” on Roosevelt’s
advisory team), the group most notably included Rexford Tugwell, Raymond Moley, and Adolph Berle. Moley,
credited with bringing the group into existence, was a government professor who advocated for a new
national tax policy to help the nation recover from its economic woes. Tugwell, who eventually focused his
energy on the country’s agricultural problems, saw an increased role for the federal government in setting
wages and prices across the economy. Berle was a mediating influence, who often advised against a
centrally controlled economy, but did see the role that the federal government could play in mediating the
stark cycles of prosperity and depression that, if left unchecked, could result in the very situation in which
the country presently found itself. Together, these men, along with others, advised Roosevelt through the
earliest days of the New Deal and helped to craft significant legislative programs for congressional review
and approval.
INAUGURATION DAY: A NEW BEGINNING
March 4, 1933, dawned gray and rainy. Roosevelt rode in an open car along with outgoing president Hoover,
facing the public, as he made his way to the U.S. Capitol. Hoover’s mood was somber, still personally angry
over his defeat in the general election the previous November; he refused to crack a smile at all during the
ride among the crowd, despite Roosevelt’s urging to the contrary. At the ceremony, Roosevelt rose with the
aid of leg braces equipped under his specially tailored trousers and placed his hand on a Dutch family Bible
as he took his solemn oath. At that very moment, the rain stopped and the sun began to shine directly on the
platform, and those present would later claim that it was as though God himself was shining down on
Roosevelt and the American people in that moment (Figure 26.4).
Figure 26.4 Roosevelt’s inauguration was truly a day of new beginnings for the country. The sun
breaking through the clouds as he was being sworn in became a metaphor for the hope that
people felt at his presidency.
Bathed in the sunlight, Roosevelt delivered one of the most famous and oft-quoted inaugural addresses in
history. He encouraged Americans to work with him to find solutions to the nation’s problems and not to be
paralyzed by fear into inaction. Borrowing a wartime analogy provided by Moley, who served as his
speechwriter at the time, Roosevelt called upon all Americans to assemble and fight an essential battle
against the forces of economic depression. He famously stated, “The only thing we have to fear is fear
itself.” Upon hearing his inaugural address, one observer in the crowd later commented, “Any man who can
talk like that in times like these is worth every ounce of support a true American has.” To borrow the popular
song title of the day, “happy days were here again.” Foregoing the traditional inaugural parties, the new
president immediately returned to the White House to begin his work to save the nation.
CLICK AND EXPLORE
Visit the American Presidency Project (http://openstax.org/l/fdraug) to listen to Roosevelt’s first
inaugural speech and identify ways he conveyed optimism and a spirit of community to his
listeners.
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26.2 The First New Deal
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Learning Objectives
By the end of this section, you should be able to:
Identify the key pieces of legislation included in Roosevelt’s “First New Deal”
Assess the strengths, weaknesses, and general effectiveness of the First New Deal
Explain Roosevelt’s overall vision for addressing the structural problems in the U.S. economy
Much like a surgeon assessing the condition of an emergency room patient, Roosevelt began his
administration with a broad, if not specific, strategy in mind: a combination of relief and recovery programs
designed to first save the patient (in this case, the American people), and then to find a long-term cure
(reform through federal regulation of the economy). What later became known as the “First New Deal”
ushered in a wave of legislative activity seldom before seen in the history of the country. By the close of
1933, in an effort to stem the crisis, Congress had passed over fifteen significant pieces of legislation—many
of the circulated bills allegedly still wet with ink from the printing presses as members voted upon them.
Most bills could be grouped around issues of relief, recovery, and reform. At the outset of the First New Deal,
specific goals included 1) bank reform; 2) job creation; 3) economic regulation; and 4) regional planning.
REFORM: THE BANKING CRISIS
When Roosevelt took office, he faced one of the worst moments in the country’s banking history. States
were in disarray. New York and Illinois had ordered the closure of their banks in the hopes of avoiding further
“bank runs,” which occurred when hundreds (if not thousands) of individuals ran to their banks to withdraw
all of their savings. In all, over five thousand banks had been shuttered. Within forty-eight hours of his
inauguration, Roosevelt proclaimed an official bank holiday and called Congress into a special session to
address the crisis. The resulting Emergency Banking Act of 1933 was signed into law on March 9, 1933, a
scant eight hours after Congress first saw it. The law officially took the country off the gold standard, a
restrictive practice that, although conservative and traditionally viewed as safe, severely limited the
circulation of paper money. Those who held gold were told to sell it to the U.S. Treasury for a discounted rate
of a little over twenty dollars per ounce. Furthermore, dollar bills were no longer redeemable in gold. The law
also gave the comptroller of currency the power to reorganize all national banks faced with insolvency, a
level of federal oversight seldom seen prior to the Great Depression. Between March 11 and March 14,
auditors from the Reconstruction Finance Corporation, the Treasury Department, and other federal agencies
swept through the country, examining each bank. By March 15, 70 percent of the banks were declared
solvent and allowed to reopen.
On March 12, the day before the banks were set to reopen, Roosevelt held his first “fireside chat” (Figure
26.5). In this initial radio address to the American people, he explained what the bank examiners had been
doing over the previous week. He assured people that any bank open the next day had the federal
government’s stamp of approval. The combination of his reassuring manner and the promise that the
government was addressing the problems worked wonders in changing the popular mindset. Just as the
culture of panic had contributed to the country’s downward spiral after the crash, so did this confidenceinducing move help to build it back up. Consumer confidence returned, and within weeks, close to $1 billion
in cash and gold had been brought out from under mattresses and hidden bookshelves, and re-deposited in
the nation’s banks. The immediate crisis had been quelled, and the public was ready to believe in their new
president.
Figure 26.5 Roosevelt’s “fireside chats” provided an opportunity for him
to speak directly to the American people, and the people were happy to
listen. These radio addresses, commemorated at the Franklin D.
Roosevelt Memorial in Washington, DC, with this bronze sculpture by
George Segal, contributed to Roosevelt’s tremendous popularity. (credit:
Koshy Koshy)
DEFINING AMERICAN
The Power of Hearth and Home
Fireside chats—Roosevelt’s weekly radio addresses—underscored Roosevelt’s savvy in
understanding how best to reach people. Using simple terms and a reassuring tone, he invoked a
family patriarch sitting by the fire, explaining to those who trusted him how he was working to help
them. It is worth noting how he explained complex financial concepts quite simply, but at the
same time, complimented the American people on their “intelligent support.” One of his fireside
chats is provided below:
"I recognize that the many proclamations from State capitols and from Washington, the legislation,
the Treasury regulations, etc., couched for the most part in banking and legal terms, should be
explained for the benefit of the average citizen. I owe this in particular because of the fortitude and
good temper with which everybody has accepted the inconvenience and hardships of the banking
holiday. I know that when you understand what we in Washington have been about I shall continue
to have your cooperation as fully as I have had your sympathy and help during the past week. . . .
" "The success of our whole great national program depends, of course, upon the cooperation of
the public—on its intelligent support and use of a reliable system. . . . After all, there is an element
in the readjustment of our financial system more important than currency, more important than
gold, and that is the confidence of the people. Confidence and courage are the essentials of
success in carrying out our plan. You people must have faith; you must not be stampeded by
rumors or guesses. Let us unite in banishing fear. We have provided the machinery to restore our
financial system; it is up to you to support and make it work. It is your problem no less than it is
mine. Together we cannot fail."
"—Franklin D. Roosevelt, March 12, 1933"
A huge part of Roosevelt’s success in turning around the country can be seen in his addresses like
these: He built support and galvanized the public. Ironically, Roosevelt, the man who famously
said we have nothing to fear but fear itself, had a significant fear: fire. Being paralyzed with polio,
he was very afraid of being left near a fireplace. But he knew the power of the hearth and home,
and drew on this mental image to help the public view him the way that he hoped to be seen.
CLICK AND EXPLORE
Listen to one of Roosevelt's fireside chat
(http://www.americanrhetoric.com/speeches/fdrfirstfiresidechat.html) speeches. What kind of
feeling does his language and demeanor evoke?
In June 1933, Roosevelt replaced the Emergency Banking Act with the more permanent Glass-Steagall
Banking Act. This law prohibited commercial banks from engaging in investment banking, therefore stopping
the practice of banks speculating in the stock market with deposits. This law also created the Federal
Deposit Insurance Corporation, or FDIC, which insured personal bank deposits up to $2,500. Other
measures designed to boost confidence in the overall economy beyond the banking system included
passage of the Economy Act, which fulfilled Roosevelt’s campaign pledge to reduce government spending
by reducing salaries, including his own and those of the Congress. He also signed into law the Securities
Act, which required full disclosure to the federal government from all corporations and investment banks that
wanted to market stocks and bonds. Roosevelt also sought new revenue through the Beer Tax. As the
Twenty-First Amendment, which would repeal the Eighteenth Amendment establishing Prohibition, moved
towards ratification, this law authorized the manufacture of 3.2 percent beer and levied a tax on it.
THE FIRST HUNDRED DAYS
In his first hundred days in office, the new president pushed forward an unprecedented number of new bills,
all geared towards stabilizing the economy, providing relief to individuals, creating jobs, and helping
businesses. A sympathetic Democrat-controlled Congress helped propel his agenda forward.
Relief: Employment for the Masses
Even as he worked to rebuild the economy, Roosevelt recognized that the unemployed millions required jobs
more quickly than the economy could provide. In a push to create new jobs, Roosevelt signed the WagnerPeyser Act, creating the United States Employment Service, which promised states matching funds if they
created local employment opportunities. He also authorized $500 million in direct grants through the Federal
Emergency Relief Act (FERA). This money went directly to states to infuse relief agencies with the muchneeded resources to help the nearly fifteen million unemployed. These two bills illustrate Roosevelt’s dual
purposes of providing short-term emergency help and building employment opportunities that would
strengthen the economy in the long term.
Roosevelt was aware of the need for immediate help, but he mostly wanted to create more jobs. FERA
overseer Harry Hopkins, who later was in charge of the Civil Works Administration (CWA), shared this
sentiment. With Hopkins at its helm, the CWA, founded in early 1933, went on to put millions of men and
women to work. At its peak, there were some four million Americans repairing bridges, building roads and
airports, and undertaking other public projects. Another work program was the Civilian Conservation
Corps Relief Act (CCC). The CCC provided government jobs for young men aged fourteen to twenty-four
who came from relief families. They would earn thirty dollars per month planting trees, fighting forest fires,
and refurbishing historic sites and parks, building an infrastructure that families would continue to enjoy for
generations to come. Within the first two months, the CCC employed its first 250,000 men and eventually
established about twenty-five hundred camps (Figure 26.6).
Figure 26.6 The CCC put hundreds of thousands of men to work on
environmental projects around the country. Some call it the beginning of
the modern environmentalist movement in the United States.
The various programs that made up the First New Deal are listed in the table below (Table 26.1).
New Deal Legislation
Years
Enacted
Brief Description
Agricultural Adjustment
Administration
1933–
1935
Farm program designed to raise process by curtailing
production
Civil Works Administration
1933–
1934
Temporary job relief program
Civilian Conservation
Corps
1933–
1942
Employed young men to work in rural areas
Farm Credit Administration
1933today
Low interest mortgages for farm owners
Federal Deposit Insurance
Corporation
1933–
today
Insure private bank deposits
Federal Emergency Relief
Act
1933
Direct monetary relief to poor unemployed Americans
Glass-Steagall Act
1933
Regulate investment banking
Homeowners Loan
Corporation
1933–
1951
Government mortgages that allowed people to keep
their homes
Indian Reorganization Act
1933
Abandoned federal policy of assimilation
National Recovery
Administration
1933–
1935
Industries agree to codes of fair practice to set price,
wage, production levels
Public Works
Administration
1933–
1938
Large public works projects
Resettlement
Administration
1933–
1935
Resettles poor tenant farmers
Securities Act of 1933
1933–
today
Created SEC; regulates stock transactions
Tennessee Valley Authority
1933–
today
Regional development program; brought electrification
to the valley
Table 26.1 Key Programs from the First New Deal
The final element of Roosevelt’s efforts to provide relief to those in desperate straits was the Home Owners’
Refinancing Act. Created by the Home Owners’ Loan Corporation (HOLC), the program rescued
homeowners from foreclosure by refinancing their mortgages. Not only did this save the homes of countless
homeowners, but it also saved many of the small banks who owned the original mortgages by relieving them
of the refinancing responsibility. Later New Deal legislation created the Federal Housing Authority, which
eventually standardized the thirty-year mortgage and promoted the housing boom of the post-World War II
era. A similar program, created through the Emergency Farm Mortgage Act and Farm Credit Act, provided
the same service for farm mortgages.
CLICK AND EXPLORE
In this American Experience (http://www.pbs.org/wgbh/americanexperience/features/authorinterview-neil-maher/) interview, Neil Maher, author of Nature’s New Deal: The Civilian
Conservation Corps and Roots of the Modern Environmental Movement, provides a
comprehensive look into what the CCC offered the country—and the president—on issues as
diverse as economics, race, and recreation.
Rescuing Farms and Factories
While much of the legislation of the first hundred days focused on immediate relief and job creation through
federal programs, Roosevelt was committed to addressing the underlying problems inherent in the American
economy. In his efforts to do so, he created two of the most significant pieces of New Deal legislation: the
Agricultural Adjustment Act (AAA) and the National Industry Recovery Act (NIRA).
Farms around the country were suffering, but from different causes. In the Great Plains, drought conditions
meant that little was growing at all, while in the South, bumper crops and low prices meant that farmers
could not sell their goods at prices that could sustain them. The AAA offered some direct relief: Farmers
received $4.5 million through relief payments. But the larger part of the program paid southern farmers to
reduce their production: Wheat, cotton, corn, hogs, tobacco, rice, and milk farmers were all eligible. Passed
into law on May 12, 1933, it was designed to boost prices to a level that would alleviate rural poverty and
restore profitability to American agriculture. These price increases would be achieved by encouraging
farmers to limit production in order to increase demand while receiving cash payments in return. Corn
producers would receive thirty cents per bushel for corn they did not grow. Hog farmers would get five
dollars per head for hogs not raised. The program would be financed by a tax on processing plants, passed
on to consumers in the form of higher prices.
This was a bold attempt to help farmers address the systemic problems of overproduction and lower
commodity prices. Despite previous efforts to regulate farming through subsidies, never before had the
federal government intervened on this scale; the notion of paying farmers not to produce crops was unheard
of. One significant problem, however, was that, in some cases, there was already an excess of crops, in
particular, cotton and hogs, which clogged the marketplace. A bumper crop in 1933, combined with the slow
implementation of the AAA, led the government to order the plowing under of ten million acres of cotton, and
the butchering of six million baby pigs and 200,000 sows. Although it worked to some degree—the price of
cotton increased from six to twelve cents per pound—this move was deeply problematic. Critics saw it as
the ultimate example of corrupt capitalism: a government destroying food, while its citizens were starving, in
order to drive up prices.
Another problem plaguing this relief effort was the disparity between large commercial farms, which received
the largest payments and set the quotas, and the small family farms that felt no relief. Large farms often cut
production by laying off sharecroppers or evicting tenant farmers, making the program even worse for them
than for small farm owners. Their frustration led to the creation of the Southern Tenant Farmers Union
(STFU), an interracial organization that sought to gain government relief for these most disenfranchised of
farmers. The STFU organized, protested, and won its members some wage increases through the mid1930s, but the overall plight of these workers remained dismal. As a result, many of them followed the
thousands of Dust Bowl refugees to California (Figure 26.7).
Figure 26.7 Sharecroppers and tenant farmers suffered enormously
during the Great Depression. The STFU was created to help alleviate this
suffering, but many farmers ending up taking to the road, along with
other Dust Bowl refugees, on their way to California.
AMERICANA
Labor Songs and the Southern Tenant Farmers Union
"And if the growers get in the way, we’re gonna roll right over them
We’re gonna roll right over them, we’re gonna roll right over them
And if the growers get in the way, we’re gonna roll right over them
We’re gonna roll this union on
—John Handcox, “Roll the Union On”"
“Mean Things Happening in This Land,” “Roll the Union On,” and “Strike in Arkansas” are just a
few of the folk songs written by John Handcox. A union organizer and STFU member, Handcox
became the voice of the worker’s struggle, writing dozens of songs that have continued to be
sung by labor activists and folk singers over the years. Handcox joined the STFU in 1935, and
used his songs to rally others, stating, “I found out singing was more inspiring than talking . . . to
get the attention of the people.”
Racially integrated and with active women members, the STFU was ahead of its time. Although
criticized by other union leaders for its relationship with the Communist Party in creating the
“Popular Front” for labor activism in 1934, the STFU succeeded in organizing strikes and bringing
national attention to the issues that tenant farmers faced. While the programs Roosevelt put in
place did not do enough to help these farmers, the STFU—and Handcox’s music—remains a
relevant part of the country’s labor movement.
The AAA did succeed on some fronts. By the spring of 1934, farmers had formed over four thousand local
committees, with more than three million farmers agreeing to participate. They signed individual contracts
agreeing to take land out of production in return for government payments, and checks began to arrive by
the end of 1934. For some farmers, especially those with large farms, the program spelled relief.
While Roosevelt hoped the AAA would help farms and farmers, he also sought aid for the beleaguered
manufacturing sector. The Emergency Railroad Transportation Act created a national railroad office to
encourage cooperation among different railroad companies, hoping to shore up an industry essential to the
stability of the manufacturing sector, but one that had been devastated by mismanagement. More
importantly, the NIRA suspended antitrust laws and allowed businesses and industries to work together in
order to establish codes of fair competition, including issues of price setting and minimum wages. New Deal
officials believed that allowing these collaborations would help industries stabilize prices and production
levels in the face of competitive overproduction and declining profits; however, at the same time, many felt it
important to protect workers from potentially unfair agreements.
A new government agency, the National Recovery Administration (NRA), was central to this plan, and
mandated that businesses accept a code that included minimum wages and maximum work hours. In order
to protect workers from potentially unfair agreements among factory owners, every industry had its own
“code of fair practice” that included workers’ rights to organize and use collective bargaining to ensure that
wages rose with prices (Figure 26.8). Headed by General Hugh S. Johnson, the NRA worked to create over
five hundred different codes for different industries. The administration of such a complex plan naturally
created its own problems. While codes for key industries such as automotive and steel made sense,
Johnson pushed to create similar codes for dog food manufacturers, those who made shoulder pads for
women’s clothing, and even burlesque shows (regulating the number of strippers in any one show).
Figure 26.8 Consumers were encouraged to buy from companies displaying the Blue Eagle (a), the logo signifying compliance
with the new NRA regulations. With talons gripping a gear, representing industry, and lightning bolts, representing power, the
eagle (b) was intended to be a symbol of economic recovery.
The NIRA also created the Public Works Administration (PWA). The PWA set aside $3.3 billion to build public
projects such as highways, federal buildings, and military bases. Although this program suffered from
political squabbles over appropriations for projects in various congressional districts, as well as significant
underfunding of public housing projects, it ultimately offered some of the most lasting benefits of the NIRA.
Secretary of the Interior Harold Ickes ran the program, which completed over thirty-four thousand projects,
including the Golden Gate Bridge in San Francisco and the Queens-Midtown Tunnel in New York. Between
1933 and 1939, the PWA accounted for the construction of over one-third of all new hospitals and 70
percent of all new public schools in the country.
Another challenge faced by the NRA was that the provision granting workers the right to organize appeared
to others as a mandate to do so. In previously unorganized industries, such as oil and gas, rubber, and
service occupations, workers now sought groups that would assist in their organization, bolstered by the
encouragement they now felt from the government. The Communist Party took advantage of the opportunity
to assist in the hope of creating widespread protests against the American industrial structure. The number
of strikes nationwide doubled between 1932 and 1934, with over 1.5 million workers going on strike in 1934
alone, often in protests that culminated in bloodshed. A strike at the Auto-Lite plant in Toledo, Ohio, that
summer resulted in ten thousand workers from other factories joining in sympathy with their fellow workers
to attack potential strike-breakers with stones and bricks. Simultaneously in Minneapolis, a teamsters strike
resulted in frequent, bloody confrontations between workers and police, leading the governor to
contemplate declaring martial law before the companies agreed to negotiate better wages and conditions for
the workers. Finally, a San Francisco strike among 14,000 longshoremen closed the city’s waterfront and
eventually led to a city-wide general strike of over 130,000 workers, essentially paralyzing the city. Clashes
between workers, and police and National Guardsmen left many strikers bloodied, and at least two dead.
Although Roosevelt’s relief efforts provided jobs to many and benefitted communities with the construction
of several essential building projects, the violence that erupted amid clashes between organized labor and
factories backed by police and the authorities exposed a fundamental flaw in the president’s approach.
Immediate relief did not address long-existing, inherent class inequities that left workers exposed to poor
working conditions, low wages, long hours, and little protection. For many workers, life on the job was not
much better than life as an unemployed American. Employment programs may have put men back to work
and provided much needed relief, but the fundamental flaws in the system required additional attention—
attention that Roosevelt was unable to pay in the early days of the New Deal. Critics were plentiful, and the
president would be forced to address them in the years ahead.
Regional Planning
Regionally, Roosevelt’s work was most famously seen in the Tennessee Valley Authority (TVA) (Figure 26.9),
a federal agency tasked with the job of planning and developing the area through flood control, reforestation,
and hydroelectric power. Employing several thousand Americans on a project that Roosevelt envisioned as a
template for future regional redevelopment, the TVA revitalized a river valley that landowners had badly overfarmed, leaving behind eroded soil that lacked essential nutrients for future farming. Under the direction of
David Lilienthal, beginning in 1933, the TVA workers erected a series of dams to harness the Tennessee
River in the creation of much-needed hydroelectric power. The arrival of both electric lighting and machinery
to the region eased the lives of the people who lived there, as well as encouraged industrial growth. The TVA
also included an educational component, teaching farmers important lessons about crop rotation, soil
replenishment, fertilizing, and reforestation.
Figure 26.9 The TVA helped a struggling part of the country through the
creation of jobs, and flood control and reforestation programs. The
Wilson Dam, shown here, is one of nine TVA dams on the Tennessee
River. (credit: United States Geological Survey)
The TVA was not without its critics, however, most notably among the fifteen thousand families who were
displaced due to the massive construction projects. Although eventually the project benefited farmers with
the introduction of new farming and fertilizing techniques, as well as the added benefit of electric power,
many local citizens were initially mistrustful of the TVA and the federal government’s agenda. Likewise, as
with several other New Deal programs, women did not directly benefit from these employment opportunities,
as they were explicitly excluded for the benefit of men who most Americans still considered the family’s
primary breadwinner. However, with the arrival of electricity came new industrial ventures, including several
textile mills up and down the valley, several of which offered employment to women. Throughout his
presidency, Roosevelt frequently pointed to the TVA as one of the glowing accomplishments of the New Deal
and its ability to bring together the machinery of the federal government along with private interests to
revitalize a regional economy. Just months before his death in 1945, he continued to speak of the possibility
of creating other regional authorities throughout the country.
ASSESSING THE FIRST NEW DEAL
While many were pleased with the president’s bold plans, there were numerous critics of the New Deal,
discussed in the following section. The New Deal was far from perfect, but Roosevelt’s quickly implemented
policies reversed the economy’s long slide. It put new capital into ailing banks. It rescued homeowners and
farmers from foreclosure and helped people keep their homes. It offered some direct relief to the
unemployed poor. It gave new incentives to farmers and industry alike, and put people back to work in an
effort to both create jobs and boost consumer spending. The total number of working Americans rose from
twenty-four to twenty-seven million between 1933 and 1935, in contrast to the seven-million-worker decline
during the Hoover administration. Perhaps most importantly, the First New Deal changed the pervasive
pessimism that had held the country in its grip since the end of 1929. For the first time in years, people had
hope.
It was the hard work of Roosevelt’s advisors—the “Brains Trust” of scholars and thinkers from leading
universities—as well as Congress and the American public who helped the New Deal succeed as well as it
did. Ironically, it was the American people’s volunteer spirit, so extolled by Hoover, that Roosevelt was able
to harness. The first hundred days of his administration was not a master plan that Roosevelt dreamed up
and executed on his own. In fact, it was not a master plan at all, but rather a series of, at times, disjointed
efforts made from different assumptions. But after taking office and analyzing the crisis, Roosevelt and his
advisors did feel that they had a larger sense of what had caused the Great Depression and thus attempted
a variety of solutions to fix it. They believed that it was caused by abuses on the part of a small group of
bankers and businessmen, aided by Republican policies that built wealth for a few at the expense of many.
The answer, they felt, was to root out these abuses through banking reform, as well as adjust production and
consumption of both farm and industrial goods. This adjustment would come about by increasing the
purchasing power of everyday people, as well as through regulatory policies like the NRA and AAA. While it
may seem counterintuitive to raise crop prices and set prices on industrial goods, Roosevelt’s advisors
sought to halt the deflationary spiral and economic uncertainty that had prevented businesses from
committing to investments and consumers from parting with their money.
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