The
"NEW DEAL"
(United States) Presidents, 1933-1938
The nation needed immediate relief, recovery from economic
collapse, and reform to avoid future depressions, so relief,
recovery and reform became Franklin D. Roosevelt's goals
when he took the helm as president. At his side stood a
Democratic Congress, prepared to enact the measures carved
out by a group of his closest advisors — dubbed the
“Brain Trust” by reporters. One recurring theme
in the recovery plan was Roosevelt’s pledge to help
the “forgotten man at the bottom of the economic pyramid.”
Birth of the “New Deal”
The
term New Deal was coined during Franklin Roosevelt’s
1932 Democratic presidential nomination acceptance speech,
when he said, "I pledge you, I pledge myself, to a
new deal for the American people." Roosevelt summarized
the New Deal as a "use of the authority of government
as an organized form of self-help for all classes and groups
and sections of our country."
At his inauguration
in March 1933, Roosevelt declared in his lilting style,
"Let me assert my firm belief that the only thing we
have to fear is, fear itself — needless, unreasoning,
unjustified terror which paralyzes needed efforts to convert
retreat into advance." In his first 99 days, he proposed,
and Congress swiftly enacted, an ambitious "New Deal"
to deliver relief to the unemployed and those in danger
of losing farms and homes, recovery to agriculture and business,
and reform, notably through the inception of the vast Tennessee
Valley Authority (TVA). The New Deal effects would take
time; some 13,000,000 people were out of work by March 1933,
and virtually every bank was shuttered.
The New Deal
programs were born in Brain Trust meetings prior to Roosevelt’s
inauguration, and also were a grateful nod to Theodore Roosevelt's
"square deal" of 30 years earlier. Members of
the group included Raymond Moley, an American journalist
and public figure; Rexford Tugwell, Adolf Berle of Columbia
University, attorney Basil O'Connor, and later, Felix Frankfurter
of Harvard Law School. Many of Roosevelt's presidential
campaign advisors continued to counsel him after he was
elected, among them Berle, Moley, Tugwell, Harry Hopkins,
and Samuel I. Rosenman; but they never met again as a group
after his inauguration.
Herbert
Hoover
Opening
the way for the New Deal, President Herbert Hoover was defeated
by Franklin D. Roosevelt in the Election of 1932. Hoover,
who had been blamed for the stock market crash and the Depression,
strongly opposed Roosevelt's New Deal legislation, in which
the federal government assumed responsibility for the welfare
of the nation by maintaining a high level of economic activity.
According to Hoover, Roosevelt had been slow to reveal his
New Deal programs during the presidential campaign and worried
that the new president would sink the nation into deficit
spending to pay for the New Deal. Roosevelt never consulted
Hoover, nor did he involve him in government in any way
during his presidential term.
The
"Hundred Days"
The
president called a special session of Congress on March
9. Immediately he began to submit reform and recovery measures
for congressional validation. Virtually all the important
bills he proposed were enacted by Congress. The 99-day (March
9-June 16) session came to be known as the "Hundred
Days."
On March 12,
1933, Roosevelt broadcast the first of 30 "fireside
chats" over the radio to the American people. The opening
topic was the Bank Crisis. Primarily, he spoke on a variety
of topics to inform Americans and exhort them to support
his domestic agenda, and later, the war effort. During Roosevelt's
first year as president, Congress passed laws to protect
stock and bond investors.
Among the measures
enacted during the first Hundred Days were the following:
Emergency
Banking Act (March 9), provided the president with
the means to reopen viable banks and regulate banking;
Economy
Act (March 20), cut federal costs through reorganization
of and cuts in salaries and veterans' pensions;
Beer-Wine
Revenue Act (March 22), legalized and taxed wine and
beer;
Civilian
Conservation Corps Act (March 31). Three million young
men, between the ages of 18 to 25, found work in road building,
forestry labor and flood control through the establishment
of the Civilian Conservation Corps (CCC);
Federal
Emergency Relief Act (May 12), established the Federal
Emergency Relief Administration to distribute $500 million
to states and localities for relief. Administered by Harry
Hopkins for relief or for wages on public works, that federal
agency would eventually pay out about $3 billion;
Agricultural
Adjustment Act (May 12), established the Agricultural
Adjustment Administration to decrease crop surpluses by
subsidizing farmers who voluntarily cut back on production;
Thomas
Amendment to the Agricultural Adjustment Act, permitted
the president to inflate the currency in various ways;
Tennessee
Valley Authority Act (May 18), allowed the federal
government to build dams and power plants in the Tennessee
Valley, coupled with agricultural and industrial planning,
to generate and sell the power, and to engage in area development.
The TVA was given an assignment to improve the economic
and social circumstances of the people living in the river
basin; and the
Federal
Securities Act (May 27), to stiffen regulation of the
securities business.
The
“Second Hundred Days"
Congress also
enacted several important relief and reform measures in
the summer of 1935 — sometimes called the Second Hundred
Days.
During the Second
Hundred Days, those measures enacted included:
Joint
resolution to abandon the gold standard (June 5);
National
Employment System Act (June 6), to create the U.S.
Employment Service;
Home
Owners Refinancing Act (June 13), to establish the
Home Owners Loan Corporation (HOLC) to refinance non-farm
home mortgages;
Glass-Steagall
Banking Act (June 16), to institute various banking
reforms, including establishing the Federal Bank Deposit
Insurance Corporation, that insured deposits up to $5,000,
and later, $10,000;
Farm
Credit Act (June 16), to provide for the refinancing
of farm mortgages;
Emergency
Railroad Transportation Act (June 16), to increase
federal regulation of railroads; and the
National
Industrial Recovery Act (June 16), to establish the
National Recovery Administration and the Public Works Administration.
Following Roosevelt's
lead, the government launched a relief program, the Civil
Works Administration (CWA), in winter 1933-1934. The CWA
provided funds to such authorities as mayors and governors
for public projects including road, bridge, and school construction,
park restoration, and others. Critics castigated the CWA
as make-work, much of it useless.
After a few months,
Roosevelt terminated the CWA, but other programs enjoyed
longer lives. The Civilian Conservation Corps (CCC) lasted
from 1933 until 1942. Its members produced notable and lasting
results with flood control, soil conservation and forestry
programs. The Works Progress Administration (WPA) was established
in 1935 to provide work for the unemployed. Between that
year and 1941, the WPA employed an average of two million
people a year. The WPA went on to spend billions on reforestation,
flood control, rural electrification, water works, sewage
plants, school buildings, slum clearance, student scholarships,
and other projects. Their crowning achievement came in the
completion of the Bonneville Dam on the Columbia in 1937.
The
New Deal also greatly influenced the American Labor Movement,
especially through the following legislation:
Through the National Industrial Recovery Act of 1933 the
National Recovery Administration (NRA) came into being.
The NRA attempted to revive industry by raising wages, reducing
work hours and reining in unbridled competition. Portions
of the NRA were ruled unconstitutional by the Supreme Court
in 1935; however, the Works Progress Administration (WPA),
which was the second part of the NRA, was allowed to stand.
The majority of its collective bargaining stipulations survived
in two subsequent bills. The NRA — a product of meetings
among such “Brain Trust” advisors as Raymond
Moley, big business leaders, and labor unionists —
illustrated Roosevelt's willingness to work with, rather
than against, business interests.
Employees were
guaranteed the right to negotiate with employers through
unions of their choosing by the Wagner Act of 1935, and
it established a Labor Relations Board as a forum for dispute
resolution. The act bolstered the American Federation of
Labor, and pointed to the inception of the Congress of Industrial
Organizations (C.I.O.), another labor movement.
Workers were given the right to bargain collectively through
the National Labor Relations Act of 1935.
The Fair Labor Standards Act of 1938 promulgated a 44-hour
workweek with time-and-a-half for overtime and pegged a
minimum wage of 25 cents an hour. The act also provided
that the hours worked would drop to 40 and the wage would
incrementally rise to 40 cents. In addition, the bill made
child labor under the age of 16 illegal.
The U.S. government
could reach out in the widest way to alleviate human misery
— such was an assumption that underlay the New Deal.
Beginning in 1935, Congress enacted the Social Security
Act of 1935 (and later amendments) that provided pensions
to the aged, benefit payments to dependent mothers, crippled
children and blind people, and unemployment insurance. Small
businesses, homeowners and the oil and railroad industries
were given help by other legislation.
Who
paid for the New Deal?
The
foregoing projects, and others, were expensive, and the
government was not taking in enough revenue to avoid deficit
spending. To fund all the new legislation, government spending
rose. Spending in 1916 was $697 million; in 1936 it was
$9 billion. The government modified taxes to tap wealthy
people the most, who could take it in stride most easily.
The deficit was made up in part by raising taxes and borrowing
money through the sale of government bonds. Meanwhile, the
national debt climbed to unprecedented heights.
Response in the U.S. Supreme Court
Supreme
Court Chief Justice Charles Evans Hughes provided a swing
vote during the critical Depression and New Deal eras, although
liberal senators had assumed that he would hold conservative
positions when he was nominated by Hoover in 1930. Critics
have suggested that some of Hughes’ pro-New Deal stances
were prompted by a desire to weaken FDR's court-packing
scheme, not by conviction. He supported Franklin Roosevelt’s
decision not to pay government obligations in gold, provided
a critical vote upholding collective bargaining rights under
the Wagner Act and upheld the controversial Social Security
Act.
On other occasions,
however, Hughes dealt severe blows to the New Deal, most
notably in Schechter Poultry Corporation v. United States
(1935), in which he voted with the majority to strike down
the National Industrial Recovery Act. In 1937, Hughes publicly
opposed Roosevelt’s plan to pack the Supreme Court
with sympathetic justices and offered his opinion in writing
to the Senate Judiciary Committee.
Opponents
of the New Deal
By
1934, the New Deal was encountering opposition from both
ends of the political spectrum. All around the country,
brazen unions — some Marxist-influenced — sparked
job actions, including a city-wide strike in San Francisco.
Nevertheless, the most prominent left-wing threat to Roosevelt
was a Louisiana senator, Huey P. Long, who railed at the
New Deal for not doing enough. Conservatives argued that
Roosevelt had done too much. Some of them organized the
American Liberty League in August 1934 to galvanize the
right. However, in the mid-term elections, the Democrats
gained enough seats in both houses of Congress to enjoy
veto-proof majorities.
The nation saw
measurable progress by 1935, but businessmen and bankers
increasingly opposed the New Deal. The president's experiments
alarmed them. The rich, conservatives, numerous businessmen
— and those who were all three — vigorously
opposed the New Deal. They were dismayed by his toleration
of budget deficits and his removal of the nation from the
gold standard, and were disgusted by legislation favorable
to labor.
Election of 1936
The
U.S. Supreme Court had been nullifying crucial New Deal
legislation, but the president was re-elected by a wide
margin in 1936. That nationwide endorsement of FDR, who
carried every state except Vermont and Maine, convinced
him that he had popular backing. To capitalize on it, Roosevelt
introduced legislation to expand the federal courts, ostensibly
as a straightforward organizational reform, but actually
to "pack" the courts with justices sympathetic
to his proposals. He was unsuccessful, but constitutional
law would eventually change to allow the government to regulate
the national economy.
Conclusion
As
the free world geared up to fight the Axis powers, Roosevelt
began to turn his attention away from domestic policies
and toward helping the Allies, while maintaining an isolationist
position towards entering the fighting of World War II.
With America’s eventual entry into the war, that nation’s
economy continued to improve. Large-scale production of
military equipment and the draft turned America’s
eyes toward a larger enemy than the beast of poverty that
it had once known during The Great Depression, thus closing
the chapter on the New Deal.
(http://www.u-s-history.com/pages/h1851.html)
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