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The Great Depression and The New Deal 1933-1939
The Great Depression and The New Deal 1933-1939
1933-1939
were forced to lower their work hours so that more people could be hired; a
minimum wage was also established. Workers were formally guaranteed the right
to organize and bargain collectively through representatives of their choosing, not
through the company's choosing.
Although initially supported by the public, collapse of the NRA came in 1935 with
the Supreme Court's Schechter decision in which it was ruled that Congress could
not "delegate legislative powers" to the president and that congressional control of
interstate commerce could apply to local fowl business.
The Public Works Administration (PWA) was intended for both industrial
recovery and for unemployment relief. Headed by Harold L. Ickes, the agency
spent over $4 billion on thousands of projects, including public buildings and
highways.
In order to raise federal revenue and provide a level of employment, Congress
repealed prohibition with the 21st Amendment in late 1933.
Paying Farmers Not to Farm
Congress created the Agricultural Adjustment Administration (AAA). It
established "parity prices" for basic commodities. "Parity" was the price set for a
product that gave it the same real value, in purchasing power, that it had from
1909-1914. The agency also paid farmers to reduce their crop acreage,
eliminating surpluses, while at the same time increasing unemployment.
The Supreme Court struck down the AAA in 1936, declaring its regulatory taxation
provisions unconstitutional.
The New Deal Congress passed the Soil Conservation and Domestic Allotment
Act of 1936. The reduction of crop acreage was now achieved by paying farmers
to plant soil-conserving crops.
The Second Agricultural Adjustment Act of 1938 continued conservation
payments; if farmers obeyed acreage restrictions on specific commodities, they
would be eligible for parity payments.
Dust Bowls and Black Blizzards
Late in 1933, a prolonged drought struck the states of the trans-Mississippi Great
Plains. The Dust Bowl was partially caused by the cultivation of countless acres,
dry-farming techniques, and mechanization.
Sympathy towards the affected farmers came with the Frazier-Lemke Farm
Bankruptcy Act, passed in 1934. It made possible a suspension of mortgage
foreclosures for 5 years. It was struck down in 1935 by the Supreme Court.
In 1935, President Roosevelt set up the Resettlement Administration, given the
task of moving near-farmless farmers to better lands.
The Indian Reorganization Act of 1934 encouraged Native American tribes to
establish self-government and to preserve their native crafts and traditions. 77
tribes refused to organize under the law, while hundreds did organize.
Battling Bankers and Big Business
In order to protect the public against fraud, Congress passed the "Truth in
Securities Act" (Federal Securities Act), requiring promoters to transmit to the
investor sworn information regarding the soundness of their stocks and bonds.
In 1934, Congress took further steps to protect the public with the Securities
and Exchange Commission (SEC). It was designed as a watchdog
administrative agency.
wage and maximum-hour levels. Labor by children under the age of 16 was
forbidden.
In 1938, the CIO joined with the AF of L and the name "Committee for Industrial
Organization" was changed to "Congress of Industrial Organizations."-led by
John Lewis. By 1940, the CIO claimed about 4 million members.
Landon Challenges "the Champ" in 1936
As the election of 1936 neared, the New Dealers had achieved considerable
progress, and millions of "reliefers" were grateful to their government.
The Republicans chose Alfred M. Landon to run against President Roosevelt. The
Republicans condemned the New Deal for its radicalism, experimentation,
confusion, and "frightful waste."
President Roosevelt was reelected as president in a lopsided victory. FDR won
primarily because he had appealed to the "forgotten man." He had forged a
powerful and enduring coalition of the South, blacks, urbanites, and the poor.
Nine Old Men on the Supreme Bench
Ratified in 1933, the 20th Amendment shortened the period from election to
inauguration by 6 weeks. FDR took the presidential oath on January 20, 1937,
instead of the traditional March 4.
Roosevelt saw his reelection as a mandate to continue the New Deal reforms. The
ultraconservative justices on the Supreme Court proved to be a threat to the New
Deal as the Roosevelt administration had been thwarted 7 times in cases against
the New Deal.
With his reelection, Roosevelt felt that the American people had wanted the New
Deal. If the American way of life was to be preserved, he argued, and then the
Supreme Court had to get in line with public opinion. President Roosevelt released
his plan to ask Congress to pass legislation allowing him to appoint one new justice
to the Supreme Court for every member over the age of 70 who would not retire;
the maximum number of justices would now be 15. Shocking both Congress and
the public, the plan received much negative feedback.
The Court Changes Course
President Roosevelt was belittled for attempting to break down the checks and
balances system among the 3 branches of government.
Justice Owen J. Roberts, formerly regarded as a conservative, began to vote
liberal. In March 1937, the Supreme Court upheld the principle of state minimum
wage for women, reversing its stand on a different case a year earlier. The Court,
now sympathetic towards the New Deal, upheld the National Labor Relations Act
(Wagner Act) and the Social Security Act.
A succession of deaths and resignations of justices enabled Roosevelt to appoint 9
justices to the Court.
FDR aroused conservatives of both parties in Congress so that few New Deal
reforms were passed after 1937. He lost much of the political goodwill that had
helped him to win the election of 1936.
The Twilight of the New Deal
In Roosevelt's first term, from 1933-1937, unemployment still ran high and
recovery had been relatively slow. In 1937, the economy took another
downturn as new Social Security taxes began to cut into payrolls and as the
Roosevelt administration cut back on spending out of the continuing reverence for
the orthodox economic doctrine of the balanced budget.
The New Deal had run deficits for several years, but all of them had been
somewhat small and none was intended. Roosevelt embraced the
recommendations of the British economist John Maynard Keynes. The newlyaccepted "Keynesianism" economic program was to stimulate the economy by
planned deficit spending.
In 1939, Congress passed the Reorganization Act, giving President Roosevelt
limited powers for administrative reforms, including the new Executive Office in
the White House.
Congress passed the Hatch Act of 1939, barring federal administrative officials
from active political campaigning and soliciting. It also forbade the use of
government funds for political purposes as well as the collection of campaign
contributions from people receiving relief payments.
New Deal or Raw Deal?
Foes of the New Deal charged the president of spending too much money on his
programs, significantly increasing the national debt; by 1939, the national debt
was at $40,440,000,000. Lavish financial aid and relief were undermining the old
virtue of initiative.
Private enterprise was being suppressed and states' rights were being ignored.
The most damning indictment of the New Deal was that it did not end the
depression; it merely administered "aspirin, sedatives, and Band-Aids." Not until
World War II was the unemployment problem solved.
FDR's Balance Sheet
New Deal supporters had pointed out that relief, not economy, had been the
primary objective of their war on the depression. Roosevelt believed that the
government was morally bound to prevent mass hunger and starvation by
"managing" the economy.
FDR was a Hamiltonian in his idea of big government, but a Jeffersonian in his
concern for the "forgotten man."
New Deal Acronyms
Acronym
Definition
AAA
Agricultural
Adjustment
Administration
CCC
Civilian
Conservation Corps
CWA
Civil Works
Administration
FERA
Federal Emergency
Relief
Administration
FHA
Federal Housing
Administration
FSA
Farm Security
Administration
HOLC
NRA
National Recovery
Administration
NYA
National Youth
Administration
PWA
Public Works
Administration
REA
Rural Electrification
Administration
SSA
Social Security
Administration
TVA
Tennessee Valley
Authority
WPA
Work Projects
(Progress)
Administration