history

The Great Depression, 1929-1941, Part 2

5. The First New Deal

During FDR’s first few months in office in 1933 he enacted a series of emergency federal bills designed to respond to the Depression.

His administration’s main strategy was to try and restore the public’s faith in banking, and to provide work and federal dollars to the unemployed male workforce.

This period was called at the time “the first hundred days.”

(The first hundred days was also called the First New Deal.)

Below is a brief description of the most influential bills of the First New Deal:

· Emergency Banking Relief Act: Expanded the government’s authority over private banks.

· Federal Deposit Insurance Corporation (FDIC): It’s main task was to insure bank deposits by business and ordinary people up to several hundred thousand dollars, thereby guaranteeing depositors that their money would not vanish in the event of another crisis. This encouraged faith in banking.

· Federal Emergency Relief Administration (FERA): Congress authorized $500 million for FERA, which was a system of federal grants for states to establish local work-relief projects.

· Agricultural Adjustment Administration (AAA): set prices for corn, wheat, hogs, cotton, rice, and dairy products. The AAA planners were aiming to restore market prices equal to 1909-1914; also introduced subsidies, where farmers where paid for reducing surplus and in many cases not planting at all.

· Tennessee Valley Authority (TVA): Great success of the New Deal. A public corporation that paid for the construction of dams and power plants, produced cheap fertilizer for farmers, and brought electricity for the first time to thousands of rural people in six southern states.

· National Recovery Administration (NRA): A government agency established to hammer out agreements between unions and corporations to keep production going and to prevent strikes.

· Public Works Administration (PWA): Focused on constructing roads, public and administrative buildings, and other city projects. Eventually the PWA ended up spending $4.2 billion employing men constructing roads, schools, parks, post offices, bridges, and courthouses, mostly in towns and citis.

· Civilian Conservation Corps (CCC): Established in March of 1933. Focused on rural road construction, reforestation, flood control, and national park construction, all in work camps across the nation. Workers received room and board and $30 each month, of which $25 had to be sent home to dependents. By 1942 almost 3 million young men had worked in more than 1,500 CCC stations across the nation.

6. The Presidential Election of 1936

FDR won the 1936 presidential elections, garnering 61% of the popular vote.

He carried every state except Maine and Vermont.

In the 1936 election FDR’s main supporter were white Democrats in the South who were mostly poor farmers, and urban, working-class Jews, Catholics, and black Americans in cities in the north and out west.

This voting bloc became the “New Deal Coalition” ensuring that with one exception--Dwight D. Eisenhower in 1953--all presidents after FDR up to the 1968 elections were Democrats.

The 1936 election was the first time Black Americans voted majority Democrat, not Republican (“Lincoln’s party”), since the end of the Civil War in 1865.

One of the reasons for this shift was that for the first time, many black Americans acquired a sense of hope that with FDR and the Democrats, the long legacy of racial discrimination might change.

Though there were no New Deal programs that officially focused on black Americans, FDR worked with black community leaders to divert some federal funds to employ black Americans.

For example, by 1935 the WPA had employed 350,000 black workers…the CCC employed about the same number by the time it ended in 1942.

7. The Second New Deal

During this second term in office FDR tried to focus on creating a federal safety net for unemployed workers, in the event a similar crisis befell the nation again.

He wanted to prevent the absence of any institutionalized assistance for America’s workers that had characterized the stock market crash of 1929.

Plus, both political conservatives and progressives had criticized FDR during the First New Deal.

Conservatives claimed he went too far, and progressives claimed he did not go far enough.

As a result, already in 1935 at the end of his first term and lasting into his second term, FDR pushed Congress to enact a series of laws that were more progressive, focusing on unemployment, old-age retirement, and labor relations.

FDR relied on several research committees comprised of women professors, researchers, and economists.

This period of FDR’s continued legislation to plan for future unemployment was called the Second New Deal.

The center piece was the Social Security Act of 1935.

It did the following:

· Provided old-age retirement pension money and unemployment insurance. A payroll tax on workers and their employers created a fund from which retirees received monthly payments after age 65. Payments depended on how much workers and their employers had contributed over the years. All this was to be administered by the Social Security Board, a massive and complex bureaucracy (hence the SSN). Monthly payments for retirees were small at first, as little as $10 per month. The SSA Act made no provisions for part-time workers, public workers, domestic workers, or agricultural workers.

Other important legislation from the Second New Deal included:

· The 1935 National Labor Relations Act (Wagner Act): For the first time the federal government guaranteed the right of workers to form unions and bargain collectively for improved wages, benefits, and working conditions with corporations.

· The 1935 Resettlement Administration (RA): The RA was supposed to provide loans for farmers to relocate to more productive areas. It also sponsored reforestation and erosion projects in the West and Southwest. Due to lack of funds and mismanagement, the RA only resettled one percent of the estimated 500,000 families who needed help.

· The 1937 National Housing Act set aside money for public housing and to demolish slums

· The 1938 Fair Labor Standards Act established, for the first time, federal minimum wage and maximum work hours, as well as prohibiting child labor. The first federal minimum wage was .25 cents an hour.

It’s important to underline that the New Deal program did not actually end the Great Depression.

In fact, the stock market crashed a second time in 1938.

It was America’s entry into World War II that revitalized the economy.

Responses (Due Monday April 13):

What was the stock market crash of 1929?

How did “good business” during the 1920s contribute to the crash of 1929?

Name three examples from the New Deal programs designed to prop up America’s economy during the 1930s.

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