THE NEW DEAL
SOCIAL and ECONOMIC CHANGE
1933-1939
Richard J. Garfunkel
4/4/2000
I. The Crash 1929 and Its Aftermath
A. The economy 1919-29
1. The boom after WWI
2. Growth of National Income in the early 1920’s
3. WWI debt owed to the United States by the Allies
4. Recurring business cycle
B. The Stock Market Collapse of 1929
1. Overvalued stocks
2. Margin debt owed to brokers
3. Stock Market value in 1932; 17% of Sept ’29 value
4. Reduced consumer spending
5. Over-saturated automobile market
6. Reduction of immigration- reduced housing
C. The Depression
1. Collapse of raw material prices
2. Decline of exports
3. Collapse of German economy
4. The Smoot-Hawley protective tariff
5. Retaliatory foreign tariffs and trade restrictions
6. British withdrawal from the Gold Standard
7. Liquidity crisis over the Federal Reserve’s policies
II. The Aftermath 1929-32
1. Business Failures per 100,000 concerns
a. 1928 -109
b. 1929- 104
c. 1930- 122
d. 1931- 133
e. 1932- 154
f. 1933- 100
g. 1934- 61
h. 1935- 62
2. Gross Nation Product (Goods and Services of U.S.A.)
a. 1929- 103.8 Billion
b. 1930- 90.7
c. 1931- 75.9
d. 1932- 58.3
e. 1933- 55.8
f. 1934- 64.9
g. 1941- 125 (WWII)
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3. Employment and the % Unemployed (thousands)*
a. 1928- 46,057 4%
b. 1929- 47,925 3
c. 1930- 46,081 6.3
d. 1931- 42,727 16.5
e. 1932- 38,727 29.4
f. 1933- 38,827 30.5
g. 1934- 41,474 23.3
* US Bureau of the census, “Historical Statistics of the United States 1789-45
Washington, DC, US Government Printing Office 1952
III. The Social Atmosphere
1. National Conditions:
a. Vast unemployment
b. Collapse of commodity prices
c. Failure of the farms
d. Immigration from the farms to the Coasts
e. Breadlines
f. Ban failures
g. Social unrest
2. Political Consequences
a. Shift in power
b. 1860-1932 GOP the dominant party
1. Controlled the Senate for 62 years
2. Controlled the House for 46 years
3. Two Democratic Presidents (16 years) Cleveland
and Wilson
4. Loss of Congress and the Presidency
5. GOP unused to minority statue
c. Senate Dems Reps Other
1. 1933-4 60 35 1
2. 1935-6 69 25 2
3. 1937-8 76 16 4
4. 1939-40 69 23 4
d. House
1. 1933-4 310 117 5
2. 1935-6 319 103 10
3. 1937-8 331 89 13
4. 1939-40 261 164 4
e. Presidency- Electoral Votes and %
1. 1932 472 57.4
2. 1936 523 60.8
3. 1940 449 53.5
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IV. The Rise of the New Deal- (Phrase written for FDR’s acceptance speech at 1932
Democratic National Convention in Chicago. Theodore Roosevelt’s Square Deal,
Woodrow Wilson’s New Freedom)
1. The First New Deal 1933-4 Aims ( The first Hundred Days) 1.
a. Unemployment and poverty relief
b. Economic Recovery
c. Economic and Social Reform
2. Phase One- Stop the Panic- Bring back confidence in the government
a. The Hundred Days- Legislation- 1933
1. Unemployment relief- jobs- CCC, PWA, FERA
2. Banking and Security Reform-FDIC
3. Regional Development- TVA, CWA
4. End of Prohibition- Repeal of the Volstead Act
5. National Planning- NRA , NLB
6. Farm Relief- AAA, FCA
b. Executive Action
1. Fireside Chats
2. Publicity
3. Bank Holiday
4. Reversing the panic
5. Support of Business
6. Phase Two- Social Change and Reform- 1934
a. The Emergence of Labor, Federalization and Regulation
1. Labor Laws- NRB, NLRB (Wagner Act)
2. Housing- FHA
3. Regulation- FCC-SEC
4. Transportation- NRAB- railroads
7. The NRA- National Recovery Administration
a. Government and Business Cooperation
b. AAA factories couldn’t prosper while farms were in a
depression.
c. Pump- Priming
1. PWA- Harold Ickes- Interior Dept.
2. FERA- Harry Hopkins –
3. Monetary Expansion- going off the Gold Standard
deficit spending- Keynsian economics.
d. Electoral Support- first and only time Presidential Party gains
seats in both Houses
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8. Criticism over the pace of progress
a. Thunder on the Left and the Right
1. The Left:
a. Huey Long
b. Father Coughlin
c. Francis Townsend
d. Norman Thomas
e. Upton Sinclair
f. The LaFollettes
2. The Right
a. Herbert Hoover
b. The Liberty League
c. Business community
V. The 2nd New Deal 1935- Response to Criticism
1. New Legislation and its Impact
a. Social Impact- REA- rural electrification
b. Soil Conservation- SCS- helping farmers
c. National Youth Act- NYA- social involvement
d. Old Age Pensions- SSB- Social Security
e. Employment- WPA- helping employ non factory labor
f. Bituminous Coal Labor Board- labor in the minds
2. Judicial Review
a. Supreme Court rules NRA unconstitutional
b. Other laws (Social Security, NLRB, Tax reform,
utility dissolution threatened by Court review
3. Electoral Coalition
a. Political referendum of 1936
1. Landslide- winning 46 states- 60.8% of the vote
2. Uniting different groups
a. Urban workers
b. Farmers
c. Ethnic and racial minorities
d. Intellectuals
e. Southern poor
b. Consequences
1. Legislative dominance 1936 to the 1970’s
2. New constituencies and favored legislation
a. Labor laws
b. Farm subsidies
c. Welfare
d. Religious and ethnic toleration- job set-a-sides
e. Educational opportunities
f. Medicare, Medicaid
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V. The Third New Deal- 1937-8
1. Electoral success versus Judicial Review
a. Court Re-organization
1. Legislation to expand the Court from 9 to 15 members
2. Age criteria ( many of the Justices were over 70 years old, 7 were appointed by Republican Presidents and most were conservative)
3. Congressional Coalition halts plan
4. Justices retire
5. Legislation upheld
b. Roosevelt eventually appoints all new court
2. Third New Deal Legislation
a. Farm Security- FSA- 1937, Fed. Crop Ins. Corp. FCIC 1938
b. Housing -USHA- Housing Authority -1937
c. Regulation- CAA- Civil Aeronautics -1938, Maritime Labor Board- MLB Fair Labor Standards Act
d. Federal Reorganization- BOB- Bureau of the Budget, Federal
Security Agency, FSA
3. Electoral Purge of 1938 and political set-backs
VI- Evaluation of the New Deal
1. Criticism from the Right
a. Government intervention in the economy and society had gone
to far.
b. Market mechanism impaired
c. Too much reliance on government
d. Too much concentration of power in Washington
2. Criticism from the Left
a. New Deal saved a capitalistic system that failed
b. Achieved only minor reforms
c. Recovery did not really come until WWII
d. Inequalities of income were not noticeably narrowed
e. Relief from poverty was stingy and limited
3. Both sets of these arguments were rejected by a majority of the electorate and
historians.
4. Programs universally applauded: CCC, FDIC, TVA, Social Security
5. WPA was on one hand the most popular and the most unpopular!
6. Much of the New Deal was unknown to most of the public.
7. The New Deal enmeshed politics and economics- regulated or “safety-net capitalism
8. Did not bring full economic recovery! Unemployment remained high and economic activity never fully recovered to 1928 levels.
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In Roosevelt’s own words this introduction to the first volume of his collected papers and addresses possibly sums up his thoughts on the philosophy of the New Deal:
There were inconsistencies of methods…inconsistencies born of insufficient knowledge. There were
inconsistencies springing from the need of experimentation. But through them all, I trust that there
also be found a consistency and continuity of broad purpose.
Consistently I have sought to maintain a comprehensive and efficient functioning of the representative
form of democratic government in its modern sense. Consistently I have sought through that form of
government to help our people to gain a larger social justice.
Basically we aim at the assurance of a rounded, permanent national life. Change from what historian Arthur Schlesinger called “single-interest” government, to the goal of a comprehensive and efficient functioning of the representative form of democratic government. FDR’s desire for a “rounded permanent national life” expressed his idea of a stronger sense of community mutuality and obligation, man to man, and man to land, which were in his view the only basis of a lasting security. Probably the most central concept of the New Deal, at least in terms of frequency was interdependence. In private, FDR mixed the satisfaction of achievement with disappointment that the New Deal system had not come closer to his intentions. But he often acknowledged its flaws as democracy’s price.
After the war, he said, there must be renewed efforts to achieve resource and public works planning… In the meantime, shortcomings should be noted in the spirit of a remark he made in 1936, so often quoted.
The immortal Dante tells us that divine justice weighs the sins of the coldblooded and the sins of the
warmhearted in different scales. Better the occasional faults of a government that lives in the spirit
of charity that the constant omissions of a government frozen in the idea of its own indifference.