The Great Depression and its impact Attempts to halt the depression The FDR Years
The Great Depression and its impact
Attempts to halt the depression
The FDR Years
Second New Deal (1935-37)
Primary aim: permanent reform
Objectives: increased purchasing power and social security for public (social welfare measures such as pensions)
Beneficiaries: small farmers and labor; ordinary citizens
Aimed to make lasting changed so the Great Depression never happens again
Farm Security Administration (FSA) (1937)
A response to the problems of the AAA
Gave low interest rate loans to sharecroppers and tenant farmers to buy their own land
This policy may have been influenced by Eleanor Roosevelt, FDR’s wife, as she travels the U.S. in place of FDR. She talks to those affected and tells FDR.
She is quite progressive and aided in gaining the vote for FDR in the 2nd election as he seems to support minorities.
Works Progress Administration (WPA) (1935-43)
Purpose: relief and recovery
employed 8 million people at an average of $2 a day
built roads, bridges, schools and other public works, plus a 1600km windbreak of trees to stop further erosion from the Dust Bowl
thousands of unemployed writers, musicians, artists, actors temporarily went on the federal payroll, producing public projects ranging from murals to national park guidebooks
Aimed at both the industrial and agricultural sector
It was also dubbed "We Piddle Around"
Social Security Act (1935)
Many European countries had already introduced some form of social security to help the old, sick and the unemployed in the 1930s.
Gave money to states for aid to dependent children, established unemployment insurance through payroll deduction (superannuation), set up old-age pensions for retirees.
It proposed an unemployment insurance scheme to be provided by the individual states, with aid from the federal government.
This was very controversial as some believed this to be too socialist or communist
This is still enforced today
Background and beliefs
From a wealthy, establishment background
1921 – contracted polio that left him without the use of his legs
1928 – became Governor of New York
1930 – re-elected, showing more resource in dealing with Depression that other governors
FDR's personal qualities that made him popular:
He was pragmatic (practical)
He was a charismatic person who exhibited a warmth and understanding of people
→ fireside chats
He knew how to handle press by focusing attention on Washington – press conferences
He was willing to experiment .
→ flexibility allowed him to freely deal with Depression
→ Unlike Hoover who was restricted by his beliefs, ideals and policies such. As laissez-faire and voluntarism
Restored confidence and hope
Reasons that made FDR unpopular
To some was seen as too socialist
Was too concerned with the working and lower classes (majority) and was not entirely pro-business with his policies → therefore disliked by the wealthy
The Hundred Days
The economy was such a terrible state that Congress realised that drastic measures had to be taken
Senate and House of Representatives granted FDR power to take action
This special session lasted 100 days (8 March to 16 June 1933)
During this time, 13 new laws were passed to deal with the emergency
Emergency Banking Act:
FDR immediately closed all banks for a "four-day holiday" and rushed the act in 8 hours
Only banks that the government decided were honest and well run could reopen.
These banks were supported by the government loans to help them to continue operating and to reassure people that their money would be safe
The public's confidence in the banking system was restored and customer redeposited $1 billion shortly after the banks reopened.
FDR brought an end to it in 1933.
Breweries were legalised again and Americans could now enjoy a drink without being arrested.
Aided in decreasing unemployment as brewers were needed to produce the alcohol for consumption
The paying of the workers and the purchase of alcohol promoted the circulation of money in the economy
The sale of alcohol was also a new source of taxation for the govt in which the money obtained can be used in the initiatives to fund the New Deals
OVERVIEW: The New Deal
Involved the effort of a panel of experts called the "Brain Trust" to put together a programme of new laws and policies to help the U.S. out of the Depression
Relief: immediate, relieve extreme poverty – feed, clothe, shelter the starving and homeless; provide some kind of work for the unemployed and protect farmers from foreclosure; funded by the govt
Recovery: more long term solutions; to get the economy back into high gear, “priming the pump”; tackling problems such as over-production and under-consumption which were laying off workers
Reform: overhaul the system so could never happen again, make USA better for all - regulate banks, social welfare measures; social welfare payments were seen in the U.S. for the first time such as old age, unemployment and disability pensions
Overall objective: to save capitalism
First New Deal (1933-35)
Included in the first Hundred Days of his presidency, they came to be known as the "Alphabet Agencies"
Emphasis: relief and recovery
Primary aim: economic recovery
Objectives: higher prices for agriculture and business; create employment
Beneficiaries: big business (banks, industry) and agricultural business (recovery); the unemployed (reform)
Civilian Conservation Corp (CCC)
Gave outdoor jobs to single men under 25
Lived in govt camp in the countryside and did hard work such as clearing land, planting trees to stop soil blowing away and strengthening rivers for flood control.
The men got food, clothing and a sense of purpose
Most of their small wages ($1 a day) were sent home to help their parents.
Between 1933 and 1942, nearly 3 million men took part in the CCC scheme.
Some people criticised it as cheap labour, but it was not compulsory and those who did join learnt skills that could help them get jobs afterwards.
First Agricultural Adjustment Agency (AAA)
Purpose: the recovery of agriculture
Paid farmers who to produce less food by taking land out of production or reducing livestock
This dealt with problems of over-production and under-consumption
Less produce meant the prices went up and between 1933 and 1939, the farmers’ incomes doubled
The government. bought and killed six million piglets in 1933. Some of the meat was tinned and given to the poor but about 9/10 was destroyed wastage
The AAA helped the farmers but not the tenants and sharecroppers who worked on the land.
Many of them were often evicted because there was not much work for them to do and farmers replaced them with machinery which they purchased with govt money
It was overturned by the Supreme Court as it was unconstitutional as regulations on the agricultural sector could only be made by individual states and not by the Federal Govt.
National Recovery Administration (NRA) (1933 – 35)
Purpose: recovery of industry (and some elements of reform)
Created a partnership of business, labor, and government to attack the Depression with such measures as union representation, price controls, high wages, and codes of fair competition and employment (these could be considered reform)
Increase worker’s wages so that they would have more money to spend on goods
Increase the price of factory goods (which had dropped rock bottom) to help the factories
Give workers a fairer deal in the workplace, including better working conditions and shorter hours
Codes were drawn up for each industry which owners and businesspeople were encouraged to sign.
The codes fixed prices for the goods, limited workers’ hours, set minimum wages, and forbade child labour.
Workers were given the right to join trade unions and brutal strike-breaking practices were outlawed.
Workers were in agree while employers, republicans and conservatives were not a form of govt intervention as they set prices, working hours, wages and forbade child labour
people were against this as this began to look like socialist planning and as a result it was overturned by the supreme court due to it being unconstitutional
the president is not allowed to make laws to control business