Election of 1932
CHAPTER 15
FRANKLIN D. ROOSEVELT
AND THE NEW DEAL
• Herbert Hoover: Rep. Candidate
• Franklin D. Roosevelt: Demo.
Candidate
• Major Issue: the depression
• Minor Issue: prohibition
Herbert Hoover
•
•
•
•
•
Born in Iowa
Quaker
Orphaned
Attended Stanford
Self-made millionaire
(mining engineer)
• Food Administrator
during WW1
• Elected Pres. in 1928
Franklin D. Roosevelt
•
•
•
•
•
Wealthy N.Y family
Asst. Sect. Navy
N.Y. State Legislator
Gov. New York: 1928
V.P. Candidate in 1920
election (Cox)
• Paralyzed with polio at
age 39 (1921)
FDR’s famous quotes
• “I pledge to you, I pledge to myself, to a
new deal for the American people.”
• FDR promised to help the “forgotten
man at the bottom of the economic
pyramid.”
• “the only thing we have to fear is fear
itself.”
•
•
•
•
•
•
•
•
Economic Crisis in 1933
Ideological Responses to the
Economic Crisis
25% unemployment
50% unemployment for A.A.
Farmers forced to sell crops at a loss
400,000 farms lost through foreclosure
50% population earned below poverty level
85,000 businesses went bankrupt
Over 4,000 banks closed
Elderly and disabled had no income
• Conservative Response: Gov’t.
should do nothing. Natural business
cycle; actually healthy for the economy.
• Liberal Response: Gov’t. must provide
help to get the economy moving.
(public works, social welfare, regulation)
• Radical Response: Replace
capitalism with socialism or communism
The Three R’s
• Relief: for people out of work
• Recovery: for agriculture and industry
• Reform: for American economic
institutions (banks, stock market, etc)
“Relief” to the unemployed
• In order to provide jobs for the millions
of unemployed Americans, the New
Deal established many public works
projects:
– Civilian Conservation Corp (CCC):
• Provided work for men 18-25. 3 million jobs.
$30.00 month. Planting trees, building roads,
developing parks, dams, soil erosion, etc.
The New Deal
• Greatly expanded the size of the federal
government
• Greatly expanded the scope of the
federal government’s operations and
functions
• Greatly expanded the powers of the
presidency
Civilian Conservation Corp
• 113 sites in Pa. (2110
across the nation)
• Penn Roosevelt State
Park
• Whipple Dam
• Black Moshannon State
Park
• Colyer Lake
• Poe Valley
CCC Camp
Relief Projects
• Federal Emergency Relief
Administration (FERA): offered federal
money to states and local governments
to provide direct relief to the poor.
Distributed 3 billion to the states.
Primary recipients were widows and
dependant children. (we call this
welfare today)
Relief Projects
• Works Progress Administration
(WPA): employed 3.4 million people
constructing bridges, roads, airports,
libraries, etc.
– Also employed artists, writers, actors to
paint murals, write histories, perform in
plays
– recorded slave narratives (2,000 interviews
in 17 states)
WPA Slave Narratives
• http://memory.loc.gov/learn/collections/
born_slavery/history.html
• http://memory.loc.gov/ammen/snhtml/sn
intro00.html
Recovery Measures
Recovery Measures
• Agricultural Adjustment Act (AAA): paid
farmers to remove land from production. For
surpluses already grown--plow it under.
• Govt. subsidies paid to farmers.
• Wheat, cotton, corn, hogs, rice, tobacco, dairy
• Purpose of AAA--create shortages/raise
prices
• Declared unconstitutional by Supreme Court.
WHY?
• National Recovery Administration (NRA):
attempt to guarantee reasonable profits for
businesses and fair wages/hours for laborers.
• Helped industries set wages, hours, level of
production and prices for goods.
• Allowed workers the guaranteed right to
organize and bargain collectively
• Found unconstitutional by Supreme Court
Reform Measures
Reform Measures
• Federal Deposit Insurance Corporation
(FDIC): guaranteed savings of bank
deposits up to $2500
• Securities and Exchange Commission
(SEC): govt. agency designed to
regulate the stock market
•
•
Social Security Act: 1935
Three Goals:
a) Provide unemployment insurance for
those who lost job due to illness
b) Provide old age pension fund for people
65 and older
c) Provide help for the handicapped (blind,
deaf, crippled, dependent children)
Social Security
Social Security
• Pension Plan for retirement established
by the government
• Funds paid by younger generation to
support costs of those currently retired
• Payroll tax (FICA). Employee pays
6.2% of wages and employer pays
6.2% to match contribution
• Self-employed must pay 12.4%
• Must pay the 6.2% tax on earned income up
to $90,000.
• Must work a total of 10 years to be eligible to
collect benefits upon retirement
• Retirement age 65. If born after 1960,
retirement age 67.
• Can retire at 62 with 30% benefit reduction
Social Security
• Checks range from $8800 to $21,900 a year,
depending on earned income
• Ratio of 18 wage earners to one retiree when
SS first began
• Today ratio is three wage earners to one
retiree
• Estimated by 2041, more people collecting
than paying in due to baby boomers retiring
Changes to the current
system?
• Shift the responsibility to individuals, requiring
them to set up own retirement accounts
• Keep the current system and raise the payroll
tax to help cover costs
• Rewrite the contract (raise retirement age,
reduce benefits for upper income, let people
decide to participate or not)
Currency Crisis
• Major Economic Problem During the
Great Depression--DEFLATION
• Demand low, wages low, prices low
• Money was hard to earn “tight money”
• Need more money in circulation
• Partially removed US currency from
gold standard (1.00=59.06 cents in
gold)
Modified Gold Standard
• Purpose:
– Put more money in circulation
– Raise prices (create inflation)
• Bankers said “legalized robbery”
– Lent money out backed by 100% gold
– Payments back at 59.06% gold
Deficit Spending
Dangers of Deficit Spending
• New solution offered to FDR to help end
the depression--deficit spending
• Suggested by economist John M.
Keynes (Keynesian economics)
• Would create jobs and get money into
circulation
• AKA “priming the pump”
• Gov.t borrows from banks, other
countries, etc.
• High interest on borrowed $. At least
15% of gov’t spending goes for interest
• Leaves future generations with a bill for
services they didn’t get
• Less $ available for education,
infrastructure, new technology, etc.
Many Critics of the New Deal
• Left wing liberals: gov’t not doing
enough (Huey Long, Dr. Townsend,
Father Coughlin)
• Right wing conservatives: gov’t doing
too much. Bordering on socialism. (Am.
Liberty League, wealthy business
leaders, bankers)
FDR still very popular
• Election of 1936:
– FDR renominated by Democrat Party
– Alfred Landon (Gov. Kansas nominated by
Republican Party)
– New Deal brought income up and
unemployment down
– Popular vote 22 million for FDR, 16 million
for Landon
– Electoral vote 523 FDR, 8 Landon
Critics of New Deal
Second Inaugural Address
Court Packing Proposal
• “I see one-third of a nation ill-housed, illclad, and ill-nourished. The test of our
progress is not whether we add more to
the abundance of those who have
much. It is whether we provide enough
for those who have too little”.
• 7 out of 9 New Deal measures found to
be unconstitutional by Supreme Court
• FDR proposes to appoint new Justices
for each member over the age of 70 (6
out 9)
• Lost the proposal but eventually
Justices began to retire and by 1941,
FDR made 4 appointments (7 total)
New Deal: A friend to Labor
Friend to Labor
• Many New Deal measures were
beneficial to industrial laborers:
– Wagner Act: right to join unions, engage in
collective bargaining. Employers can no
longer interfere with unions, fire union
members without cause. Set up NLRB to
hear testimony about unfair practices
• Fair Labor Standards Act (1938):
– Minimum hourly wage (25 cents)
– Maximum work week of 40 hours
– New child labor laws banning children
under 16 from factory labor
Unions Grow
• 1933-1941 union membership rose from
3 million to 8 million.
• AFL was only for skilled workers
• Created CIO for unskilled and
semiskilled
• New bargaining tactic: sit-down strike.
Prevented use of scabs.
Motion Pictures of 1930’s
• Golden age of motion pictures (65% of
population attended movies once a week)
• “talking” pictures launched a new era of
glamour in Hollywood
– Gone With The Wind (1939)
– Wizard of Oz (1939)
• Clark Gable, James Cagney, Greta Garbo
Radio Programs Entertain
• 90% of homes owned a radio in 1930’s
• Variety of programs: news, comedies,
dramas, soap operas, children shows.
• Orson Wells’ drama “War of the Worlds”
based on H.G. Wells’ novel. 1938
special announcement “ martians had
invaded Earth”.
American Artists
• Most famous portrayals of America’s
rural life during the Great Depression by
Grant Woods.
• American Gothic (1930)
• Two stern faced farmers, father and
daughter, standing stiffly in front of their
farmhouse
What did you see?
• A tribute to hard-working farm families
• The narrow-minded, puritanical
intolerance of many rural and small
town Americans
Legacies of New Deal
•
•
•
•
•
•
•
Wagner Act
Fair Labor Standards Act
National Labor Relations Board (NLRB)
Farm subsidies
Securities and Exchange Commission
FDIC
Social Security
Impact of the New Deal
• Deficit Spending: by 1943--54 billion
• A balance of two extremes:
unregulated capitalism (laissez-faire)
and overregulated socialism
• Expansion of the federal government’s
power (creating jobs, regulating supply
and demand, settling labor disputes)
Legacies of New Deal
• Impact on the environment:
– Planting trees
– Hiking trails
– Soil conservation and erosion prevention
– Electric power plants
– New national parks
– Air, water, land pollution, strip mining
Entitlement Programs
• What are “entitlement programs”?
• Government programs that require
payment to anyone who meets specific
qualifications
• Guarantee access to benefits because
of rights or an agreement by law
Entitlement Programs
• These programs take up to half of the
federal budget
• 20% Social Security
• 20% Medicare & Medicaid
• 8% Social Aid Programs
• Right or personal responsibility for poor
Entitlement Programs
•
•
•
•
•
•
•
Social security (old age pension 67+)
Medicare (health insurance 65 +)
Medicaid (health insurance poor)
Food stamps
Welfare
Farm subsidies
Low income housing