CHAPTER 12
SECTION 1
The First New Deal
Roosevelt’s Rise to Power
 Big Ideas: Franklin Roosevelt, former Secretary
of the Navy and Governor of New York,
campaigned on a promise of a “new deal” between
Americans and their government.
 Roosevelt was upbeat, enthusiastic, and
optimistic about the country’s future.
Roosevelt’s Rise to Power
 Franklin Roosevelt grew up
in a wealthy family in Hyde
Park, NY.
 He was a former governor of
New York, Secretary of the
Navy, and a Vice
Presidential candidate.
 In 1921 he was struck by the
polio disease which left
him without the use of his
legs.
Roosevelt’s Rise to Power
 Polio was one of the most
dreaded diseases of the
early 19oos.
 Roosevelt used his influence
to create the organization
known as The March of
Dimes.
 They collected dimes to fund
research.
 Jonas Salk developed a
vaccine for the viral disease
in 1954.
Promoting recovery
 In his acceptance speech for
the Democratic nomination
for president, FDR said, “I
pledge to you, I pledge to
myself, to a new deal for the
American people.”
 From this point on, Roosevelt’s
policies for ending the
depression became known as
the New Deal.
Promoting recovery
 Roosevelt won a landslide victory, and a nervous
public began pulling their savings out of banks.
 People were worried that FDR would end the gold
standard. Under the gold standard the value of a dollar
was directly tied to the price of gold. 1 oz. of gold was
worth $20.67.
 You could always take in your dollars and exchange them
for gold coin.
Promoting recovery
 During the winter of
1933 more than 4000
banks had collapsed
due to bank runs.
 9 million savings
accounts were lost.
 Governors ordered
bank holidays,
allowing the banks
to close, as a defense
against runs.
Bank Failures
The 100 Days
 Big Ideas: FDR was
inaugurated on March 4,
1933, and he immediately
began sending bills to
Congress.
 In just the first 100 days,
Congress passed 15 major acts to
deal with the economic crisis. –
a legislative pace that has never
been equaled
Banks and Debt Relief
 The first thing Roosevelt set
out to do was restore trust in
the banking system.
 The House of Representatives
only took 38 minutes to pass
FDR’s Emergency Banking
Relief Act.
 Under the law, federal
examiners would survey the
nation’s banks and issue
certificates to those that were
found to be financially sound.
Banks and Debt Relief
 After the passage of the
bank act, Roosevelt
addressed 60 million
listeners over the radio
informing them that the
banks were a safe place to
put their money.
 The radio addresses FDR
used to keep citizens
informed of his plans for
action became known as
“fireside chats.”
The FDIC and the SEC
 In 1933 Congress passed the
Securities Act which required
people who sold stocks and
bonds to tell the truth to
investors.
 Congress created the Security
and Exchange Commission to
regulate the stock market.
 The Glass-Steagall Act made it
illegal for banks to risk
customer deposits in the stock
market.
The FDIC and the SEC
 Congress also set up the Federal Deposit
Insurance Corporation (FDIC).
 If a bank failed, customers would get their money
back because it was insured by the FDIC. This
increased confidence in banks.
Mortgage and Debt Relief
 To help home owners pay
their mortgages, the
government purchased the
loans from the banks through
the Home Owners’ Loan
Corporation.
 The government extended the
loans so that payments would
be less expensive.
 This only helped those who
still had a job and were not
farmers.
Mortgage and Debt Relief
 To help out the farmers,
the Farm Credit
Administration was
established to lend money
to farmers so they could
stay on their property.
 It helped the farmers in the
short term, but probably
hurt the overall recovery
effort.
Farms & Industry
 Big Ideas: Roosevelt’s
economic advisors knew
that farmers and
businesses were suffering
from overproduction and
low prices.
 Many advisors wanted the
government to manage the
economy.
Farms & Industry
 Secretary of Agriculture
Henry Wallace drafted the
Agricultural Adjustment
Act.
 The AAA would pay farmers to
not grow certain crops and raise
certain livestock.
 In order to raise prices,
farmers slaughtered 6 million
piglets, 200k sows, and plowed
under 10 million acres of
cotton.
Farms & Industry
 Farmers received more
than $1 billion in
support payments.
 While this did increase
food prices, that was not
good news for
customers.
 Also, most of the cotton
fields landlords plowed
under, were worked by
African American
tenant farmers.
Farms & Industry
 To help manufacturing,
the government created
the National Recovery
Administration.
 The NRA set prices,
regulated factory
schedules, and set a
minimum wage, and
gave workers the right to
unionize.
Farms & Industry
 The government had no
way to enforce the rules,
but businesses that
agreed to the rules
received an NRA sign for
their shop and,
Americans were
encouraged to only shop
at places featuring the
NRA sign.
Farms & Industry
 The NRA was not very effective
because it was voluntary and
tended to favor big business
over small business.
 Also, businesses didn’t like
that gave workers the right to
form unions.
 The Supreme Court
unanimously ruled the NRA
unconstitutional in 1935
because it regulated more
than just interstate
commerce.
Relief Programs
 Big Ideas: Roosevelt
and his advisors didn’t
want to simply give cash
to needy people. Instead
they wanted to create
jobs so unemployed
people could earn an
income.
 It would also keep men busy,
making them less likely to
join subversive groups such as
the fascists and communists.
Relief Programs
 One of the most
successful of the New
Deal program was the
Civilian Conservation
Corps (CCC).
 The CCC offered young
men jobs working with
the Forest Service
planting trees, creating
trails, and fighting
forest fires.
Relief Programs
 The men lived in work camps.
The government paid them $5
a month and sent $25 a month
to their family.
 The CCC also taught 40,000
men to read and write.
 More than 3 million men
worked for the CCC including
80,000 Native Americans and
250,000 veterans.
Relief Programs
 The Federal Emergency
Relief Administration
(FERA) channeled
money to state and
local government
programs to help the
unemployed.
Relief Programs
 The Public Works
Administration
(PWA) was created to
provide jobs for
construction workers.
 The PWA built highways,
sewer systems, schools,
and other government
facilities.
Relief Programs
 The PWA did not hire
workers directly, but issued
contracts to private
companies.
 The PWA was the only
government program to
insist that contractors not
discriminate against
African American workers.
Relief Programs
 By 1933 the FERA and PWA had
not been enough to
significantly reduce
unemployment , so FDR
authorized the creation of the
Civil Works Administration
 The CWA hired workers directly for
the construction of highways, sewer
systems, schools, and other
government facilities.
 However the program spent $1
billion in just 5 months, so FDR had
it discontinued the following spring.