The Great Depression 3 The New Deal

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The Great Depression 3 The New Deal

A cheerful, energetic man, Franklin Delano Roosevelt won in 1932 in a landslide. Or maybe it was an earthquake. In 1932, FDR won 42 states to Hoover’s six, and carried huge Democrat congressional wins on his coat-tails (313-117 in the house). Campaigning with a song titled "Happy Days Are Here Again", Roosevelt made big promises about the American economy.

In office, Roosevelt’s “New Deal” for the country aimed to fix the economy and create prosperity with workfare and new rules for the marketplace.

06. Summarize the life and early career of Franklin Delano Roosevelt.

07. Outline FDR’s economic policies of the First New Deal.

08. Identify major critics and criticisms of Roosevelt’s policies.

09. Evaluate the effectiveness of Roosevelt’s New Deal.

10. Summarize the policies and results of the Second New Deal.

VI. President Franklin Delano Roosevelt

A. FDR the person

1. Roosevelt’s family had been in America since before the Revolution; they were an established upper-crust family from Hyde Park, New York. Franklin Roosevelt

2. FDR was also perpetually optimistic (how could he not be?—W), conversant in German and French, an accomplished sailor, a long-hitting golfer, and an average student—albeit a Harvard man.

3. Theodore Roosevelt, the 26th President, was Franklin’s fifth-cousin, and FDR’s role model and hero—even wearing the same kind of glasses, picking up his “Dee-lighted!” and “Bully!” expressions, and hoped to follow his career path as an energetic, reformer president.

4. At age 20, he married Eleanor Roosevelt, his cousin, with whom they had six kids. At a certain point, they fell out of love, and their marriage became a business/political partnership. FDR had an affair with Lucy Mercer, Eleanor’s secretary. (He also had a suspected affair with Marguerite LeHand, his secretary. There is also evidence of an affair with Princess Märtha of Sweden, who lived at the White House when Germany invaded Norway—W). Eleanor wrote that she could forgive, but not forget—he considered divorce, but the Roosevelt family considered it a scandal

5. In 1921, he became crippled due to polio—an infectious viral disease that causes muscle weakening, skeletal deformity, and paralysis. He spent many years visiting with endless doctors, exercising, and doing anything he could to walk again. He never walked again.

6. In fact, he never admitted to the public that he was crippled until just a few months before he died. He learned to fake-walk, and he was always standing (with help).

B. Career

1. Like TR, he became Assistant Secretary to the Navy.

2. In 1920, at age 38, he was the Democratic party’s candidate for Vice President (They lost in the post-WWI Republican landslide; President Harding received 60.2% of the vote, and the Republicans piled up big majorities in Congress—Wuebker)

3. In 1930,

4. In 1932, he ran for president. He looked incredibly energetic, but may have not been exactly clear on what he would do as president. He said in may 1932, “The country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.”

VII. Banking, Finance, and the First New Deal

A. Banking

1. A lot of banks were unhealthy. From late 1929 to 1933, a bank closed per week. When banks close, depositors might never get your money back. Deposits were not insured then; there was no FDIC (Federal Deposit Insurance Corporation). In this atmosphere, banks might not lend to each other, because what if they could not get their money back? (Would you lend $100 to a friend who never pays anyone back?—Wuebker)

2. President Roosevelt declared a “Bank Holiday” with the Emergency Banking & Relief Act. This closed the banks until people could learn which ones were solvent (healthy).

3. They also put FDIC into place. FDIC (Federal Deposit Insurance Corporation) means that even if the bank goes broke, depositors still get your money back—up to $2,500 at the time (Today, the FDIC insures bank accounts up to $250,000. If you have $250,001 in that account, you don’t get that last dollar back. Sorry. If you have 250,001—just open a second account at a different bank—W)

B. The Stock Market

1. The Roosevelt Administration created the Securities and Exchange Commission. The SEC

2. The basic goals were to make companies disclose a lot more information so that people knew exactly what they were buying.

C. The First New Deal (1932-36)

1. Roosevelt’s economic plan was designed to get the unemployed working, build economic recovery, and ease fears of riots and/or revolution. Its goals were economic, and not primarily political. That is, FDR was genuinely trying to end the Great Depression,

2. Alphabet Soup: FDR created a number of agencies with a variety of responsibilities—all of which had the same goal: get people doing work. (There are too many to memorize. They include: AAA, CCC, WPA, PWA, FERA, CWA, NYA, TVA, REA, and more. For an agency, you might be doing useful work, like building dams or roads. Or you might be raking leaves east to west in the local park one day, and then raking them west to east the next. That’s what the textbooks sometimes say, and what older people said when I was a teen—Wuebker)

3. FDR’s idea was workfare, not welfare. Welfare is free money from the government, without work. FDR disagreed with this, and it did not exist in any significant measure in the USA until the 1960s. If a person was old, disabled, or a child—that was another story; if a person honestly could not work, FDR wanted to make sure they would not die homeless in the street. Hence, he created Social Security (1935) and programs for orphans.

4. Social Security is a retirement insurance system to provide money to people over age 65. People pay into the system while they are young and working, then collect benefits when they retire. At the time, there were 16 workers paying in for every person collecting. (Now it’s 2:1.) The first people to collect never paid anything in. It was meant to be a supplement, not something to live off.

D. The National Recovery Administration existed, not to create jobs, but to established rules to regulate business and eliminate “cut-throat” competition by having “fair practices” (emphasis Wuebker—W).

1. The Supreme Court unanimously killed it in 1935, saying that the President

2. The N.R.A.’s goals were to:

a. Help workers by setting a minimum wage

b. Set maximum weekly hours

c. Not let products be sold for less than minimum prices.

3. Its stated goal was to end “destructive competition,” but a titan of industry like Rockefeller or Carnegie could use the same actions to severely stress their competition and possibly bankrupt them. Thus, it was (is?—W) controversial.

4. Although the Supreme Court declared these things unconstitutional, many of these policies reappeared a few years later in the Wagner Act (National Labor Relations Act, 1935). Politically, they created and favored unions, which became part of the New Deal Coalition, which lasted for at least 30 more years.

VIII. The Fiery Critics

A. Huey Long, former Governor of Louisiana and then-current Senator.

1. Long proposed capping personal fortunes at $50 million each (roughly $600 million in today's dollars) through a restructured, progressive federal tax code and sharing the resulting revenue with the public through government benefits and public works.

2. At first an ally of FDR, he turned on the President by running to FDR’s left. He disliked the rich and the banks. His motto was

3. Long expanded hospitals & schools, massive highway and bridge construction. He set up a system of charity hospitals for the poor and free textbooks for schoolchildren (Long remains a controversial figure in Louisiana. Was he a dictator? A demagogue? A populist? Lots of dictators give away “free” stuff. You trade away your freedom for stuff. Also, where does “free” stuff come from? People found Huey Long mesmerizing. People could not take your eyes off of him. Long was probably going to run against FDR in 1936 as a more left-wing Democrat or perhaps as a Socialist—Wuebker).

4. Huey Long was shot and killed in 1935 by Dr. Carl Weiss. Huey Long’s bodyguards then shot Dr. Weiss 61 or 62 times (leaving Weiss’s motives to be forever the subject of conspiracy theories—W)

B. Father Charles Coughlin, Roman Catholic priest

1. Fr. Charles Coughlin was a controversial Roman Catholic priest and a radio broadcaster. He had an astonishing 30,000,000 listeners, which is 50% more than the #1 person (Rush Limbaugh) has today (and that was when the population was about 130,000,000—today it is over 320,000,000—W)

2. He was an ally of Huey Long, and like Huey Long, Fr. Coughlin started off as an ardent fan of FDR. But he turned hard against him in 1934, and formed the National Union for Social Justice. In the National Union for Social Justice, he called for the nationalization of major industries and railroads,

3. Fr. Coughlin’s anti-banker attitude hinted that he did not like Jewish bankers. Then he began to support some of Hitler’s and Mussolini’s ideas under the slogan of “Social Justice”.

4. Primarily, he talked politics & economics, not religion. The Vatican wanted him silenced, but it was the FDR govt. that canceled his show when war broke out in 1939 (Even Freedom of Speech has its limits—W).

C. Dr. Francis Townsend, who felt FDR’s programs needed to be twice as big.

1. Dr. Townsend was originally another enthusiastic promoter of FDR. In particular, he admired Roosevelt’s Social Security program. But he felt the elderly deserved twice as much as FDR was allocating for them.

2. So, he broke away from FDR,

IX. Did the First New Deal Work?

A. Unemployment was down…but it is unclear if it was a result of the New Deal or due to an economic principles of “Expectations Theory”, where peoples’ expectations drive the economy. If the public thinks the economy will improve, they begin to spend and invest—which actually lifts the economy out of its slump. Thus, FDR did not need to actually do anything for him to have an impact:

B. But how Did People Feel? Not good. In 1936, although unemployment was better at 15.3%, people still remembered the Roaring Twenties, with unemployment at 3.3%, the stock market making people rich, and the endless stream of new tech like cars, radios, talking movies, appliances, and airplanes (At this point, FDR stopped doing straight-up economics, which means he stopped trying to solve the problems of unemployment and the hideous economy. He shifted into politics, meaning to get people to support you in Us vs. Them terms. FDR’s biographers often say even though he really did not have polling data to work from, he had a great sense of what the American people believed, what they would accept, and what they would not accept—Wuebker)

X. The Second New Deal

A. In what seems now like great political expediency, the Second New Deal focused on a few target audiences: farmers, labor unions, Democratic state party organizations, city machines, blue collar workers, minorities (racial, ethnic, and religious), farmers, white Southerners (even though they discriminated against blacks), people on relief, and intellectuals.

1. This “New Deal Coalition” became a block of loyal Democrat voters

2. Besides defining his supporters, FDR portrayed to the rich as his political and economic opponents, labeling them “economic royalists” and “the enemy within our gates” in his “A Rendezvous with Destiny” presidential nomination acceptance speech at the 1936 Democratic National Convention.


1. 60.8% (FDR, D) to 36.5% (Alf Landon, R.);

2. 27.7 to 16.6 million votes!

3. 46-2 states.

C. Then, in 1937, on the brink of what seemed like recovery,

1. In what is sometimes referred to as the “Depression within the Depression”, 2,000,000 people lost their jobs, and unemployment jumped from 14.3% to 19.0% in 1938.

2. People were back to living in shantytowns. (The popular historian H.W. Brands said they might have been called “Rooseveltvilles” like “Hoovervilles,” except it was an awkward word which never caught on—Wuebker)

D. Frustrated by the Supreme Court, which declared the centerpiece of FDR’s rule-enforcing bureaucracy (the N.R.A.) unconstitutional, FDR in 1937 (after the election) responded with the Court-Packing Plan.

1. FDR wanted to add 7 more Justices to the Supreme Court. That way, the Court would vote in favor of all of his policies.

2. This alarmed a majority of Americans. People saw it as an effort to subvert/destroy the Constitution,

3. It was rejected, and it made some people think FDR had a tendency to go too far.

E. Further, Roosevelt was always putting off doing anything for African-Americans. 71% had voted for him (in a strong departure from the Republican “Party of Lincoln”, for which African Americans had been loyal voters since 1866—W), but very little was happening. Given the slow progress of the New Deal and these other problems,

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