IV. Roosevelt's Administration - Domestic Issues - New Deal
A. Phase I - 1933-34
B. Post Hundred Days Actions
- Initial Actions of Roosevelt's First Administration
a. Inauguration - FDR was sworn in as 32d US President on 4 March 1933.
(1) With no blueprint of what to do concerning the growing economic crisis,
he did not know for certain what would or would not work.
(2) He had tried many innovative things while Governor of NY.
(3) He manifested a flexible, pragmatic approach to meet the economic crisis,
and brought with him his NY "Braintrust."
b. After many serious runs on banks, FDR declared a 4-day banking holiday
(1) From 1930 to FDR's inauguration, 5,504 banks closed with deposits totaling
almost $3.5 billion.
(2) An embargo on the exportation of gold, silver and currency was also
put into place, without a license from the Treasury Dept.
- Hundred Days - 9 March -16 June 1933
(1) With strong majorities in both Houses of Congress, a special session
of the 73d Congress began on 9 March, at first focusing on immediate relief.
(2) What emerged was a 3-fold focus -- Relief - Recovery - Reform
(3) First action of the special session -- Emergency Banking Relief
Act - 9 Mar 1933
(a) The President was given broad powers over credit transactions and over
transactions in currency, gold, silver and foreign currency.
(b) Gold hoarding and exportation of gold was prohibited (10-year sentence
+ $10,000 fine) as the US was taken off the gold standard for its currency.
(c) Banks could reopen on 10 March if they could prove solvency.
(d) By 12 March, 1000 banks reopened, and the money panic subsided
(e) Within two weeks, stocks rose 15% as hoarded currency was returned to
the banks, and gold and gold certificates were returned to the Treasury.
(4) 12 March - FDR's first fireside chats -- "we only
had fear to fear"
b. Relief Actions
(1) Federal Emergency Relief Act - 12 May 1933
(a) It established the Federal Emergency Relief Administration (FERA
) and appropriated $500 million for quick relief with 1/2 given immediately
as direct relief
(b) It matched $1 for every $3 to states with their own relief programs.
(c) Harry Hopkins was appointed as the Federal Relief Administrator.
(2) Reforestation Relief Act -
31 March 1933
(a) It created the Civilian Conservation Corps (CCC) with
250,000 immediate jobs for men aged 18-25 at $30 per month with as much
as $25 being sent home
(b) Members were supplied with food, shelter, transportation, clothing,
medical care and some education or training.
(c) Projects included reforestation, road construction, soil erosion and
flood control, and development of national parks, although critics claimed
this was "make work."
(d) By its end in 1941, 21/2 million men had worked in 1,500 CCC camps.
c. Recovery Actions
(1) Agricultural Adjustment Act (AAA
) 12 May 1933
(a) The dramatic reduction in farm prices from 1929-32 led to a farmer's
strike (summer 1932) led by Milo Reno (IA) and Farmers' Holiday Assoc.
(b) It was designed to restore purchasing power of agricultural producers
by cutting production eliminating surplus crops of basic
commodities and establishing parity prices
(c) It established the subsidy principle whereby, for voluntary reduction
of acreage in production, farmers were paid direct benefits or rental payments.
(d) It authorized the president to inflate the currency by devaluating its
gold content or the free coinage of silver and issue $3 billion in paper
(e) It also provided funds for loans to farmers to meet their mortgage payments.
Farm Credit Act - 16 June 1933
(f) Payments for these programs would come from a production tax on the
processors of certain farm commodities.
(g) The processors tax (and the AAA itself funded by the tax) was struck
down by the US Supreme Court - US vs Butler 19369
(2) National Industrial Recovery Act (NIRA
) 16 June 1933
(a) The NIRA was designed to balance the interests of business and labor
and consumers and to reduce unemployment.
i) For codes of fair competition, anti-trust laws were suspended.
ii) Section 7(a) guaranteed workers the right to collective bargaining.
iii) It established minimum wage and maximum hour laws.
(b) Hugh S. Johnson directed the National Recovery Administration,
whose symbol was the blue eagle and its motto "We
Do Our Part ."
(c) It also established the Public Works Administration
(PWA) which supervised the building of roads, public buildings and other
projects, funded with $3.3 billion
i) Secretary of the Interior Harold Ickes was appointed
ii) Among the projects were the Grand Coulee Dam, NY's Triborough Bridge
and almost 3/4 of the nation's new schools.
(d) Supreme Court struck down parts - Schechter Poultry vs US
d. Reform Actions
(1) Tennessee Valley Authority - TVA - 18 May
(a) Munitions plants on the TN River in Alabama and a large hydroelectric
power plant built by the government in WWI were still in government hands,
but the government wanted to dispose of these to private interests.
(b) Legislative attempts of Sen. George Norris (NE) to continue the federal
operation at Muscle Shoals failed under Coolidge and Hoover.
(c) Under FDR, Tennessee Valley Authority was created and all government-owned
property at Muscle Shoals was transferred to the Authority, governed by
a three-man board.
i) The Authority was charged with building dams, generating and selling
electricity, manufacturing and selling fertilizers produced, establishing
flood control and developing navigation.
ii) Six dams were completed before World War II.
(d) Critics charged that it was unfair competition with private companies
supplying electricity in the area. (TN, N.C. KY, VA, MS, GA)
(e) Unfortunately it was the only such project developed domestically.
(2) Federal Securities Act - 27 May 1933
(a) It required the Federal Government to register and approve all issues
of stocks and bonds and issuers to make full disclosure all pertinent information
about an issuing company.
(b) On 6 June 1936, some of its duties were assumed by the Securities Exchange
Act which created the Securities and Exchange Commission
i) It regulates exchanges and transactions involving securities.
ii) Joseph P. Kennedy was the first chairman of the SEC.
(3) Home Owners Refinancing Act (16 June 1933)
established the Home Owners Loan Corporation (HOLC) to provide mortgage
money and other aid such as taxes, and money for repairs, aiding over 1
million homeowners when dismantled in 1936.
(4) Banking (Glass-Steagall) Act of 1933 - 16
(a) It created the Federal Deposit Insurance Corporation (FDIC
) empowered to guarantee individual bank deposits up to $5000.
(b) It permitted branch banking, allowed savings and industrial banks to
be members of the Federal Reserve System and separated commercial banking
from investment banking thus eliminating excessive speculation with depositor's
(1) The Hundred Days laid the foundation for the New Deal.
(2) Although not solving many problems of the Depression, the nation definitely
had turned around and people were more confident about their government.
C. Critics of the New Deal -- Because many proposals passed in the first
phase of the New Deal did not work as well as expected, a number of critics
voiced the opinion that the New Deal had either gone too far, or had not
gone far enough.
- Civil Works Administration (CWA
) 8 November 1933 created by executive order
a. In the winter of 1933-34, FDR created the CWA to provide temporary jobs.
b. Some 4 million were employed raking leaves, shoveling snow, and working
in national parks, which critics again complained was "make work."
c. Harry Hopkins directed this agency, ceasing Mar 1934
after spending $740 million.
- Gold Reserve Act - 30 January 1934
a. All gold in the Federal Reserve banks was transferred to the National
b. FDR was empowered to fix the value of the US dollar between 50-60 in
terms of gold.
c. 31 January - he set the price of gold at $35 an ounce and the dollar
at 59.06 .
- Communications Act - 19 June 1934 - established
the Federal Communications Commission (FCC
) to supervise radio, telegraph, and telephone communications.
- Silver Purchase Act - 19 June 1934 - empowered FDR to increase the
Treasury's silver holdings to 1/3 the value of gold, nationalizing silver
stocks and purchases (victory for Free Silverites)
- Firsts for Women - Roosevelt Appointees
a. Cabinet Member - Frances Perkins (l880-l965),Secretary
of Labor to 1945.
b. Director of the Mint - Nettie T. Ross , previously elected
first woman Governor
c. Ambassador - Ruth Bryan Owen - Denmark 1933-36.
- Other Events in 1934
a. The Gross National Debt was $34 billion
b. 22 July - John Dillinger, Public Enemy # One, shot by the FBI near a
c. Life Magazine began.
D. Phase II of the New Deal - 1935-36
- Those Who Thought the New Deal Had Gone Too Far
a. Conservative Dissatisfaction
(1) Liberty League , established in August 1934, was composed
of financiers, indus-trialists, corporation lawyers, conservative Democrats,
(2) It attacked the New Deal as a dangerous Constitutional departure and
actively opposed measures like the Wagner-Connery Labor Relations (National
Labor Relations) Act and the Wealth Tax (Revenue Act of 1935).
b. American Socialist Movement
(1) The Socialist Movement fell apart after World War I.
(2) Two US communist parties merged into the Communist Party USA (CPUSA)
(3) Growing by the mid-1930s, it was never more than 10,000 strong, mostly
among journalists, writers and labor leaders.
(4) At first highly critical of the New Deal as an attempt to salvage the
US capitalist system, it gradually changed its image in the US by denying
its own revolutionary doctrine.
(a) As world communism became more conciliatory, it focused on programs,
(b) As diplomatic relations were established between the US and the USSR
in 1933, the CPUSA worked to establish trade relations between both nations.
(5) Its well-disciplined membership was effective esp. within the labor
(6) Because the depression did not create within the American worker a desire
to change the US system beyond recognition -- only a refinement of the system
-- the socialists did not attract millions of US workers as elsewhere.
- Those Who Thought That the New Deal Had Not Gone Far Enough
a. Dr. Francis Townsend -- Old Age Revolving Pension
(1) He called for payments of $200 per month to persons over 60 years of
age, to be paid for by a 2% tax on all commercial transactions.
(2) Each recipient would have to spend it all within the month.
(3) By 1935, they claimed 5 million backers, illustrating a desire for a
kind of old age pension.
b. Rev. Charles E. Coughlin and the National Union
for Social Justice
(1) The Jesuit priest, Charles Coughlin, lived in Royal Oak MI and in 1930,
began a radio broadcast in Detroit, which eventually claimed almost 40 million
(2) At first an enthusiastic supporter of the New Deal, but by 1934, he
voiced the opinion that FDR was not going far enough.
(3) He was specific in calling for silver inflation, but was extremely vague
on other issues, offering no real solutions.
(4) His broadcasts attacked international bankers, Communists, labor unions,
and Roosevelt's administration, as unemployment remained high.
(5) By 1937, however, he increasingly voiced anti-semitic and pro-Fascist
views, which lost him his relevancy and his huge audience.
(6) His superiors silenced him in 1942.
c. Senator Huey P. Long (1893-1935) and the Share
Our Wealth Movement
(1) Huey Long (LA) demanded that the government make Everyman
(a) Guarantee every family an annual income of $2,000 and a homestead or
$6000 to build a home
(b) To pay for this, the government would nationalize all banks and allow
no one to be over a "ten millionaire."
(c) Clubs sprang up across the country, especially in the South, supporting
the Share Our Wealth concept.
(2) In August 1935, Long announced his intentions to run for President
(a) If not as the Democratic nominee, then as a third party candidate.
(b) Roosevelt was certain that such a candidacy would pull votes from his
campaign for reelection in 1936.
(3) 8 September - Long was shot at the Capital building in Baton Rouge,
dying of internal bleeding on 10 September 1935.
(a) His alleged assailant, Dr. Carl Austin Weiss Jr whose
father-in-law had been ruined by Long, was immediately killed by Long's
(b) It is believed today that Long's bodyguards accidentally shot him
(4) Rev. Gerald L.K. Smith attempted to keep the Share-Our-Wealth
Clubs operative after Long's death, but the movement was never the same.
E. Attempts to Halt the New Deal
- Roosevelt's Annual Address to Congress - 4 January 1935
a. Roosevelt outlined phase two of the New Deal, establishing the modern
(1) The federal government would withdraw from direct relief leaving
it to state and local governments, although some national works program
would continue to absorb the unemployed.
(2) A program of social reforms included social security for the
aged, unemployed and ill, and slum clearance and better housing
(3) Better tax reform
b. The chief beneficiaries of phase two were small farmers and laborers.
- Emergency Relief Appropriation Act - 8 April 1935
a. Roosevelt was granted new powers to create agencies to employ millions
not yet absorbed into the private sector
b. By Executive Order, he created three additional relief agencies in 1935:
(1) Works Progress Administration (WPA
) May 6 Harry Hopkins admin
(a) The WPA spent $11 billion, and employed over 81/2 million in over 1,410,000
projects between 1935 and its termination on 30 June 1943.
(b) Projects involved manual labor to build public buildings, schools, airfields,
parks and post offices, but many projects involved writers, artists, scholars,
musicians and actors.
i. Federal Theater Project was created in 1936.
ii) Federal Art Project employed 5,000 in 44 states.
(c) While most critics charged that the WPA was inefficient, wasteful and
politically corrupt, it did increase the national purchasing power.
(d) In 1939, the WPA, aka Works Project Administration, was the most serious
attempt at relief in Phase Two.
(2) Resettlement Administration (RA
) 1 May Rexford G. Tugwell , admin
(a) Its goals were to improve the condition of farm families not benefiting
from the AAA, prevent waste by unprofitable farming operations or improper
land use and projects such as reforestation and flood control.
(b) Farm families whose land was unproductive because of the extended drought,
esp. in Ark and OK, were relocated to more productive land (about 4500 farm
(c) This agency also resettled destitute families in subsistence homestead
communities, constructing new suburbs for poor city workers
i) Low income city workers were relocated in "Greenbelt Towns."
ii) Three such communities -- Greenbelt near Washington D.C. Greenhills
near Cincinnati Ohio; Greendale near Milwaukee, WI
(3) Rural Electrification Administration (REA
) 11 May
(a) Its goals were to provide electricity to isolated rural areas, where
it was not feasible to provide service by private utility companies.
(b) The REA made low interest, long-term loans for the entire cost of constructing
light plants and power lines into such isolated areas.
- Additional Reform Efforts 1935
a. National Labor Relations (Wagner-Connery
) Act 5 July
(1) Established the National Labor Relations Board (NLRB)
(2) Section 7 guaranteed employees could join labor unions and bargain collectively
through labor representatives.
(3) Section 8 defined unfair practices on the part of the employer.
(4) Most importantly, it compelled employers to recognize a union if over
50% of the employees joined the union.
(5) The Supreme Court upheld it on 12 April 1937
(a) One week after Roosevelt unveiled his "courtpacking" plan,
two justices switched their opinion from the earlier Schecter case.
(b) National Labor Relations Board vs Jones & Laughlin Steel
Corp 5 to 4 guaranteed worker rights to unionize.
b. Social Security Act - 14 August 1935
(1) Partially as the result of the Townsend-Long proposals, the act established
a coopera-tive federal-state system of unemployment compensation by levying
a federal tax on total payrolls of those employing eight or more persons
(1% in 1936, 2% in 1937, 3% thereafter)
(2) It levied a tax (1% in 1937) equally between employee and employer to
provide for old-age pensions for retirees in January 1942, receiving monthly
checks between $10-85.
(3) For persons already retired, the federal government shared the costs
with states ($15 per month matching funds plus some aid for administrative
(4) Grants were provided for financial aid for the blind, homeless, crippled
and dependent children, and some services such as maternity and infant care.
(5) The Supreme Court upheld it - 24 May 1937
(a) Steward Machine Co vs Davis - 5 to 4 - unemployment
(b) Helvering vs Davis - 7 to 2 - old age benefits
c. National Housing (Wagner-Steagall )
Act - 1 September 1937 - created the US Housing Authority (USHA)
to administer low-interest 60-year loans to small communities for slum clearance
and construction projects and to grant subsidies for setting rent geared
to low-income levels in areas where local agencies provided 25% of the federal
d. Public Utility Holding Company (Wheeler-Rayburn) Act
(1) Following the collapse of the financial empire of Samuel Insull
, a number of utility companies were threatened with bankruptcy.
(2) Congress limited the possibility of controlling companies with a small
amount of capital and prevented the type of pyramiding which Insull had
done, creating several layers into a super corporation that was only a holding
(3) Electric and gas holding companies were restricted to a single and concentrated
system in a single location.
(4) Roosevelt likened this pyramid to a "96-inch dog being wagged by
a 4-inch tail"
- Revenue Act of 1935 (Wealth Tax Act
) - 30 August - particularly irksome to wealthy conservatives
a. Increased the surtax rate on individual incomes over $50,000, the estate
tax on individual estates over $40,000 and graduated steeply taxes on individual
incomes over $1 million until the rate was 75% in excess of $5 million.
b. Decreased the small corporation tax rate to 12% while increasing the
corporate tax, on incomes above $15,000 to 15%.
c. Some excess profits over 10% were taxed at a 6% rate and in excess of
15% at a 12% rate.
- Additional events in 1935
a. 9 November - The AF of L created an industrial union, the Committee
for Industrial Organization (CIO ), to organize
other workers not covered by the AF of L.
(1) United Mine Workers president John L Lewis
was the chairman.
(2) Continued challenges to AF of L conservative leadership resulted in
expulsion in 1937 after which it reorganized into Congress of Industrial
b. 5 Dec 1955 - AF of L and CIO combined with George Meany
F. Phase III of the New Deal 1938
- Election of 1936
(1) Standing on the Administration's record, Democrats in Philadelphia,
no longer plagued by the 2/3 rule (abolished in 1932), renominated Roosevelt
and Garner by acclamation for a 2nd term, although neither faced oppositon
from within the party.
(2) Republicans in Cleveland nominated for President the only Republican
to win aa governor in 1934, Alf Landon (KS) and
Col Frank Knox (IL), for Veep
(a) Their platform condemned the New Deal, accused Roosevelt of taking over
the powers of Congress, of passing unconstitutional laws and of reckless
"deficit" spending (calling him Franklin "Deficit" Roosevelt),
and called for the return of relief administration to local nonpolitical
agencies, a balanced budget, no more devaluation of the dollar, a revision
of personal and corporate taxes and the right of labor to bargain collectively.
(b) Many conservative Democrats supported the Republican candidate, including
Alfred E. Smith and others active in the Liberty League
(1) A bitterly fought campaign was waged against the New Deal, condemning
it as a planned, bureaucratic economy, wasteful, radical, experimental and
confusing, aided by almost 80% of the nation's newspapers which endorsed
(2) Campaign slogans that emerged: Let's Get Another Deal
; Life, Liberty, and Landon ; Defeat the New Deal
and its Reckless Spending
(3) After an unscientific telephone survey (only the super rich had phones),
which overwhelmingly chose Landon, the slogan Make It A Landon-slide
(1) Roosevelt received 27,751,612 popular (523 electoral) votes to Landon's
16,681,913 popular (8 electoral) votes, carrying only Maine and Vermont.
(2) Democrats carried over 2/3 of both Houses of Congress (Senate 76 - 16,
gaining seven, 4 to minor parties; House 331 - 89, 13 to minor parties).
- Supreme Court
a. During Roosevelt's first term, the Supreme Court struck down as unconstitutional
major pieces of New Deal Legislation.
(1) Schechter vs US 1935 declared the NIRA unconstitutional because
Congress had no control over intrastate commerce (Schechter Company operated
only in NY)
(2) Butler vs US 1936 declared the AAA's processor's tax unconstitutional.
b. 5 Feb 1937 - Roosevelt, determined to halt this continued threat to his
New Deal, introduced the Judiciary Reorganization Bill
(1) It proposed to add judges at all levels of the federal courts, assign
judges to the more congested courts and adopt procedures to expedite the
appeals process by sending lower court cases on constitutional matters directly
to the Supreme Court
(2) Its main purpose, however, was to add justices to the Supreme Court
(a) Justices of the Supreme Court who reached age 70 could retire
(b) When a Supreme Court justice, age 70, did not retire, FDR could add
an additional judge up to 6, potentially increasing the court to 15 members.
c. A serious debate erupted
(1) Roosevelt was accused of attempting to upset the balance of powers which
existed in the US system, by "packing" the court.
(2) Many desired such changes to be put into a constitutional amendment
(3) The bill reached a serious impasse in Congress in 2 months, dividing
(4) As the opposition mounted a serious attack against the bill, Roosevelt
countered that six old men should not erode the people's wishes and that
he was instead trying to restore the balance of power between the three
branches of government
d. Several things happened which lessened the urgency of the bill
(1) Supreme Court Retirement Act 1 March 1937
permitted Supreme Court Justices to retire at age 70 with full pay, after
10 years of service
(a) Justice Willis Van Devanter, New Deal opponent, announced his retirement
for 18 May, and was replaced by Senator Hugo Black, New Deal supporter,
although his confirmation bogged down when it was revealed that he had been
a member of the KKK in his youth.
(b) Roosevelt filled seven positions in the next four years, including Louis
D. Brandeis who at age 82, retired 13 February 1939
(2) Several New Deal acts were upheld by the Supreme Court (as
(a) 12 April 1937 - by a 5-4 vote, the NLRA Act was upheld
(b) 24 May - The Social Security Act was upheld.
(3) 26 August 1937 - Judicial Procedure Reform Act
revised the lower courts as needed without providing for new judges or justices.
(4) 14 July - when the major proponent of the measure, Senator Joseph
T. Robinson (AR) , died the bill died in committee.
(1) The rift among Democrats over the issue was never fully resolved, as
was apparent in the Bi-Elections of 1938, when Republicans gained seats
in Congress for the first time since 1928.
(2) Conservative Democrats and Republicans combined in Congress to slow
or halt further New Deal legislation.
G. Conclusion to the New Deal
- Federal relief declined from 3,184,000 to 2,122,960 by 1938.
- Revenue Bill extended tax cuts to corporations
because of the lingering recession.
- Second Agricultural Adjustment Act - 16 February
a. Reestablished the "parity payment" principle.
b. Established the Federal Crop Insurance Corporation (FCIC) within the
Department of Agriculture to insure wheat crops only beginning in 1939.
c. The financing would be provided by the Federal Government, not a processor's
- Fair Labor Standards (Wages and Hour
) Act 25 June
a. Businesses engaged in interstate commerce (with some exceptions) were
required to pay a minimum wage of 40 cents per hour (up from 25 cents).
(1) It increased to 75 @ hour in 1949 and through 1981, 13 times to $3.35
(2) In 1967, farm workers were included at $1.00 per hour.
b. The work week was limited to 44 hours per week without overtime, beginning
in 1938 and later trimmed to 40 hours per week by October 1940.
c. Children under 16 were not allowed to work; where hazardous, the age
limit was 18.
d. 3 Feb 1941 - The Supreme Court upheld it - US vs Darby Lumber
H. Other Events - First major league baseball night game was held in 1935
between Cincinnati Reds and the Philadelphia Phillies. (Cincinnati won 2
- The New Deal had reached its ideological limits in 1938 and Congress
had grown conservative as many Democrats abandoned their enthusiasm for
FDR's ideas after the "Courtpacking" incident.
- Increasingly, however, Roosevelt focused on events in Europe and