The Great Depression (1929 - 1939)

Recession

  • immediately after World War I, the US went into a short recession
  • millions of jobless veterans
  • most jobs are gone - had been via war industries
  • shortages of consumer goods - because of war; great demand following war increased prices greatly
  • high prices, massive inflation, cost of living doubled 1913-1920
  • America was on edge and nervous; disillusioned by war meant that they had little patience for economic problems
    • wanted to revive economy as quickly as possible
    • counterproductive/unpatriotic people got in their way
    • the Red Scare - communists, anarchists, unions lumped together as useless to America

Return of Corruption

  • major goal of government was to help business, and take industry to maximum efficiency
  • opened opportunities to circumventing government restrictions for bigger profit
  • return of bribes, insider information
    • Progressives had tried to get rid of it, now it's back
    • many scandals, in the highest levels of government
    • shook belief in government - led to scepticism
  • businesses/corporations did generally well
  • farmers, wage labourers did poorly
    • technology created too much yield and bad prices for farmers
    • nobody focussed on them because everything else was doing so well

Warren G. Harding

  • can't say "no" - gives in to everyone
    • weak Presidency
    • does put some strong people into place
      • Charles Evan Hughes - Secretary of State
      • Andrew Mellon - Secretary of the Treasury, architect of trickle-down economics
      • Herbert Hoover
    • others were appointed via patronage
      • Albert Fall
      • Harry Daugherty
      • the "Ohio Gang" used Harding for their own gain

Scandals

  • Teapot Dome
    • 1921, Secretary of the Interior Albert Fall persuaded the Secretary of the Navy to allow oil companies to lease Teapot Dome, Wyoming and Elk Field, California
    • these oil fields had been set aside by Congress for the use of the Navy
    • Harding signed the leases - not corrupt, just an idiot
    • Fall took a $100,000 bribe from one company, $300,000 from the other
    • signed in 1921, took 7 years to reverse the deal
  • "Pay to Play"
    • Attorney General Harry Daugherty gave "special considerations" to individuals up for prosecution
    • if they paid him, he might not prosecute
    • sold pardons, liquor permits, etc.
    • trial in 1927, attempted to implicate Harding
  • Col. Charles Forbes, Army
    • head of Veterans Bureau
    • was caught shifting appropriations from Veterans hospitals
    • stole about $200 million from taxpayers
    • 2 years in a federal jail

Nationalise or Privatise?

  • following the war, the remaining Progressive Democrats wanted to nationalise the railroads and merchant marine
  • Harding didn't believe that the government should run businesses, so he privatised them
  • Esch-Cummins / Railroad Transportation Act (1920)
    • all railroads were given back to private ownership
    • declares that the railroad should be solvent, and will receive assistance from the ICC
    • the railroad could not compete with technological advances, however - cars, trucks, airlines, interstates
    • the railroads were forced to seek government help, and continue to be bailed out to the present day
  • Railway Labour Board
    • government gets involved with the railroads
    • demands that the workers take paycuts to help solve problems
    • led to a two-month strike
  • Merchant Marine Act (1920)
    • got rid of 1500 war-built cargo ships
    • American shipping still couldn't compete with foreign shippers

Government and Business

  • in less than 3 years, Harding appointed 4 Supreme Court Justices
  • swings back to laissez-faire, overturning the Progressive movement
  • ultra-conservative Justices, Congress, and President meant that much Progressive legislation was reversed
    • unsympathetic to labour, favoured business (expansion and strength)
    • Taft was one appointment, as Chief Justice; he was thoughtful, and not extreme - a good choice
  • Muller v Oregon - protected women in the workplace (during Progressive era)
  • Adkins v Children's Hospital (1923) - no special considerations were to be given to any one group of workers; all groups must be treated the same
  • companies were allowed to collude, fix wages and prices
  • ICC, etc. didn't enforce anti-trust laws
  • Secretary of Commerce Hoover believed that cutthroat competition and self-regulation made businesses more efficient
    • intrusive government would be inefficient
    • businesses take advantage of his attitude
  • Trickle-Down Economics
    • Andrew Mellon - creator of the Bureau of the Budget (now the Office of Management and Budget)
    • for the economy to grow, need to:
      • reduce taxes (echoed by British Keynes later)
      • balance the budget
      • increase tariffs to protect from outside forces
    • this was the "pure" form of trickle-down; Reagan would call his plan "trickle-down", but in reality only did the reduce taxes part
    • tariffs will cause the most problems in making this plan work long-term
    • World War I - national debt went from $2 billion to $24 billion, and taxes were as high as 66%
    • money saved by lowered taxes could be reinvested and cause the economy to grow
    • business growth would create more jobs, which meant more taxpayers, which meant more government revenue
    • Mellon cut the deficit by $16 billion
    • however, the tax breaks went to the rich, increasing class differences
    • critics say that the excess cash available contributed to the 1929 crash
    • much pressure to keep foreign goods out
  • Fordney - McCumber Tariff (1922)
    • increased duties on foreign goods from 27 to 38%
    • as US rates rose, European rates did as well, slowing world trade
    • this slowdown hurt European economies, which were struggling to raise money to pay for war debts

Foreign Policy

  • rejected the Treaty of Versailles
    • 1921 - Resolution of Congress declared American involvement in the war to be over
    • rejected the League of Nations
    • sent "unofficial observers" to Geneva (League headquarters), but didn't participate
    • Wilson's dream was dead
  • cannot be totally isolationist
    • oil was critical to Allies' victory, and everyone knows that access to oil was critical for world powers
    • Secretary of State Charles Evans Hughes would work to maintain US access to oil
    • the US and Britain got oil-drilling concessions in the Middle East
    • an arms race also began, US v. Britain v. Japan
    • most agreed it had a high risk
      • cost
      • armed conflict
      • huge navies
      • anything could happen
    • Washington Conference (1921-1922)
      • Secretary of State proposed radical restrictions
      • parity between US, Britain, and Japan in battleships and aircraft carriers
      • Japan, in order to agree, demanded that Britain and the US not fortify Far East possessions, whereas Japan could (and did)
      • all nations with holdings in the Pacific agreed not to expand those holdings
      • the 5-Power Pact
    • the 4-Power Pact (Britain, France, US, Japan) guaranteed respect for Pacific possessions
    • the 9-Power Pact re-affirmed the Open Door in China
    • all these agreements were thought to be diplomatic victories on the road to prolonged world peace
    • the ability to build smaller cruisers, destroyers, submarines wass not addressed
    • the US was the only nation that didn't improve their fleet - thought that world peace could be ensured by their participation in the agreements
  • Harding was so overwhelmed that is was suggested that he get away from Washington for a while
    • went on a speaking tour to Alaska and the West
    • collapsed in Seattle in Aug 1923; died in San Francisco of a blood clot and pneumonia
    • millions of Americans mourned his death

Calvin Coolidge: "Silent Cal"

  • questionable, fragile state of health - took plenty of time out to sleep
  • least active President in American history
  • took over for Harding, then ran on his own for President in 1924
    • issues: deep fragmentation of Democratic Party, Progressivism, Prohibition, sectionalism, urban v rural, immigration, conservative (Davis) v Progressive (La Follette)
    • Coolidge (Republican) won easily
      • Democrats were divided
      • nation was prospering
      • Democrats did take the "solid South"
      • Coolidge took the North, and La Follette took Wisconsin

Domestic Issues

  • pressured by veterans to be repaid wages that had been lost while in service
    • lobbied by the American Legion, which had been organised by Teddy Roosevelt, Jr. in 1919
    • Bonus Bill was vetoed by Harding in 1922
    • Adjusted Compensation Act (1924)
      • gave each veteran a paid-up insurance policy with 20-year maturity
      • cost $3.5 billion
      • Coolidge vetoed it as too costly, but Congress overrode his veto
  • American farmer was suffering
    • high demand for farm products during war
    • after war, Europe began farming again
    • farmers could harvest more than ever with new technology, but the technology was too good - they produced more than the market could handle
    • 25% of farms were foreclosed on
    • this was the glaring weakness in an otherwise good economy
    • organised into a farm block, lobbied for legislation
    • Capper-Volstead Act
      • exempted farm co-ops from anti-trust acts
      • President consistently vetoed acts like this, and Congress couldn't override
      • goes back to the ideas of the Farmers' Alliance

Foreign Policy

  • "outlawing war": Kellogg - Briand Pact
    • 62 countries signed it, declaring that war was no longer an option for international policy
    • however, it was unenforcable
    • Secretary of State Frank Kellogg won the Nobel Peace Prize for this
    • aggressor nations tried to appear to be in accordance, and framed attempts to take land as a self-defence
  • American passivism included keeping foreign nations out of the Caribbean
    • sent troops to Haiti, Nicaragua, Dominican Republic
    • troops out of Nicaragua in 1925, back in 1926
    • these troops stayed for long periods of time: about 20 years in Haiti Nicaragua
    • 1926: Mexico made a move to nationalise the oil industry
      • Coolidge was pressured to send in the military, but didn't
  • America attempted to squeeze $10 billion in World War I loans from Britain and France
    • so, Britain and France pressured Germany to pay its $33 billion in war reparations
    • the economy of Europe was progressing - but very slowly; tariffs are high, hindering trade
    • 1923: France sent troops into the Ruhr to force Germany to pay
      • so, Germany printed new money to pay them - huge inflation
      • the German mark became worth one-trillionth of the pre-war value; literally wasn't worth the paper it was printed on
      • the German economy was terrible, leading to political unrest; radicalism, fascism grew
    • Europe borrowed from the US and other private banks to pay off debts
    • Dawes Plan 1924
      • reduce German reparations
      • streamlined flow of money between the US and Europe
      • extended credit to Germany
      • the US never got its money, though
      • only Finland ever paid in full
      • the war ended up costing $10 billion and a lot of bad feelings

Election 1928

  • Coolidge didn't run again, so Herbert Hoover stepped in
    • he had a tremendous history - very capable
    • successful businessman, Secretary of Commerce, etc.
  • Al Smith was has opponent
    • New York, Tammany Hall Democrat
    • wanted to end the "noble experiment" of Prohibition - "Alcohol Al"
    • and he's Catholic - can't win
  • Smith gets the deep South, and Massachusetts (Irish Boston)
  • Hoover gets everything else: North, West, Florida
  • first to combine the whistle-stop train campaign with radio addresses - politicians would need to have the "right" voice for radio; Smith didn't, Hoover did
  • Hoover also won a Republican Congress

Herbert Hoover

  • entered office, and the economy tanked (like Cleveland); not his fault
  • farming sector had been suffering
    • to help them, sponsored the Agricultural Marketing Act
      • a Federal farm board would buy surpluses to shore up prices
      • create cooperatives
    • the Fed was slow in helping them, and farm prices kept dropping
  • business sector
    • economy was /too// good
    • Fed began to raise interest rate, tried to slow down the economy
    • but, the Fed was /too// active, didn't have the "right touch"
  • Sept 1929
    • many people began to sell stocks to leave the market while the price was still good
    • 24,29 Oct, prices fell drastically
    • sellers went crazy
    • by December, $40 billion in stock value had been lost
    • had been overvaluing business, no value in stocks
    • stocks could be bought on margin - loans secured with the stock; when stock values tanked, the loans became worthless
    • beginning of Great Depression

Causes of the Great Depression

  • lack of diversification
    • prosperity of 1920s was largely based on construction and automobiles
    • coal, etc. - other businesses declined
  • increasingly unequal distribution of income
    • purchasing power of cash increased, but poor didn't gain
    • less rich, more poor
    • the economy needs an even pyramid of wealth to be healthy; in this case, the top became to narrow
    • 10% of the nation had 40% of the disposable income
  • overproduction
    • farm income declined 66% from 1920-1929
    • overproduced goods and farm products - made more than could be consumed
    • lack of demand led to surplus led to price drop
    • price of corn, for example, fell drastically
  • technology
    • with new labour-saving devices, there was less need for workers
    • whole groups of old jobs were lost
    • for example, cars replaced trains, and the train industry collapsed
  • speculation
    • everywhere - especially in real estate
    • Americans were told to invest everywhere - "you too can become rich"
    • sell lots in Florida sight unseen - worthless swampland
  • credit problems
    • credit got out of control
    • began to rely too much on credit, leading to huge debt
    • lenders and borrowers both took a hit, as the whole credit system broke down
  • banking
    • banking industry collapsed
    • late 1920s, string of banks failed
    • farmers were unable to pay mortgages
    • many foreclosures
    • banks speculated in stock market
  • results
    • 100,000 businesses, 6000 banks failed
    • corporate profits dropped from $10 billion to $1 billion
    • 9 million savings accounts were lost
    • 25% unemployment
    • tent cities, shantytowns, health problems, soup kitchens, breadlines, starvation
    • suicides
    • many never get past this period - still hide cash in their houses, etc.

Hoover's Response

  • believed that direct relief, giving handouts of money, would undermine the moral character of America by lessening the rugged individualism of the nation
  • rejected programs that he deemed socialistic
  • suggested to Americans that they band together and turn to their communities, churches, Salvation Army, etc. for help
  • it was left to the states to develop aid programs for their citizens, as he felt they were better equipped to deal with their own unique problems
  • on Constitutional grounds, the federal government could only do broad-based, general programs - no specific aid
  • because of the magnitude of the downturn, communities, churches, etc. began to run out of resources
  • it was tough for states to get money - no workers meant no taxes
  • waiting lists for welfare
  • met with businesses, labour leaders to try to convince them to avoid layoffs and keep people working
    • convinced unions not to strike
    • kept businesses going as long as possible
  • started federal financing for huge work projects - Boulder Dam, Hoover Dam; he justified the projects as good for the nation, will serve for a long time; keep people working - not handouts
    • Norris - La Guardia Anti-Trust Act / Anti-Injunction Bill (1932) - ended "yellow-dog" contracts, which hired a worker on the condition that he wouldn't join a union
  • 1932 - Reconstruction Finance Corporation
    • $.5 billion in loans to large corporations
    • loans would allow them to pay suppliers, it would trickled own - in theory
    • but, it never trickled down
    • this was a huge departure from the views held by Hoover and his administration, as the idea of paying corporations was completely foregin to them
    • but, many people argued that it was too little, too late
    • however, it became a blueprint for the New Deal (and for today)
    • ineffective - some argue that it was counterproductive
    • businesses saved themselves, and no one else
  • 1930 - Smoot-Hawley Tariff
    • attempted relief for farmers
    • created monstrous tariffs rates, although the original plan was to lower them from Fordney-McCumber (39%) to 38%
    • however, raised tariffs to 60%
      • all foreign trade and exports ended
      • nations stopped trading
      • created years of worldwide destruction
      • Roosevelt would have to re-negotiate country-by-country to reopen trade
  • hampered in his attempts to help by a hostile Congress
    • in the off-year election, the Republicans lost the House, but kept the Senate
    • much political manoeuvring took precedence over the welfare of the nation
    • Hoover accused them of placing politics over human misery
  • Bonus Army
    • 20,000 veterans came to Washington, and camped in makeshift shantytowns
    • lobbied for immediate payment of their bonus
    • Congress decided not to pay, and asked Hoover to deal with the veterans, who were becoming unruly
    • Hoover arranged transport for 6000, the rest were evicted by the military
    • Douglas MacArthur was put in charge of their removal - he was "exuberant in his job"
    • instead of working with the veterans, he went in with fixed bayonets and tear gas
    • Hoover took the blame, and became known as a "veteran hater"

Election of 1932

  • Hoover ran for re-election, won six states
    • with the economy so bad, he couldn't win
    • while campaigning, he was bombarded with rotten fruit
    • tried to be optimistic: "the worst is in the past"
  • Franklin Delano Roosevelt
    • portrayed as being more socialist than capitalistic
    • described himself as a "cautious liberal"
    • offered a "New Deal" for the "forgotten man"
    • promised a balanced budget and major economic reform
    • "Happy days are here again"
    • Democratic Party platform called for an end to Prohibition, increased federal relief, personal payments
    • 57% of the popular vote, Democrats get House and Senate

Franklin Delano Roosevelt

  • New York governor, charming, intelligent, self-assured, mesmerising speaker
  • had a gift for wonderful phrases, which endeared him to the common man
  • pledged a "New Deal" - his simple words came at the right time and place for America
  • 1921 - contracted polio
    • confined him to a wheelchair
    • spent years in therapy while recovering
    • historians say that the process of recovery (intense therapy, paralysis, etc.) gave him a better understanding of life - more patient and thoughtful
    • would go out of his way - and got cooperation from the press - to never be seen as "weak", in his wheelchair, or being carried
    • only two pictures of him exist of him in his wheelchair
    • Eleanor Roosevelt helped Roosevelt out very much, she worked tirelessly for FDR and other causes, she became the "legs of FDR", Considered a champion for the poor and dispossessed, she was responsible for the democratic coalition that brought African-Americans, women, and labourers to the Democratic party.
    • had an unofficial cabinet of people called the Brain-trust that consisted mostly of college professors, this was a progressive idea that Roosevelt used at a national level to help pull the economy out of the depression, it turned out to be a huge success and further help the Democrats dominate the federal government
    • between the November election and the March inauguration the economy got much worse, unemployment soared to 25%, 8 out of every 10 banks closed

First 100 days

  • Roosevelt was unsure about what to do and about the state of the nation
  • he established the 100 day achievement review, came from all of the programs he started mostly in the first 100 days
  • March 6th he issued an executive order to close every bank in the United States for a holiday, this stopped the mass withdrawal of money from the banks
  • March 9th he called a special session of Congress; Congress passed the Emergency Banking Relief Act that allowed Congress to regulate banks and then reopen banks that were thought to be strong enough to run in the economy
  • Congress then passed the FDIC in addition to other acts; this would insure money in savings accounts against collapse
  • Roosevelt also began half hour radio talk shows to make people believe the economy is being fixed and things will be back to normal; said that banks were safe and asked Americans to deposit money into banks again
  • Roosevelt then turned to currency; ended the gold standard, and based the currency value of GDP
  • Roosevelt primarily aimed for relief, recovery, and action
  • Congress gave him unprecedented power and cooperation to achieve his goals, more than any other President
  • created hoards of programs with something for everyone

New Deal Programs

  • The programs were kind of a return to progressivism because they reformed, regulated, and grew the nation
  • Civilian Conservation Corps (CCC)
    • designed to put young people to work doing conservation work
    • took people out of cities, fed them, gave them a place to sleep, paid them to work, and saved families a person to worry about
    • part of your pay went to your family
    • very effective and successful program
    • completely voluntary for young men
    • over 3 million young men were employed
    • critics were disgusted with the uniforms and sleeping arrangements and called it the military
  • Federal Emergency Relief Act (FERA)
    • Designed for welfare and help projects
    • Harry Hopkins in charge of it, he was very influential and always around Roosevelt
    • one of the FERA offshoots was the CWA that was many projects designed to get people through the winter
    • it was designed as a relief and recovery program
  • AAA - Agricultural Adjustment Act/Administration
    • designed to help farmers keep their farms and crops
    • protected banks from loan failure
    • designed for relief and recovery
    • designed to reduce market supply
    • designed to reduce supply - paid farmers to decrease what they grew
    • bought and killed pigs, cows, etc. so they couldn't be sold
    • lowered supply to raise prices
    • to pay for it, taxed food processors
      • grain mills, slaughterhouses, etc.
      • taxing one group to benefit another was declared unconstitutional in Butler v US (1936)
    • the AAA was scrapped
    • replaced by Soil Conservation and Domestic Allotment Act (1936), which paid farmers to have fallow land or to plant beans and buckwheat, which conserved the soil but were not cash crops
    • 1938 - Second AAA; paid for out of government dollars, from all other taxes

Dust Bowl (1930s)

  • nature joined the Depression with a devastating drought
  • Texas, Oklahoma (especially panhandle region), Nebraska, Eastern Colorado became known as the "Dust Bowl"
  • can't grow anything - like a desert
  • inspired John Steinbeck's Grapes of Wrath
  • Frazier-Lemke Farm Bankruptcy Act
    • declared a suspension of all mortgage foreclosures for 5 years
    • the Supreme Court declared it unconstitutional
    • Congress amended it, taking out the "suspend" part and putting in "forestall", as well as changing the limit to 3 years; this passed the Court
  • there would be no rain until the 1940s

End of Prohibition

  • Roosevelt was committed to repealing Prohibtion
    • the "noble experiment" had failed - alcohol consumption increased during Prohibition
    • organised crime grew out of it - bootlegging, speakeasies, Al Capone, gang fights, etc.
    • money was wasted on law enforcement
  • March 1933
    • 18 days after Roosevelt entered office
    • Congress legalised light (3.2% alcohol) beer and wine
    • by allowing it, people would buy it - and it could be taxed
    • later in 1933, the 21st Amendment (repealing the 18th) was passed
  • organised crime didn't disappear - instead turned to drugs, etc.

Securities and Exchange Commission

  • reform of stock markets
  • one problem was the buying of stock on margin (credit) - when the market slid, the margin was called, but there was no money to pay for it
  • the SEC ended margin and insider trading
  • corporations now needed to prepare a portfolio for the SEC, detailing their operations and finances
  • no more "penny stock" that doesn't exist
  • created a level playing field
  • stopped fraud and manipulation
  • didn't work perfectly

Public Utilities

  • 1935 - Public Utilities Holding Company Act
  • huge conglomerates had been merging small local companies together
  • when the Insull company collapsed, thousands of customers were affected
  • this provided a change to create would become a model government program - one that actually worked
  • Senator George Morris was behind this movement
  • created the Tennessee Valley Authority (TVA)
    • 20 dams to prevent flooding, generate electricity
    • supported an entire region
    • in spite of the efforts of local companies to discredit them, it worked out well
    • accused of being socialistic - government-controlled
    • but the government did do a good job with it
    • put people to work, via the Civilian Conservation Corps

Housing

  • Federal Housing Administration (FHA) - 1934 - designed to make loans to homeowners for home improvement or completion of construction
  • United States Housing Authority (USHA) - 1937 sponsored new home construction
  • homes for low income families - not great quality, but a roof over your head and a place to start

National Recovery Administration

  • "look for the blue eagle"
    NewDealNRA.jpg
  • coordinated between business and labour - called for restraint from both to reduce unemployment
  • set up codes for "fair competition" - minimum wage, maximum hours; tried to maximise employment
  • encouraged collective bargaining from labour
  • great public promotion - almost every business had the blue eagle sticker
    • businesses that participated were declared wonderful, patriotic, etc.
    • if the sticker wasn't in the window, angry workers would break the windows
  • a lot of complaints from business and labour, but they felt that they had to join despite complaints
  • in the end, the NRA asked for too much sacrifice
    • people who actually had jobs were asked to work less hours to accommodate others
    • businesses that actually had business had to cut back to help others compete
  • eventually shot down - Schecter Poultry v US
    • or, the "Sick Chicken" case
    • in New York, Schecter Poultry was forced to abide by NRA rules
    • they were a small business, and the NRA was hurting them, to they took it to court
    • the Supreme Court declared that Congress had overstepped its bounds by giving legislative authority to the executive branch
    • also, Schecter was a local business - not interstate, no federal authority

Ickes

  • Harold Ickes, Sr.
    • Secretary of the Interior under Roosevelt
    • in charge of the Public Works Administration (PWA)
    • this was an unemployment relievement, economic recovery program that wasn't very successful
    • he was given carte blanche, and created many jobs
    • but, he was cheap, and wouldn't spend the money Congress gave him, which ruined the PWA program
  • Harold Ickes, Jr. (contemporary)
    • one of the chief antagonists of the Republican Party
    • with Hillary Clinton, architected plan to nationalise health care under Bill Clinton
    • runs a corporation to avoid campaign finance laws today

Second New Deal

  • in spite of welfare, job programs, etc., unemployment was still high in 1935, and the mood of the nation was desperate
  • Roosevelt decided that his programs hadn't gone far enough, and that another series of reforms was needed
  • Works Progress Administration
    • headed by Harry Hopkins
    • spent $11 billion on a variety of public works, education, the arts, etc.
    • built bridges, roads, etc.
    • wrote history, taught, painted, murals, etc.
    • paid about $.30/hr, but was better than nothing
    • allowed people to earn money and retain some dignity
  • National Labour Relations Act / Wagner Act
    • took the side of labour while bargaining collectively
    • if removed from a job because of union issues, a worker could go to the NLR board
    • this is still in existence
  • Social Security
    • a government-sponsored insurance program for the unemployed, dependent children, retirees, handicapped
    • funded by mandated contributions from workers and employees
    • originally didn't cover self-employed; does today
    • conservatives bitterly opposed it as socialism
    • called it a "ponzi scheme" - illegal investment where incoming funds are used to pay those collecting their returns; mathematically, will always fail
    • promoted as the greatest idea ever - take 1.5% (never more), and your employer matches it
    • the plan's so great that federal employees (Senators, Congressmen, etc.) are exempted

Critics

  • previously, radicals were ignore; terrible times mean that they are heard
    • Hitler, Stalin
    • say democracy/capitalism are not the answer
    • ideas of communal ownership, equal wealth, come to America
    • in America, people see other nations as improving while America isn't - maybe change is needed
  • Father Charles Coughlin
    • enormous New Deal supporter, at first
    • had a radio show with millions of listeners; based out of Royal Oak, Michigan
    • "New Deal is Christ's Deal"
    • coined the phrase "social justice"
    • as time progressed, he began to have serious doubts about the New Deal
    • thought that the programs didn't go far enough, or only helped the "haves" (not "have-nots")
    • though that the banks should have been nationalised
    • with bigger audiences, he became more full of himself
    • began to demonise Roosevelt, had fascist and anti-Semite rhetoric
    • eventually forced off the air by the Archbishop
    • his parish, Shrine of the Little Flower, has been attacked several times - KKK, etc.
  • Senator Huey P. "Kingfish" Long
    • former governor of Louisiana
    • "chicken in every pot", "car in every garage", share the wealth - every man can be a king
    • wanted to give everyone $5000 from taxes on those with the highest incomes - take from the rich, give to the poor
    • wanted to tax large estates to build roads, hospitals, etc.
    • by 1935, gathered a large enough following that he thought the could seriously challenge Roosevelt for the Presidency
    • was assassinated in 1935, with rumours of Roosevelt's supporters' being involved
    • ideas of share the wealth stayed
      • in California, Upton Sinclair ran for governor, against Earl Warren (later of the Supreme Court)
      • "Campaign of the Century" - 1934 governor's race
      • Hollywood realised they'd be done if Sinclair won, so they threw their support behind Warren, who won
  • Dr. Francis Townsend
    • created an old age revolving pension plan
    • each person over 60 would be given $200/month
    • to receive the next $200, they had to prove they had spent the previous $200
    • $200 was a considerable wage for the time
    • to be paid for with a national sales tax
    • this didn't go through, but it was a precursor to Social Security
  • American Liberty League
    • conservative Democrats joined with well-off Republicans
    • viewed the New Deal as socialism
    • goals was to defend capitalism
    • wanted to fight unions with open-shop laws
    • classified New Deal programs as wasteful, hopelessly muddled, and radical
    • supported Alf Landon for President
    • backed by Hoover

Election of 1936

  • debate over the proper role of government in society - same issue as today
  • should the government control wages, bailout banks, etc.?
  • Roosevelt won in a landslide vote, as those benefiting from far outnumbered those who felt that they were paying for the New Deal
  • divided the nation along class and income lines
  • Roosevelt was sworn in on 20 Jan instead of 4 Mar, due to the 20th Amendment (1933); this shortened the lame duck period

Court-Packing

  • after this election, Roosevelt became a bit too confident
  • he had been frustrated by the ultra-conservative Supreme Court, which had knocked down 7 of his New Deal programs
  • also, 6 of the justices were over 70 years old
  • he asked Congress to allow him to add a justice for every justice over the age of 70, with the maximum number of judges being 15
  • claimed he was doing the Court a favour, as some the elderly gentlemen were overworked and the Court was behind in its cases
  • however, looking at the record revealed that the Court was not behind
  • this "court-packing" scheme turned out to be a huge mistake, as Roosevelt was accused of trying to break the checks and balances of the system and obtain dictatorial powers
  • his scheme backfired - his period of absolute control of Congress was over
  • passing New Deal programs was henceforth more difficult
  • if he had waited, the several of the judges retired or died anyway
  • some argue that he wasn't actually trying to "pack" the Court; rather, he was trying to send them a message
  • after this, the Court will view Roosevelt's plans more favourably, passing the Wagner Act (National Labour Relations Act), Social Security, etc.
  • Roosevelt will end up being able to name 9 judges over his 4 terms in office

Recession of 1937

  • by 1937, it looks like the worst of the Depression is over, and Roosevelt began to back off of the welfare programs
  • he tried to reduce deficit spending and balance the budget
  • however, in 1937/8 there was a renewed recession, in which the nation lost the gains from 1933 and onward
  • Roosevelt decided to use the ideas of British economist Keynes, who advocated extensive deficit spending
  • to Keynes, deficit spending could be made up for with increased taxes when good times return
  • however, Roosevelt knew that his return to deficit spending established a bad precedent for the future, as the people will expect to be given money
  • he didn't like the idea of lost incentive to work, but he didn't like the idea of being called a Hoover, either

1938

  • Wage and Hours Bill / Fair Labor Standards Act
    • all industries in interstate commerce were required to establish minimum wages and maximum hours
    • the eventual goal was a 40-hour work week with $0.40 per hour
    • this act excluded service, farm, and domestic workers
  • 1938 Off-Year Election
    • the Democrats lost 80 seats in the House; a new conservative coalition could now block the New Deal
    • no more New Deal programs were passed after 1939
    • the economy was slowly beginning to mend
    • there were still more than 20% unemployed pre-1940
    • most will argue that the New Deal allowed the nation to "tread water" and survive until World War II, which truly ended the Depression
    • the New Deal did create the lasting legacy of a huge government bureaucracy
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