Lecture 8: FDR, New Deal, Prelude to WWII

U.S. History II
Lecture 8, Chapter 25: FDR and the New Deal

Roosevelt and Hoover rode to the 1933 inauguration in the same car but didn’t speak to one another. Hoover was incensed that Roosevelt had done nothing after the election to prevent the nation’s slide further into depression. Roosevelt refused to box himself in with any of Hoover’s ideas and therefore agreed with nothing Hoover proposed between November 1932 and March 1933.

At the inauguration, Roosevelt gave few specifics. Instead, he exuded confidence in his speech. In his first paragraph, FDR stated that “the only thing we have to fear is fear itself--nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”*1*

Roosevelt needed to project confidence, because the nation certainly lacked it. More than 5,000 banks failed from 1930 to 1932, factories had closed, farmers had lost their land, and the unemployment rate was at 25%. However, FDR did not have a comprehensive plan to address the Depression. Rather, his philosophy was, “Take a method and try it.... If it fails admit it frankly and try another.”

Banking Crisis

Even as FDR was inaugurated, banks were failing in such large numbers that state governors were unilaterally declaring “bank holidays” to shut the banks and prevent runs on deposits. FDR called Congress into a special session on 6 March 1933 and declared a national “bank holiday” to close all banks in the nation. Under FDR’s plan, no bank could open again without federal inspection. Only those banks with sound deposits would re-open after the holiday; others would be either re-organized or closed. The holiday went into effect 3 days later.

On 12 March, FDR gave his first “fireside chat,” a series of radio addresses from the White House directly to the American public. His first “chat” reached an estimated 60 million people. FDR assured the public their money was safe in the banking system; as he put it, “I can assure you that it is safer to keep your money in a reopened bank than under the mattress.”*2* As banks reopened across the nation, more than $1 billion in funds were deposited by citizens who chose to deposit money rather than withdraw it. As FDR said in his fireside chat, “it is my belief that hoarding during the past week has become an exceedingly unfashionable pastime.”*3*

The New Deal Programs

Congress’ special session lasted from 9 March to 16 June 1933, a total of 100 days. This was known as the “first hundred days” of FDR’s term. Congress passed more than a dozen bills, including bills for:

The Civilian Conservation Corps (CCC), a work program that paid boys from ages 17 to 24 $30 a month to work around the nation, usually in rural areas or national parks. $22 of the salary was sent to the man’s family. The Labor Department recruited workers, while the Army ran the camps where they stayed. The CCC built many conservation and anti-erosion projects, including camping trails and buildings in national parks. The CCC also planted trees and engaged in wildfire fighting. The CCC lasted until 1943, when the nation was embroiled in World War II.
The Federal Emergency Relief Administration (FERA), which gave funds to the states for unemployment relief. The FERA was given a budget of $500 million to help states. Harry Hopkins, a former social worker, was chosen to run the FERA. The FERA’s money, through the states, paid unemployment benefits to over 20 million people. Hopkins was wary of simply giving people money for no work, so the FERA instituted the Civil Works Administration (CWA) to put people to work. CWA workers built over 400 airports and 200,000 miles of roads across the nation. CWA workers also worked in schools serving school lunches and immunizing children. The program ended after only 4 months at FDR’s insistence because of its budget.
The Glass-Steagall Act of 1933 created the Federal Deposit Insurance Corporation (FDIC), to insure bank deposits up to $5,000 per depositor. This government entity ensured that depositors would no longer lose their savings when they used FDIC-insured financial institutions.
The Tennessee Valley Authority (TVA). The Tennessee Valley was the nation’s poorest region, with over 4 million people living mostly on small farms without electricity, paved roads, or adequate medical care. Few industries would locate there because of these liabilities. The TVA harnessed the Tennessee River with dams to provide cheap electrical power to encourage development in this area.
The Agricultural Adjustment Act (AAA). This act was designed to address the most difficult aspect of the Depression: appalling economic conditions for the nation’s farmers.

The nation’s farmers had never enjoyed the prosperity of the 1920’s, ironically because of the productivity gains caused by better farming. Foreclosures became common throughout the farming areas as prices fell on agricultural goods due to bumper crops. In many areas, farmers grew militant, blocking roads and threatening bankers who foreclosed on their neighbors’ farms.

The AAA offered a radical solution: Pay farmers for non-production. There was no mention of foreign trade, no mention of shipping goods overseas. The simple fact was that there were too many farms producing too much food to maintain living wages on the farms. Therefore, the AAA paid farmers to plow under their crops. More than 3 million farmers signed contracts with the AAA to do just that. 6 million baby pigs and 600,000 pregnant sows were slaughtered to raise pork prices.

In addition to the crops not planted or destroyed under AAA contract, the nation’s heartland experienced the worst drought in history. The “dust bowl” wiped out farms from Texas to the Dakotas, with massive windstorms blowing topsoil from countless farms. More than 3 million people abandoned their farms in the Midwest, with many of them migrating to California for work. The Californians didn’t want them, leading to massive discrimination for dust bowl victims.

Most of the nation could not believe the AAA’s goals of raising prices for food when the unemployment rate was so high, but without the AAA, there would be fewer farmers in the first place. As a result of the AAA, farm income rose almost 60% between 1932 and 1935.

Unfortunately, most of the AAA’s subsidies went to larger farms, many of which were leased out to tenant farmers and sharecroppers. Many landowners evicted their tenants and sharecroppers to obtain AAA bonuses. To assist these small farmers, the Administration created the Resettlement Administration to aid evicted farmers in settling elsewhere in the nation.

The National Industrial Recovery Act. The NIRA created the Public Works Administration (PWA) and the National Recovery Administration (NRA). The PWA was designed to provide jobs for unemployed and new orders for factories. Run by Harold Ickes, the PWA spent $2.8 billion of its $3.3 budget on schools, hospitals, post office, and sewage systems. Ickes insisted on approving contracts himself to insure that no corruption occurred in the PWA.

The NRA was run by General Hugh Johnson and encouraged fair practices in business, including minimum wages and maximum hours per week. For the first time, a 40-hour work week became the norm in the nation. Business leaders, in return, received relief from antitrust laws. The NRA also guaranteed labor unions the right to organize workers and bargain collectively. Unfortunately, the NRA proved controversial for the resulting price increases and for its insistence on voluntary compliance. Big businesses followed the rules only when they benefitted from them. Otherwise, Big Business ignored the NRA. The Supreme Court would later strike down the NRA in Schechter Poultry Company v. United States in 1935. Roosevelt later said of the NRA, “It has been an awful headache.... I think perhaps NRA has done all it can do.”

The abolition of Prohibition. FDR practically threw in the towel by allowing beer and wine with an alcohol level of 3.2% to be sold throughout the nation so the government could collect taxes on the revenue. The 18th Amendment was repealed by the 21st Amendment in 1933.

The first 100 days of FDR’s administration gave the nation more hope than the previous 4 years of the Hoover administration. However, FDR’s plans were not universally popular. In 1934, a retired USMC general, Smedley Butler, came forward to say he had been approached by leading capitalists to lead a coup in Washington.

Furthermore, many people thought FDR had gone too far in expanding executive powers and in interfering with private enterprise and the free market system. They were correct; the existing economic system had proved incapable of meeting the challenge of the Depression, so FDR did what he deemed necessary. In 1934, conservative business leaders formed the American Liberty League to combat the New Deal and its provisions that, they thought, benefitted workers at the expense of employers. According to one League member, “There can be only one capital, Washington or Moscow.”

The League supported the Republicans in midterm elections in 1934, but the Democrats swept the nation, winning 9 additional Senate seats and 9 additional Congress districts.

If FDR faced opposition from the right, he also faced opposition from the left from people who thought he hadn’t done enough. The Socialists and Communists constantly preached that capitalism had failed and the U.S. needed to follow the USSR down a path toward Communism.

Others on the left may not have wanted to go so far as Socialism, but they wanted to ensure more government intervention in the economy than had been the case before the Depression. In Minnesota, the governor was elected on a platform of state ownership of utilities and railroads. In Wisconsin, the Progressive party ran on the idea of a welfare state.

In Louisiana, Governor Huey “Kingfish” Long slapped the wealthy and corporations with massive tax increases that funded construction of hospitals, roads, and bridges (over 12,000 miles of roads and over 100 bridges), and an airport for New Orleans. Long proposed a scheme in which no one could earn more than $1.8 million a year or have a fortune of more than $5 million ($26.8 million and $74.6 million in 2005 dollars). Every family would receive a house, car, radio and annual income of at least $2,500 per year; deserving college students would attend college free of charge, veterans would receive their bonuses, and the elderly would receive pensions. Long’s big problem was the cost of his program, but he didn’t care. He told his followers, “You don’t have to understand it... just shut your ... eyes and believe it. That’s all.” Long’s motto was, “Every man a king.” FDR called Long “one of the most dangerous men in America.” Long was set to run against FDR in the 1936 presidential election, but he was assassinated in Baton Rouge on 8 September 1935 by Carl Weiss. Long’s last words were, “ Don't let me die, I have got so much to do.”*4*

FDR faced this opposition from both sides going into the 1936 elections. FDR’s advisors encouraged him to go further to the left to silence his critics. According to Hopkins, “boys — this is our hour.... We’ve got to get everything we want — a works program, social security, wages and hours, everything — now or never.”

In 1935, Roosevelt went to Congress with the “Second New Deal.” The Second New Deal included many of Hopkins’ items, including:

The Social Security Act of 1935, which created a national pension fund for the elderly, an unemployment insurance system, and public assistance for dependent mothers and children and the physically disabled. The fund was to be financed with a payroll tax of 2% on all income below and including $3,000.*5* The first benefits were only $20 to $30 a month because FDR did not want the pension to become the primary source of retirement income. Also, domestic workers, farm workers, and self-employed citizens were exempted from the program.
The Works Progress Administration (WPA), which was led by Hopkins. Its motto was, “Jobs, jobs, jobs!” The WPA employed blue-collar workers primarily, but it also employed artists and white-collar workers in projects across the nation; as many as 3.3 million people were employed by the WPA by November 1938. According to Wikipedia, “The WPA built 650,000 miles of roads, 78,000 bridges, 125,000 buildings, and seven hundred miles of airport runways. It presented 225,000 concerts to audiences totaling 150 million, and produced almost 475,000 works of art.”*6* The WPA ended on 4 December 1943.
The National Labor Relations Act (NLRA) to pick up where the NIRA left off with its ending by the Supreme Court. The act supported workers’ rights to organizing labor unions, collective bargaining, and participation in strikes.

The NLRA was immediately controversial within the labor movement. The movement had split in 1935 when AFL leaders refused to recruit workers from within mass production industries. The AFL was primarily composed of craftsmen. John Lewis, head of the United Mine Workers, stormed from the AFL convention in 1935 and formed the Congress for Industrial Organization (CIO) to organize these workers. Many in the AFL saw the NLRA as sympathetic to the CIO.

The 1936 Elections

When the parties met in their conventions in 1936, FDR had no opposition in the Democratic Party. Herbert Hoover was eager for another campaign, but he was passed over in favor of Alfred Landon of Kansas. Landon promised “fewer radio talks, fewer experiments, and a lot more common sense,” but he failed to connect with the voters. Republicans did him no favors when they attacked FDR’s programs as too far left. FDR responded in his final campaign speech by saying, “Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me-and I welcome their hatred.”*7*

The election on 3 November 1936 was the most lopsided election since 1820. FDR won almost 28 million votes to Landon’s 16.6 million; FDR carried every state but Maine and Vermont, and the Democrats added to their majorities in both Houses of Congress.

FDR, the Second Term

FDR got off to a bad start in his second term when he attacked the primary focus of opposition to his New Deal programs: the U.S. Supreme Court. The Supreme Court, controlled by justices appointed by Harding and Coolidge, was adamantly pro-business and vehemently opposed to FDR’s business philosophy. The Court struck down the NRA, the AAA, and several social welfare laws. Although FDR had been willing to bide his time and wait for a Justice to retire, none did in his first term.

In February 1937, FDR proposed legislation to add a judge for each federal judge over the age of 70 who refused to retire. The 50 new federal judgeships would include 6 new Supreme Court Justices. Although the plan was legal, it was opposed by almost everyone in the nation outside the White House. FDR refused to back down.

In the spring of 1937, the Supreme Court blinked first. The Court upheld the Wagner Act (the NLRA) and the Social Security Act by 5-4 votes. After this, the conservatives on the Court began to retire. FDR filled 5 vacancies in 3 years with Justices Hugo Black (of Alabama), Felix Frankfurter, and William O. Douglas, among others.

With the legality of the NLRA established, the CIO began massive programs to unionize workers. GM suffered a “sitdown” strike in 1937, where the workers refused to leave their posts but refused to work while there. GM recognized the United Automobile Workers as the legitimate union of its workers. Other industrial giants caved in soon thereafter, with Ford Motor Company and Republic Steel of Chicago bringing up the rear after violent protests at Republic in which 10 workers were killed.

Foreign Affairs: Europe Stumbles toward War

America had returned to its isolationist ways after World War I. Many in the nation felt the U.S. had been tricked into entering the war by business interests who profited hugely from selling arms and equipment to the government and to the Allies.

In Europe, Joseph Stalin cemented his control of the Soviet Union, putting the last piece into place for the coming world war. Hitler and the Nazis controlled Germany; Tojo and the military ruled in Japan; and Mussolini and the Fascists controlled in Italy. Foch’s 20 year truce was ending.

Italy still resented Allied inaction on claims against former Austro-Hungarian territory. Mussolini seized this territory in the 1920’s, beginning with the town of Fiume. In 1934, Mussolini invaded Ethiopia; this time the Italians won. Italy annexed Albania in 1939. The League of Nations did nothing against Italian aggression.

When Italy invaded Ethiopia in 1935, Congress passed the first Neutrality Act. The Act empowered the president to determine when war existed anywhere in the world; such a determination would trigger an arms embargo on all combatants. In the Second Neutrality Act, American banks were prohibited from extending loans to any nation at war. Although FDR opposed the Acts, he signed them to maintain his political clout for domestic affairs.

In 1936, civil war erupted in Spain between the leftist government and the Spanish army, led by General Francisco Franco. Hitler and Mussolini supported Franco; Joseph Stalin of the Soviet Union supported the government. America was torn, with many supporting Franco but others joining the Communist-led “Abraham Lincoln Brigade” to fight with the government. Most Americans simply wanted to be left alone. Congress passed a third Neutrality Act in 1937 that extended the previous 2 Acts to civil wars.

Hitler began pushing the League of Nations soon after his election. In 1935, Hitler denounced the demilitarization of Germany and enacted military conscription. Suddenly, all the “soldiers” in the 100,000 man army became non-commissioned officers, allowing for a vast expansion of the army.

Secondly, the Germans had been banned from creating or maintaining an air force. Glider flying became a popular “pastime” in Germany during the 1930’s; by the end of the decade, all the “glider pilots” became military pilots in the new air force, the Luftwaffe. In 1939, the Luftwaffe had over 4,000 planes.

In 1936, Hitler began the great gambles that would eventually lead to the war. Germany had lost land in the Treaty of Versailles and had been forbidden from uniting with Austria. Germany had also been prohibited from keeping military units in the Rhineland, the area between the Rhine River and the Belgian border. In early 1936, Hitler renounced the Locarno Treaty and sent military units into the Rhineland. At this point, Hitler had few units and would have backed down if the Allies had pushed. France was hindered by political uncertainty (a new election was coming); Britain had a new government led by the Conservative Party, and the Conservatives had no intention of involving British units on the Continent ever again. Therefore, while Britain and France did nothing but bicker over whether to enforce the Treaty of Versailles, Hitler continued militarizing the area.

Next, Hitler looked toward Austria. In March 1938, he annexed Austria in a sham election called the Anschluss. Austrian Nazis facilitated the union by working against the Austrian government. The French were again in a political crisis, and the British hadn’t liked the prohibition in the first place; therefore, the Allies again did nothing.

Over 10 million Germans lived outside Germany in the post-World War I Europe. Hitler turned to Czechoslovakia and demanded the Sudetenland, an area with 2.8 million Germans. This time, the Allies took notice. Hitler responded by saying he supported self-determination of the area. British Prime Minister Neville Chamberlain met with Hitler to discuss the issue. In a meeting between the British, French, and Germans (the Czechs weren’t invited), the Allies agreed that the Sudetenland belonged to Germany. Hitler declared the Sudetenland would be his last annexation. In 1938, Britain, France, and Germany signed the Munich Agreement, giving the Sudetenland to Germany. Chamberlain returned to Britain waving the agreement and saying he had won “peace in our time.” In early 1939, Hitler took the rest of Czechoslovakia, Germans, Slavs, and all.

Chamberlain’s policy was called appeasement. The Allies felt that if they merely “appeased” Hitler and the Germans, they could avoid another war. No one wanted another war on the Continent, and few really understood Hitler’s determination to unite all German speakers into one nation. Had any of the British or French politicians in control taken the time to read Mein Kampf, they would have seen Hitler’s intentions.

After the Germans took Czechoslovakia, the Allies realized that Hitler would not stop with that nation, but it was too late to do anything to oppose him. By this time, the German army — the Wehrmact — numbered in the millions, the Luftwaffe was fully armed, and both groups had been battle-hardened in the Spanish Civil War of 1936-1939. Their cooperation during the Spanish Civil War led Mussolini and Hitler to sign the Italo-German Alliance in 1936. The two nations later signed the Anti-Comintern Treaty with Japan in 1936, surrounding the Soviet Union with hostile powers.

Stalin saw through Hitler’s post-Czech passiveness and ordered his foreign minister, Vyacheslav Mikhailovich Molotov, to negotiate a treaty with the Germans. Molotov and the German foreign minister, Joachim von Ribbentrop, negotiated the Molotov-Ribbentrop Pact, which guaranteed non-aggression between the two nations. Unknown to the rest of the world, the treaty also partitioned Poland along pre-World war I lines.

In 1939, Hitler demanded the final piece of the puzzle: The Polish Corridor that separated Germany and East Prussia. Poland refused to budge, and this time the British and French stood firm against Germany. On 1 September 1939, the Wehrmact invaded Poland. On 3 September, Britain and France declared war on Germany. World War II had begun in Europe. It was only a matter of time before the U.S. was engulfed in the greatest war that humanity has ever witnessed.

*1*Source: Miller Center — Franklin D. Roosevelt Speeches. available online: http://millercenter.virginia.edu/scripps/diglibrary/prezspeeches/roosevelt/fdr_1933_0304.html, last accessed 28 February 2006.
*2*Miller Center — Franklin D. Roosevelt Speeches. available online: http://millercenter.virginia.edu/scripps/diglibrary/prezspeeches/roosevelt/fdr_1933_0312.html, last accessed 28 February 2006.
*3*Ibid.
*4*Source: wikipedia.org, http://en.wikipedia.org/wiki/Huey_Long, last accessed 28 February 2006.
*5*Source: Web Page: "Social Security.” By James Ruoco. Just Facts, June 13, 2001. Accessed at justfacts.com/socialsecurity.htm. Revised 12-30-05. last accessed 28 February 2006.
*6*Source: wikipedia.org, http://en.wikipedia.org/wiki/Works_Progress_Administration, last accessed 28 February 2006.
*7*Miller Center — Franklin D. Roosevelt Speeches. available online: hhttp://millercenter.virginia.edu/scripps/diglibrary/prezspeeches/roosevelt/fdr_1936_1031.html, last accessed 28 February 2006.