1920-1945 FD Roosevelt and the New Deals: conflict of ideas over the role of the Federal Government Flashcards
Why did Roosevelt win the 1932 Presidential election?
Roosevelt won the 1932 presidential election partly because of his own promises of a New Deal but also due to the failings of the Hoover administration.
Roosevelt was by far the strongest Democratic nominee for president. Hoover was the only possible Republican nominee unless the party changed its policies. However, Hoover was too busy fighting the Depression to campaign effectively. The members of his re-election team were themselves short on ideas.
Hoover lacked charisma: Roosevelt exuded it. However, many historians have argued that there was little to choose between the candidates in terms of economic policies. Certainly, Roosevelt did not promise government action to solve economic problems. In fact, he even made a speech on 19 October attacking Hoover’s extravagant government spending and pledging a 25 per cent cut in the federal budget.
The most important factor was that Hoover expected to lose, while his opponent was determined to win. Many of Roosevelt’s promises were vague and even contradictory. In San Francisco, he made a speech advocating economic regulation only as a last resort while, at Oglethorpe University, Georgia, he spoke of ‘bold experimentation’ to beat the Depression and of a redistribution of national income.
Roosevelt used the radio to great effect. It was as though he was speaking directly to individuals and he won by the biggest majority since Abraham Lincoln in 1864.
However, it was not an overwhelming victory: 57 per cent of the popular vote is little more than half. Moreover, few really knew what Roosevelt stood for. Political columnist Walter Lippmann was possibly close to the truth when he wrote that Roosevelt was a pleasant man who, without any important qualifications for the office, would very much like to be president.
However, Americans were voting above all for change. Whatever Roosevelt may have stood for is what he seemed to offer.
To what extent did the first New Deal achieve its aims?
Following his inauguration, President Roosevelt called Congress into a special session that lasted for 100 days and saw the development of the First New Deal.
This resulted in a considerable amount of emergency legislation and the setting up of many ‘alphabet agencies;. Many historians have categorised the measures into those intended to bring about ‘relief, recovery or reform’, but as we shall see it is dangerous to assume Roosevelt had a blueprint to transform American life greatly.
What was the Hundred days?
Roosevelt saved the capitalist system in the USA through his New Deal programme. The New Deal may by no means have been a cohesive programme; indeed, it often seemed contradictory. It might best be seen as a series of measures to deal with specific crises, with little overall plan. Certainly, it is most easily categorised with the hindsight of history.
Roosevelt’s priority was to create economic improvement, which he attempted not merely through measures to effect recovery but also to improve the infrastructure, for example in banking and finance. This was to ensure the system would be modern and sophisticated enough to promote and stimulate a modern economy and, if necessary, able to address any downturn in the future.
Roosevelt was very charismatic and used his personality to good effect. He spoke directly to the electorate via the radio in his ‘fireside chats’ in which he explained his policies. His reassuring voice helped restore confidence and made people feel recovery was on the way.
What was the Tennessee Valley Authority (TVA), May 1933?
The TVA was set up to deal with the underdevelopment and poverty in the Tennessee Valley. The TVA was one of the most grandiose schemes of the New Deal.The IVA had several major tasks:
to construct twenty huge dams to control the floods that periodically affected the region
to develop ecological schemes such as tree planting to stop soil erosion
to encourage farmers to use more efficient means of cultivation, such as contour ploughing
to provide jobs by setting up fertiliser manufacture factories
to develop welfare and educational programmes
most significantly, perhaps, to produce hydro-electric power for an area whose existing supplies of electricity were limited to two out of every 100 farms.
The TVA effectively became a central planning authority for the region. It was largely responsible for the modernisation and improved living standards that saw its residents increase their average income by 200 per cent in the period from 1929 to 1949.
What was the Agricultural Adjustment Act, May 1933?
Overproduction had been the greatest problem of American agriculture.
The main principle behind the Agricultural Adjustment Act was that the Government would subsidise farmers to reduce their acreage and production voluntarily.
By producing less, the cost of food would increase, and so would farmers’ incomes.
A new agency was set up called the Agricultural Adjustment Administration would pay farmers to reduce their production of staple items, initialy corn, cotton, milk, pork, rice, tobacco and wheat.
Reduction of cotton production was perhaps the most pressing need. At the beginning of 1933, unsold cotton in the USA already exceeded the total average annual world consumption of American cotton. Moreover, farmers had planted 400,000 acres more than in 1932. They were, quite simply, paid to destroy much of this. A total of 10.5 million acres were ploughed under, and the price of cotton accordingly rose from 6.5 cents per pound in 1932 to 10 cents in 1933.
However, it was one thing to destroy cotton but it was far more contentious to destroy food when so many Americans were hungry. Six million piglets were bought and slaughtered. Although many of the carcasses were subsequently processed and fed to the unemployed, the public outcry was enormous.
In fact, the AAA destroyed only cotton and piglets. Drought helped to make the 1933 wheat crop the poorest since 1896, and agreements were reached to limit acreage in other crops in subsequent years.
Total farm income rose from $4.5 billion in 1932 to $6.9 billion in 1935. The percentage of farmers signing up for AAA agreements was high at first - 95 per cent of tobacco growers, for example - and the Act was very popular with farmers. Faced by drought, Western ranchers sought to bring beef cattle under the protection of the AAA in 1934.
By January 1935, the Government had purchased 8.3 million head of cattle, in return for which ranchers agreed to reduce breeding cows by twenty per cent in 1937. Overall, it would appear that
the AAA worked effectively to deal with the crisis of overproduction, although there were problems.
What was the Emergency Banking Relief Act?
On 6 March 1933, Roosevelt closed all the banks in the country for four days to give Treasury officials time to draft emergency legislation. Its aim was simply to restore confidence in the American banking system. It gave the Treasury power to investigate all banks threatened with collapse. The Reconstruction Finance Corporation was authorised to buy their stock to support them and to take on many of their debts. In doing so the RFC became in effect the largest bank in the world.
In the meantime, Roosevelt appeared on radio with the first of his fireside chats. He explained to listeners, in a language all could understand, the nature of the crisis and how they could help. The message on this occasion was simple; place your money in the bank rather than under your mattress. It worked. Solvent banks were allowed to reopen and government officials reorganised others to put them on a sounder footing. By the beginning of April, $1 billion in currency had been returned to bank deposits and the crisis was over.
What was The Glass-Steagall Act?
The Glass-Siegal Act of 1933 had the following effects:
Commercial banks that relied on small-scale depositors were banned from 1920 involvement in the type of investment banking that had fuelled some of the 1920s speculation
Bank officials were not aloud to take personal loans from their banks
Authority over open-market operations such as buying and selling government securities was centralised by being transferred from the Federal Reserve Banks to the Federal Reserve Board in Washington.
Individual bank deposits were to be insured against bank failure up to the figure of $2,500, with the insurance fund to be administered by a new agency, the Federal Deposit Insurance Corporation (FDIC).
What was the Truth-in-Securities Act, 1933?
required brokers to offer clients realistic information about the securities they were selling.
What was the The Securities Act, 1934?
set up a new agency, the Securities Exchange Commission (SEC). Its task was to oversee stock market activities and prevent fraudulent activities such as insider dealing, as in the bull pool.
How successful was Rossevelts industrial recovery?
Industrial recovery was a priority for the New Deal. However, it had only limited success due to the scale of the industrial collapse. Although the economy grew ten per cent per year during Roosevelt’s first term from 1933 to 1936, output had fallen so low since 1929 that this still left unemployment at fourteen per cent. The problem was that there was no consensus on how to go about ensuring industrial recovery. Roosevelt’s primary aims were to get people back to work and to increase consumer demand.
What was the Public Works Administration?
The second part of NIRA set up an emergency Public Works Administration
(PWA) to be headed by the Secretary of the Interior, Harold Ickes. It was funded with $3.3 billion and its purpose was ‘pump-priming. It was hoped that expenditure on public works such as roads, dams, hospitals and schools would stimulate the economy. Road building would lead to increased demand for concrete, for example, which would lead the concrete companies to employ more workers, who would therefore have more money to spend, and so on. Eventually the P WA put hundreds of thousands of people to work, building, among other things, nearly 13,000 schools and 50,000 miles of roads.
It pumped billions of dollars into the economy and was responsible for massive public works schemes, particularly in the West, where it enabled dams to be built to help irrigate former semi-desert land, electricity to be produced and four vast National Parks to be created.
What was the National Recovery Administration?
The NRA was set up to oversee industrial recovery. Headed by General Hugh Johnson, it seemed to offer something to all groups involved in industry.
Powerful businessmen, for example, benefited from the suspension of anti-trust legislation for two years. The argument behind this was that if industrial expansion was to be promoted, it was crazy to maintain laws that restricted it.
Firms were encouraged to agree to codes of practice to regulate unfair competition such as price cutting, and to agree on such matters as working conditions and minimum wages in their industry.
Ultimately the codes did not help economic recovery. This led Johnson to attempt a ‘Buy Now’ campaign in October 1933 to encourage people to spend and therefore stimulate production. He also advocated an overall ten per cent wage increase and ten-hour cut in the working week. Neither was successful.
In reality, the NRA codes looked impressive but they could not bring about an economic recovery. Many critics argued that they did little except allow large firms to indulge in unfair practices- the very
opposite of what had been intended.
The Supreme Court dealt the death blow in May 1935 when it declared the
NRA unconstitutional.
What was the Civil Works Administration?
This agency was created in November 1933, with a $400 million grant from the PWA, primarily to provide emergency relief to the unemployed during the hard winter of 1933-34. Although it put 4 million people to work on public works projects, it was closed down in March when the winter was over.
However, FERA agreed to fund more public works projects itself.
Despite the fact that many job agencies such as the PWA were created, unemployment and attendant social problems persisted and the Federal Government had to turn to relief measures.
What was the Federal Emergency Relief Act, May 1933?
This act established the Federal Emergency Relief Administration (FERA). It was given 500 million to be divided equally among in to sates to help provide unemployed. Half the money was to be granted to states for outright relief. With the remainder, the Government would pay each state Sl for every $3 it spent on relief.
Roosevelt chose Harry Hopkins to run this programme. He had administered the relief programmes that the President had introduced when Governor of New York. The Act said that each state should set up a FERA office and organise relief programmes. It should raise the money through borrowing, tax rises or any other means. When some states such as Kentucky and Ohio refused to comply, Hopkins simply threatened to deny them any federal monies.
Many states were wedded to the idea of a balanced budget and found expenditure on relief extremely distasteful. It was still felt by many that to be poor was your own fault. Those requiring reliet were often not treated well. In many places there could be interminable waits and delays.
In the face of such opposition, FERA’s effectiveness was limited. Its workers were refused office space in some states and often their caseloads were numbered in thousands. Its funds were limited, too. In 1935, it was paying about $25 per month to an average family on relief, while the average monthly minimum wage for subsistence was estimated at $100.
However, although its effects were disappointing, it did set the important precedent of federal government giving direct funds for relief.
How significant were the achievements of the Second New Deal?
Many historians have argued that the New Deal seemed more radical in the years after 1935, with Roosevelt trying to favour the pooer classes at the expense of the rich. They point in particular to the measures that made up the Second New Deal as evidence of this, such as the introduction of made security and the legalisation of labour unions.
