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America's History Chapter 25: The New Deal, 1933-1939

America's History Chapter 25: The New Deal, 1933-1939



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Published by irregularflowers
Notes on America's History Chapter 25: The New Deal, 1933-1939
Notes on America's History Chapter 25: The New Deal, 1933-1939

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Published by: irregularflowers on Sep 14, 2009
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Chapter 25: The New Deal, 1933-1939The New Deal Takes Over, 1933-1939I.The term New Deal came to stand for the Roosevelt’s administration’s complex set of responses to theDepression. The New Deal was not a carefully formed plan. Its ideology contained manycontradictions, but it provided a measure of economic security against the worst depression is UShistory.The Roosevelt Style of LeadershipI.Although the New Deal represented many things to many people, one unifying factor was the personality of its master architect: FDR.II.The New Deal was a “very personal enterprise” and Roosevelt established an unusually close reportwith the American people.A.Many citizens credited him with the positive changes in their lives.B.Roosevelt mastered the medium of radio, typified by the “fireside chats” he broadcast during hisfirst 2 terms.III.Roosevelts personal charisma and political talent allowed him to continue the expansion of political power begun during the administrations of Theodore Roosevelt and Woodrow Wilson.A.Roosevelt centralized decision making in the white house. In doing so, he dramatically expandedthe role of the executive branch in initiating policy and helped to create the modern presidency.B.Young people flocked to the white house to become a part of his administration.The Hundred DaysI.The first president the new president confronted was the collapse of the banking system, which had brought the depression home to the middle class more than anything else.A.The day after his inauguration, Roosevelt declared a bank holiday and called Congress into specialsession. 4 days later Congress passed Roosevelt’s proposed emergency banking bill, which permitted banks to reopen beginning on March 13, but only if the Treasury Department inspectionshowed that they had sufficient cash reserves.The Emergency Banking ActI.The Emergency Banking Act, which Roosevelt developed in consultation with business leaders, wassuch a conservative document that it could have been proposed by Herbert Hoover. The difference wasthe public’s reaction.A.Roosevelt assured people that the banks were now safe, and people believed him.II.The Banking Act was the first of 15 pieces of major legislation enacted by Congress in the openingmonths of the Roosevelt administration. This legislative session, which became known as the HundredDays, remains one of the most productive ever.A.Congress created the Home Owners Loan Corporation to refinance home mortgages threatened byforeclosure.
A second banking law, the Glass-Steagall Act, curbed speculation by separating investment banking from commercial banking and created the Federal Deposit Insurance Cooperation, whichinsured bank deposits up to $2,500.C.Another act created the Civilian Conservation Corps, through which 250,000 young men went tolive in camps where they did reforestation and conservation work.D.The Tennessee Valley Authority received legislative approval for its innovative plan of government-sponsored regional development and public energy.The Agricultural Adjustment ActI.The Roosevelt administration targeted 3 pressing problems for immediate attention: agriculturaloverproduction, business failures, and unemployment. Roosevelt considered a farm bill “the key torecovery.”
A.The Agricultural Adjustment Act was developed by Henry Wallace, Rexford Tugwell, and MLWilson in close conjunction with the leaders of major farmers’ organizations.B.The AAA established a domestic allotment system for 7 commodities with cash subsidies tofarmers who cut production—a pattern of federal subsidies that continues to the present. Those benefits were financed by a tax on processing, which was passed on to consumers.C.New Deal planners hoped that prices would rise in response to the federally subsidized scarcity,halting the steep deflation and thus spurring a more general recovery.II.The AAA stabilized the agricultural situation, but its benefits were distributed unevenly.
Subsidies for reducing production went primarily to the owners of large and medium-sized farms,who often cut production by reducing their renters’ and sharecroppers’ acreage rather than their own. In the south, this strategy had racial overtones, displacing black tenet farmers from their land.B.New Deal agricultural policies thus fostered the migration of small farmers in the South andMidwest to northern cities and CA, and consolidated the economic and political clout of larger landholders.The National Recovery AdministrationI.The New Deal attacked the problem of economic recovery with the National Industry Recovery Act,which created the National Recovery Administration.A.The NRA, which drew on the WWI experience of Bernard Baruch’s War Industries Board, set up asystem of individual self-government to handle the problems of overproduction, cutthroatcompetition, and price instability. For each industry a code of prices and production quotas wasestablished. In effect, those legally enforceable agreements suspended the antitrust laws.B.The codes also established minimum wages and maximum hours and outlawed child labor.C.One of the most far-reaching provisions, Section 7(a), guaranteed workers the right to organizeand bargain collectively. These union rights dramatically spurred the growth of the labor movement in the 1930s.II.The negotiating process theoretically took into account equal input from management, labor, andconsumers; but trade associations, controlled by large companies, tended to dominate the code-drafting process, thereby solidifying the power of large businesses at the expense of smaller enterprises.A.Labor had little input, and consumer interests had almost none.B.To sell the program to skeptical consumers and businesspeople, the NRA launched an extensive public relations campaign.Unemployment Legislation
The early New Deal also addressed the critical problem of unemployment. In the 4
year of thedepression, the total exhaustion of private and local sources of charity made it essential to providesome form of federal relief.A.Roosevelt was a fiscal conservative, fearful of large federal deficits, and he moved reluctantlytoward federal responsibility for the unemployed.B.The Federal Emergency Relief Administration offered federal money to the states for relief  programs. FERA was designed to keep people from starving until other recovery measures took hold.
Roosevelt always maintained a strong distaste for the dole. Wherever possible, New Dealadministrators promoted work relief over cash subsidies; they also consistently favored relief jobs thatdid not compete directly with the private sector.A.The Civil Works Administration constructed highways and public buildings and set up community projects. It was regarded as a stopgap measure to get the country through the winter of 1933-34.III.Many early emergency measures were deliberately inflationary, they were designed to trigger pricesrises that were thought necessary to halt the steep deflation and thus stimulate recovery.
A.Another element of the strategy was Roosevelt’s executive order to abandon the gold standard andlet gold rise in value like any other commodity. As the price of gold rose, administrators hoped, sotoo would the price of manufactured and agricultural goods.B.Abandoning the gold standard allowed the Federal Reserve System to manipulate the value of thedollar in response to economic conditions, an important shift in economic power from the privateto public sector.IV.An obvious target for reform was Wall Street, where insider trading, fraud, and other abuses hadcontributed to the 1929 crash.A.In 1934 Congress established the Securities and Exchange Commission to regulate the stock market. The commission had the power to regulate the purchase of stocks on credit, or margin buying, and to restrict speculation by those with inside information on corporate plans.B.The banking system also came under scrutiny. The Banking Act of 1935 enhanced the federalgovernment’s role in controlling the economy and business. The act authorized the president toappoint a new Board of Governors of the Federal Reserve System, placing control of interest ratesand other money market policies at the federal level rather than with regional banks.C.By requiring that large-scale banks join the Federal Reserve System by 1942 in order to takeadvantage of the federal deposit insurance system, the law further encouraged centralization of thenation’s banking system.The New Deal Under Attack I.As Congress and the President consolidated the early New Deal, their work came under attack fromseveral quarters. Although Roosevelt billed himself as the savior of capitalism, his actions provokedstrong hostility from many Americans.A.To the wealthy, Roosevelt became a traitor to his class.B.Business leaders and conservative Democrats formed the Liberty League in 1934 to lobby againstthe New Deal and its “reckless spending” and “socialist reforms.”
The conservative majority on the Supreme Court also disagreed with the direction of the New Deal. Inthe case Schecter v. United States, the court ruled that the National Industrial Recovery Act representedan unconstitutional delegation of legislative power to the executive branch.A.In its decision the court ruled that the NRA regulated commerce within states, whereas theConstitution limited federal regulation to interstate commerce.III.Other citizens thought that the New Deal had not gone far enough.A.Many Americans feared poverty in old age because few had pension plans and many had lost their life savings in bank failures.B.Francis Townsend proposed an Old Age Revolving Pension Plan, which would have given retirees$200/month if they agreed to spend the money within a month, thereby opening up new positionsin the work force and pumping money back into the economy. The plan was never adopted, thoughTownsend Clubs sprang up across the country.IV.Father Charles Coughlin also challenged Roosevelt’s leadership and attracted a large following,especially in the Midwest.A.At first Coughlin supported the ND, but he soon broke with Roosevelt over the president’s refusalto support nationalization of the banking system and expansion of the money supply.B.In 1935 Coughlin organized the National Union for Social Justice to promote his views as analternative to Roosevelt’s.V.The most direct threat to Roosevelt came from Democratic senator Huey Long.A.As governor of LA, Long had increased the share of taxes paid by corporations and embarked onan ambitious program of public works, which included the construction of new highways, bridges,hospitals, and schools.

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