The New Deal

The New Deal

During the winter of 1932-33 the despair of the depression gripped the US ever more tightly.

The spreading panic was completely engulfing the banking system. As the economy continued its downward spiral more and more people began withdrawing their savings and converting it into cash.

On the last day of the Hoover administration the President declared that "we are at the end of our rope, there is nothing else we can do."

FDR assumed the office of the Presidency at the age of 51. Action was quick to follow the inauguration of FDR as he immediately declared a banking holiday and called Congress into a special session.

FDR then submitted a bill to reduce the expenses of the Federal government and he then followed his economy message with a call for the amendment of the Volstead Act to legalize light wines and beers.

Amending the Volstead act quickly allowed the public to gain confidence in government and in itself.

FDR also sought to rationalize agriculture and industry.

Farm prices had fallen so much that the farmer’s purchasing power was only 60% of what it had been in 1929.

The central idea in the Administration proposal was "agricultural adjustment" and the plan was to increase farm income by controlling production.

Its aim was to control production by offering benefits to farmers who agreed to regulate their plantings according to a master , national agricultural plan.

No program would go into effect until it was voted upon by a national referendum of farmers, and the local administration of the plan was to be as much as possible in the hands of the farmers themselves.

The government under this plan could pay farmers to leave certain amount of land fallow in order to stabilize prices and the market for a certain agricultural commodity.

But there was much trouble in the American farm belt, for in late April a mob marched on a Judge in Le Mars, Iowa and collectively lynched him for foreclosing on their properties.

The Farmer’s Holiday Association then renewed its strike for a general farm strike and the situation became so bad that the governor of Iowa called out the National Guard and placed 8 counties under martial law.

All these developments helped sped the passage of the Agricultural Act, and the government acted at once at eliminating surpluses in a period of great hunger and want.

Farmers were paid to plow their crops under and slaughter all their livestock and bury them at a time when most Americans were going to bed hungry every night.

The terrible logic of scarcity seemed to work for farm prices did recover, but only the large commercial farms profited by these policies, middle size family farms fared much less well and poor sharecroppers and tenant farmers suffered greatly.

In the spring of 1933 the Administration worked out its national-industrial recovery bill and two agencies were set under the National Industrial Recovery Act—the National Recovery Administration and the Public Works Administration with Harold Icles at its head.

The NRA led a national crusade to boost production and restore employment and employers began to accept NRA minimum wage and maximum hour codes.

This led to price, production, and wage stabilization.

The NRA, however, began to meddle into the affairs of even small businesses who felt that the NRA over-regulated. By 1935 most people except for labor unions were against the NRA and in the Supreme Court declared that the NRA was unconstitutional.

There many other acts of FDR’s first 100 days. The Securities Act of 1933 was a first step towards disciplining Wall Street and required full, federal disclosure in the issuance of new securities.

It also provided for the separation of commercial and investment banking in order to limit irresponsible speculation by banks.

Another result of the 100 days was The House Owner’s Loan Act which saved countless homes by providing means for refinancing mortgages.

Even more precedent breaking was the Federal Emergency Relief Act which established the first system of federal relief for the poor.

Under the direction of a social worker named Harry Hopkins, the new relief agency rapidly supplied the states with cash for immediate assistance to the chronically unemployed and homeless.

The Civilian Conservation Corps was also formed during this period which recruited young men and boys between the ages of 18 and 25 to work in the countryside building parks, roads, dams, firebreaks, trails and many other rural improvements.

The most striking effort of the 100 days was an attempt to immediately develop an entire region in the Tennessee Valley that was steeped in poverty and misery for the poor farmers. Over 50% of the families in the valley were on federal relief, but the valley due to its water resources was one of the most valuable electrical power sites in the country.

FDR saw this area as having great potential to solve its own problems with a little federal help.

In May of 1933, Congress established, at FDR’s urging the Tennessee Valley Authority. The TVA built dams, power houses,cleared rivers, replenished the top soil, rebuilt the forests, and brought electricity to almost all the farmers in the valley.

Unfortunately grass-roots democracy and development in the valley was for Whites only. And without protest from Washington, local agencies working with the TVA systematically excluded Blacks from participation and benefits.

Though the policies of the 100 days had ended despair they had not produced recovery. By 1935 the GNP was still $30 billion less than what it had been in 1929, and there were still 9 million unemployed workers.

By 1935 FDR himself was becoming disillusioned with national planning for even the defects of the AAA also needed remedy until the Supreme Court found it unconstitutional in 1936.

The crop limitation and price support programs of the AAA operated to the disadvantage of the sharecroppers and tenant farmers, many of whom were in the South.

Also by the mid 1930’s the great dust storms of the Great Plains were forcing small farmers there t join the migration towards California.

In 1935 FDR responded by establishing the Resettlement Administration, which was to rehabilitate tenants and small farmers, establish farming cooperatives and resettle farm families who were existing on land that had lost its top soil.

In August of 1935 the Congress passed the Social Security Act which would provide a pension for the old and provide men and women protection from unfortunate circumstances that were beyond their control.

The New Deal as the period of history was called strove continuously for both economic recovery and social reform, both at the same time.

FDR still had to face an election test in 1936 and there was a Hate-Roosevelt feeling, and also the conviction that the New Deal represented the end of the American way of life. These feelings against FDR and his policies were very prevalent in the conservative wing of the Republican party.

Al Landon was the Republican candidate who at first argued that the New Deal was good but only the Republicans could fully implement it.

FDR conducted his campaign in a mood of great confidence, he was however aware that the business community was extremely bitter towards him.

Nevertheless FDR swept the election taking every state except Maine and Vermont.

The years of 1935 and 1936 had been years of slow but steady economic growth. But by 1937 in the first months of the year the economy seriously deteriorated.

National income fell 13% and payrolls 35%, durable good production 50%, and profits 78%.

The recession of 1937 persuaded FDR to resume his anti-monopoly drive. In 1938 he appointed Thurman Arnold as head of the anti-trust division do the Department of Justice. Arnold immediately began a series of antitrust suits, Congress created the Temporary National Economic Committee to survey the concentration of economic power in the US.

As the depression induced despair it also discredited the structure of status and prestige that had ruled the US in the 1920’s. The big swifty businessman had no been reduced to the status of a vain, greedy, pompous fool.

People from outside the business community, especially intellectuals and politicians were now in power.

The New Deal by reversing the structure of status brought profound social changes, including visible gains for previously disadvantaged ethnic groups.

Organized labor also experienced a rise in respectability. The social revolution enhanced the quality of rural life. By 1938 no other federal agency effected the quality of rural life as did the Rural Electrification Administration.

In 1935 on 10% of the farms in the US had electrical power. Through low interest loans to cooperatives the REA enabled farmers to build their own power lines.

The spread of electricity in the rural sector brought with it radios and power for labor saving machines that quickly modernized the rural areas of the US.

Most striking in terms of social changes was the rise in the expectations of Blacks who for many years were the victims of economic and political neglect.

The Republicans since the Civil War had shown little concern for the welfare of the Blacks people, and Black leaders had denounced Hoover as the White man in the lily white house.

FDR brought to Washington a larger sympathy for Black problems.

New Dealers appointed many able Black to administrative positions from which they were able to not only to symbolize new opportunities for their race, but to suggest programs to assist their people.

The New Deal did far less for American Blacks than their circumstances warranted, but it did far more than had any administration since Reconstruction.

By 1936 Black voters had begun to shift to the Democratic party.

New Deal policies also mitigated by did not end discrimination against women. In the 1930’s a much larger number of women than ever before needed industrial or clerical employment in order to support themselves and their families.

With the depression employers began to discharge women before men and women found it far harder to secure new jobs.

But the NRA set labor codes for men and women and the WPA actually created jobs for women and the CIO union began to vigorously recruit women into its industrial ranks.

The New Deal also succeeded in recruiting women voters for the Democratic party.

The New Deal especially assisted the Middle class for it protected their savings, homes and farms. It opened the way to middle class comforts and status for previously stigmatized ethnic groups and many clerical and blue collar workers.

Chapter 28, The Decay of Peace

The Great Depression intensified nationalism all over the world.

In Germany Adolph Hitler became chancellor on January 30, 1933, and in March received dictatorial authority from the Reichstag.

FDR realized immediately that Hitler meant that there were soon be a war in Europe, a war that Europe was clearly not ready for due to the depression.

FDR embraced the "Good Neighbor" policy of his predecessor, for clearly the security of the Western Hemisphere depended on improved relations with the countries of Latin America.

In 1933 FDR withdrew the Marines from Haiti and in 1934 abrogated the Platt Amendment. He renounced the right of intervention in Panama and recognized Panama’s joint responsibility for operating the canal and protecting it; and in 1940 he ended American financial control of the Dominican Republic.

Even in Mexico as the new president Lazaro Cardenas expropriated the properties of foreign owned oil companies, and carried out a thorough land reform that seized American owned properties in Mexico and redistributed them to landless peasants, FDR urged only moderation and restraint.

FDR also cut tariffs and other forms of economic nationalism for he wanted to both stimulate foreign trade and stabilize the value of the dollar.

The Political cooperation that FDR sought in Europe had been foundering by 1936 as the Nazis were rearming at an incredible rate in clear violation of the Treaty of Versaille.

FDR publicly said that if war were to come to Europe again, he would do everything in his power to keep the US out it this time.

In 1934 Japan unilaterally terminated the Washington Naval Treaty, and by this time the Geneva Conference on Disarmament also had clearly failed.

There was great dissaray among the relations of powers that had been friendly to the US, and there was great distrust between the US and the USSR.

In October of 1935 Italian troops invaded Ethiopia, and FDR responded that American oil companies carry out a moral embargo of Italy.

The Outbreak of civil war in Spain deepened FDR’s sense of a General European disintegration, and when Congress reconvened in 1936 FDR sought to strengthen the existing Neutrality Act of 1935, so that the US could avoid another fiasco as happened in WWI.

But the attempt of Spanish fascists under General Fransisco Franco to overthrow the democratic government of Spain created new problems, forthe mandatory embargo applied to wars between nations, not civil wars.

The problems of Asia seemed far more closer to most Americans than what was going on in Europe.

Since the announcement of the Open Door policy, the US had conceived of itself as playing a direct role in Asian affairs.

By 1915, the US had concluded that the major threat to its policy designs would come from Japan.

To the State Department the cornerstone in containing Japanese aggression had to be the build up of a strong navy.

Secretary of State Cordell Hull maintained that any attempt by the US to contain Japan with a weak Pacific navy would only provoke Tokyo even more.

In July of 1937, the Japanese Army staged an incident at the Marco Polo Bridge just north of Bejing, that would serve as the excuse they needed for an all out invasion of China.

By the end of July, Japanese troops occupied Bejing and were moving down the coastline. The KMT government retreated from Nanking to Chongquing and prepared resistance to the Japanese invaders.

Popular sympathy was wholly with the Chinese, but FDR was reluctant to acknowledge a state of war existed between China and Japan, and for this reason the Chinese were not entitled to any lend-lease non military provisions. And this hurt the Chinese resistance.

FDR became more and more alarmed at the prospect that Hitler would seize most of Europe and thought that it would be wise to meet with the British PM Neville Chamberlain. But Chanberlain had no confidence in the US and instead thought that he could make Hitler reasonable through a program of appeasement.

In a speech in 1937 in Chicago FDR made his famous "Quarantine speech" where he urged that the US and the rest of the nations carry out a financial and material quarantine of aggressor nations.

In 1936 German troops moved into the Rhineland, in March of 1938 Germany invaded Austria and Czechoslovakia was next.

In September of 1938 Chamberlain hastily called for a conference at Munich with Hitler, Mussolini and the PM of France. No representative of either the Czechs or the USSR were present. On 9/29 the democratic powers swallowed Hitlers demands for all of Czechoslovakia.

In January of 1941 the Administration introduced the lend lease bill which would allow the president to sell, transfer, exchange, lend or lease war equipment and other commodities to any country that the president deems vital for the defense of the US.

This bill committed the US to economically supporting the allies.

In August of 1941 FDR, Stalin and Churchill met on a warship off the coast of New Foundland in order to decide how they would divide up the post-war world. The big three also agreed that there would be a consensus on how territories taken from the Germans would be administered.

Japan in 1941 stepped up its actions in China, and in September Japan joined the Axis powers.

The American response was an embargo on material shipped to Japan. In 1938 the US supplied Japan with 90% of its scrap metal, 91% of its copper, 66% of its oil and 100% of its aviation gasoline.

There were calls for an embargo of US goods to Japan, but FDR was more concerned with the mounting crisis in Europe and did not wish to provoke an open confrontation with Japan at this time.

In July of 1941 Japanese troops invaded Cochin China and occupied Saigon.

In mid October the militarists in the Japanese cabinet succeeded in ousting the last moderate, Prince Konoye and quickly appointed his successor General Tojo.

By October it was clear to both the Japanese and the Americans that war would be coming soon between the US and the Hull-Nomura talks began in Washington.

However, these talks were simply a smoke screen for both sides to buy time and ready their armies and navies for the eventual clash that would come in the Pacific.

On December 7, 1941 the Japanese bombed Pearl Harbor shipyards in the Hawaiian Islands and war was declared between the US and Japan.