 Today's lecture will focus on the first and second new deals and how the United States finally began to dig its way out of the Great Depression of the 1930s, focused primarily on President Franklin D. Roosevelt, his efforts to help resolve so many of the major economic, social and political problems caused by the Depression, but also set in motion a system that would prevent a depression from ever happening again. So what we're going to do in today's lecture is examine, first of all, what Roosevelt did and why he felt that he could solve the nation's problems. And we're going to look at the first of these new deals and how Roosevelt responded to the problems of the Depression and then look at the second of the new deals and how Roosevelt tried to set in place a social safety net to prevent a second depression from having such a horrible impact on the United States. Well, FDR's election in the fall of 1932 is certainly a very momentous event because of course, by the fall of 32, as we talked about in the last lecture, Herbert Hoover is just probably one of the most unpopular people in the United States, and certainly many Americans see him as being a failed president. His opponent in the election of 1932 is this young, very charismatic gentleman named Franklin D. Roosevelt. He was a longtime politician and been involved in politics since a very young man. And he is a fresh face, and he has this fresh vision of how he's going to fix the United States. And one of the more famous examples is that he's oftentimes depicted as the captain. He's the captain steering the United States back to prosperity. And this is sort of the attitude that he takes in that he's going to fix the problem. He tells American people that they vote for him. He's going to establish a new deal. In other words, he's going to help fix the problems that the depression has caused, joblessness, homelessness, people being just giving up hope, and he's going to fix these problems and give everybody a new opportunity and a new lease on life, essentially. And this is his whole campaign, is we need action. Roosevelt never quite says specifically during the campaign how he's going to fix the economy, how he's going to fix all these problems of the depression. But his whole argument is, if you vote for me, I will promise you that I will do something. I will fix the problems. And here, as we can see in this map of the election in 1932, he's very successful. The blue states are the states that Hoover wins. Hoover just wins a handful of states in New England and Pennsylvania. Roosevelt wins a landslide. He sweeps pretty much the election and wins a significant majority of the electoral votes, 472 here compared to 59. So it's a landslide. People, again, are not so much voting for Roosevelt as they are both voting against Herbert Hoover and essentially voting for change. Well, FDR is elected in the fall of 1932. He becomes president. He in other words, takes the other office in March of 1933. And immediately, within days of his inauguration, he begins to set in motion a series of policies to help fix all the problems caused by great depression. Now, Roosevelt had been elected, as I said, it was a landslide, but he had been elected by a very broad coalition of farmers, industrial workers, middle-class performers, Northern African-Americans, and Southern white elites. So this very odd kind of mix of people who supported him, primarily because he said that he could make their lives better. He could solve their problems. They supported him because his idea, his approach to solving these problems, at least this is what he claimed, would be a middle-of-the-road approach. It wouldn't be extreme. It wouldn't be left wing. It wouldn't be right wing. It wouldn't be fascist, which would sort of be right wing. It wouldn't be communist, which might be considered left wing. He was going to do an American solution to an American problem. It was going to be a middle-of-the-road approach to fixing this horrible, horrible great depression. FDR and his advisers were very clear that this was going to be a problem that was going to be fixed by the federal government. The federal government was the only organization big enough to solve this problem. The federal government was going to be involved from the top-down, fixing the great depression, because he argued that the market was just too complicated. The economy in the United States was too complicated to be left to its own. It wouldn't fix itself. The federal government was the only entity that was strong enough and powerful enough to fix the American economy. And so this new deal really represented the first effort by the federal government in the United States to get involved at every level of the American economy to try to solve all of these issues that were plugging the economy because of the great depression. The first new deal, which lasts from 1933 through 1935 primarily, is essentially an effort to stop the bleeding. It's an effort to prevent the economy from getting any worse. And so for the most part, the first new deal is a series of plans that Roosevelt and his advisors come up with to try to essentially stop the drop. In other words, stop the economy from getting any worse. And they just came up with, they spitballed. They came up with all sorts of ideas, and they worked. That's great. They didn't work. They would come up with something else. And so what I'm going to do is just highlight a few of these first new deal programs that Roosevelt and his advisors did to try to, as I said, pledge quick action in the emergency to try to deal with the issues that were plugging the United States right away. One of the first things that Roosevelt does when he takes office is push to something through Congress called the Emergency Banking Act. And this is to deal with all these banks that were going out of business and creating panic among Americans because they were losing their savings. Here we have this cartoon of the victim of bank failure. And the squirrel, of course, who saves the nuts for winter says, well, why didn't you save money for the future? And the guy says, I did. I had all this money in the bank, and the bank went out of business. And I lost all my money. Well, this is a common complaint amongst Americans, that they had put money in the bank, but the banks had gone out of business and they lost all their money. So what Roosevelt does first of all in the Emergency Banking Act is he creates a bank holiday. He signs a law, signs an act that closes all of the banks in the United States, essentially stops all banking activities for about two weeks. So Americans will stop panicking because the banks are closed, so they won't be able to try to go get their money out. And what happens is during those two weeks, federal auditors go through and try to examine as many of these banks as they can to see which ones are, you know, able to recover and which ones should go out of business. And so Americans will have more confidence in their local banks. It also creates an organization called the Federal Deposit Insurance Corporation, or the FDIC, which is insurance for bank deposits. In other words, Americans, when they put money in the bank, the government guarantees that money. What that means is that for Americans, if you put $1,000 in your local bank and that bank had gone out of business, the federal government will cut you a check for $1,000. We'll repay the money that you lost when your local bank went out of business. It's, again, a move that's intended to make Americans stop panicking, to restore their confidence in their local financial institutions, to make them more willing to take money that they maybe had under a mattress, and to put it back in the bank so that it could benefit the broader economy. A last of these emergency banking measures is something called the Glass Steakle Act. And this is very important, because what it does is it separates commercial banking from investment banking. It says, if you're a commercial bank, in other words, you're a bank that takes deposits by average Americans, that basically gives loans to people, you can't play in the stock market. You can't do anything that would be considered a risky investment banking. And so in other words, you will not put the money that people deposit with your bank at risk. If you're an investment bank and you want to play in the stock market and do stuff like that, that's fine. You can't get your money from people just putting in an opening checking account or saving account. It helps stabilize the economy in a way because it separates out banking functions. It makes Americans, once again, more confident that their local banks, the small banks where they had most of their money deposited, will be safe and the banks are gonna be doing stupid things and losing all their money. Well, the Emergency Banking Act occurs as a first step to restoring American confidence in the economy. But there were so many Americans out of work. There's 11 million Americans unemployed when Roosevelt takes office. He has to do something to put people back to work. And one of the ways he does that is by creating a number of government work programs to put Americans to work, just doing anything. One of these is the Civilian Conservation Corps. That is created to put young men, especially, to work in the nation's forests and parks, national forests and national parks, doing heavy labor-intensive jobs to fix up those parks. Building roads, and we have examples of CCC workers who have built roads through national forests. Building structures, visitor centers, interpretive centers, cabins, all sorts of things. And they were essentially projects that really didn't need to be done. But Roosevelt said, you know what? We have all these people out of work. Let's give them, let's cut them a check, or let's actually, let's give them cash for working hard out in the forest and doing things productive as opposed to, you know, being homeless on the street corner, begging for money. Other kinds of projects involve works for the federal government involving things such as the Tennessee Valley Authority, which is the TVA, building big dams along the Tennessee River to provide power for people living in rural areas, to provide flood control so that their farms wouldn't flood every spring. All these are programs that were designed to essentially take government money and put it into the economy. So people would regain their confidence. They'd have a steady paycheck, they'd be more willing to spend money, and that money would then kind of trickle down into the economy in ways that would ultimately benefit businesses and that would benefit everybody. Well, along with the Emergency Banking Act and jobs programs like the CCC, Roosevelt also felt that part of the problem of the depression was that there's too many businesses were making too much stuff and they were competing against each other and dropping prices. And prices were so low that remember prices dropped almost 40% that businesses couldn't make any money. And so the next big effort that Roosevelt and Congress pushed forward is the NRA, which stands for the National Industrial Recovery Act. And this was a plan that would allow businesses in various industries throughout the United States to work together to help stabilize the economy. It would actually legalize agreements about pricing, worker pay, the amount of goods being produced. So essentially things that have been outlawed because they tended to promote monopolies were encouraged because they would help promote industrial stability. And if businesses knew exactly how much their competitors were charging, they would be more willing to kind of work together to establish a reasonable price as opposed to a panic price. If they knew how much their rivals were paying their employees, they would pay their employees probably the same amount in order to encourage in more even an equal workforce. So the whole point of the NRA was to prevent ruin of competition to make businesses profitable again. After a few years of basically free fall where businesses were losing money again and again and again. Another aspect of the NRA was that it encouraged unionization. It actually promoted unionization of employees as a solution. Unfortunately for Roosevelt in 1935, the Supreme Court struck down the NRA. Argued that it was unconstitutional and the Supreme Court affirmed that. They said it was unconstitutional for the government to promote industry cooperation for the government to try to regulate the economy as it was doing through the NRA. And unfortunately for Roosevelt, this was something that happened on a number of different efforts that he had put into place. And here we have another cartoon, this idea of New Deal remedies, Congress and this thing. Of course, when we have to change remedies if we don't get results and hear all the different projects, New Deal projects that Roosevelt and Congress had tried to pass. Well, this was sort of his response. The NRA has struck down, he and Congress try to come up with something else to try that perhaps as constitutional. A final measure to mention that's part of the first New Deal is something that's called the AAA. In other words, the Agricultural Adjustment Act. And this is sort of like the NRA, the National Industrial Recovery Act for farmers. In other words, what happens if the federal government guaranteed farmers that they would make a steady income? Once again, farming prices that collapsed just like industrial goods prices collapsed at the beginning of the Depression. Farmers couldn't make any money. So the Agricultural Industrial, the Agricultural Adjustment Act offers federal oversight over agriculture production, established production quotas. Farmers couldn't grow more than a certain amount of food. And that would encourage the increase in prices. It actually gave farmers payments for not planting good. So farmers could still make money by actually not planting goods and essentially a farmer's holiday. Farmers getting paid not to work. And here we have an example of one of the first checks to be cut to farmers for not doing their work. So you have, once again, the federal government getting involved, trying to fix all the different things that were going wrong with the economy, like making people more confident in the future. And of course, while initially there's the economy, it kind of, it stops the bleeding, over time, many of these efforts that Roosevelt and Congress put in place gradually begin to help solve many of the problems like joblessness, homelessness, and so forth that were hurting the American economy in the early 1930s. Well, beginning at the end of 1935, Roosevelt and Congress began to shift the focus of the New Deal from kind of stopping the bleeding, from stopping the drop, as I said, to long-term projects that would make the American economy more stable, would make workers more confident that if there was another depression, they would be in better shape. And this was the focus of Roosevelt and Congress's second New Deal. As I said, second New Deal was developing a social safety net. The second New Deal lasts from 1935, really to the 1937, 1938 or so. But again, the focus was largely more on long-term projects and a little bit less on these kind of short-term make-works sorts of programs. A number of programs are developed as a part of the second New Deal. One of these is the WPA, the Works Progress Administration. Again, public works projects, but unlike the CCC, these were bigger public works projects that would involve both white-collar as well as blue-collar labor. And when I say white-collar, we're talking more about educated kind of managers, people with engineering degrees, kind of mid-level workers as opposed to blue-collar workers, who largely would be factory or farm workers. WPA promoted arts projects, promoted more kind of public improvement programs, paid writers who were out of work to develop travel guides for places throughout the United States. There were WPA writers guides to most of the American states during the 1930s. So again, long-term projects that would more benefit people throughout the United States. Creation of the Rural Electrification Administration to provide power to people living in rural areas who did not have access to electricity or to electrified equipment to create these co-ops, as we see here, to provide low-cost electrical equipment, refrigerators, washing machines, other sorts of things, to people living in rural areas of the United States who didn't have access to them before. So once again, trying to improve people's lives, give them more access to things like washing machines, light, in order to make their lives in the long run much better. Probably the biggest aspects of the second new deal, the hallmarks, if we will, of the new deal were, number one, the Social Security Act, which is the focus here. And the Social Security was intended to provide, once again, a safety net for Americans in the long run. The idea behind the Social Security Act was that it would provide old age and unemployment benefits for Americans. So if you were too old to work, the government would cut you a check every month and you would at least have a little bit of money to survive. You wouldn't be pouring on the streets, begging for money, as often happened to old people who couldn't work anymore. If you lost your job, you would have unemployment benefits that would once again help you survive until you could get a new job. The notion of Social Security was somewhat controversial, but the idea of how it worked was that you would contribute from your paycheck. Every month when you get a paycheck or every two weeks depending, you would contribute a certain amount to Social Security. And that money would then go in force to pay people who were currently on Social Security. The promise was that in the long term, when you were old enough to retire and join Social Security, you would indeed get the same kind of payments back that you had made when you were younger and working. So the notion was that it would be contributions from current workers going to retired workers. It wouldn't be in the form of a national tax or some other proposal as some people had suggested that was much more controversial. Initially, Social Security is pretty limited though. It's only really applies to industrial workers and it's only over time that agricultural workers, domestic workers, female workers in various industries gain Social Security protections and gain access to the Social Security system so that when they retire, they're able to use the Social Security system. Other areas, of course, that benefit from the second new deal, the next one would be the Wagner Act. This is an act that was intended to promote unionization in the United States and encourage workers to form labor unions, which have been really strongly resisted by most businesses prior to the 1930s. The Wagner Act made it legal to unionize, made it harder for companies to challenge efforts to unionize in the workplace and also gave unions greater rights within the workplace, which certainly benefited the people in those workers. A third aspect of the new deal that was very important was the Fair Labor Standards Act. Any American worker today benefits from fair labor standards, still very much the law of the land for modern workers, establishes a national minimum wage, establishes the 40 hour work week as the official standard in the United States, provides for overtime if you work more than 40 hours. Companies couldn't force you to work more than 40 hours without providing you with some form of overtime either through comp hours or through extra money. So it once again provides long-term stability of the workforce to encourage people to work, but at the same time to be paid better for that work. So these were some of the important features of the second new deal. Now by 1937, the new deal begins to lose momentum for a number of reasons. One of the things is that Europe was becoming less and less stable in the 1930s. And so Roosevelt began to worry more about the potential for a war breaking out of Europe. And so he became less focused on new deal projects and more focused on perhaps building up America's military in order to protect the nation in the event of a war in Europe. There was also growing resistance among members of the new deal coalition, this coalition of Northern African-Americans, Southern whites, industrial workers, agriculture workers. There were growing tensions, especially amongst white Southern Democrats to what was going on with the new deal. There were a lot of white Southern Democrats who feared the new deal was ultimately too beneficial for African-Americans and other minorities and perhaps might undermine some of the Jim Crow legal system that was in place in the South. So they started to kind of resist and push back against efforts to continue the new deal by providing, for instance, minority employment, by providing minority housing in areas like that. So ultimately the new deal doesn't go as far as it could've. Roosevelt certainly could've gone a lot further. But what it does do is it restores a sense of optimism in the United States, which is very important because Americans begin to have confidence in the economy. Now, if you look at the numbers, of course, the new deal doesn't actually solve anything immediately. It's only when the United States enters the Second World War in the early 1940s that employment problems go away. And suddenly, there is actually essentially a 0% unemployment. But the new deal, as I said, does promote confidence. It does help Americans feel more better about the economy, the feel that the economy was gonna be headed in the right direction. That America had good leadership, that Congress and the president knew what was going on, and that they were responding to the problem. So the new deal is as much a psychological boost as it is really an economic and a political boost for the economy. In the long term, of course, the United States is fundamentally transformed by the new deal. It really encourages the federal government to serve as essentially a mediator between industry and citizens through things such as the Fair Labor Standards Act and the Wagner Act. It does redistribute wealth, certainly does. Wealthy people are taxed more. A lot of that money trickles down to middle and lower class people because of the new deal. It creates massive government bureaucracies like the Social Security Administration, some of the labor organizations, to help administer economic and social programs. And ultimately, it leads to the creation of a very limited welfare state in the United States. In other words, a safety net that people who are poor, who lose their jobs or who just are too old and have to retire will be taken care of at least in a very limited way by the government, that nobody is gonna be out on the street once they retire from their work in the United States. And this is sort of the notion of this limited welfare state. The government's not gonna provide everything, but the government will at least provide you with a very basic amount of money to help make things easier if you lose your job or to make things easier if you are old and you can't work. And so this is really, again, the long-term consequence of the new deal, is your source confidence, but it also produces a very limited welfare state that make it easier for Americans to get by, but also to make them more confident in the long-term prospects of the economy. And believe that no matter, that there wouldn't be another depression. The government would never allow another great depression to happen that would cause so many problems as the depression of 1929 through 19 through the mid-30s did.