Topic 11 The First New Deal 1933 1935

Topic 11 The First New Deal, 1933 -1935

New Deal Link, Videos #4 -7

March – June, 1933

“Banking Holiday”

Emergency Banking Act of 1933 FDR signing the Emergency Banking Act of 1933

FDR signing the Banking Act of 1933, called the Glass-Steagall Act of 1933

Federal Deposit Insurance Corporation (FDIC)

Truth-in-Securities Act of 1933

The Homeowners Loan Act of June, 1933 created the Homeowners Loan Corporation (HOLC), which loaned billions to banks for the refinancing of mortgages

The Farm Credit Act of June, 1933 created the Farm Credit Administration, which did the same thing for farming mortgages. An auction on a foreclosed farm

The Federal Emergency Relief Act of May, 1933 created the Federal Emergency Relief Administration (FERA)

Included as part of FERA was a pilot program for food stamps for the needy

The free spender Harry Hopkins, a former social worker who was very thin and hyperactive, was put in charge of the FERA. He became a major figure in the New Deal

The CCC worked in such projects as reforestation, soil erosion control, flood control, and park maintenance, among others.

Military style camps to instill discipline and teamwork

Location of CCC camps

Tennessee Valley Authority (TVA)

The TVA created jobs but it also built hydroelectric damns that helped with flood control and allowed for cheap electricity where before there was none

FDR sides with those advisors arguing for limiting production of agricultural goods to raise farm prices. Cartoon suggesting the farm industry needed a complete overhaul.

Farmers receiving their AAA checks to reduce their production (right), the money raised through a tax on food production The Agricultural Adjustment Act of May, 1933 created the Agricultural Adjustment Administration (AAA). Its goal was to cut production and thus raise the price of farm produce

Farmer plowing under his fields (above) Anti-AAA cartoon showing a women wondering about tearing up her home garden

The National Industrial Recovery Act of June, 1933 (left). It created the National Recovery Administration (NRA) The NIRA created various ”Codes of Fair Competition” to guide industry (above, and left)

National Recovery Administration (NRA)

FDR picked Hugh Johnson, a former general who had served on the War Industries Board during WWI, to lead the new NRA.

The Codes of Fair Competition were technically voluntary and Johnson then led a national campaign to get businesses to abide by the codes for their respective industries

Blue Eagle = “We do our part”

Title VII, A of the NIRA created the Public Works Administration (PWA)

The Economy Act of March, 1933 sought to reduce debt from the costs of all the new programs. It cut federal workers’ salaries, veteran benefits and pensions, and otherwise reduced the budget. It demonstrated that FDR had still not completely adopted Keynesian Economics. He was still a bit conservative in that way. A cartoon of conservative praise for FDR signing the Economy Act.

People laughed about the “alphabet soup” of new federal agencies

The New Deal employed war metaphors to keep up public support, for example “battling the Depression”

Although the economy slightly rebounded in the summer of 1933, it then turned worse again. FDR decided to separate PWA from the NRA, believing that Hugh Johnson, who led the NRA, was inefficient and mired in red tape. FDR moved PWA to the Department of Interior, where he hoped Secretary of Interior Harold Ickes would spend the money more quickly and efficiently. Cartoon showing FDR throwing out the junk of PWA Harold Ickes (right) Hugh Johnson (left)

Soon frustrated with Ickes’ slow progress, however, FDR then created a new public works program, the Civil Works Administration (CWA), using money earlier appropriated for PWA and new money appropriated just for CWA.

Newspaper article (left) discussing Harry Hopkins appointment to lead the new CWA (The article suggests in a humorous fashion that if he succeeds in fighting unemployment at CWA, he would lose his own job) Harry Hopkins with the press FDR then appointed the free spending Harry Hopkins, who had led the FERA, to lead the new CWA

Hopkins predictably began free spending at CWA and pressed FDR for more money. In the spring of 1934, however, FDR was still worried about the debt. He still was not completely willing to embrace Keynesian economics. Switching gears, FDR abolished CWA in 1934. FDR’s actions demonstrated that he was operating the New Deal in pragmatic but haphazard way, far from a liberal ideologue intent upon a predesigned plan.

The National Housing Act of June, 1934 created the Federal Housing Administration (FHA) to help ensure new mortgages.

Between 1934 and 1940, the FHA insured 2. 3 million loans totaling $945 million for home repairs, and 554, 000 loans totaling $2. 3 billion for new home construction. The FHA was, therefore, a significant boost to the construction industry.

The Securities Exchange Act of 1934 created the Securities and Exchange Commission (SEC) to monitor and police the stock market.

FDR appointed Harvard Law School Dean James E. Landis to lead the New SEC. The SEC, however, soon found itself hampered by the rulings of the conservative Supreme Court.

By early 1935, the pace of FDR’s legislative proposals had begun to slow down, which historians later defined as the end of the First or Early New Deal. In retrospect, one could say that the First New Deal was a bit conservative: 1) FDR could have nationalized the banks but did not 2) FDR could have nationalized the stock market but did not 3) FDR had not fully embraced Keynesian Economics and still worried about the debt, as shown in: a. the Economy Act of 1933 b. the abolition of the Civil Works Administration 4) In a sense the National Recovery Act and the Agricultural Adjustment Act were conservative: a. the NRA’s codes of fair competition were, in a technical sense, set by business itself with participation voluntary b. The AAA’s production limits were likewise technically set by leading industry leaders, not the government.