Lecture 23 The New Deal 1933 1940 I A New President A New Deal A Bank Holiday 1 As Roosevelt s inauguration approached the nation faced a severe banking crisis for several reasons a Unable to collect debts owed and drained by too many investments in the sinking stock market many banks had gone out of business since the crash which had left depositors penniless b In 1932 1 456 banks failed and the entire banking system seemed ready to collapse by March 1933 c The public s dwindling confidence in banks caused a growing number of runs on banks as depositors demanded their money and since most banks did not have this money they were forced to close their doors 2 On March 6 Roosevelt announced a Bank Holiday that closed all the country s banks and he called a special session of Congress to pass an Emergency Banking Bill a Democrats and Republicans responded almost immediately and drafted the Emergency Banking Act which allowed the Federal Reserve to examine banks and certify those that were sound b The act also allowed the Federal Reserve and the Reconstruction Finance Corporation to support the nation s banks by providing funds and buying stocks of preferred banks 3 In the first of his Fireside Chats on March 12 Roosevelt told Americans that they had nothing to fear and that the federal government was solving the banking crisis a When banks in the twelve Federal Reserve cities reopened the next day customers appeared to deposit rather than withdraw money 4 The Banking Act of 1933 reorganized the banking and financial system gave new powers and responsibilities to the Federal Reserve System and created the Federal Deposit Insurance Corporation FDIC 5 The Federal Security Act created the Securities and Exchange Commission which regulated stock market activities including the setting of margin rates 6 The Twenty First Amendment repealed Prohibition and the Beer and Wine Act provided a small amount of revenue but greatly boosted public morale 1 B C Seeking Agricultural Recovery 1 The plight of farmers appeared near disaster as Roosevelt assumed office and politically the president was aware that a successful farm program would help tie the Farm Bloc to him and the Democratic Party a The goal was to raise farm prices through national planning to a point of parity with prices received prior to World War I and reducing rural poverty would be a by product 2 The Agricultural Adjustment Act AAA contained the Domestic Allotment Plan which encouraged farmers to reduce production by paying them not to plant a Although large amounts of land were removed from production in many cases production did not drop since farmers took their least productive land out of cultivation b The Commodity Credit Corporation provided money to farmers participating in the domestic allocation program based on the price of their crop c By 1935 recovery in the agricultural sector had clearly started d Butler v United States declared the AAA unconstitutional since the federal government could not set production quotas and the special tax on food processing was illegal 3 Congress approved a second AAA that reestablished the principle of federally set commodity quotas acreage reductions and parity payments a The combination of drought and governmental policies took sizable amounts of land out of production stabilized farm prices and saved farms Seeking Industrial Recovery 1 The National Industrial Recovery Act NIRA offered something for everyone and quickly earned widespread support from business labor the unemployed and community leaders a The Public Works Administration PWA put people to work immediately while the National Recovery Administration NRA provided programs to restart the nation s industrial engine and create permanent jobs b Business supported the NRA because it allowed price fixing which raised prices and profits while labor was attracted by codes that gave workers the right to organize and bargain collectively outlawed child labor and established minimum wages and maximum hours of work c Schechter Poultry Corporation v United States declared the NRA unconstitutional because the government was not permitted to set national codes or set wages and hours in local plants 2 D II TVA and REA 1 The Tennessee Valley Authority TVA showcased federally directed regional planning and development of a rural and impoverished region a The project brought seasonal flooding more under control and made hundreds of miles of rivers and lakes more navigable b The TVA s electrification program became a precedent for a nationwide effort 2 The Rural Electrification Administration REA had brought electricity to 45 percent of rural homes and farms by 1945 and had increased that to 90 percent by 1951 E Remembering the Forgotten Man 1 The Civilian Conservation Corps CCC established army style camps to house and provide a healthy moral environment for unemployed urban males aged eighteen to twenty five 2 The Federal Emergency Relief Administration FERA along with the PWA provided a wider range of relief programs for the forgotten man 3 The Civil Works Administration CWA provided nearly four million immediate jobs especially during the winter of 1933 34 4 The Home Owner s Loan Corporation HOLC permitted homeowners to refinance their mortgages at lower interest rates through the federal government and the Federal Housing Administration FHA provided federally backed loans for home mortgages and repair The Second Hundred Days A Populist Voices 1 Supported by congressional Democrats and public opinion through 1934 Roosevelt continued to add to the New Deal and became less willing to cooperate with conservatives and business 2 Unexpected grassroots criticism that the New Deal was not doing enough to help the forgotten man was led by three outspoken critics a Senator Huey Long of Louisiana advocated a Share the Wealth plan which called for the federal government to provide every American family with an annual check for 2 000 a home a car a radio and a college education for each child b Dr Francis Townsend a public health doctor advocated a federal old age pension plan 3 The growing popularity of Coughlin Long and Townsend reflected the frustration of a large segment of the American population who believed that the government was still doing too little to help them B A Shift in Focus 3 1 III Responding to the growing pressures to modify the New Deal and showing his irritation with business leaders Roosevelt focused more on people than on