The New Deal in two minutes
- Roosevelt declared a bank holiday in March 1933 and reassured the country in a radio fireside chat; the Emergency Banking Act and the Glass–Steagall Act, which created the FDIC, restored trust.
- In the Hundred Days Congress passed fifteen major laws aimed at relief, recovery and reform, including the Civilian Conservation Corps, Tennessee Valley Authority, Agricultural Adjustment Act and National Recovery Administration.
- Critics pushed from both sides: Huey Long and Francis Townsend wanted more redistribution, the American Liberty League wanted less government, and the Supreme Court struck down the NRA in 1935.
- The Second New Deal of 1935 added the Works Progress Administration, the Wagner Act protecting collective bargaining and the Social Security Act; Roosevelt then won 46 of 48 states in 1936.
- Limits showed: the Court-packing plan failed in 1937, a recession followed spending cuts in 1937–1938, and Social Security excluded farm and domestic workers, many of them Black.
- The New Deal did not end the Depression, which ended with wartime spending, but it left lasting reforms and a Democratic coalition of unions, urban voters and African Americans.
- On the exam: Topic 7.10 asks about the New Deal's causes and legacy, including the role of government and political realignment; compare it with the Progressive Era.
Topic 7.10 key terms
- Bank holiday
A government-ordered closing of the banks. Roosevelt declared one on March 6, 1933, so frightened customers couldn't drain them.
- Bank run
Many customers demand their money at once. A bank keeps only part of its deposits as cash, so it can run out and fail.
- Fireside chat
One of Roosevelt's radio talks to the whole country. The first, on March 12, 1933, explained the banking crisis in plain words.
- Hoarding
Pulling your cash out of the bank and keeping it at home. Enough people doing it can drain banks and make them fail.
- Brain Trust
Professors and experts Roosevelt brought in as advisers, first as governor of New York and then as president.
- Emergency Banking Act (1933)
The first law of the New Deal, passed the day Congress met. It let federal examiners inspect the closed banks and reopen the sound ones with government backing.
- Hundred Days
The special session of Congress from March 9 to June 16, 1933, when Roosevelt's first big New Deal programs became law.
- The three Rs
The New Deal's three goals. Relief: help unemployed and poor people right away. Recovery: restart the economy. Reform: change banking, business and labor rules to prevent another depression.
- Glass–Steagall Act (1933)
The Banking Act of 1933. It separated ordinary commercial banks from investment banks and created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits.
- Tennessee Valley Authority (TVA)
A federal corporation created May 18, 1933, to control floods, improve navigation, make fertilizer, sell cheap electricity and plan the development of a whole river valley. It is the New Deal's best-known example of regional planning.
- Civilian Conservation Corps (CCC)
Created March 31, 1933. Unmarried young men, at first ages 18 to 25, from families on relief planted trees and built parks, trails and dams for $30 a month, of which $25 went home to their families. About 3 million served before it ended in 1942.
- Relief, recovery, reform
The three goals historians use to sort New Deal programs. Relief: help for people in need right now. Recovery: restarting the economy. Reform: changing the rules so a crash like this one can't happen again.
- Rural Electrification Administration (REA)
Created by executive order in May 1935 and made permanent by Congress in 1936. It lent money to farmer-owned electric cooperatives to run power lines to farms that private companies said were too costly to reach.
- Tennessee Electric Power Co. v. TVA (1939)
The Supreme Court held that private utilities had no legal right to be protected from competition from the TVA, so their suit to stop it failed.
- National Recovery Administration (NRA)
Created by the National Industrial Recovery Act (June 16, 1933). Each industry wrote a code of fair competition setting prices, wages, hours and a ban on child labor, and the government approved it. Struck down in 1935.
- Section 7(a)
The clause in the National Industrial Recovery Act that promised workers the right to organize and bargain collectively. The Wagner Act (1935) made that right stronger after the NRA died.
- Agricultural Adjustment Act (AAA)
Passed May 12, 1933. It paid farmers to cut production of crops such as cotton, wheat and hogs so prices would rise, and it was funded by a tax on food processors. The Supreme Court struck it down in 1936.
- Southern Tenant Farmers' Union (1934)
Founded in July 1934 near Tyronza, Arkansas, by seven Black and eleven white men after a planter evicted twenty-three families. It had more than 35,000 members by 1938.
- Schechter Poultry Corp. v. United States (1935)
The Supreme Court unanimously ruled that the NRA gave Congress's lawmaking power to industry codes, and that it reached businesses that were not in interstate commerce.
- Townsend Plan
$200 a month for every retired American 60 and over, paid for by a 2 percent tax on every business transaction, and to be spent within 30 days.
- American Liberty League (1934)
Business leaders (the du Pont brothers, John J. Raskob) and conservative Democrats (Al Smith, John W. Davis) who argued that the New Deal was destroying the Constitution and free enterprise.
- Second New Deal
Historians' name for the wave of 1935 laws that went further than the first New Deal: the WPA, the Wagner Act, Social Security and higher taxes on the wealthy.
- Social Security Act (1935)
The law that created old-age insurance paid for by taxes on workers and employers, unemployment insurance run by the states, and aid for dependent children and the blind. Farm and household workers were left out.
- WPA
Works Progress Administration (1935): a federal agency that paid millions of jobless Americans to build roads, schools and parks, and to paint murals and write guidebooks.
- Wagner Act (1935)
The National Labor Relations Act. It gave most private-sector workers a federal right to form unions and bargain with their employers, and it made it illegal for employers to fire workers for union activity. It replaced the NRA's Section 7(a) after the Supreme Court killed the NRA.
- Collective bargaining
Workers negotiating with an employer as a group, through representatives they choose, instead of one at a time. The Wagner Act made employers legally required to bargain in good faith with the union a majority of workers picked.
- NLRB
The National Labor Relations Board, created by the Wagner Act. It runs union elections and can order employers to stop firing workers for organizing.
- CIO
The Committee for Industrial Organization, formed by Lewis and seven other union leaders in November 1935 (renamed the Congress of Industrial Organizations in 1938). It organized whole industries, skilled and unskilled, including Black and women workers.
- Sit-down strike
A strike in which workers stop work but stay inside the plant instead of walking out. The company can't bring in replacements or restart the line, and it risks damaging its own machinery if it tries to force them out. Flint's began December 30, 1936; the Supreme Court ruled sit-downs illegal in 1939.
- Dust Bowl
The southern Great Plains in the 1930s (the Oklahoma and Texas panhandles, western Kansas, and parts of southeastern Colorado and northeastern New Mexico), where drought and plowed-up grassland turned topsoil into dust storms.
- Soil Conservation Service (1935)
A Department of Agriculture agency created by Congress in April 1935 and led by Hugh Bennett. It taught and helped farmers stop erosion with contour plowing, terraces, cover crops and tree windbreaks.
- “Okies”
The insulting name Californians gave to Dust Bowl-era migrants from Oklahoma and nearby states, whether or not they came from Oklahoma.
- Repatriation
In the early 1930s, local and federal officials pressured or forced hundreds of thousands of Mexicans and Mexican Americans, many of them U.S. citizens, to leave the United States. The drives were meant to cut relief costs and free jobs.
- Resettlement Administration
A New Deal agency created in 1935 to help poor farm families with loans and resettlement. Its Historical Section hired photographers, including Lange, to document rural poverty. It became part of the Farm Security Administration in 1937.
- Court-packing plan (1937)
Roosevelt's proposal to add a new justice for each sitting justice over seventy, up to six. He said aging judges could not keep up with their work; critics said he wanted a Court that would uphold his laws. Congress refused, but the Court soon began upholding New Deal laws anyway.
- Keynesian economics
The idea that when families and businesses stop spending, the government should spend more to make up the difference, even if that means borrowing. The 1937–38 recession, after Roosevelt cut spending, seemed to prove the point.
- Conservative coalition
Conservative Democrats, mostly Southern, who began voting with Republicans in 1937 to block new New Deal programs. Their Conservative Manifesto, drafted by Senator Josiah Bailey of North Carolina, called for a balanced budget, lower taxes, more power for the states and private enterprise.
- Fair Labor Standards Act (1938)
The last big New Deal law. It set the first national minimum wage (25 cents an hour), required overtime pay after a set number of hours (down to 40 a week by 1940), and limited child labor. At first it covered only about one worker in five. Farm workers were left out, and so were domestic workers until 1974.
- Black Cabinet
Bethune's Federal Council on Negro Affairs, formed in 1936: Black advisers in New Deal agencies who pushed from inside for fair treatment of Black Americans.
- New Deal coalition
The voters who made the Democrats the majority party from the 1930s on: union households, big-city immigrants and their children, Black voters, farmers, liberals and white Southerners.
- Political realignment
A lasting shift of whole groups of voters from one party to another. In the 1930s many Black, ethnic and working-class voters left the Republicans for the Democrats.
- Limited welfare state
Government programs that protect citizens from poverty, old age and unemployment, on a smaller scale than in many other rich countries. The New Deal built it, and Americans still argue about its size.
- Modern American liberalism
The view, built in the New Deal, that the federal government should regulate business, help manage the economy and guarantee citizens a basic level of security.
Transcript
Quotes are from the historical record and name their source. Lines marked Dramatized are reconstructions.
Sunday Night
March 12–15, 1933
Key terms: Bank holiday, Bank run, Fireside chat, Hoarding
Sunday, March 12, 1933
For a week, every bank in the United States had been closed.
Thousands of banks had failed. Many families kept what cash they had left in the house. Tonight the new president would explain banking. On the radio.
Franklin D. Roosevelt
I want to talk for a few minutes with the people of the United States about banking…
Franklin D. Roosevelt
…when you deposit money in a bank the bank does not put the money into a safe deposit vault.
The same voice was in every lit window in town.
Franklin D. Roosevelt
It invests your money in many different forms of credit…
Franklin D. Roosevelt
I can assure you that it is safer to keep your money in a reopened bank than under the mattress.
Franklin D. Roosevelt
…hoarding during the past week has become an exceedingly unfashionable pastime.
When the banks opened again that week, the lines came back. This time people were carrying money in.
Will Rogers wrote that the president took a subject as dry as banking and “made everybody understand it, even the bankers.”
A speech could stop a panic. It couldn't give anybody a job, and one worker in four didn't have one. Could the government fix what the market had broken? And how much government would Americans put up with?
A Hundred Days
1933–1934
Key terms: Brain Trust, Emergency Banking Act (1933), Hundred Days, The three Rs, Glass–Steagall Act (1933)
Franklin Roosevelt was a rich New Yorker and Theodore Roosevelt's fifth cousin. In 1921 polio paralyzed his legs, and photographers almost never showed it.
He had no master plan. He had a method.
Franklin D. Roosevelt
It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.
His labor secretary, Frances Perkins, was the first woman in any cabinet. She took the job only after he agreed to her list, from a minimum wage to health insurance.
On March 9 the clerk read the Emergency Banking Act aloud, because the House had no printed copies.
Rep. Bertrand Snell
The house is burning down, and the President of the United States says this is the way to put out the fire.
In a hundred days Congress passed fifteen major laws. Most of them went by their initials.
Relief · Recovery · Reform
Historians sort them three ways. Relief: help people now. Recovery: get the economy moving. Reform: change the rules so it can't happen again.
Start with relief. Harry Hopkins, who ran the new federal relief agency, sent out five million dollars in his first hours.
Reform began with the banks. The Glass–Steagall Act split everyday banking from Wall Street speculation, and created the FDIC to insure your deposits.
About four thousand banks failed in 1933. In 1934, after deposit insurance began, sixty-one did.
In 1934 a new Securities and Exchange Commission began policing Wall Street. Its first chairman, Joseph P. Kennedy, had made money in exactly the kind of deals it now banned.
The night of his first fireside chat, Roosevelt reportedly said, “I think this would be a good time for beer.” By April 7, it was legal. By December, Prohibition was over.
The Valley
1933–1940
Key terms: Tennessee Valley Authority (TVA), Civilian Conservation Corps (CCC), Relief, recovery, reform, Rural Electrification Administration (REA), Tennessee Electric Power Co. v. TVA (1939)
The Tennessee River drains parts of seven states. In 1933 its valley was one of the poorest places in the country.
Senator George Norris, a Nebraska Republican, had fought for ten years to build public dams here.
In May 1933 Congress created the Tennessee Valley Authority. It was a government corporation that would build dams, stop floods, make fertilizer and sell cheap power.
Young men came to plant trees. The Civilian Conservation Corps paid them thirty dollars a month, and twenty-five of it went home.
This valley puts seven years into one day. Look around.
In 1933, about three farms in a hundred here had electricity. Across the country in 1935, about one in ten did. By the end of the war, about half.
The lakes had a price. Norris Reservoir alone covered the homes of nearly three thousand families. TVA crews moved more than five thousand graves.
The New Deal kept Jim Crow's rules. The CCC put Black men in separate camps. Norris, the TVA's model town, was for white families only. Tennessee built its new parks by race.
Private power companies called the TVA unfair competition, funded by taxes they paid too. They sued, and they lost. Their spokesman, Wendell Willkie, ran for president in 1940.
The Blue Eagle and the Sick Chicken
1933–1936
Key terms: National Recovery Administration (NRA), Section 7(a), Agricultural Adjustment Act (AAA), Southern Tenant Farmers' Union (1934), Schechter Poultry Corp. v. United States (1935)
Recovery meant factories. The National Recovery Administration had each industry write a code. A quarter of a million marched for it up Fifth Avenue.
Firms that signed put a Blue Eagle in the window. Shoppers were urged to buy only from them.
The law promised workers the right to organize. Organizers told miners, "The President wants you to join the union." Roosevelt never said it.
Big firms wrote most of the 557 codes. Small ones called them rigged. Even burlesque theaters got one, with minimum pay for the chorus.
Farmers grew too much, and prices collapsed. So the Agricultural Adjustment Administration paid them to plow under cotton already growing.
The government bought about six million young pigs and slaughtered them to raise pork prices. With so many hungry, it looked like waste.
Farm prices rose. But the checks went to landowners, and many evicted their sharecroppers, Black and white. In Arkansas, both joined one union.
Then came the chickens. Brooklyn's Schechter brothers, kosher poultry dealers, were convicted of breaking the poultry code. Reporters called it the sick chicken case.
Customers had to take a coop's chickens as they came. As TIME reported, Justice Sutherland wondered:
Justice George Sutherland
All the chickens… might be in one end.
On May 27, 1935, a unanimous Supreme Court struck down the NRA.
Chief Justice Charles Evans Hughes
Extraordinary conditions do not create or enlarge constitutional power.
Roosevelt said the Court had sent the country back to the horse and buggy. Seven months later, the Court struck down the AAA too.
The Desk
1934–1935
Key terms: Townsend Plan, Share Our Wealth, American Liberty League (1934), Second New Deal, Social Security Act (1935), WPA
Two years in, about one worker in five still had no job. Millions of Americans stopped waiting for Roosevelt and started listening to other men.
Every Sunday, Father Charles Coughlin preached against bankers on the radio, to as many as thirty million listeners.
A retired doctor in Long Beach, Francis Townsend, had written a letter to the local paper.
Dr. Francis E. Townsend
I suggest that the national government retire all who reach that age on a monthly pension of $200 a month or more, on condition that they spend the money as they get it.
That age was sixty.
Senator Huey Long of Louisiana wanted to cap great fortunes and give every family a home and an income.
Sen. Huey P. Long
The U.S. is like a fool carrying a loaf of bread under his arm and starving to death at the same time.
On the other side, business leaders and conservative Democrats formed the American Liberty League.
Its star was Al Smith, the Democrats’ 1928 candidate.
Alfred E. Smith
There can be only one Capitol – Washington or Moscow.
Then the Supreme Court killed the NRA. It all landed on one desk.
That summer, Congress passed so much that historians call it the Second New Deal.
Franklin D. Roosevelt
We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life…
Huey Long never got to run. He was shot in the Louisiana Capitol in September 1935 and died two days later.
Sit Down
1935–1937
Key terms: Wagner Act (1935), Collective bargaining, NLRB, CIO, Sit-down strike
The Wagner Act gave workers what the NRA had only promised: the right to join a union. They could bargain as a group, and a new labor board would enforce it.
The old unions organized one craft at a time. John L. Lewis wanted one union for everyone in a plant. In 1935, that argument ended with Lewis punching the carpenters' president.
Unions backed Roosevelt in 1936, and most of big business backed his opponent. At Madison Square Garden, he answered them.
Franklin D. Roosevelt
They are unanimous in their hate for me—and I welcome their hatred.
The Literary Digest's giant poll said Alf Landon, the Republican, would get fifty-seven percent. Roosevelt won forty-six of forty-eight states.
Eight weeks after the vote, workers at General Motors, the world's biggest carmaker, stopped the line in Flint, Michigan.
Then, instead of walking out, they sat down.
On February 11, 1937, after forty-four days, General Motors agreed to bargain with the United Auto Workers.
GM had called it trespassing, and a judge ordered the strikers out. Governor Frank Murphy sent in the National Guard to keep order, and refused to use it against them.
Within a year, the auto workers' union grew from about thirty thousand members to about four hundred thousand.
Other companies fought. On Memorial Day, 1937, Chicago police fired on strikers and their families outside Republic Steel. Ten people died.
That summer, Roosevelt said the public was telling both sides, 'A plague on both your houses.' The man whose unions had helped reelect him answered on the radio.
John L. Lewis
It ill behooves one who has supped at labor's table and who has been sheltered in labor's house to curse with equal fervor and fine impartiality both labor and its adversaries when they become locked in deadly embrace.
Black Sunday
1930–1939
Key terms: Dust Bowl, Soil Conservation Service (1935), “Okies”, Repatriation, Resettlement Administration
In the 1910s and ’20s, plains farmers plowed up millions of acres of grassland for wheat. Then came years of drought.
With the grass gone, the soil blew. In May 1934, plains dust fell on Washington, and on ships far out at sea.
April 14, 1935, was a clear, warm Sunday after weeks of dust.
It came at fifty or sixty miles an hour. Where it hit, day turned to night.
The next day, an Associated Press reporter in Guymon, Oklahoma, gave the place its name.
Robert E. Geiger
Three little words—achingly familiar on a Western farmer's tongue—rule life today in the dust bowl of the continent— If it rains.
Dust filled lungs as well as houses. Doctors called it dust pneumonia. It killed the old and the very young.
Two weeks after Black Sunday, Congress created the Soil Conservation Service to teach farmers to hold their soil.
Hundreds of thousands headed west. Most came from cotton country east of the dust, pushed off the land by drought, low prices and AAA evictions.
Others were pushed out. Officials pressured Mexican and Mexican American families to leave, to cut the relief rolls. Hundreds of thousands went. Many were U.S. citizens.
In March 1936, Dorothea Lange, a photographer for a federal relief agency, stopped at a pea pickers' camp in California.
Dorothea Lange
I did not ask her name or her history.
Her agency wanted public support for relief. The picture ran in a newspaper, and the government rushed food to the camp. The woman in it had already moved on.
Her name was Florence Owens Thompson. She was thirty-two, of Cherokee descent, and a mother of seven.
Florence Owens Thompson
I wish she hadn't taken my picture… She didn't ask my name.
Too Far, Not Far Enough
1937–1939
Key terms: Court-packing plan (1937), Keynesian economics, Conservative coalition, Fair Labor Standards Act (1938), Black Cabinet
Roosevelt's second term began in a cold rain.
Franklin D. Roosevelt
I see one-third of a nation ill-housed, ill-clad, ill-nourished.
The Court had struck down the NRA and the AAA. In 1937 Roosevelt asked Congress to add a justice for each one over seventy, up to six.
On the radio, he called the three branches a team of horses.
Franklin D. Roosevelt
Two of the horses are pulling in unison today; the third is not.
He lost that fight but got most of what he wanted. That spring it upheld a state minimum wage and the Wagner Act, both five to four.
Then the economy fell again. Unemployment went from fourteen percent to nineteen. Roosevelt had cut spending, just as Social Security taxes began.
So he changed course. In 1938 he spent again, as the English economist John Maynard Keynes urged, and the economy began to recover.
Conservative Democrats and Republicans issued a manifesto for a balanced budget and private enterprise. Roosevelt tried to beat some of them in 1938 primaries and mostly failed.
The last big New Deal law passed in June 1938. It set a minimum wage of twenty-five cents an hour and limited child labor.
In San Antonio, about twelve thousand pecan shellers, mostly Mexican American women, struck against a pay cut. Emma Tenayuca, just twenty-one, led them, and they won.
The New Deal's protections often stopped at the color line. Social Security left out farm and domestic workers: nearly two-thirds of Black workers.
Federal housing agencies rated Black neighborhoods as bad risks for loans. And Roosevelt would not back a law against lynching. He needed Southern Democrats.
Some pushed from inside. Eleanor Roosevelt went everywhere and reported back. Mary McLeod Bethune gathered Black officials into what people called the Black Cabinet.
What Lasted
1939 → today
Key terms: New Deal coalition, Political realignment, Limited welfare state, Modern American liberalism
Black voters had long stayed loyal to the party of Lincoln. By 1936, about seven in ten backed Roosevelt. They joined union families, immigrants' children and white Southerners in one uneasy coalition. It lasted a generation.
In 1939 the Daughters of the American Revolution wouldn't let Marian Anderson sing in their hall. She was Black.
Eleanor Roosevelt quit the DAR. The Interior Department gave Anderson the Lincoln Memorial. Seventy-five thousand people came.
The New Deal did not end the Depression. In 1939, about one worker in six still had no job. Full employment waited for the war.
It did change what Americans expect from Washington. An insured bank account. A pension. A minimum wage. The right to join a union.
Ida May Fuller of Vermont got the first monthly Social Security check. She had paid in $24.75. She lived to a hundred and collected almost $23,000.
How much government?
More government than ever before. Less than Townsend or Long wanted. More than the Liberty League could stand. The argument over that line never stopped.
September 3, 1939. Britain and France were at war with Germany.
Franklin D. Roosevelt
This nation will remain a neutral nation, but I cannot ask that every American remain neutral in thought as well.