U.S. Hist Ch. 10 – Flashcards

abbreviated term for poliomyelitis, an acute infectious disease affecting the skeletal muscles, often resulting in permanent disability and deformity

a monetary standard in which one ounce of gold equals a set number of dollars

closing of banks during the Great Depression to avoid bank runs

radio broadcasts made by FDR to the American people to explain his initiatives

government practice of spending borrowed money rather than raising taxes, usually in an attempt to boost the economy

process whereby a neutral party hears arguments from two opposing sides and makes a decision that both must accept

a method of boycotting work by sitting down at work and refusing to leave the establishment

the act of changing the political balance of power in a nation's judiciary system whereby a national leader, such as the president of the United States, appoints judges who will rule in favor of his or her policies

role of the government to work out conflicts among competing interest groups

something that provides security against misfortune; specifically, government relief programs intended to protect against economic disaster

Roosevelt began his political career in 1910 when he was elected to the New York State Senate. He earned a reputation as a progressive reformer. Three years later, he became assistant secretary of the navy in the Wilson administration. In 1920 his reputation (and famous surname) helped him win the vice-presidential nomination on the unsuccessful Democratic ticket. After losing the election, Roosevelt temporarily withdrew from politics. The next year, he caught the dreaded paralyzing disease polio. Although there was no cure, Roosevelt refused to give in. He began a vigorous exercise program to restore muscle control. By the mid-1920s, Roosevelt was again active in the Democratic Party. In 1928 he ran for governor of New York. He campaigned hard to show that his illness had not slowed him down, and he narrowly won the election. Two years later, he was reelected in a landslide. As governor, Roosevelt oversaw the creation of the first state relief agency to aid the unemployed. Roosevelt's popularity in New York paved the way for his presidential nomination in 1932. Americans saw in him an energy and optimism that gave them hope despite the tough economic times. After Roosevelt became president, his serenity and confidence amazed people. In mid-June 1932, when the country was deep in the Depression, Republicans gathered in Chicago and nominated Herbert Hoover to run for a second term as president. Later that month, the Democrats also held their national convention in Chicago. When Roosevelt won the nomination, he broke with tradition by flying to Chicago to accept it in person. From that point forward, Roosevelt's policies for ending the Depression became known as the New Deal. Roosevelt's confidence that he could make things better contrasted sharply with Herbert Hoover's apparent failure to do anything effective. On Election Day, Roosevelt won in a landslide, winning the electoral vote in all but six states.

Roosevelt won the presidency in November 1932, but the situation grew worse between the election and his inauguration. Unemployment continued to rise and bank runs increased. People feared that Roosevelt would abandon the gold standard and reduce the value of the dollar to fight the Depression. Under the gold standard, one ounce of gold equaled a set number of dollars. To reduce the value of the dollar, the United States would have to stop exchanging dollars for gold. Many Americans and foreign investors with deposits in American banks decided to take their money out of the banks and convert it to gold before it lost its value.

Across the nation, people stood in long lines with paper bags and suitcases, waiting to withdraw their money from banks. By March 1933, more than 4,000 banks had collapsed, wiping out nine million savings accounts. In 38 states, governors declared bank holidays—closing the remaining banks before bank runs could put them out of business.By the day of Roosevelt's inauguration, most of the nation's banks were closed. One in four workers was unemployed. Roosevelt knew he had to restore the nation's confidence.

Roosevelt and his advisers came into office bursting with ideas about how to end the Depression. Roosevelt had no clear agenda, nor did he have a strong political ideology. The new president sent bill after bill to Congress. Between March 9 and June 16, 1933—which came to be called the Hundred Days—Congress passed 15 major acts to resolve the economic crisis. These programs made up what would be called the First New Deal.

Although he alone made the final decision about what policies and programs to pursue, Roosevelt depended on his advisers for new ideas. He deliberately chose advisers who disagreed with one another because he wanted to hear many different points of view. One influential group of President Roosevelt's advisers supported the belief that if the government agencies worked with businesses to regulate wages, prices, and production, they could lift the economy out of the Depression. A second group of advisers, who distrusted big business and felt business leaders had caused the Depression, wanted government planners to run key parts of the economy. A third group of advisers supported former president Woodrow Wilson's "New Freedom" philosophy. They wanted Roosevelt to break up big companies and allow competition to set wages, prices, and production levels. This group of advisers also thought that the government should impose regulations to keep economic competition fair.

Roosevelt knew that very few of the new programs would work as long as the nation's banks remained closed. Before he did anything else, he had to restore people's confidence in the banking system. Within a week of his taking office, was passed. The new law required federal examiners to survey the nation's banks and issue Treasury Department licenses to those that were financially sound.

On March 12, Roosevelt addressed the nation by radio. Sixty million people listened to this first of many "fireside chats." He said, "I assure you that it is safer to keep your money in a reopened bank than under the mattress." When banks opened on March 13, deposits far outweighed withdrawals. The banking crisis was over.

Many of Roosevelt's advisers wanted to go further, pushing for new regulations for banks and the stock market. Roosevelt agreed, and supported the Securities Act of 1933 and the Glass-Steagall Banking Act. The Securities Act required companies that sold stocks and bonds to provide complete and truthful information to investors. The Securities and Exchange Commission was created to regulate the stock market and stop fraud. The Glass-Steagall Act separated commercial banking from investment banking. Commercial banks handle everyday transactions and could no longer risk depositors' money through stock speculation. The act also created the Federal Deposit Insurance Corporation to provide government insurance for bank deposits. The creation of the FDIC increased public confidence in the banking system.

Terrified of losing their homes and farms, many Americans cut back on spending to make sure they could pay their mortgages. Roosevelt responded by introducing policies to help Americans with their debts. For example, the Home Owners' Loan Corporation bought the mortgages of home owners who were behind in their payments. It then restructured the loans with longer repayment terms and lower interest rates. The Farm Credit Administration helped farmers refinance their mortgages. These loans saved millions of farms from foreclosure. Although the FCA may have slowed economic recovery by making less money available to lend to more efficient businesses, it did help many desperate and impoverished people hold onto their land.

Many of Roosevelt's advisers believed that both farmers and businesses were suffering because prices were too low and production too high. To help the nation's farmers, Congress passed the Agricultural Adjustment Act. The act was based on a simple idea—that prices for farm goods were low because farmers grew too much food. Under this act, the government's Agricultural Adjustment Administration (AAA) would pay farmers not to raise certain livestock, grow certain crops, and produce dairy products. Over the next two years, farmers withdrew millions more acres from cultivation and received more than $1 billion in support payments. The program met its goal, although raising food prices in a depression drew harsh criticism. Also, not all farmers benefited. Thousands of tenant farmers, many of them African Americans, lost their jobs and homes when landlords took their fields out of production.

The government turned its attention to manufacturing in June 1933, with the National Industrial Recovery Act. Once passed, this law authorized the National Recovery Administration to suspend antitrust laws and allowed business, labor, and government to cooperate with rules, or codes of fair competition, for each industry. Codes set prices, established minimum wages, shortened workers' hours to create more jobs, permitted unionization, and helped businesses develop industry-wide rules of fair competition. The NRA revived a few industries, but the codes were difficult to administer. Employers disliked that the NRA allowed workers to form unions. They also argued that paying minimum wages forced them to raise prices. After the NRA was instituted, industrial production fell. The NRA was declared unconstitutional in 1935.

Many of President Roosevelt's advisers emphasized tinkering with prices and providing debt relief to solve the Depression. Others maintained that the Depression's fundamental cause was low consumption. They thought getting money into the hands of needy individuals would be the fastest remedy. Because neither Roosevelt nor his advisers wanted to give money to the unemployed, they supported work programs for the unemployed.

The most highly praised New Deal work relief program was the Civilian Conservation Corps. It offered unemployed young men 18-25 years old the opportunity to work under the direction of the forestry service planting trees, fighting forest fires, and building reservoirs. To prevent a repeat of the Dust Bowl, the workers planted a line of more than 200 million trees, known as a Shelter Belt, from north Texas to North Dakota. The young men lived in camps near their work areas and earned $30 a month, $25 of which was sent directly to their families. The average CCC worker returned home after six to twelve months, better nourished and with greater self-respect. CCC programs also taught more than 40,000 of their recruits to read and write. By the time the CCC closed down in 1942, it had put 3 million young men to work outdoors—including 80,000 Native Americans, who helped reclaim land they had once owned. After a second Bonus Army march on Washington in 1933, Roosevelt added some 250,000 veterans to the CCC as well.

A few weeks after authorizing the CCC, Congress established the Federal Emergency Relief Administration. Roosevelt chose Harry Hopkins, a former social worker, to run FERA. Initially, it did not create projects for the unemployed. Instead, it gave money to state and local agencies to fund their relief projects. After meeting with Roosevelt to discuss his new job, Hopkins took the next two hours to spend $5 million on relief projects. When critics charged that some of the projects did not make sense in the long run, Hopkins replied, "People don't eat in the long run—they eat every day."

In June 1933, Congress authorized another relief agency, the Public Works Administration. One-third of the nation's unemployed were in the construction industry. To put them back to work, the PWA began building highways, dams, schools, and other government facilities. The PWA awarded contracts to construction companies. By insisting that contractors not discriminate against African Americans, the agency broke down some of the racial barriers in the construction trades.

By the fall of 1933, neither FERA nor the PWA had reduced unemployment significantly, and Hopkins realized that unless the federal government acted quickly, a huge number of unemployed citizens would be in severe distress once winter began. After Hopkins explained the situation, President Roosevelt authorized him to set up the Civil Works Administration. Hiring workers directly, the CWA employed 4 million people, including 300,000 women. The agency built or improved 1,000 airports, 500,000 miles of roads, 40,000 school buildings, and 3,500 playgrounds and parks. The program spent nearly $1 billion in just five months. Although the CWA helped many people get through the winter, President Roosevelt was alarmed by how quickly the agency was spending money. He did not want Americans to get used to the federal government providing them with jobs. Warning that the Civil Works Administration would "become a habit with the country," Roosevelt insisted that it be shut down the following spring.

During his first year in office, Roosevelt convinced Congress to pass an astonishing array of legislation. The First New Deal did not restore prosperity, but it reflected Roosevelt's zeal for action and his willingness to experiment. Banks were reopened, many more people retained their homes and farms, and more people were employed. Perhaps the most important result of the First New Deal was a change in the spirit of the American people. Roosevelt's actions had inspired hope and restored Americans' faith in their nation.

President Roosevelt was tremendously popular during his first two years in office, but opposition to his policies began to grow. New Deal programs had created more than 2 million new jobs. More than 10 million workers remained unemployed, however, and the nation's total income was about half of what it had been in 1929.

Roosevelt faced hostility from both the political right and the left. The right wing had long believed that the New Deal regulated business too tightly. Opponents thought that it gave the federal government too much power over the states. By late 1934, the right wing increased its opposition as Roosevelt started deficit spending, abandoning a balanced budget and borrowing money to pay for his programs. Many business leaders became alarmed at the growing deficit. Some on the left, however, believed that the New Deal had not gone far enough. They wanted even more economic intervention to shift wealth from the rich to middle-income and poor Americans. One outspoken critic was Huey Long. As governor of Louisiana, Long had championed the poor. He improved schools, colleges, and hospitals, and built roads and bridges. These benefits made him popular, and he built a powerful but corrupt political machine. In 1930 Long was elected to the U.S. Senate. In 1934 he established the Share Our Wealth Society. He planned to run for president in 1936. Roosevelt also faced a challenge from Catholic priest and popular radio host Father Charles Coughlin. Once an ardent New Deal supporter, the Detroit resident had grown impatient with its moderate reforms. He called for inflating the currency and nationalizing the banking system. In 1934 he organized the National Union for Social Justice, which some Democrats feared would become a new political party. A third challenge came from California physician Francis Townsend. He proposed that the federal government pay citizens over age 60 a pension of 200 a month. Recipients would have to retire and spend the entire check each month. Townsend believed that the plan would increase spending and free up jobs for the unemployed. His proposal attracted millions of supporters, especially older Americans, who mobilized as a political force for the first time. Together, the three men had supporters around the country. Roosevelt faced the possibility of a coalition that would prevent his reelection.

In 1935 Roosevelt launched a series of programs, now known as the Second New Deal, to generate greater economic recovery. Among these new programs was the Works Progress Administration, the New Deal's largest public works program. Between 1935 and 1941, the WPA employed 8.5 million workers and spent $11 billion to construct about 650,000 miles of roadways, 125,000 public buildings, 853 airports, more than 124,000 bridges, and more than 8,000 parks. One WPA program, called Federal Number One, financed artists, musicians, theater people, and writers. Artists created murals and sculptures for public buildings; musicians set up orchestras and smaller musical groups; playwrights, actors, and directors wrote and staged plays; and writers recorded the stories of those who had once been enslaved and others whose voices had not often been heard.

In May 1935, in Schechter Poultry Corporation v. United States, the Supreme Court struck down the authority of the National Recovery Administration. The Schechter brothers had been convicted of violating the NRA's poultry code. The Court ruled that the Constitution did not allow Congress to delegate its legislative powers to the executive branch, and therefore the NRA's codes were unconstitutional. Roosevelt worried that the ruling suggested the Supreme Court could strike down the rest of the New Deal. Roosevelt knew he needed a new series of programs to keep voters' support. He called congressional leaders to a White House conference and thundered that Congress could not go home until it passed his new bills. That summer, Congress passed Roosevelt's programs.

When the Supreme Court struck down the NRA, it also invalidated the section of the NIRA that gave workers the right to organize. Democrats knew that the working-class vote was key to winning reelection in 1936. They also believed that unions could help end the Depression because high union wages would give workers more money to spend, thereby boosting the economy. Opponents disagreed, arguing that high wages forced companies to charge higher prices and hire fewer people. Despite these concerns, Congress pushed ahead with new labor legislation.

In July 1935, Congress passed the National Labor Relations Act, also called the Wagner Act. This act guaranteed workers the right to unionize and bargain collectively. It also established the National Labor Relations Board which organized factory elections by secret ballot to determine whether workers wanted a union. The NLRB could also investigate employers' actions and stop unfair practices. The Wagner Act also set up a process called binding arbitration, whereby dissatisfied union members took their complaints to a neutral party who would listen to both sides and decide on the issues.

The Wagner Act led to a burst of labor activity. In 1935 John L. Lewis, leader of the United Mine Workers, helped form the Committee for Industrial Organization which set out to organize unions that included all workers, skilled and unskilled, in a particular industry. First, it focused on the automobile and steel industries, two of the largest industries in which workers were not yet unionized. Organizers used new tactics to get employers to recognize the unions. For example, during sit-down strikes, employees stopped work inside the factory and refused to leave. This technique prevented management from sending in replacement workers. It was a common CIO tactic for several years.

In late December 1936, the United Auto Workers (UAW), a CIO union, began a sit-down strike at General Motor's plant in Flint, Michigan. Family, friends, and others passed food and other provisions to them through windows. Violence broke out when police launched a tear gas assault on strikers, wounding 13, but the strike held. On February 11, 1937, General Motors recognized the UAW as its employees' sole bargaining agent. The UAW became one of the most powerful unions in the United States.

U.S. Steel, the nation's largest steel producer and a long-standing opponent of unionizing, decided it did not want to repeat GM's experience. In March 1937, the company recognized the CIO's steelworkers union. Smaller steel producers did not follow suit and suffered bitter strikes. By 1941, however, the steelworkers union had won contracts throughout the industry.

In the late 1930s, employees in other industries worked hard to gain union recognition from their employers. Union membership tripled from roughly 3 million in 1933 to about 9 million in 1939. In 1938 the CIO changed its name to the Congress of Industrial Organizations and became a federation of industrial unions.

After passing the Wagner Act, Congress began work on one of the United States's most important pieces of legislation. This was the Social Security Act, which provided some financial security for older Americans, unemployed workers, and others. Roosevelt and his advisers viewed the bill primarily as an insurance measure. Workers earned the right to receive benefits because they paid special taxes to the federal government, just as they paid premiums in buying a life insurance policy. The legislation also provided modest welfare payments to others in need, including people with disabilities and poor mothers with dependent children. Some critics did not like the fact that the money came from payroll taxes imposed on workers and employers, but to Roosevelt these taxes were crucial. What Roosevelt did not anticipate was that Congress would later borrow from the Social Security fund to pay for other programs without raising payroll taxes. The core of Social Security was the monthly retirement benefit, which people collected when they stopped working at age 65. Unemployment insurance supplied a temporary income to workers who had lost their jobs. Although Social Security helped many people, at first it left out many of the neediest Americans, such as farm and domestic workers. About 65 percent of all African American workers in the 1930s fell into these two categories. Nevertheless, Social Security established the principle that the federal government should be responsible for those who, through no fault of their own, were unable to work.

In 1936 millions of voters owed their jobs, mortgages, and bank accounts to the New Deal. Many African Americans, who had reliably voted Republican since Reconstruction, switched their allegiance to the Democratic Party. Women and African Americans had made modest gains, thanks to the support of Eleanor Roosevelt. She persuaded her husband to address some of their problems in his New Deal programs. A Democratic Party coalition emerged, including not just the white South but also African Americans, farmers, workers, immigrants, women, progressives, and intellectuals.

The Republicans nominated Kansas governor Alfred Landon as their presidential challenger. He wanted to "free the spirit of American enterprise," but could not convince most voters change was needed. Roosevelt won more than 60 percent of the popular vote.

Although the New Deal was popular, the Supreme Court saw things differently. In January 1936, it declared the Agricultural Adjustment Act unconstitutional. Cases pending on Social Security and the Wagner Act meant that the Court might strike down other New Deal programs. Roosevelt was furious. After his reelection, he tried to change the Court's political balance. He sent Congress a bill that would increase the number of justices and allow the president to appoint an additional justice if a sitting justice who had served 10 years did not retire within six months of reaching age 70. The bill, if passed, would have allowed Roosevelt to appoint up to six new justices. The court-packing plan, as it was called, was a major political mistake. Many Southern Democrats feared new justices would overturn segregation. African American leaders worried future justices might oppose civil rights. Many Americans thought the plan gave the president too much power. The Court appeared to back down, narrowly upholding the constitutionality of both the Wagner Act and the Social Security Act. Soon after, a conservative justice's resignation allowed Roosevelt to appoint a justice who supported the New Deal. Although the bill was quietly killed and Roosevelt achieved his goal of changing the Court's view of the New Deal, the court-packing plan hurt his reputation. Moreover, it caused conservative Democrats to work with Republicans to block any further New Deal proposals.

Roosevelt's problems continued. In early 1937, the economy seemed to be on the verge of recovery. Industrial output was almost back to pre-Depression levels, and many people believed the worst was over. Concerned about rising debt, Roosevelt ordered the WPA and the PWA to be cut significantly. Unfortunately, he cut spending just as the first Social Security payroll taxes took $2 billion out of the economy. By the end of 1937, about 2 million people were out of work. At first, Roosevelt was reluctant to begin deficit spending again. Some critics believed the recession proved the public was becoming too dependent on government spending. But in early 1938, with no recovery in sight, Roosevelt asked Congress for $3.75 billion for the PWA, the WPA, and other programs.

A debate over the value of government spending arose within the administration. The leaders of the WPA and the PWA cited a new economic theory called Keynesianism which held that government should spend heavily in a recession to jump-start the economy.

One of the president's goals for his second term was to provide better housing for the nation's poor. Eleanor Roosevelt, who had toured poverty-stricken Appalachia and the rural South, strongly urged the president to do something. Roosevelt responded with the passage of the National Housing Act, which established the United States Housing Authority. This organization received $500 million to subsidize loans to builders willing to construct low-cost housing.

Roosevelt also sought to help the nation's tenant farmers. About 150,000 white and 195,000 African American tenant farmers were expelled from farms when landlords took their land out of production under the AAA. To stop this trend, Congress created the Farm Security Administration to give loans to tenants so they could purchase farms.

The last major piece of New Deal reform was the Fair Labor Standards Act, which abolished child labor, limited the workweek to 44 hours for most workers, and set the first federal minimum wage at 25 cents an hour. The recession of 1937 enabled Republicans to win seats in Congress in the midterm elections of 1938. Together with conservative Southern Democrats, they began blocking further New Deal legislation. By 1939, the New Deal era had come to an end.

The New Deal did not end the Depression, but it did give many Americans a stronger sense of security and stability. As a whole, the New Deal tended to balance competing economic interests. Supreme Court decisions in 1937 and 1942 further increased federal power over the economy and allowed it to mediate between competing groups. In taking on this mediating role, the New Deal established what some have called the broker state, in which the government works out conflicts among different interests. This broker role has continued under the administrations of both parties ever since. The New Deal also brought about a new public attitude toward government. Roosevelt's programs had succeeded in creating a safety net—safeguards and relief programs that protected people against economic disaster. Throughout the hard times of the Depression, most Americans maintained a surprising degree of confidence in the American system. Another legacy of the New Deal is a continuing debate over how much government should intervene in the economy. Critics have argued that the New Deal made the federal government too powerful.