The
Great Depression – Part 2
The New Deal
The year of 1932 was an election year. The Republican Party nominated President
Hoover for re-election. The Democratic Party nominated Franklin Roosevelt, the
governor of New York.
During the campaign, Roosevelt promised "a new deal for the American people."
He meant that under his leadership, the government would make laws that could
end the depression and help the needy.
Voters chose Roosevelt over Hoover by more than seven million votes.
Roosevelt Takes Action
President Roosevelt took office in March 1933. (Up until 1937, all United States
Presidents took office on March 4. Amendment 20 made January 20 the day that
the President's term begins and ends.) President Roosevelt immediately began
to put into action a plan that he and his advisors had developed to end the
depression. That plan became known as the New
Deal.
In those years, Congress always began its session a few weeks after a new President
began his term. President Roosevelt called a special session of Congress to
start earlier. During the next three months, the President sent 15 bills concerning
the depression to Congress. Congress approved each law.
Government Helps the Banks
One of President Roosevelt's first actions was to close all the nation's banks.
Congress then passed the Emergency Banking Relief
Act. The Act allowed banks to reopen only if they could prove to
the government that they were sound, or in no danger of failing.
Then President Roosevelt spoke to Americans on the radio. It was the first in
a series of talks that Roosevelt called "fireside chats." President
Roosevelt guaranteed Americans that their money would be safe in the reopened
banks. The President's confidence and strong, steady voice soothed Americans'
fears. Within a few weeks, the banking crisis passed.
Help for the Needy
President Roosevelt had three goals in his New Deal plan: to provide relief
to needy Americans and find jobs for the unemployed; to bring about an economic
recovery, or return to normal, by helping business and agriculture; and to reform
the nation's economy so depressions would not develop again.
Congress moved quickly to help the President reach the first of his goals-help
for the needy. In May 1933, Congress set up the Federal Emergency Relief Administration
(FERA). FERA provided money for
needy Americans to pay for food and clothing. By 1935, FERA had spent over two
billion dollars in aid to the needy.
Help for the Unemployed
Congress also acted quickly to provide jobs for the unemployed. Government leaders
believed that jobs would provide workers with money to spend. If more people
spent money, the economy would improve.
In 1933, Congress set up the Civilian Conservation Corps (CCC).
The CCC put young men to work on conservation projects. The conservation projects
helped preserve and protect natural resources such as forests, rivers, and wild
life. CCC workers planted trees, dug reservoirs, and fought forest fires.
In 1935, Congress set up the Works Progress Administration (WPA).
WPA workers built hospitals, airports, schools, and roads. WPA actors, musicians,
and singers performed around the country. By 1936, about four million people
were working for the WPA.
Helping Farmers Recover
Congress also acted quickly to help President Roosevelt reach his second goal-economic
recovery. Congress first helped farmers. In 1933, Congress set up the Agricultural
Adjustment Administration (AAA).
You read that farmers suffered even before the depression because of low food
prices. During the depression, farm prices remained low mainly because farmers
were producing more food than people could buy.
In 1933, the government began to pay farmers not to grow certain crops, such
as wheat, rice, and sugar. In that way, the prices of those crops would rise.
By 1935, prices of farm products had risen sharply.
Helping Business Recover
During the early years of the depression, many businesses were in trouble. Business
people cut prices. Competition became unfair. That resulted in business failures
and unemployment.
To help business, Congress set up the National Recovery Administration (NRA).
The NRA encouraged businesses to work together to set fair prices and end unfair
competition. Leaders from different industries, such as the automobile industry
and the textile industry, met to set up codes, or rules. The codes described
how much a company could produce and how much it could charge for its products.
At first, many businesses cooperated with the NRA. But by 1934, companies stopped
following the NRA codes.
The Supreme Court Attacks the New Deal
President Roosevelt believed the federal government had to expand its power
to deal with an emergency like the depression. But some Americans believed that
certain New Deal laws, such as the laws that set up the NRA and AAA, were unconstitutional:
Some people believed those laws gave the federal government more power than
it was allowed under the Constitution.
In 1935, the Supreme Court declared the NRA unconstitutional. In 1936, the Court
declared the AAA unconstitutional. In both cases, the Court said the federal
government had gone beyond its powers under the Constitution.
New Deal Reforms
During the New Deal years, Congress passed several laws to correct problems
in the economy that had led to the depression.
For example, Congress passed the Truth-in-Securities
Act to control the stock market. The Act set up the Securities and
Exchange Commission (SEC). The
SEC watches over the stock market and regulates the buying and selling of stock.
Congress also reformed the nation's banking system. The Glass-Steagall Banking
Act was passed to protect Americans from bank failures. It also set up the Federal
Deposit Insurance Corporation (FDIC).
The FDIC insures, or protects from loss, people's savings. If a bank fails,
the FDIC pays its depositors the full amount of their savings. The FDIC continues
to insure people's savings today.
Other Reforms Help Workers
Other New Deal reforms helped workers. During the depression, many companies
tried to keep workers from joining unions. In 1935, Congress passed the National
Labor Relations Act. The Act guaranteed workers the right to join
a union.
Many companies forced workers to work longer hours during the depression. At
the same time, wages were cut. In 1938, Congress passed the Fair
Labor Standards Act. The Act set the maximum, or longest, work week
at 44 hours. The Act said that businesses must pay extra to workers who work
more than 44 hours.
The Act also set a minimum wage of 25
cents an hour. (Since 1938, the minimum wage has been raised many times.) The
Act also prohibited the hiring of children under 16 to work in factories.
Social Security
In 1935, Congress passed the Social Security Act
to help the aged, unemployed, and disabled. The Act was the first national welfare
law in history.
The Social Security Act set up a plan for paying pensions to people over 65.
(A pension is money paid to people who
no longer work.) The Act also helped the states set up unemployment insurance
plans that give unemployed people money to live on while they look for work.
The Act also provided money for states to help homeless children, and the blind
and other disabled people.
The Importance of the New Deal
The New Deal brought some lasting changes to American life. Before the New Deal,
most Americans had little contact with the federal government. But during the
New Deal, federal programs brought government into the lives of nearly every
American. Millions of Americans worked for the government or received government
benefits-money or other aid. They still do today.
Before the New Deal, most Americans believed that the government should not
interfere with the economy. Today, most Americans expect the government to do
what it can to keep the economy healthy.
Many New Deal reforms, such as social security, the maximum work week, the minimum
wage, and restrictions on child labor, have lasted. They continue to protect
workers and improve lives today.
Homework: Answer the questions below on a separate sheet of lined paper. Be sure to write your answers in complete sentences using proper spelling, capitalization, and punctuation.