FDR elected in 1932: promised a 'New Deal' based on four principles:
1. Humanised capitalism providing security for all.
2. Govt regulation to restrain capitalist excesses.
3. Govt responsibility for unmet needs.
4. Experimentation – if something fails, try something else.
FDR’s 4th Fireside Chat (1934): the New Deal aimed for the ‘3Rs’:
• Relief (helping the poor & unemployed).
• Recovery (reviving the economy).
• Reform (preventing future depressions).
The New Deal occurred in two phases:
• 1933–35: Relief & economic recovery.
• 1935+: Radical social reforms.
First New Deal
In March 1933, a banking crisis worsened the Depression. FDR convinced Congress to grant during the ‘Hundred Days’ (March–June 1933), unleashing unprecedented legislation to tackle the crisis.
1. Confidence
a. Prohibition abolished:
• Restored public trust by ending laws widely ignored. Boosted govt revenue.
b. Fireside Chats:
• FDR explained policies via radio. Answered 8k daily letters; ensured all calls were answered.
c. Banking Reform: Restored confidence: people reinvested in banks.
• (March 1933): 4-day bank holiday; reopened with Federal Reserve backing.
• (June 1933): Separated depositors’ money from speculative banking activities.
d. Stock Exchange Reform:
• introduced rules to prevent another 1929-style crash.
2. Finance & Economy
a. Balanced Budget:
• No deficit spending; govt cut employees’ pay by 15%. Borrowed $ for projects designed to repay later.
• (AAA): Paid farmers to reduce production → raised prices.
• (NRA): Businesses formed cartels & cut production → assured profitability, but raised wages & allowed unions; symbolised by blue eagle badge (22m workers joined).
• Abolished Child Labour → more adult employment.
d. Currency Policy:
• Banned private gold ownership, banks gave gold to govt → Govt increased gold price → boosted reserves.
• Jobs for 2.5m young men in conservation projects (e.g., tree planting, park maintenance).
b. FERA (Federal Emergency Relief Administration):
• Matched funding for state welfare payments.
c. PWA (Public Works Administration):
• $7bn for large-scale public works (dams, bridges, hospitals, schools).
d. WPA (Works Progress Administration):
• Jobs in arts, literacy, & construction projects; poor pay but meaningful work.
e. TVA (Tennessee Valley Authority):
• 21 dams built in 10 yrs → stopped flooding, provided cheap electricity, created jobs.
Second New Deal (1935+)
In 1935, Roosevelt's New Deal was hugely popular with the people, but opposition:
a. SUPREME COURT ruled AAA & NRA unconstitutional.
b. Business opposition: some ignored NRA rules, calling them costly & wasteful.
→ a much more radical 'reform' agenda in the run up to the 1936 election:
4. (1935):
• Old-age pensions, unemployment insurance, aid for children & disabled.
5. (1935):
• aka Wagner Act. Replaced NRA.
• Protected union membership rights. National Labour Relations Board (NLRB) set up to protect workers from victimisation.
6. (1935):
• Replaced AAA; subsidised farmers to conserve soil.
7. (1937):
• Loans for home ownership; reduced high rents.
8. (1938):
• Minimum wage, fixed working hours & conditions.
What was the New Deal?
FDR elected in 1932: promised a 'New Deal' based on four principles:
1. Humanised capitalism providing security for all.
2. Govt regulation to restrain capitalist excesses.
3. Govt responsibility for unmet needs.
4. Experimentation – if something fails, try something else.
FDR’s 4th Fireside Chat (1934): the New Deal aimed for the ‘3Rs’:
• Relief (helping the poor & unemployed).
• Recovery (reviving the economy).
• Reform (preventing future depressions).
The New Deal occurred in two phases:
• 1933–35: Relief & economic recovery.
• 1935+: Radical social reforms.
First New Deal
In March 1933, a banking crisis worsened the Depression. FDR convinced Congress to grant EMERGENCY POWERS during the ‘Hundred Days’ (March–June 1933), unleashing unprecedented legislation to tackle the crisis.
1. Confidence
a. Prohibition abolished:
• Restored public trust by ending laws widely ignored. Boosted govt revenue.
b. Fireside Chats:
• FDR explained policies via radio. Answered 8k daily letters; ensured all calls were answered.
c. Banking Reform: Restored confidence: people reinvested in banks.
• EMERGENCY BANKING ACT (March 1933): 4-day bank holiday; reopened with Federal Reserve backing.
• HOME LOAN ACT & Home Owners Loan Corporation (HOLC) helped homeowners avoid foreclosure.
c. Prices & Wages:
• AGRICULTURAL ADJUSTMENT ACT (AAA): Paid farmers to reduce production → raised prices.
• NATIONAL INDUSTRIAL RECOVERY ACT (NRA): Businesses formed cartels & cut production → assured profitability, but raised wages & allowed unions; symbolised by blue eagle badge (22m workers joined).
• Abolished Child Labour → more adult employment.
d. Currency Policy:
• Banned private gold ownership, banks gave gold to govt → Govt increased gold price → boosted reserves.
