and Study Guide Lesson 1 The First New Deal ESSENTIAL QUESTION Can government fix the economy? Is government responsible for the economic well-being of its citizens? Reading HELPDESK Content Vocabulary polio abbreviated term for poliomyelitis, an acute infectious disease affecting the skeletal muscles, often resulting in permanent disability _ and deformity gold standard a monetary standard in which one ounce of gold equals a set number of dollars bank holiday closing of banks during the Great Depression to avoid bank runs fireside chats radio broadcasts made by Roosevelt to the American people to explain his initiatives Academic Vocabulary apparent appearing to be fact as far as can be understood ideology a system of thought that is held by an individual, group, or culture fundamental being of central importance
TAKING NOTES: Sequencing ACTIVITY As you read about Roosevelt s first three months in office, complete a time line to record the major problems he addressed during this time. IT MATTERS BECAUSE Franklin Delano Roosevelt became president in 1932. He had promised a New Deal for Americans. In his first hundred days in office, he proposed a great deal of new legislation. Some of the laws were intended to save banks, industry, and farming. Other laws were designed to provide jobs for the unemployed. Roosevelt s Rise to Power GUIDING QUESTION What qualities make an effective leader? A distant cousin of Theodore Roosevelt, Franklin Delano Roosevelt grew up in Hyde Park, New York. As a youth, he learned to hunt, ride horses, and sail and grew to love the outdoors. He developed a lifelong commitment to conservation and a love of the nation s rural areas. Later, Roosevelt studied at Harvard University and Columbia Law School. At Harvard, he met Eleanor Roosevelt, Theodore Roosevelt s niece. The two became friends and eventually married. Roosevelt was highly competitive and liked to be in control. He also liked being around people. His charming personality, deep voice, and wide smile showed confidence and hopefulness. He had the right personality to succeed in politics. After Roosevelt was elected to the New York State Senate in 1910, he became known as a progressive reformer. When Woodrow Wilson became president in 1913, Roosevelt served as assistant secretary of the navy. In 1920 the Democrats chose him to be the candidate for vice president. They chose him partly because of his good reputation and partly for his famous family name. However, the Democrats did not win the 1920 election. Roosevelt temporarily left politics after losing the election. The next year he caught polio, a feared disease that caused paralysis, or the inability to move. Although there was no cure, Roosevelt refused to give up. He did special exercises to restore some muscle control. He used heavy steel supports on his legs so that he could seem to walk short distances. To move, Roosevelt needed to lean on a cane and a person s arm. He could then swing his legs forward from his hips. While recovering from polio, Roosevelt depended on his wife and his aide Louis Howe to keep the New York Democratic Party aware of him. Eleanor Roosevelt became an effective public speaker. Her work also helped keep her husband s political career alive.
By the mid-1920s, Roosevelt was again active in the Democratic Party. He ran for governor of New York in 1928. He worked hard to show that his illness had not slowed him down and 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 help the unemployed. Roosevelt s popularity in New York helped him gain the presidential nomination in 1932. Americans saw an energy and hopefulness that gave them hope despite the tough economic times. After Roosevelt became president, his calmness and confidence amazed people. He once explained that working so hard to recover from polio had made everything seem easy to him. In mid-june 1932, the country was deep in the Depression. Republicans met 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. They nominated Roosevelt, who broke with tradition by flying to Chicago to accept the nomination in person. In his acceptance speech, he promised the American people that they would receive a new deal. From that time, Roosevelt s plans 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. Interpreting What characteristics did Roosevelt have that made him popular with Americans? The Hundred Days GUIDING QUESTION Why are the first hundred days so important for a president? Roosevelt won the election in November 1932, but the economic situation grew worse between the election and his inauguration. Unemployment continued to rise and bank runs increased. People feared that Roosevelt would stop using the gold standard and lower the value of the dollar to fight the Depression. Under the gold standard, one ounce of gold equaled a certain number of dollars. To lower the value of the dollar, the United States would have to stop exchanging dollars for gold. Many Americans and foreign investors with money in American banks withdrew their money to exchange it for gold before the money lost its value. Across the nation, people stood in long lines with paper bags and suitcases. They waited to withdraw their money from banks. By March 1933 more than 4,000 banks had failed, causing nine million savings accounts to disappear. In 38 states, governors declared bank holidays. They closed the remaining banks before runs on those banks 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 get people to feel confident again. In his Inaugural Address, he told the American people that the nation needed to stop being afraid and take action. The New Deal Begins Roosevelt and his advisers entered office with many ideas about how to end the Depression. Roosevelt did not have a clear agenda or a strong political ideology. He believed that the most important thing to do was to try something. The new president sent many bills to Congress. The time between March 9 and June 16, 1933, became known as the Hundred Days. During this time, Congress passed 15 major acts to try to fix the economy. The programs Congress approved made up what would be called the First New Deal. A Divided Administration Roosevelt made the final decisions about what policies and programs to try. However, he listened to his advisers for new ideas. He purposely chose advisers who disagreed with one another. He did this because he wanted to hear many different points of view. One influential group of advisers thought that government agencies should work with businesses to regulate wages, prices, and production. They believed that this could improve the economy. A second group of advisers did not trust big business. They felt that business leaders had caused the Depression. This group of advisers wanted government planners to run important parts of the economy. A third group supported Wilson s New Freedom philosophy. This group wanted Roosevelt to break up big companies into smaller ones. Pay, prices, and production levels would be set by competition between companies. In addition, this group thought that the government should set regulations to keep economic competition fair. Summarizing What were the key accomplishments during Roosevelt's first hundred days in office? Banks and Debt Relief GUIDING QUESTION Why did Roosevelt broadcast fireside chats? Roosevelt knew that very few of the new programs would work as long as the nation s banks stayed closed. Before he did anything else, he needed to get people to trust the banking system again. Within a week of Roosevelt s taking office, the Emergency Banking Relief Act was passed. The new law said that federal examiners would study the nation s banks. The examiners would decide which banks were strong enough to stay open. They would then give these banks a Treasury Department license.
On March 12, Roosevelt spoke to the country by radio. Sixty million people listened to the first of many fireside chats. Roosevelt told the American people that the banks were safe. He said that people should put their money into the reopened banks. When banks opened on March 13, more money was deposited than was withdrawn. The banking emergency was over. The FDIC and SEC Many of Roosevelt s advisers wanted to go even further. They argued for new regulations for banks and the stock market. Roosevelt agreed. He supported the Securities Act of 1933 and the Glass-Steagall Banking Act. The Securities Act said that companies that sold stocks and bonds must provide complete and truthful information to investors. The Securities and Exchange Commission (SEC) was created to regulate the stock market and stop fraud. The Glass-Steagall Act separated commercial banking from investment banking. Commercial banks _ handle everyday banking. They could no longer risk the money people deposited through stock speculation. The Glass-Steagall Act also created the Federal _ Deposit Insurance Corporation (FDIC). This group provided government insurance for bank deposits. The creation of the FDIC increased public confidence in the banking system. Mortgage and Debt Relief Many Americans feared that they would lose their homes or farms. They cut back on spending to ensure they could pay their mortgages. In response, Roosevelt introduced policies to help Americans with their debts. For example, the Home Owners Loan Corporation bought the loans of homeowners who were behind in their payments. Then it reorganized the loans to give people more time to repay them. The new loans also had lower interest rates. The Farm Credit Administration (FCA) helped refinance farmers loans. These loans saved millions of farmers from losing their land through foreclosure. The FCA may have slowed the economic recovery, however. It made less money available to lend to more efficient businesses. But the agency helped many desperate poor people keep their land and homes. Summarizing How did the government restore confidence in the banking system? Farms and Industry GUIDING QUESTION How did New Deal legislation try to stabilize agriculture and industry? Many of Roosevelt s advisers believed that both farmers and businesses were having problems because prices were too low and production was too high. Congress passed the Agricultural Adjustment Act to help the nation s farmers. The act was based on a simple idea that prices for farm products were low because farmers grew too much food. Under this act, the government s Agricultural
Roosevelt Roman Civilization and the New Deal, 1933-1941 Adjustment Administration (AAA) would pay farmers not to keep certain livestock, grow certain crops, and produce dairy products. Over the next two years, farmers stopped using millions of acres of farmland. They received more than $1 billion in support payments. The program met its goal. But it also made food prices go up during a depression. As a result, it drew a great deal of criticism. Also, not all farmers benefited. Thousands of tenant farmers lost their jobs and homes when landlords took their fields of these tenant farmers out of production. Many of these tenant farmers were African Americans. The government began focusing on manufacturing in June 1933. Congress passed the National Industrial Recovery Act (NIRA). This law allowed the National Recovery Administration (NRA) to suspend antitrust laws. It also allowed business, workers, and government to work together with rules for each industry. They called these rules codes of fair competition. Codes set prices and minimum wages. Codes also shortened workers hours to create more jobs. They allowed unionization. Finally, they helped businesses develop industry-wide codes of fair competition. The NRA helped a few industries, but the codes were difficult to manage. 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 established, industrial production fell. The NRA was declared unconstitutional in 1935. Examining How was the Agricultural Adjustment Act intended to stabilize the agricultural industry? Relief Programs GUIDING QUESTION How did New Deal programs differ from President Hoover s attempts to combat the Depression? Many of President Roosevelt s advisers felt the Depression could be solved by adjusting prices and helping people pay their debts. Other advisers said that the fundamental cause of the Depression was that consumers were not buying enough. Those advisers thought that the economy would improve if poor people had money to spend. However, Roosevelt and his advisers did not want to give money to the unemployed, so they supported work programs for the unemployed. The CCC The Civilian Conservation Corps (CCC) was the most popular New Deal work relief program. The CCC gave jobs to unemployed young men between 18 and 25 years old. Supervised by the forestry service, the men planted trees, fought forest fires, and built reservoirs. In one project, the workers planted a line of more than 200 million trees known as the Shelter Belt. The line of trees went from north Texas to North Dakota. The CCC hoped the trees would prevent another Dust Bowl. The young men lived in camps near their work areas. They earned $30 a month.
Roosevelt Roman Civilization and the New Deal, 1933-1941 Twenty-five dollars of that was sent directly to their families. The average CCC worker returned home after six to twelve months. On his return, a worker usually was better fed and had more self-respect. CCC programs also taught more than 40,000 of their workers to read and write. Over time, the CCC put 3 million young men to work outdoors. Among these workers were 80,000 Native Americans, who helped reclaim the land they had once owned. After a second Bonus Army march on Washington in 1933, Roosevelt added 250,000 veterans to the CCC as well. FERA and the PWA Congress also set up the Federal Emergency Relief Administration (FERA). Roosevelt chose a former social worker named Harry Hopkins to run FERA. At first, FERA did not create projects for the unemployed. Instead, it gave money to state and local agencies. Those agencies used the money to pay for state and local relief projects. Hopkins spent $5 million on relief projects. Critics complained that some of the projects did not make sense in the long run. Hopkins said that he was not worried about the long run. He wanted to make sure people had enough money to eat every day. In June 1933 Congress agreed to the creation of the Public Works Administration (PWA). One-third of the nation s unemployed were in the construction industry. The PWA put these people to work. They built highways, dams, schools, and other government structures. The PWA gave contracts to construction companies. Construction companies that wanted to work for the PWA could not discriminate against African Americans. Thus the agency weakened some of the racial barriers in the construction business. The CWA By the fall of 1933, neither FERA nor the PWA had reduced unemployment much. Hopkins knew that the federal government needed to act quickly. Otherwise, many unemployed people would be in serious trouble when winter began. Hopkins explained the problem to President Roosevelt. Roosevelt gave Hopkins permission to set up the Civil Works Administration (CWA). The CWA hired workers directly. It 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. The CWA did help many people get through the winter. However, the agency was spending money very quickly. Roosevelt was concerned about this spending. He did not want Americans to get used to the federal government providing them with jobs. Warning that the CWA would make the country dependent, Roosevelt insisted that it be ended the following spring. Hopkins believed that the CWA had been successful during its short life because its workers had built so many important public works throughout the nation. Success of the First New Deal During his first year in office, Roosevelt convinced Congress to pass a great deal of legislation. The First New Deal did not make the country rich again. However, its programs showed Roosevelt s energy and willingness to experiment. Banks were reopened. Many people were able to get loans to keep their homes and farms.
Roosevelt Roman Civilization and the New Deal, 1933-1941 More people were employed. Perhaps the most important result was a change in the spirit of the American people. Roosevelt s actions had inspired hope and restored Americans faith in their nation. Identifying How did the relief programs help combat the Depression?