Attempts to address the greatest needs

The first step was to stop the run on the banks that had people desperately trying to withdraw their savings, thus making bank collapse a self-fulfilling prophecy. Roosevelt temporarily closed all the banks and then reopened them under the Emergency Banking Act, which took only eight hours to pass.

Congress created the Federal Deposit Insurance Corporation (FDIC) (1933), guaranteeing bank deposits and thus helping stop the panic. To create more money, FDR purposely caused inflation by increasing the price of gold.

For direct help to starving people, Congress passed the Federal Emergency Relief Administration (1933), which handed out billions of dollars in grants and jobs through the states. More help was on the way.

Civilian Conservation Corps (CCC)

The Civilian Conservation Corps (CCC) (1933) created more than 3 million jobs in the nine years of its life, hiring mostly young men from poor families. Civilian Conservation Corps camps were run by the Army in every state in the nation.

The CCC constructed buildings and trails in city, state, and national parks that still exist today. The first CCC recruit was ready for training little more than a month after Roosevelt took office; the program continued until World War II gave young men something else to do.

Most Americans happily endorsed the CCC as a combination of good work and necessary economic support — most of a CCC recruit's small-but-regular pay went home to help his family. Although the national CCC ended, over a hundred state and local work programs still exist today modeled on the Conservation Corps.


More jobs were created by the Works Progress Administration (WPA), the Civil Works Administration (CWA) and the Public Works Administration (PWA). A regular alphabet soup of well-meaning agencies tried to help America keep working through the nightmare of the Depression.

Trails and roads weren't the only New Deal projects; the PWA built the Grand Coulee Dam on the Columbia River, the largest structure in the world that had been built up to that time since the Great Wall of China. To keep people cheerful and raise needed tax revenue, the nation got rid of Prohibition with the Twenty-first Amendment (1933).

Tennessee Valley Authority (TVA)

The federal government got into the electricity business with the construction of the nine dams of the Tennessee Valley Authority (TVA) (1933). Even by Depression standards, the Tennessee Valley area was in bad shape, with exhausted soil, epidemic malaria, and widespread poverty. The TVA brought jobs and low-cost power with what was to become one of the largest electrical utilities in the world. At the same time, state public utility commissions began to control abuses by private power companies.

Help for agriculture

The Agricultural Adjustment Act (1933) helped improve farm income by limiting supply, but the Supreme Court overturned it. The Soil Conservation and Domestic Allotment Act (1936) and a reformed second Agricultural Adjustment Act (1938) passed court tests to become the beginning of the national farm support program that continues to this day.


Question: What was the Agricultural Adjustment Act (1933)?

Answer: This act was the first attempt at a national farm policy that included limiting supply to raise farm income.

Securities and Exchange Commission (SEC)

Because Wall Street had problems in the Great Depression, the Roosevelt government started the first fair trading rules for stocks with the Securities and Exchange Commission (SEC) (1934). The SEC is still functioning and gets regularly updated when new corporate problems arise.

Federal Housing Administration (FHA)

To increase the number of construction jobs and homes, the Federal Housing Administration (FHA) (1934) began to back small loans for remodeling and new home construction.

When the FHA started, most home mortgages were short-term, three-to-five-year interest-only loans, with a huge balloon payment for the entire value of the loan at the end of the three or five years. Buyers had to come up with at least 40 percent of the value of the home as a down payment. With the Depression, people couldn't make big balloon payments or find 40 percent for a down payment. Banks were stuck with houses nobody could afford to buy, and the housing market bottomed out. With the FHA, home ownership has increased from 40 percent in the 1930s to nearly 70 percent today.

Social Security

Francis Townsend (1936) had a plan for old age assistance (aptly named the Townsend Plan), which wasn't practical itself but did help spur the Social Security Act. Certainly the largest, most lasting change in life for older people, the Social Security Administration (1935) guaranteed small pensions for the elderly and the handicapped by taxing the income of current workers. In the presidential election of 1936, Roosevelt overwhelmingly defeated his Republican opponent, Alf M. Landon of Kansas. The Democrats controlled two thirds of the votes in both the House and the Senate. No political party had enjoyed this much public support since the Era of Good Feelings (see Chapter 9) more than 100 years before.


Question: How was the Social Security Administration funded?

Answer: Social Security taxed current workers to pay for retirement benefits.


Question: What was the contribution of Francis Townsend in the 1930s?

Answer: His Townsend Plan helped encourage the development of Social Security.

National Recovery Administration (NRA)

FDR and the New Deal made mistakes. To create more jobs, the government created the National Recovery Administration (NRA), in which participating industries agreed to job sharing and wage and price controls to make more work. It was an administrative nightmare and seemed to legalize cartels. It was soon declared unconstitutional in 1935.

Roosevelt went too far when he tried to add more justices to the Supreme Court to keep it from blocking his legislation. Even his supporters wouldn't go along with this manipulation of the Constitution, dubbed the court-packing scheme (1937).

Wrapping up the New Deal agencies

The Indian New Deal, officially named the Indian Reorganization Act of 1934, encouraged tribes to organize their own governments and stopped the breakup of American Indian lands.

A change in government treatment of unions was signaled by the National Labor Relations Board (NLRB) (1935), which allowed workers a fair hearing when organizing unions. Even with a more sympathetic government, strikers were killed in San Francisco (1934) and Chicago (1937). The Congress of Industrial Organizations (CIO) (1937) was later formed to organize whole industries, including unskilled workers and blacks who hadn't been part of the older AFL confederation (see Chapter 14). By 1938, the CIO had 4 million members.

To keep enthusiastic government employees from campaigning for their boss, the Hatch Act (1939) barred political work by government employees.


Question: What did the Congress of Industrial Organizations (CIO) add to the labor-organizing movement?

Answer: The CIO offered representation to unskilled workers and blacks across whole industries, going beyond the AFL's push for skilled workers by trade.

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