Chapter 31: The Great Depression & FDR’s New Deal

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Welcome back to the Deep Dive.

Today, we're jumping into, well, a really pivotal moment in American history, the Great Depression and the huge government response we call the New Deal.

That's right.

And we're drawing heavily from Chapter 31 of the American Pageant, focusing on those crucial years,

1933 to 1939.

So set the stage for us.

What did things look like right before FDR came in?

Oh, it was grim.

I mean, really grim.

You've got over 11 million unemployed in 1932.

Factories just silent.

The whole country felt traumatized.

The mission was clear.

Absolutely.

The new government under Roosevelt aimed for what they called the three

relief for the immediate suffering, recovery for the economy and reform to make sure this couldn't happen again.

And the person leading this charge was Franklin D.

Roosevelt, FDR.

Now, he came from privilege, right?

Wealthy family, Harvard, T .R.'s cousin.

He did.

But the sources really emphasize something else that shaped him profoundly contracting polio in 1921.

That struggle, they say, gave him a kind of patience, tolerance, even compassion that maybe he wouldn't have had otherwise.

It helped him connect.

Interesting.

And it wasn't just him love it.

Eleanor Roosevelt played a huge role.

Oh, absolutely.

The American Pageant calls her the conscience of the New Deal.

And that's pretty accurate.

She wasn't just the first lady.

She was a force.

She'd worked in settlement houses, the Women's Trade Union League.

And she used her platform, right?

Speeches, her newspaper column.

Exactly.

Lobbying constantly, connecting with activists, really pushing for the oppressed.

The source gives that amazing example in Birmingham, Alabama.

Yeah, where she deliberately ignored segregation rules at a public meeting.

Right there.

Straddling the racial aisle, making a very public point.

It shows her influence and, frankly, her courage on civil rights issues, using her position to push boundaries.

So the country was desperate.

They elect FDR in a landslide.

A massive landslide.

472 electoral votes to Hoover's 59.

It was a clear mandate.

Do something.

And he did.

Immediately.

The famous

lightning speedriller.

March 9th to June 16th, 1933.

And the first crisis was existential.

The banks were collapsed.

People were losing everything.

Confidence was zero.

It's totally gone.

So FDR's first big move.

He declared a nationwide bank holiday.

Closed every bank.

That sounds drastic.

How did people react?

Well, then he went on the radio, his first fireside chat.

He spoke directly to about 35 million people, you know, very calmly explaining that it was safer to put money back into a reopened sound bank than to keep it, like, under the mattress.

And it worked.

Amazingly well.

Confidence surged back almost overnight.

And then came the laws to back it up.

Okay, what were those?

First, the Emergency Banking Relief Act let the solvent banks reopen under Treasury supervision.

But the big one, the lasting reform, was the Glass -Steagall Act.

Ah, that created the FDIC, right?

Exactly.

The Federal Deposit Insurance Corporation, ensuring individual deposits up to $5 ,000 initially.

That move basically ended the epidemic of bank failures.

It's still with us today, protecting your deposits.

But he didn't stop at just regulating banks.

He messed with the dollar itself.

Took us off the gold standard.

He did.

It was called managed currency.

The goal was, believe it or not,

inflation.

Inflation.

Why would they want that?

To help debtors.

Think about farmers, homeowners.

Their debts were fixed, but the value of what they produced or earned had plummeted.

Inflation would make those debts easier to pay off.

How did he do it?

He ordered the Treasury to buy gold at increasing prices.

Went from $21 an ounce up to $35.

The idea was to pump more dollars into the system, raise prices, and stimulate recovery.

It definitely shocked the financial traditionalists.

Okay, so finance was step one.

But what about the millions without jobs?

One in four workers unemployed.

That was the next huge challenge.

Relief.

Getting people working again.

They talked about priming the pump, using federal money to kickstart the economy.

This is where the alphabet soup comes in, all those acronyms.

Precisely.

You get agencies like the CCC, the Civilian Conservation Corps, hugely popular.

What did they do?

They put about three million young men into camps, mostly doing conservation work, reforestation, fighting fires, flood control.

Good work.

Out in the fresh air.

And a key part was they had to send most of their pay home to their families.

So direct relief back home.

What else?

Well, you had FERA, the Federal Emergency Relief Administration, run by Harry Hopkins.

That dished out about $3 billion, either as direct payments, the dole, or for work projects.

Is that controversial?

The dole?

A bit, yeah.

Later, they created the CWA, the Civil Works Administration, specifically for

jobs.

But that got criticized for boondoggling, make work tasks that didn't seem very useful.

So jobs, jobs, jobs.

And helping homeowners, too.

Definitely.

The HULC, Homeowners Loan Corporation, it refinanced mortgages on non -farm homes, helped about a million households avoid foreclosure.

And politically, it really tied middle -class homeowners to the Democratic Party.

But even with all this activity, the Depression dragged on,

and people got impatient.

Very impatient.

And that created an opening for, well, some pretty powerful demagogues who promised even more radical solutions.

You had Father Charles Coughlin, the radio priest.

Millions listened to his social justice message every week, at least until he became openly anti -Semitic and fascistic.

Wow.

And Huey Long.

Senator Huey Kingfish Long from Louisiana,

hugely charismatic, hugely popular.

He had his Share Our Wealth program, promised every family $5 ,000, basically by taxing the rich.

He was seen as a real political threat to FDR before he was assassinated in 1935.

So these figures were putting pressure on Roosevelt.

Absolutely.

They tapped into the ongoing desperation and pushed FDR to do even more, which led to perhaps the biggest relief program of all.

The WPA.

The Works Progress Administration launched in 1935.

This was massive, spent about $11 billion, employed around 9 million people over its lifetime.

And this was focused on jobs, not handouts.

Definitely jobs, building public buildings, roads, bridges, but also things like the Federal Art Project, hiring artists, writers, musicians.

And yeah, the source mentions some unusual projects too, like counting dog populations or controlling crickets, trying to find any useful work.

And the New Deal also opened doors for women in new ways.

It did.

Francis Perkins became the first woman cabinet secretary of labor.

And Mary McLeod Bethune, a prominent African American educator, became the highest ranking black person in the administration, organizing a kind of informal black cabinet to advise on issues facing the community.

Okay.

Let's shift gears to industry and agriculture, recovery and reform there.

What was the big plan for industry?

The centerpiece initially was the NRA, the National Recovery Administration.

Very ambitious.

The one with the Blue Eagle logo.

That's the one.

Businesses were encouraged to adopt industry -wide codes of fair competition.

These set minimum wages, maximum hours, and importantly, Section 7A guaranteed workers the right to organize and bargain collectively.

Sounds like a huge change.

Did it work?

Not really.

It was just too complex, required too much self -sacrifice from businesses, too much cooperation.

Compliance was patchy.

And then the Supreme Court stepped in.

Yep.

In 1935, the Schechter case, the famous sick chicken case, the court struck down the NRA.

Said Congress couldn't delegate its lawmaking powers like that and couldn't regulate purely local businesses.

The Blue Eagle, as the book says, tumbled to earth.

So the main industrial recovery plan just vanished.

What then?

Well, there was another agency working in parallel, the PWA Public Works Administration, led by Harold Ickx.

It focused more on long -range, large -scale infrastructure projects.

Like the Grand Coulee Dam?

Exactly.

On the Columbia River.

An absolutely enormous project, the largest structure built by humans since the Great Wall of China, according to the text.

Incredible feat of engineering.

But they criticized it at the time, right, for making power where no one lived.

They did.

It seemed like a boondoggle initially, but that power eventually fueled huge growth, especially during World War II.

It was a long -term investment.

Okay.

What about agriculture?

Farmers were hit maybe the hardest.

Desperate situation.

So the government created the AAA, the Agricultural Adjustment Administration.

The goal was to raise farm prices back to parity levels by tackling the problem of surpluses.

Basically, by creating artificial scarcity.

The government would pay farmers not to plant crops on part of their land or to reduce their livestock herds.

Wait, pay farmers to destroy crops and kill livestock?

Yeah.

While people were starving.

Exactly.

That was the huge controversy.

The AAA started by plowing under acres of cotton and slaughtering millions of pigs.

Some of that meat was distributed for relief, but some was just used as fertilizer.

That must've looked terrible.

It looked awful.

The economic logic was to reduce supply to raise prices so farmers could survive.

But the image was just politically damaging and morally questionable for many.

Did the Supreme Court kill this one too?

They did in 1936.

But Congress got creative and passed new laws like the Soil Conservation Act that achieved similar goals, paying farmers to plant soil -conserving crops instead of commodity crops, effectively still emitting production.

And all this farm trouble was happening alongside a natural disaster, right?

The Dust Bowl.

Yes.

Starting around 1933,

a terrible drought hit the Great Plains.

But it was made much, much worse by years of unsustainable farming practices, dry farming,

mechanization that had pulverized the topsoil.

So the wind just blew it all away.

Literally,

giant dust storms blotting out the sun.

It forced hundreds of thousands off their land.

About 350 ,000 Okies and Arkies, mostly from Oklahoma and Arkansas, fled, many heading to California.

The story told in Steinbeck's The Grapes of Wrath.

Precisely.

Captures that desperation perfectly.

Before we move fully into reforms, the source mentions the Indian Reorganization Act.

What was that about?

A significant shift.

Under Commissioner John Collier, it aimed to reverse the old policy of forced assimilation.

It encouraged tribes to set up self -government, preserve their cultures, and manage their own lands.

A move towards restoring tribal autonomy.

Okay, so let's talk about the more permanent reforms.

Things designed to prevent another crash.

Right.

Besides the FDIC, you had major reforms targeting Wall Street abuses.

The Truth in Securities Act, or Federal Securities Act, required companies to provide sworn information to investors about stocks and bonds.

And the SEC?

The Securities and Exchange Commission, created in 1934, basically a watchdog for the stock market.

To prevent fraud and insider trading, ensure transparency.

Still very much active today.

What about regulating other industries?

Yes.

The Public Utility Holding Company Act of 1935 took aim at those massive, bloated utility empires, delivering what the text calls a death sentence to the worst offenders.

And then there's the TVA.

The Tennessee Valley Authority.

That sounds like a huge deal.

It was revolutionary.

A government agency tasked with developing an entire region, the impoverished Tennessee Valley, building dams for flood control and, crucially, generating hydroelectric power.

Why was the power generation so important or controversial?

Because the TVA was set up as a yardstick.

Its low electricity rates were meant to measure fairness of rates charged by private power companies.

Naturally, those companies screamed, creeping socialism.

So, direct government competition with private industry.

What about housing?

More action there, too.

The FHA, Federal Housing Administration, started in 1934 to ensure small loans for home construction and improvement.

And later, the USHA, United States Housing Authority, in 1937 provided federal loans for low -cost public housing projects.

But the absolute cornerstone of reform, the one everyone knows, has to be social security, right?

Without a doubt.

The Social Security Act of 1935 was epical.

It set up a federal state system for unemployment insurance and, critically, provided for old -age pensions financed by a payroll tax on both employers and employees.

A safety net the US never really had before on a national scale.

Exactly.

It was a massive step towards the modern welfare state.

But, and this is an important point the source makes, it wasn't universal coverage initially.

Agricultural workers, domestic workers, large categories that included many African -Americans, Mexican -Americans, and women.

So, while it was a landmark, its benefits weren't shared equally at the start.

Okay, what about labor?

The NRA's guarantee of collective bargaining got struck down.

Did anything replace it?

Yes, and it was even stronger.

The Wagner Act, officially the National Labor Relations Act of 1935.

This is often called the Magna Carta of American Labor.

Why so significant?

It reasserted the right of labor to organize and bargain collectively through representatives of their own choosing.

And it created the powerful National Labor Relations Board, the NLRB, to enforce this right and investigate unfair labor practices by employers.

Did this actually boost unionization?

Tremendously.

It led to the rise of the CIO, the Congress of Industrial Organizations.

Led by the fiery John L.

Lewis, the CIO focused on organizing unstilled workers in big industries like steel and automobiles, who the older AFL often ignored.

And they used new tactics, like the sit -down strike?

Yes, that was revolutionary.

Instead of picketing outside, workers in Flint, Michigan,

literally sat down at their machines inside the General Motors plant in 1936, refusing to leave.

It was hugely effective and forced GM to recognize the United Auto Workers Union.

And finally, there was a law about wages and hours.

The Fair Labor Standards Act of 1938.

This set federal minimum wage levels and maximum hour limits, aiming eventually for 40 cents an hour in a 40 -hour week.

Crucially, it also forbade child labor and industries involved in interstate commerce.

Wow.

That's an incredible amount of change in just a few years.

No wonder FDR won big again in 1936.

Crushed the Republican Alfred Landon.

523 electoral votes to 8.

It cemented that powerful Democratic coalition Southerners, black voters shifting from the Republican Party, urbanites, Catholics, Jews, the working class.

The Forgotten Man really felt FDR was on their side.

But that huge victory led to maybe his biggest political mistake, the court packing fight.

Yeah, he felt invincible.

The Supreme Court had been a thorn in his side, striking down key New Deal laws, seven out of nine major ones initially.

So in 1937, he proposed a plan to add a new justice for every existing justice over the age of 70 who wouldn't retire.

Basically letting him appoint up to six new justices who would support the New Deal.

That was the idea.

But it backfired badly.

It looked like tampering with the sacred separation of powers.

Even many Democrats opposed it.

It was seen as dictatorial.

So the plan failed in Congress.

But did it still have an effect?

Ironically, yes.

While the bill was being debated, the court started shifting.

Justice Owen Roberts began voting to uphold New Deal laws, including the Crucial Wagner Act and Social Security Act.

It became known as the switch in time that saved nine.

So FDR lost the battle but won the war.

The court started approving his programs.

Pretty much.

He reshaped the court through appointments eventually anyway.

But the fight itself did change the judicial tide.

Okay, one last hurdle, the Roosevelt recession.

Things got worse again in 1937.

They did.

It was a sharp downturn, partly caused by cuts in government spending.

FDR was worried about the deficit and partly by the new social security taxes, taking money out of circulation.

How did they respond?

This is where FDR finally fully embraced the ideas of John Maynard Keynes.

Keynesianism.

The idea that during a downturn, the government should actively spend more money than it takes in planned deficit spending to stimulate demand and promote recovery.

A fundamental shift in economic policy thinking.

A complete reversal, really.

And it's pretty much guided U .S.

policy in recessions ever since.

So looking back at the whole period,

the New Deal didn't actually end depression, did it?

No, unemployment was still high in 1939.

It was really the massive spending for World War II that finally ended it.

And critics had plenty to say.

They called it the raw deal, pointed to waste, bureaucracy, the alphabet soup, rising national debt.

Which hit $40 billion by 1939.

Though defenders point out that's peanuts compared to the debt run up during WWII.

Critics also accused it of promoting class warfare and being creeping socialism.

But the devils is pretty strong too, right?

Very strong.

The argument is that the New Deal fundamentally saved American capitalism from itself.

It averted total collapse, provided relief, and reformed the system's worst abuses without resorting to the extremes of communism or fascism that were rising elsewhere.

It preserved democracy in a time of crisis.

Exactly.

And its legacy is undeniable.

It created a limited welfare state, established permanent regulatory agencies like the FDIC, SEC, and NLRB, and fundamentally changed the relationship between the government and the eponymy.

And reshaped politics for decades with that democratic coalition.

Absolutely.

So the big question historians still debate, and maybe something for you to think about, was it a true revolution or more of a halfway revolution, one that shored up capitalism while making it fair, reflecting what Americans wanted?

Reform, but not overthrow.

A lot to consider there.

That wraps up our deep dive into the New Deal era based on the American pageant.

Thanks for joining us.

See you next time.