FDR and the New Deal

The New Deal

Mostly enacted during the first term of President Franklin D. Roosevelt between 1933 and 1938, the New Deal was implemented through legislation enacted by Congress and presidential executive orders. **The programs addressed what historians call the “3 Rs” of dealing with the depression, Relief, Recovery, and Reform**—relief for the poor and jobless, recovery of the economy, and reform of the nation’s financial system to safeguard against future depressions.

FDR and the role of the president

Inagural Address

Inaugural Address - Franklin Delano Roosevelt (FDR) won the election and became the president of the United States on March 4, 1933. In his inaugural address, he said:“**The only thing we have to fear is fear itself.** Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the government itself, treating the task as we would treat the emergency of war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.”

Bank Holiday

After the inauguration, FDR’s first act as president was to deal with the nation’s banking crisis. He knew that it was critical to restore public confidence in the nation’s banks. FDR ordered all banks—including the Federal Reserve banks—to close, and he declared a bank holiday in order to ensure that banks were financially sound. Beginning March 6, 1933, the doors to banks closed. The Federal Reserve created a 100% deposit insurance when the banks reopened. When the banks reopened on March 13, depositors stood in line to return their hoarded cash.

Budget Message

On March 9, 1933, FDR called a special session of Congress. **The Emergency Banking Act,** which authorized the government to inspect the financial health of all banks, was immediately passed. This provided for the reopening of the banks as soon as examiners had found them to be financially secure. Within three days, 5,000 banks had reopened. Later, the 1933 Banking Act (**Glass-Steagall Banking Act**) was passed, giving the Federal Reserve Board tighter control of the investment practices of banks, and the **Federal Deposit Insurance Corporation (FDIC)** was set up to insure all deposits in banks up to $2,500. This amount was increased in 1934 to $5,000. Currently, the amount is $250,000 per account holder per institution

Protection of Gold

After his inauguration, FDR abandoned the gold standard. Because gold was no longer exchanged for dollars, the U.S. gold stock was protected. He prohibited exports of gold and prohibited the Treasury and financial institutions from converting currency and deposits into gold coins - which people were hoarding. In addition, going off the gold standard had the effect of devaluing the U.S. dollar relative to other currencies. This encouraged exports and stimulated demand for domestic products relative to foreign ones.

Bank Legislation

FDR also immediately implemented several policies, including an aggressive fiscal **expansion** that **affected the federal government’s budget.** Fiscal policies are the **spending and taxing policies** used by the federal government to influence the economy. During “The Hundred Days,” Roosevelt pushed many programs through Congress that provided the basis for the New Deal. **These programs were an effort to decrease unemployment, increase output, and push prices and wages back up.**

Effects of the First 100 Days/New Deal

President Franklin Roosevelt faced mounting criticism in 1934 and 1935 despite significant achievements during his early presidency. Legislation passed in the first 100 days had positive effects, rescuing the banking system from collapse and initiating infrastructure projects. However, by the end of 1934, 20% of the workforce remained unemployed, causing doubts about the New Deal's effectiveness. The American Liberty League, formed by dissatisfied Democratic Party figures and supported by wealthy capitalists, vehemently opposed Roosevelt's programs, labeling them as a drift toward state socialism.

Opposition

Simultaneously, Roosevelt encountered opposition from various factions. Individuals like **Upton Sinclair, Floyd Olson, and Huey Long criticized the New Deal**, advocating for more aggressive measures to address unemployment and poverty. Long proposed a wealth redistribution plan, gaining considerable support before his assassination in 1935. **Gerald L. K. Smith, Father Charles E. Coughlin, and Dr. Francis Townsend emerged as third-party challengers**, each promoting their remedies for economic recovery, albeit with differing approaches. Coughlin, a Catholic priest turned radio personality, advocated for monetary reforms and denounced Roosevelt's policies. Townsend proposed an old-age pension plan but faced scrutiny due to its financial impracticality. **Despite facing opposition from both sides of the political spectrum, Roosevelt's second wave of programs in 1935-1936, including the Social Security Act and tax reforms, secured him a second term.** However, increasing resistance from Republicans and southern Democrats, coupled with a recession, hampered the New Deal's progress. Ultimately, the onset of World War II redirected the administration's priorities, leading to the decline of the reform agenda.

Huey Long

Huey Long was a charismatic politician from Louisiana who initially supported Franklin D. Roosevelt's presidency in 1932 but later became a vocal critic. Known as **"the Kingfish,**" Long **proposed a wealth redistribution plan** that aimed to limit personal earnings and provide financial benefits to American families. He founded the **Share Our Wealth Society**, gaining substantial support before his assassination in 1935. Long's opposition to FDR stemmed from his belief that Roosevelt's New Deal policies did not go far enough in addressing economic inequality and poverty. Long's populist ideas and substantial following posed a significant challenge to Roosevelt's administration during the mid-1930s.

Court Packing

President Franklin D. Roosevelt's proposal to expand the number of Supreme Court justices, commonly known as "court packing," emerged in 1937. **Frustrated by the Supreme Court's repeated rejection of key New Deal legislations as unconstitutional, Roosevelt aimed to alter the balance of the court by adding up to six new justices, thereby ensuring a majority sympathetic to his policies.** Critics viewed this move as an attempt to undermine the judiciary's independence and consolidate power in the executive branch. Despite Roosevelt's popularity, the court-packing plan faced substantial opposition from Congress, including within his own party. **Ultimately, the proposal failed to gain sufficient support and was withdrawn,** marking a significant political setback for Roosevelt.

Huey Long Background