New Deal

New Deal Depression just "normal" depression in 1930 – unemployment below 9%

less severe than 1921 recession that had ended "naturally" with "lazy fairy" laissez faire treatment

"Recovery is just around the corner"

BUT Big bank collapse in Austria – Europe catching the disease we talked about

Hoover proposes suspension reparations and loans – politically courageous

Hoover is towering "progressive wing" figure –

FDR had said earlier Hoover would be best possible president

but shy and dour – orphaned early – tough childhood

aloof and not a great communicator

depicted as uncaring

Hoover is scholarly – engineer's tidy and logical mind

(FDR intuitive – doesn't read books as an adult)

more trapped by the generally accepted political and economic doctrines of the time

Gold standard & Balanced budgets ,

Hoover video history unjust – Hoover gets demonized for earlier Harding Coolidge stupidity –

then FDR wanders in and takes credit for reforms Hoover would have been in favor of

England off Gold 1931

US Federal reserve defends gold – dumb move

raise interest rates – constrict money supply – deflation even more serious

2300 bank failures GNP down 20% Hoovervilles erupt - unemployment 16%

Crops rot – armies of tramps - 13% deficit as receipts fall and expenses mount

John Maynard Keynes doesn't explain all of this till 1936

General Theory of Employment, Interest & Money

Hoover suggests deficits – chickens out and listens to orthodox advisers – huge income tax increase

Democrats even stupider – John Nance Garner Speaker of House wants National Sales tax

a tax which hits consumers harder

Hoover Reconstruction Finance Corp RFC – gives $$ to banks, mortgage assns,

"millionaire's dole" La Guardia

BONUS ARMY – COMES TO WASHINGTON IN spring 1932 show video

Veterans are scheduled to get a bonus in 1945

Hoover reacts by smearing as socialists communists and non-veterans (there are a few)

Orders McArthur to evict from govt buildings

Douglas McArthur – ignores Hoover's orders to merely evict from govt bldgs

In full Strutting Rooster mode - Slash and burn – kill a few of the "dangerous mob"

America shocked to see images of mounted cavalry, sabres unsheathed

chasing the unemployed down the streets of the nations capital

MacArthur amazingly self-righteous – tries to start atomic war in Korea

should have been fired for insubordination

Hoover takes responsibility for the idiot

FDR sees MacArthur (and Huey Long who we meet later) as the two most dangeous men in the country

When the Bonus marchers come back later – FDR invites them to tea – gives a few CCC jobs

1932 election

PUBLIC RELATIONS POLITICS – show Sinclair video

FDR – is amiable communicator – disorderly improviser & experimenter -

"second-rate intellect with a first-rate temperament." Oliver Wendell Holmes

Jaunty confidence of Aristocrat Chronically ebulient

wide grin infectious optomism – loves people and schmoozing

no commitment to any particular method

some call "no principles"

Can't bear to fire loyal but incompetent friend

Deliberately divides authority – does not let anyone get much authority independent of him

very mixed feelings about FDR – science – free market in ideas – have to spend much of our time as advertising and rhetoric analysts

FDR like an actor making an entrance

George Bush and Al Gore Jimmy Carter and Ronnie Reagan

some people know how to talk to America

Carter video?

FDR & Hoover platforms are very similar – and FDR says all the right things to rich supporters

Hammers Hoover for not balancing the budget

Hoover calls Chameleon on Plaid

Fdr is an actor coming on stage

Cold War as "acting contest" John Gaddis – Ronnie Reagan, Pope and Vslav Havel

last lecture – from the moment of the radio politics changes

can't understand WWII without mass propaganda – Hitler's & Japan's Emperor religion

Economy continues deteriorate – Revolution?

Socialism strong in Europe – But America is the land of individualism and opportunity

Socialist Norman Thomas gets 2.2% of vote

Gross National Product 56% of 3 years before

40% fewer hours worked

Interest rates on short term treasury bonds is negative

Banking panic – most banks and stock exchanges are closed

widespread suspicion that FDR will go off gold and devalue currency

INAUGURAL – DETERMINED TO RAISE SPIRITS

"So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself - nameless, unreasoning unjustified terror which paralyzes needed efforts to convert retreat into advancer"

MAGICAL EFFECT – HOOVER HAD 1 PERSON TO ANSWER MAIL

FDR needs 70 - 450,000 LETTERS & CARDS FIRST WEEK

Press Conferences – irresistable charm – press never shows public he is crippled

meets 30 times in 100 days – at least once a week thereafter

Fireside Chats

CALLS for strong EXECUTIVE POWER

active government – the invisible hand has failed miserably

Bold persistent Experimentation – takes his brain trust from wide variety of groups

businessmen, Wilsonians, Republicans, reformers, labor

Franklin Roosevelt has one strong principle - economic justice : "The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."

BANK HOLIDAY – under authority of Trading with enemy act from WWI

3/9 Emergency Bank Relief Act – not read – pass by accclamation 38 minutes

money flows back into the banking system

FDR had scared it out – by playing cards close to vest – no cooperation with Hoover

3/20 Economy Act – reorganized govt – cuts pensions of veterans – most powerful lobby

3/21Civilian Conservation Corps CCC Dams to stop soil erosion & tame rivers

2 billion trees planted ,83,000 miles telephone wire.

122,000 miles new minor roads and trails. 23,000 water sources in wilderness

3/22 Beer and wine under 4% alcohol legal – big taxes

4/19 off the gold standard gold illegal to hold – recall coins & bullion

will devalue dollar $20.66 / oz to $35 / 0z

FDR ignores advice of paper money inflationists – more cautious corse

failed to increase domestic money supply and bank credits

Thought in terms of overproduction instead of underconsumpion too

and failed to cooperate with England and France in international stabilization efforts

Gets international agreement in 1936

5/12 Federal Emergency Relief Act – $500 million to states for relief

AAA - Agric Adjustment Act limit production , raise prices, finance farm mortgages

cut off surpluses at the farm by plowing under instead of distributing around the world

which will hurt farmers around the world (which we do now)

farm income rises 250% 1932-1935

AAA leaves out small farmers and sharecroppers –

the land taken out of production might be their share-crop land

5/18 Tennessee Valley Authority - Public Power for 7 states –

improve navagatio & flood control

power and light to poor rural communities

look beyond state & city boundaries for big project

May 1935 Rural Electrification Act –

run wires in sparcely populated areas where private companies won't

transforms economically backward impoverished area to heavily industrialized

relatively wealthy area

forests replanted – erosion halted, cheap fertilizer renews fertility

FDR wanted regional projects in all underdeveloped areas – this is the only one he gets

would have been good to have one for Mississippi levees etc

5/27 Federal Securities Act – full disclosure to investors –

first regulation for Securities business – transparency

6/16 Farm Credit Act – refinance mortgages

Emergency Railroad Transportation Act

National Recovery Act NRA Industrial Cartels to limit competition

Most collectivist move – ease antitrust – labor gets collective bargaining

codes to coordinate labor, management – set working conditions,

no child labor

Large businesses got control of codes – lower wages women doing same work

enforcing codes jammed courts – breakdown in enfrcement

Ickes too cautious – spends hardly any of PWA's $3.3 billion to fuel consumption

focus on overproduction – not enough on injecting purchasing power

found unconstitutional

Glass-Steagall Banking Act – revolutionizes US Banking– Fed Reserve control greatly strengthened –

many more banks eligible for membership

power t set Margin requirements to stop speculation on Wall Street

Reserve requirements for banks

Set Discount rates – control open-market operations

FDIC – Deposit Insurance – eliminate bank panics ever since

Fed governors 14 year terms – independent from politics

First time since Andrew Jackson US has functioning empowered banking system

Weaken Morgan – have to split off investment businesses from banking business

Upward path unmistakable despite some mistakes – going in right direction

Money supply and wholesale prices increase 10 to 12% a year for 4 years

BUT unemployment stays high 14.3% in 1937

Persistent unemployment has its good side - leads to Kids staying in school

HS diplomas double in 1930's

College degrees up 50%

1934 – SEC Securities and Exchange Commission – Joseph Kennedy first chairman –

set a thief to catch a thief

Biggest resistance from Richard Whitney – President NY Stock Exchange

when he is led out in handcuffs and sent to Sing-Sing resistance slows

NYSE gets new rules – much less cheating

Democrats from a party emphasizing states rights and minimal government

to majority party – next 62 years GOP control House only 4 years

1936 Repubs 16 senators 89 representatives

New Deal Coalition - Eastern Dem establishment friends, Wilsonian reformers,

racist and conservative Southerners, farmers, ranchers, labor unions, urban ethnics

FDR must personalize – combines New Freedom of Wilson and Square deal of Teddy

, Blacks -MAJORITY VOTE DEM 1936 first time since Civil War

but FDR must placate South – FDR tries to intervene in primaries 1938 to defeat conservative & racists – loses big-time

FDR NOT A RADICAL – NO SERIOUS INCOME REDISTRIBUTION

BUT TAX SYSTEM MUCH MUCH MORE PROGRESSIVE

DOES NOT Nationalize banks – private enterprise with transparency

Safety net for poor

Complaints from Left

Frances Townsend – old age pensions to get $ into circulation

Upton Sinclair – wrote Jungle meat packing – EPIC – end poverty in California

charged with being Commie as he runs for governor Calif – fake documentaries

FDR wusses out of endorsement –

deal with republican Governor not interfere New Deal pgms

Huey Long – every man a king – country humor - quotes deuteronomy –

Schools, roads and hospitols built

Polls indicate he can take 3 or 4 million votes from FDR in 1936

12 foot thick concrete in some roads

free textbooks for kids – tax oil and other big business interests

Senator – introduce "soak the rich" – outlaw incomes over $1 million

eveyone gets $2500 guaranteed annual income

assassinated

Father Coughlin – National Union Social Justice – loves FDR at first

then hates – has not driven Jews and money changers out of the temple

SECOND NEW DEAL

FIRST NEW DEAL WAS COALITION OF ALL CLASSES

Business and financial classes & conservative Democrats turn against adm

just before election Liberty League formed August 1934

"destroying constitutional government, coddling labor, spending country into bankrupcy

Liberty league try to gain control Democratic party

revolt of conservatives coalesced lower and middle classes

election 1934 – bigger margins – 2/3 Senate

away from Central planning to interests of specific groups

UNEMPLOYED GET WORKS PROGRESS ADMIN WPA

$10 billion – 13 million unemployed put on payroll - get avg 1 years work

half million miles country roads, 40,00 bldgs, 350 airports etc

artists and writers – Orson Welles

monthly average 2.1 million on payroll

May 1935 – Supreme court overturns NRA on oil, then Railroad retirement act

language suggests all social welfare / security legislation may be UNCONSTITUTIONAL

Nation and FDR shocked to see "horse and buggy" court invalidate laws–

confusion on future cases

Big arguments now on same topic - about commerce clause

Cases now whether govt can do wetlands protection, environmental law

Federalists say no mostly

definition of commerce - early judicial activism throws out common law

which all founders assumed beneath constitution –

Common law has death penalty for tanners who pollute river and kill someone

1936 – AAA partially unconstitutional

NRA was weak on labor – many company unions – FDR gets behind Wagner act

National Labor Relations Act –July 1934 - Wagner act – right to organize –

elections to select representatives – company unions gone

NLRB oversees elections

Magna Carta for Labor

United Auto Workers – sit-down strikes – get contracts with GM big industries

1933 AFL has 3 million members, by 1945 they have 14 million

some loose ends created – the way we supply health care – only unions and the rich get it

Re-enact some laws to meet court objections

1935 - Social Security – every European country has had similar system for half century

America's DNA – early Republic – frontier conditions

pensions funded from payroll tax employers and employees

matching state funds for non-SSecy eligible old, dependent mothers & children (welfare reform) handicapped, public health funding, and aid to blind

unemployment insurance

enlatrged and strengthened until B43

Tax reform – change entire system to progressive basis –

from 1940 to 1980 the lowest 20% are the fastest growing segment

Graduated tax on corporations

surtax on high incomes – estate tax to maximum 70%

attack on concentrated wealth -

ELECTION 1936

FDRE – campaigns against "economic royalists" "This generation of Americans has a Rendezvous with Destiny"

Alf Landon – Literary Digest sez he will win – FDR 28 million to 17 million

Blacks to Democrat party

SUPREME COURT AAA unconstitutional 1936 – food and coal "local" not interstate commerce ignore those trains and trucks (hapless toad)

cannot regulate child labor, wages and conditions – violation of freedom of contract

as we noted earlier 14^th amendment re-written in Slaughterhouse – no protect black vote

does protect corporations as "Persons"

PROGRESSIVES IN uproar

FDR submits Federal Judiciary reform "COURT PACKING"

DID NOT CONSULT congress – uproar against ignoring separation of powers

Supreme court resolves crisis – reverses itself on commerce – retirements and replacements transform court

UNIONS- CIO formed in 1937 – AFL has done only craft – skilled organizing

USSteel unionized 1937

Autos – GM 1937 Ford 1040

FDR denounces sit-down strikes – John Lewis of UMW becomes an enemy

Wagner act leaves out many categories of workers – only 28% non-farm org by 1940

CIO 5 million 1941 AFL 4.5 million

Second Inaugural "1/3 of nation ill-housed, ill-clad, ill-nourished" (2/3 by modern standards)

first attention to "invisible" people near bottom

1937 – FDR falls back into old orthodoxy - attempts to balance budget

economic downturn again

industrial output falls 33% - unemployment up rapidly

Congress becomes enthusiastic New Dealers again

Farm Tenancy – help sharecroppers buy land

National Housing – attack slums

AAA – soil conservation – producers can limit production by 2/3 vote

Fair Labor Standards (Wages and Hours) minimum wage 25 cents – to go to 40 cents later

WPA gets $3Billion for Public works in states

1938 – FDR trys to intervene in promaries and defeat conservative Dems – loses miserably

all further advances dead - civil rights, women etc – FDR looks overseas,

Lose domestic power till Pearl Harbor

Reform may have impeded investment by scaring the investing classes

US responds for first time to challenges of industrialization

sweeping administrative and regulatory reform

Increase power of federal government

Federal Share GNP 3% 1929 9% in 1940

National debt 9% to 16% GNP

FDR erects superstructure – to be adjusted and perfected thru 1970's

Responsibility of government – was balancing budget and paying down debt

becomes provider of last resort of essentials for an adequate stadard of living

freedom changes – considers the social requirements for freedom

is a sharecroppers child as Free as Bush or Forbes kid?

New Deal Concensus lasts till 1980

Strengthens after WWII.

Richard Nixon – "we're all New Dealers now"

Looking forward from this view of active government to

Reagan's "Government is the problem"

Jimmy Carter video?

Much left undone – women, blacks, agric labor

FDR Renews faith in Democracy when it is failing all around the world

PROHIBITION (18^th) – US is the only society to outlaw their customary intoxicant

2.6 gal/year just before prohibition .97 gal/year at end Repeal (21^st 1934)

subsidize crime – black Market – Capone

Harry Anslinger, head of federal Prohibition enforcement bureaucracy - needs employment after repeal

testifies about AMA findings "no medical use for marijuana" but tincture of Marijuana is one of most commonly used in pharmacaopia

Movies – Reefer madness

Hearst (owns many newspapers) just got German patents on process making paper from wood instead of hemp.

When immigration is cut off in 1920's Mexico was the only source of cheap labor left. Anglos resent competition.

Marijuana is the intointoxicant of choice for Mexican immigrants and Blacks.

Confluendce of economics, race and bureaucracy = outlaw marijuana.

Result in late 1990's : In US 39% kids experiment with Marijuana

In Netherlands (where legal and regulated) 3-6% of kids experiment

Prison-Industrial Complex & thrives with Moralistic thinking