Important Information

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History 320 1 The Thirties and WWII
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What caused the Great Depression?

• NOT the stock market crash, though contributed
• The inequalities of wealth that had been building
  since the Gilded Age
• Laissez-faire philosophy of President Calvin
  Coolidge (1923-29)
• Major Cause? The consequences of WWI
• Collapse of a vast global triangle of capital and
  debt

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The Broader Meaning of the Great Depression

• Isolationism was an illusion
• League of Nations or not, Global Capitalism had
  now clearly linked the U.S. to the fate of the
  world
• Laissez-faire policies seemed to have disastrous
  consequences in a global system
• Ideologically opposed to government management of
  even the domestic economy, free market advocates
  of laissez-faire were unlikely to countenance
  governmental management of the international
  economy
• The old belief that success and failure was
  largely just a result of individual hard work,
  discipline, etc., became even more difficult to
  sustain
• Depression throws millions of hard-working,
  responsible Americans out of work
• People lose their homes and families through no
  fault of their own
• Can individual Americans truly control their own
  destinies?
• Decisions made not just in New York board rooms,
  but offices in Berlin and London, dictate the
  fate of millions
• The Independent Yeoman Farmer is truly dead

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The Promise of a New Deal and the Rise of
Modern Liberalism
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The New Deal

• Only possible because of the mass pain and
  suffering of free-market capitalisms greatest
  historical failure (so far)
• Narrow window of opportunity to experiment with
  new ideas about the proper role of government and
  the meaning of American liberty and freedom
• In many ways, a break from the past
• But also had roots with the more modest reforms
  of the Progressive Era

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What did the New Deal do?

• Historians think in terms of the First and Second
  New Deals
• The First New Deal
• Focused primarily on basic relief of economic
  suffering and attempts foster economic recovery
• The Second New Deal
• Much more ambitious, FDRs attempt to permanently
  alter the American political economy
• Government to manage the economy for stable
  growth and to guarantee all Americans a modicum
  of economic security

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The First New Deal

• Agricultural Adjustment Act
• Federal payments to farmers to take acres out of
  production, raise fewer pigs, etc.
• Goal Limit over-production
• Civilian Conservation Corps
• Employ idle young men in public works projects
• Goal Give people jobs and pump money into
  economy
• Federal Depository Insurance Corporation
• Guarantee private savings in banks
• Goal Regain public faith in safety of banks
• National Industrial Recovery Act
• Federal regulation of minimum wages, maximum
  hours
• Promises workers right to unionize
• Public Works Administration give people federal
  jobs

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Did the First New Deal work?

• Yes and no
• Did not do succeed in getting the nation out of
  the Great Depression
• By 1935, few signs of significant economic
  recovery
• But did take the edge off the worst suffering
• Gave Americans hope in hard times
• Americans believed FDR was on their side, and he
  wins the lasting devotion of millions
• FDRs overwhelming popularity sweeps in a
  democratic majority in the Congress
• Many of these more radical than FDR and push for
  bigger changes

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Radical Threats

• After five years of depression, many Americans
  begin to listen to would-be leaders much more
  radical than FDR
• Consider what happened in many other capitalist
  nations?

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Germany Hitlers hyper-patriotic, nationalistic,
and militaristic Nazi fascism
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Italy Mussolinis hyper-patriotic,
nationalistic, and militaristic fascism
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Japan The militarys hyper-patriotic,
nationalistic, and militaristic Japanese-style
fascism
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• USSR Stalins anti-fascist, anti-capitalist,
  state-planned economy which suffered few
  ill-effects from the Great Depression
• Few realized at the time, though, that Stalin had
  created the most brutal of police states that
  would eventually murder or result in the death of
  millions of his own people

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The distinctly un-militaristic, un-nationalistic,
and un-fascistic (though nonetheless deeply
patriotic) FDR, with his Scotty Fala and an
unknown young victim of polio
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Radical threats at home

• The U.S. evinced definite strains of fascistic
  ideas in the 1920s
• 100 Americanism and radical nationalism
• Intolerance for a diversity of ideas
• Suppression of civil liberties
• First Red Scare Remember that Fascism was also
  rabidly anti-communist
• Eugenics Controlled human breeding for pure
  Anglo-Saxon blood
• The KKKWhite Sheets become Brown Shirts?
• A notable exception Lacked militarism

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• Home-grown American radicals
• Francis Townsend
• LA doctor who called for generous federal monthly
  payments to the elderly to take them out of the
  labor pool

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• Home-grown American radicals
• Father Charles Coughlin
• Detroit radio priest who called for the
  nationalization of major American industries
• Deeply anti-Semitic, blamed economic troubles on
  a conspiracy of Jewish bankers (Adolf Hitler
  anyone?)

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• Home Grown American Radicals
• Huey Long
• Demagogic Louisiana Senator who wanted to soak
  the rich
• Confiscate large private fortunes, levy a steep
  progressive income tax
• Promised government would provide every average
  American family with a minimum household income
  of 2,500

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FDRs New Political Philosophy

• In this climate of world fascism and home-grown
  radicalism, FDRs radical Second New Deal was
  clearly very moderatea middle way between total
  state control and laissez-fair demonstrating the
  amazing flexibility and adaptability of American
  democracy
• Avoids fascism and communism
• Redefines the meaning of liberalism
• The simple old days when Americans could be truly
  independent and self-sufficient were gone
• Most Americans could no longer guarantee
  themselves and their families a modicum of
  security
• Left to its own devices, it appeared that
  free-market instabilities often led to fascistic
  or other dictatorial attempts to provide fearful
  people security in an insecure world
• Therefore, it must be the task of democratically
  elected governments to guarantee some basic level
  of economic safety and securityif not, democracy
  itself would likely perish

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The Second New Deal

• Not about relief or recovery, but rather about
  creating a secure new political economy
• Cyclic unemployment was a permanent and
  inevitable feature of modern industrial
  capitalism
• Therefore, must have federal mechanisms to help
  the unemployed
• Government to be the employer of last resort

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The Second New Deal

• 1935 Emergency Relief Appropriation
• (Robert) Wagner National Labor Relations Act
• Social Security
• Required all 48 states to establish some system
  of unemployment insurance
• Provided old age pensions

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What did FDR and the New Deal do?

• Created modern liberalism A central purpose of
  government is to provide its citizens with
  economic security
• For the first time, focused on guaranteeing the
  security of the mass of average American people
  rather than its previous traditional stance of
  protecting property, business interests, etc., as
  path to that security
• Did so without destroying the creativity and
  wealth-generating power of industrial capitalism
  (indeed, post-war period sees the biggest
  economic boom in American history)
• Nevertheless, some of the wealthy elites resented
  the New Deal and thereafter constantly fought to
  roll it back and reestablish elite control
• Created an economic regulatory system and social
  safety net thatso farmay have prevented another
  economic downturn as severe as the Great
  Depression

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What did FDR and the New Deal do?

• Created the New Deal Democratic political
  coalition that would dominate until the 1980s
• Lower class, middle class, farmers, labor,
  African Americans, urban north and Solid South
• Greatly increased the size and power of the
  federal government
• Likewise, also increased taxation, potentially
  unfair or illogical regulations, etc., and
  involvement of the government in lives of
  everyday Americans
• New Deal liberalism justified bigger government
  as a necessity to balance the power of big
  business, manage the economy, avoid
  fascism/communism, and guarantee every American a
  measure of economic security
• Big Question Would big government nonetheless
  limit the freedom of Americans more than
  protecting those freedoms?
• Ronald Reagan Government is not the
  solutiongovernment is the problem.

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What did FDR and the New Deal NOT do?

• Did not result in significant long-term
  redistribution of wealth
• Did not create a system of substantial state
  ownership of industry, railroads, etc.
• Did not end the Great Depression
• In some cases, did more harm than good
• Although large federal spending (Keynesianism)
  did spur modest economic growth, the economy was
  still weak by 1940
• Needed MASSIVE federal spending, which came only
  with the start of WWII

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Questions?