Roosevelt and the First New Deal

The Roosevelt Administration

Franklin Delano Roosevelt's major legacies include the social policies of the New Deal, making the United States one of the leaders of the Allies during World War II, and redefining the role of the executive power.

FDR: Overview

Franklin Delano Roosevelt, known as FDR, was the 32nd president of the United States. He was born in 1882, in Hyde Park, New York, to James Roosevelt, a businessman and land owner, and Sara Ann Delano. Both James and Sara Ann came from affluent New York families and were able to provide their only child with considerable opportunities. They sent 14-year-old Franklin to the Groton School, a prestigious boarding school in Massachusetts that gathered children from socially influential families. In 1900, FDR went to Harvard University. His academic record was not particularly impressive, but he joined a number of elite social clubs and became editor-in-chief of the undergraduate newspaper, the Harvard Crimson. Prior to graduation, FDR became engaged to his future wife, Anna Eleanor Roosevelt. In 1903, he graduated with a degree in history. A year later, he entered Columbia Law School but dropped out in 1907.

With little interest in law, FDR began his rapid political career in the Democratic Party. He was elected to the New York State Senate in 1910 and 1912. In 1913, he became an assistant secretary of the Navy under Woodrow Wilson. In 1920, when James Cox ran as the Democratic presidential candidate, FDR served as a vice presidential candidate. The ticket of Cox and FDR lost and in 1921, FDR was diagnosed with polio. The disease left him paralyzed from the waist down and in its aftermath, FDR focused on his legal career. In 1928, he triumphantly returned to big politics, winning the office of New York State governor. Only three years later, he defeated incumbent Republican Herbert Hoover in the 1932 presidential election, taking over the office in the midst of the Great Depression.

Roosevelt's legacy is inescapably linked with the global processes that largely shaped his presidency. First, he was the force behind the New Deal, a massive program that introduced a plethora of programs and reforms to battle the consequences of the Great Depression. Second, together with Winston Churchill and Joseph Stalin, he led the victorious Allied forces during World War II.

The New Deal and The National Economy

FDR's New Deal redefined the role of the federal government in the United States. The New Deal was the first large-scale practical application of the idea that the central government could significantly intervene in the economy. Such programs as Social Security, unemployment compensation, minimum wage, bank deposit insurance, public housing, and farm subsidies are all direct legislative legacies of the New Deal.

Under the Roosevelt administration, the stock market was also regulated. Business regulations introduced at the time lived on until about 1975–85, when Libertarian ideas became ascendant. The regulation of Wall Street by the Securities and Exchange Commission continues to exist today.

World War II

During World War II, FDR served as one of three leaders representing the Allied nations. Together with Great Britain and the Soviet Union, the United States, under the leadership of Roosevelt, shaped the strategy of the eventually victorious alliance. In opposition to still strong isolationist sentiments at home, Roosevelt held more internationalist views. Before the United States formally entered the war in 1941, he successfully pushed policies that supported the Allied forces, including a lend-lease program that gave some allied nations access to American arms and supplies, regardless of their inability to pay.

The war-related production led to extremely rapid economic growth. By 1945, unemployment among the labor force dropped to less than 2%. Millions of Americans moved to new jobs in war centers and 16 million men and 300,000 women joined the military. Many New Deal reforms were no longer necessary. One of FDR's major war-related legacies at home was the 1944 G.I. Bill of Rights, which provided a wide range of benefits for returning veterans. Roosevelt's war strategy also contributed to a close relationship between the federal government and defense industries. On the international scene, FDR was a fervent supporter of the United Nations. Although the organization was formally established after his death, he was the one that initiated the talks that led to its creation.

Politics

FDR's presidency also changed the American political landscape. Roosevelt significantly broadened the appeal of the Democratic Party, turning it into the majority party. Organized labor, urban working class, including white ethnic communities (e.g. Irish Americans, Polish Americans, Jews, etc.), white Southerners, farmers, progressive intellectuals, and African Americans all aligned with the Democratic Party, creating what would be known as the New Deal Coalition (political scientists call the aftermath of this realignment the Fifth Party System). Not until the end of the 1960s did the New Deal coalition begin to fall apart. Some historians argue that the remains of the coalition existed as late as the end of the 1980s.

Perhaps the one legacy on which Roosevelt had the greatest personal impact was his role in redefining presidency. Following the steps of Theodore Roosevelt (his distant cousin) and Woodrow Wilson, FDR turned the executive branch into the center of the national government. Through his use of the new medium of radio and regular "fireside chats," he also created a personal bond with American citizens, many of whom cherished their president.

Although FDR remains one of the most popular and highly ranked presidents in American history, his legacy also includes decisions that had a disastrous impact on many American citizens. Historians are divided over Roosevelt's attitude towards African Americans, with many arguing that his alliances with influential white Southerners endorsed the disenfranchisement of and violence toward black Americans. FDR also ordered the incarceration of Japanese Americans in internment camps after the 1941 Pearl Harbor attack. Some historians also note that FDR's decision not to accept Jewish refugees during World War II contributed to their eventual death in war-torn Europe.

The Election of 1932

The Great Depression and thus the economy was the dominant issue during the presidential election of 1932 between Franklin Delano Roosevelt and incumbent Herbert Hoover.

Election in the Midst of the Great Depression

As the presidential election of 1932 took place during the Great Depression, the economy was unsurprisingly the dominant issue. With the unemployment rate at nearly 24%, heavy industries barely functioning, and dramatically low prices of farm products, Herbert Hoover, the incumbent Republican president, faced unprecedented challenges. Although the Great Depression hit countries all around the world, Hoover was held largely responsible for the consequences of the crisis in the United States. His reelection became even more questionable when Franklin Delano Roosevelt, the successful and popular governor of New York, won the Democratic nomination.

FDR

In 1930, Roosevelt was reelected governor of New York by a wide margin. The demonstrated support in the most populous state of the country, substantial political experience, and good connections (voters still remembered the presidency of his fifth cousin and Republican Theodore Roosevelt) convinced many that FDR could win an election where such cultural issues as Catholicism, prohibition, or Ku Klux Klan would not play a decisive role. By the time of the 1932 convention in Chicago, FDR was the leading candidate but was still short of the support of the required two-thirds of the delegates. However, his campaign managers, James Farley and Louis McHenry Howe, convinced House Speaker John Nance Garner of Texas to drop out of the race. Roosevelt won the nomination on the fourth ballot and, as a return favor, named Garner his running mate. Famously breaking the political tradition, he appeared at the convention and personally accepted the nomination. On the Republican side, Charles Curtis remained Hoover's running mate.

Campaign

Hoover was so unpopular that Roosevelt's campaign revolved cautiously around blaming Hoover for the disastrous economic situation and making vague promises of programs and reforms that would lead the country toward economic recovery. In a campaign speech in Iowa, FDR accused "the present Administration of being the greatest spending Administration in peacetime in all our history." Garner joined his running mate claiming that Hoover was "leading the country down the path of socialism."

While Roosevelt ran on New Deal slogans, he had no clear idea what the program would entail and offered no specific proposals. His team of advisers, known as the Brain Trust, suggested he did not go beyond such general points as aid for farmers, public development of electric power, a balanced budget, or business regulations. Even prohibition, the Democrats' favorite target, was discussed in terms of an economic issue as bringing back alcohol could not be disconnected from the question of associated tax revenues. The optimistic yet vague tone of Roosevelt's campaign was captured in his iconic campaign song "Happy Days Are Here Again," which became one of the most popular songs in American political history and the unofficial anthem of the Democratic Party.

Unlike Roosevelt, Hoover was unable to achieve either unity within his party or popularity among voters. Many prominent Republicans vehemently opposed him while others simply refused to support the incumbent. Some went as far as to support Roosevelt. As Hoover's presidency was now defined by the Great Depression, his political attacks on Roosevelt did not convince the voters. Neither was the Republican candidate himself particularly appealing. Hoover's reportedly grim personality contrasted with Roosevelt's optimism and confidence. The incumbent president was so unpopular that at times, voters threw objects at him when he was campaigning in public.

A Landslide Win

Predictably, Roosevelt won the election by a landslide. Roosevelt and Garner received over 57% of the popular vote and Hoover and Curtis over 39%. The electoral vote was 472 to 59. Of all the regions, only New England supported Hoover and the Democratic ticket carried 42 states. Democrats also won majority in both houses of Congress.

The 1932 election realigned political loyalties and coalitions in the United States. By attracting the wide and diverse base of new voters including organized labor, urban middle and working class, including white ethnic communities (Irish Americans, Polish Americans, Jews, etc.), racial minorities, white Southerners, farmers, and progressive intellectuals, the Democratic party became the majority party. This realignment transformed American politics, creating what is called the New Deal Party System or the Fifth Party System.

Roosevelt's Inaugural Speech

On March 3, 1933, Roosevelt addressed the nation in his first inaugural speech. Once again, the Great Depression was the center of everyone's attention. Roosevelt did not avoid difficult topics. He talked about dramatic unemployment, poverty, high taxes, fallen industries, and farmers who could not find markets for their products. "Only a foolish optimist," he noted, "can deny the dark realities of the moment." Yet Roosevelt offered a dose of realistic optimism when he promised government relief and recovery programs in cities and in the countryside as well as regulation of big businesses. He repeatedly compared the Great Depression to war and assured Americans that the massive economic crisis would be treated with the state of emergency typical of war emergencies. He also signaled a more internationalist attitude than most of his isolationist predecessors. Appealing to the sense of national unity and recognition that eventual success would come only with the hard work of all, Roosevelt told his compatriots what would become one of the most inspirational lines in Americans history, "[T]he only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days."

Competing Solutions

While Hoover's response to the Great Depression was initially too narrow and more decisive actions came too late, Roosevelt's New Deal drew on some of Hoover's ideas but proposed a series of sweeping reforms and programs.

Herbert Hoover 's Response to the Great Depression

On October 24, 1929, nearly eight months after Herbert Hoover began his first and only presidential term, the U.S. stock market crashed, marking the beginning of the most devastating economic crisis in the 20th century. The Great Depression eventually hit both poor and rich countries around the world but in the United States, political opponents and the public blamed the president for the disastrous economic situation.

Although Hoover was a committed Republican who believed in minimal government intervention, low taxes, and the power of free market, he also assumed that the federal government should act when the national economy and the well-being of citizens were at stake. He called for collaboration between the state and the business sector. In response to Hoover's appeals, representatives of major industries promised to continue their operations without cutting wages and jobs. The president also convinced Congress and some state governments to increase spending. Furthermore, lowering taxes, public work projects, and loosening credit policies by the Federal Reserve aimed to energize the economy.

All these initiatives suggest that Hoover believed the economic crisis to be a temporary downturn. However, by early 1931, it was clear that the situation worsened. With unemployment skyrocketing and banks on the verge of collapse, Hoover proposed a new plan. His advisers pushed for the creation of the Reconstruction Finance Corporation (RFC), a federal agency that would provide safe loans to banks, other financial institutions, and public utility companies (e.g., railroads). Congress created RFC in 1932 and for the first time in history, the federal government was able to intervene in the economy so directly. Also in 1932, Hoover signed the Emergency Relief and Construction Act, which authorized considerable funds for public works programs and direct relief programs.

Hoover's response to the Great Depression is also associated with three other critical pieces of legislation. First, in 1930, he signed the Smoot-Hawley Tariff Act that raised U.S. tariffs. While historians argue that the act was responsible for the significant decrease in the import and export of American goods, Hoover opposed the legislation and in the end, signed it under the pressure of his party and business leaders. Second, the Revenue Act of 1932, which was the largest peacetime tax increase in history, increased taxes across the board. Top earners were taxed as much as 63% on their net income. Finally, the 1932 Norris-La Guardia Anti- Injunction Act supported organized labor. The law curbed "yellow dog" contracts (hiring replacement workers to break strikes), curtailed the ability of federal courts to issue injunctions against non-violent labor disputes (e.g., strikes), and supported the right of laborers to organize.

Franklin Delano Roosevelt's Response to the Great Depression

The 1932 presidential election campaign revolved entirely around the disastrous economic situation. Franklin Delano Roosevelt (FDR), the Democratic candidate, blamed Hoover for excessive government spending and claimed a small government to be the solution. In turn, Hoover accused Roosevelt of being a capitalist that would only worsen the crisis by decreasing taxes; reducing government intervention in the economy; promoting free trade; and cutting federal, state, and local government programs. While Roosevelt ran on his New Deal platform, he offered no specifics of future reforms.

This changed immediately after he took over the office in 1933. Roosevelt's response to the Great Depression not only contrasted with his campaign rhetoric but also built upon some of the initiatives introduced by Hoover. His New Deal agenda—a series of relief and recovery programs designed to stabilize and energize the economy and directly support unemployed and poverty-stricken Americans—was a large scale response built around the idea of the central government's intervention. In short, the federal government introduced many large-scale programs and laws that had a direct impact on the life of Americans (e.g., creating jobs through massive public projects, providing direct financial support, etc.) and pushed vast legislation that regulated the market and labor relations as well as proposed social reforms. Major programs and reforms introduced under the New Deal were:

• All banking transactions were suspended. The legislation that followed this proclamation was the Emergency Banking Act, which enabled the government to close weak banks and reopen more stable banks. The initiative helped to rebuild trust in the U.S. banking system. Roosevelt also prohibited the export of gold from the United States and thus took the country off the gold standard (1933).
• The creation of the Agricultural Adjustment Administration (1933). Among many initiatives, AAA provided farm subsidies in exchange for curbed agricultural production (farmers would not cultivate all of the land on their farms) and manipulated farm product prices by buying and temporarily withholding products from the market.
• The Tennessee Valley Authority (1933) was the first large-scale public works project. It created short- and long-term jobs by building and operating a hydroelectric project in the valley of the Tennessee River.
• The National Recovery Administration (1933) allowed industries to create codes that would regulate and curb unfair competition. The Supreme Court declared NRA unconstitutional in 1935.
• The Federal Emergency Relief Administration (FERA; initiated by Hoover) created government, mostly unskilled, jobs. The program was replaced by the Works Progress Administration in 1935.
• The Civilian Conservation Corps (1933) put large numbers of men at work in natural resources projects (e.g., in national forests). The initiative combined conservation efforts with creating employment.
• The National Labor Relations Act (1933), which established the National Labor Relations Board (1935), supported the rights of workers to organize and bargain collectively.
• The Civil Works Administration (1933/34) provided temporary jobs to millions of unemployed.
• The Social Security Act (1935) established financial support for dependent minors, the disabled, and the elderly. It also introduced unemployment insurance.