Between the election and the inauguration, the economy had taken a nosedive; since 1930, 5,000 banks had run out of money. State Governors had closed many banks as crowds of panic-stricken depositors clamoured to draw out their savings. The banking structure was in danger of collapse.
On March 6 Roosevelt closed all the US banks for 4 days to give Treasury officials time to draft emergency legislation. Roosevelt called Congress together on 9 March. He asked for the Emergency Banking Act to be passed to restore the public’s confidence in the system. Government officials would inspect the accounts of every bank. Only those with properly managed accounts would reopen. Only 30 minutes were spent discussing this Act before Congress voted unanimously for it. Within a week solvent banks were reopened.
To some, the policy was not radical enough.
Wanted more Government control of banking, even nationalisation.
Should not have subsidised banks to cover incompetence just so they could stay in business.
Large banks had more control over smaller ones.
On Sunday 12 March Roosevelt delivered his first ‘fireside chat’ over the radio. It was an intimate talk that gave the impression that he was there in the listeners’ living room. The message on this occasion was simple. “I can assure you that it is safer to keep your money in a reopened bank than under your mattress.” They took his advice and the banking crisis was over. When the banks reopened, queues of people were waiting to put money back. Public confidence had been restored.
Below is an interesting source describing how people lived without access to money:
A Wisconsin wrestler signed a contract to perform in return for a can of tomatoes and a peck of potatoes, an Ohio newspaper offered free advertisements in exchange for produce. A New York State senator arrived in Albany with 12 dozen eggs and a side of pork to see him through the week. In New York boxing fans bought tickets for the semi finals of the Golden Gloves tournament with clothes, jigsaw puzzles, spark plugs and copies of the bible.
From The Glory and the Dream, William Manchester, 1973
The First Hundred Days – 8 March to 16 June
Now that Roosevelt had won public confidence, he had no intention of losing it. He asked Congress to grant him powers as if a foreign enemy had attacked the USA. There was little problem with this demand. The political journalist Walter Lippmann wrote – “The danger we have is not that Congress will give FDR too much power but that it will deny him the power he needs.”
The first 100 days were possibly the most frenzied and energetic of any President. A flood of proposals for new laws poured from Roosevelt to Congress – and most of them became the laws of the land with astonishing speed. Indeed it may be no exaggeration to say that at the end of the 100 days, the USA was transformed.
New Deal officials were young men and women, just out of law or graduate school, who were given extraordinary responsibility. Other New Dealers were university professors, businessmen, experts from industry and social workers. Women long active in social reform movements filled many posts dealing with relief or labour relations. Collectively they were known as ‘The Brain Trust’. Bright, energetic, with new ideas and methods, self-confident and with infectious enthusiasm, the Brain Trust improvised solutions to the nation’s problems; they also jockeyed for the attention of the President, who liked to play them off against each other. Night after night officials worked into the early hours of the morning thrashing out the details of new schemes for tackling the crisis. Washington bustled with activity.
The Alphabet Agencies
Much emergency legislation was passed which resulted in the setting up of many ‘alphabet agencies’ to tackle problems.
The early aims of the New Deal programmes were designed for:
RELIEF: to stop people from starving and losing their homes
RECOVERY: to revive the economy
REFORM: to make the USA a better place to live in.
In the long term, Roosevelt wanted to set people to work again. This took time but action was needed to tide people over their immediate difficulties – to feed, clothe and shelter them.
On 15 March Congress voted for an Emergency Act to cut Government spending. It cut the pay of Government employees; ex-soldiers’ pensions were cut and also the budgets of Government departments by 25%. Nearly $1 billion was saved.
Name: Civilian Conservation Corps (CCC)
Date: 30 March 1933
Aim: To recruit unemployed young men to undertake conservation work in the countryside
For a $1 a day, the young men lived in camps run by the army, doing conservation work such as tree planting, strengthening river banks, and cutting fire-breaks in forests. Blacks and white volunteers were to be paid and treated the same. However, many southern states, whites were given preference and many camps were segregated. By August 1933 the CCC had given work to 250,000 young men and overall it provided 3 million young unemployed men with temporary work while exposing them to rustic living.
Name: Federal Emergency Relief Administration (FERA)
Date: 12 May 1933
Aim: To help the individual states to pay for emergency schemes such as soup kitchens to feed the poor
The Federal Government granted $500 million to provide food and other necessities for the 15 million unemployed. It gave $1 of this money to the state Governments for every $3 that they spent on helping the unemployed. Over 3 years it spent $1 billion, 2% of the national income. Benefits varied from state to state. Monthly payments were 10 times more in New York than in Mississippi. Despite regulations, many states and local agencies favoured whites. Even with its problems, FERA represented an enormous expansion of federal responsibility for the poor and unemployed.
Many states operated a means test principle before issuing any relief:
But the FERA programme left much to be desired. People on direct relief felt humiliated. Applying for assistance was like making a formal admission of inadequacy. The applicant’s esteem suffered another blow when an investigator entered his home to ascertain whether his application was truthful. Relief recipients were often too proud to go to the depot to accept surplus commodities because they may be recognised. One New York small businessman, determined to hold to the values he had learned, insisted on paying his rent regularly, even at the sacrifice of the family’s food. The government, after learning how little the family spent for food, cut off the relief altogether, suspecting fraud.
From New Deal and War by W E Leuchtenburg 1964
In 1935, Roosevelt received a letter from Redville, Georgia.
“They gave us Black folks nothing but a few cans of pickle meat and to white folks they give blankets, bolts of cloth and things like that.”
Name: Civil Works Administration (CWA)
Date: November 1933
Aim: To provide temporary work of public value to the unemployed
In charge of the CWA was Harry Hopkins who believed in the self-respect of the unemployed. He said that keeping workers on the dole took away their pride and destroyed their morale, whereas “work relief preserves a man’s morale. It saves his skill. It gives him a chance to do something socially useful.” Within two months the CWA had found work for 4 million people, paying them 40c an hour for unskilled jobs and $1 an hour for skilled work.
Over the next three months CWA workers did all the following:
Built or improved 800,000km of roads
Built or improved 40,000 schools
Built 500 airports and improved 500 more
Built 150,000 public toilets.
The wages that the CWA provided people with increased the national purchasing power and contributed to the recovery of the American economy. But not all CWA jobs had an obvious public value. Unemployed actors were hired to give free shows, out-of-work researchers to research the history of the safety pin, and the CWA hired 100 people in Washington to walk the streets with balloons to frighten pigeons away from public buildings. Many people said that the cost of work relief was much greater than the cost of the dole. People soon began to call such jobs ‘boondoggles’, after plaits that American cowboys made from strips to pass time when they had no work to do.
C B Baldwin, a Government official at the time, remembered the CWA like this:
They set up this CWA very hurriedly. Any guy could just walk into the county office – they were set up all over the country – and get a job. Leaf raking, cleaning up libraries and painting the town hall…Within a period of 60 days four million people were put to work.
From an interview given in Hard Times by Studs Terkel 1970
Some businessmen who felt that the jobs created were pointless refused to support the CWA. This caused Roosevelt to end it in 1934. In 1935 it was replaced by a more carefully thought out organisation called the Works Progress Administration (WPA).
Name: Tennessee Valley Authority (TVA)
Date: 18 May 1933
Aim: To rejuvenate the valley of the Tennessee River
The TVA was an ambitious plan to build 16 dams on rivers in and around the Tennessee Valley, an area covering 7 states. The 45 million people living here had been badly hit by the Depression. This would provide work for thousands of construction workers and, once the dams were built, they would provide cheap hydroelectric power for industry. The dams would also help to control the frequent floods that wrecked the Tennessee Valley. Land reclamation, afforestation, re-housing, education and recreation projects were also undertaken. It is the best known and most widely admired New Deal achievement and dramatically raised living standards throughout the region.