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Episode 34 – The New Deal
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Hi, I’m John Green, this is CrashCourse
U.S. history, and today we’re going to get
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a little bit controversial, as we discuss
the FDR administration’s response to the
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Great Depression: the New Deal.
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That’s the National Recovery Administration,
by the way, not the National Rifle Association
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or the No Rodents Allowed Club, which I’m
a card-carrying member of.
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Did the New Deal end the Depression (spoiler
alert: mehhh)?
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More controversially, did it destroy American
freedom or expand the definition of liberty?
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In the end, was it a good thing?
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Mr. Green, Mr. Green.
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Yes.
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Ohh, Me from the Past, you are not qualified
to make that statement.
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What?
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I was just trying to be, like, provocative
and controversial.
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Isn’t that what gets views?
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You have the worst ideas about how to make
people like you.
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But anyway, not EVERYTHING about the New Deal
was controversial.
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This is CrashCourse, not TMZ.
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intro
The New Deal redefined the role of the federal
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government for most Americans and it led to
a re-alignment of the constituents in the
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Democratic Party, the so-called New Deal coalition.
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(Good job with the naming there, historians.)
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And regardless of whether you think the New
Deal meant more freedom for more people or
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was a plot by red shirt wearing Communists,
the New Deal is extremely important in American
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history.
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Wait a second.
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I’m wearing a red shirt.
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What are you trying to say about me, Stan?
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As the owner of the means of production, I
demand that you dock the wages of the writer
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who made that joke.
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So after his mediocre response to the Great
Depression, Herbert Hoover did not have any
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chance of winning the presidential election
of 1932, but he also ran like he didn’t
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actually want the job.
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Plus, his opponent was Franklin Delano Roosevelt,
who was as close to a born politician as the
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United States has ever seen, except for Kid
President.
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The phrase New Deal came from FDR’s campaign,
and when he was running FDR suggested that
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it was the government’s responsibility to
guarantee every man a right to make a comfortable
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living, but he didn’t say HOW he meant to
accomplish this.
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Like, it wasn’t gonna come from government
spending, since FDR was calling for a balanced
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budget and criticizing Hoover for spending
so much.
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Maybe it would somehow magically happen if
we made alcohol legal again and one thing
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FDR did call for was an end to Prohibition,
which was a campaign promise he kept.
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After three years of Great Depression, many
Americans seriously needed a drink, and the
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government sought tax revenue, so no more
Prohibition.
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FDR won 57% of the vote and the Democrats
took control of Congress for the first time
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in a decade.
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While FDR gets most of the credit, he didn’t
actually create the New Deal or put it into
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effect.
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It was passed by Congress.
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So WTFDR was the New Deal?
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Basically, it was a set of government programs
intended to fix the depression and prevent
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future depressions.
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There are a couple of ways historians conceptualize
it.
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One is to categorize the programs by their
function.
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This is where we see the New Deal described
as three R’s.
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The relief programs gave help, usually money,
to poor people in need.
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Recovery programs were intended to fix the
economy in the short run and put people back
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to work.
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And lastly, the Run DMC program was designed
to increase the sales of Adidas shoes.
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No, alas, it was reform programs that were
designed to regulate the economy in the future
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to prevent future depression.
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But some of the programs, like Social Security,
don’t fit easily into one category, and
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there are some blurred lines between recovery
and reform.
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Like, how do you categorize the bank holiday
and the Emergency Banking Act of March 1933,
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for example?
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FDR’s order to close the banks temporarily
also created the FDIC, which insures individual
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deposits against future banking disasters.
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By the way, we still have all that stuff,
but was it recovery, because it helped the
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short-term economy by making more stable banks,
or was it reform because federal deposit insurance
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prevents bank runs?
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A second way to think about the New Deal is
to divide it into phases, which historians
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with their A number one naming creativity
call the First and Second New Deal.
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This more chronological approach indicates
that there has to be some kind of cause and
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effect thing going on because otherwise why
would there be a second New Deal if the first
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one worked so perfectly?
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The First New Deal comprises Roosevelt’s
programs before 1935, many of which were passed
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in the first hundred days of his presidency.
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It turns out that when it comes to getting
our notoriously gridlocked Congress to pass
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legislation, nothing motivates like crisis
and fear.
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Stan can I get the foreshadowing filter?
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We may see this again.
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So, in a brief break from its trademark obstructionism,
Congress passed laws establishing the Civilian
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Conservation Corps, which paid young people
to build national parks, the Agricultural
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Adjustment Act, the Glass Stegall act, which
barred commercial banks from buying and selling
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stocks, and the National Industrial Recovery
Act.
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Which established the National Recovery Administration,
which has lightening bolts in its claws.
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The NRA was designed to be government planners
and business leaders working together to coordinate
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industry standards for production, prices,
and working conditions.
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But that whole public-private cooperation
idea wasn’t much immediate help to many
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of the starving unemployed, so the Hundred
Days reluctantly included the Federal Emergency
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Relief Administration, to give welfare payments
to people who were desperate.
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Alright.
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Let’s go to the ThoughtBubble.
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Roosevelt worried about people becoming dependent
on relief handouts, and preferred programs
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that created temporary jobs.
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One section of the NIRA created the Public
Works Administration, which appropriated $33
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billion to build stuff like the Triborough
Bridge.
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So much for a balanced budget.
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The Civil Works Administration, launched in
November 1933 and eventually employed 4 million
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people building bridges, schools, and airports.
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Government intervention reached its highest
point however in the Tennessee Valley Authority.
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This program built a series of dams in the
Tennessee River Valley to control floods,
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prevent deforestation, and provide cheap electric
power to people in rural counties in seven
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southern states.
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But, despite all that sweet sweet electricity,
the TVA was really controversial because it
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put the government in direct competition with
private companies.
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Other than the NIRA, few acts were as contentious
as the Agricultural Adjustment Act.
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The AAA basically gave the government the
power to try to raise farm prices by setting
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production quotas and paying farmers to plant
less food.
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This seemed ridiculous to the hungry Americans
who watched as 6 million pigs were slaughtered
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and not made into bacon.
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Wait, Stan, 6 million pigs?
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But…bacon is good for me...
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Only property owning farmers actually saw
the benefits of the AAA, so most African American
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farmers who were tenants or sharecroppers
continued to suffer.
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And the suffering was especially acute in
Oklahoma, Texas, Kansas, and Colorado, where
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drought created the Dust Bowl.
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All this direct government intervention in
the economy was too much for the Supreme Court.
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In 1936 the court struck down the AAA in U.S.
v. Butler.
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Earlier in the Schechter Poultry case (AKA
the sick chicken case - finally a Supreme
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Court case with an interesting name) the court
invalidated the NIRA because its regulations
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“delegated legislative powers to the president
and attempted to regulate local businesses
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that did not engage in interstate commerce.”[1]
Thanks, ThoughtBubble.
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So with the Supreme Court invalidating acts
left and right, it looked like the New Deal
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was about to unravel.
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FDR responded by proposing a law that would
allow him to appoint new Supreme Court justices
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if sitting justices reached the age of 70
and failed to retire.
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Now, this was totally constitutional – you
can go ahead at the Constitution, if Nicolas
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Cage hasn’t already swiped it – but it
seemed like such a blatant power grab that
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Roosevelt’s plan to “pack the court”
brought on a huge backlash.
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Stop everything.
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I’ve just been informed that Nicolas Cage
stole the Declaration of Independence not
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the Constitution.
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I want to apologize to Nic Cage himself and
also everyone involved in the National Treasure
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franchise, which is truly a national treasure.
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Anyway, in the end, the Supreme Court began
upholding the New Deal laws, starting a new
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era of Supreme Court jurisprudence in which
the government regulation of the economy was
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allowed under a very broad reading of the
commerce clause.
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Because really isn’t all commerce interstate
commerce?
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I mean if I go to Jimmy John’s, don’t
I exit the state of hungry and enter the state
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of satisfied?
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Thus began the Second New Deal shifting focus
away from recovery and towards economic security.
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Two laws stand out for their far-reaching
effects here, the National Labor Relations
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Act, also called the Wagner Act, and the Social
Security Act.
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The Wagner Act guaranteed workers the right
to unionize and it created a National Labor
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Relations Board to hear disputes over unfair
labor practices.
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In 1934 alone there were more than 2,000 strikes,
including one that involved 400,000 textile
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workers.
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Oh, it’s time for the Mystery Document?
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Man, I wish there were a union to prevent
me from getting electrocuted.
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The rules here are simple.
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I guess the author of the Mystery Document.
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And I’m usually wrong and get shocked.
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“Refusing to allow people to be paid less
than a living wage preserves to us our own
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market.
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There is absolutely no use in producing anything
if you gradually reduce the number of people
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able to buy even the cheapest products.
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The only way to preserve our markets is an
adequate wage.”
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Uh I mean you usually don’t make it this
easy, but I’m going to guess that it’s
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Franklin Delano Roosevelt.
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Dang it!
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Eleanor Roosevelt?
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Eleanor.
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Of course it was Eleanor.
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Gah!
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The most important union during the 1930s
was the Congress of Industrial Organizations,
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which set out to unionize entire industries
like steel manufacturing and automobile workers.
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In 1936 the United Auto Workers launched a
new tactic called the sit-down strike.
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Workers at the Fisher Body Plant in Flint,
Michigan simply stopped working, sat down,
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and occupied the plant.
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Eventually GM agreed to negotiate, and the
UAW won.
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Union membership rose to 9 million people
as “CIO unions helped to stabilize a chaotic
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employment situation and offered members a
sense of dignity and freedom.”[2]
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That quote, by the way, is from our old buddy
Eric Foner.
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God, I love you, Foner.
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And unions played an important role in shaping
the ideology of the second New Deal because
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they insisted that the economic downturn had
been caused by underconsumption, and that
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the best way to combat the depression was
to raise workers’ wages so that they could
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buy lots of stuff.
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The thinking went that if people experienced
less economic insecurity, they would spend
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more of their money so there were widespread
calls for public housing and universal health
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insurance.
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And that brings us to the crowning achievement
of the Second New Deal, and/or the crowning
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achievement of its Communist plot, the Social
Security Act of 1935.
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Social Security included unemployment insurance,
aid to the disabled, aid to poor families
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with children, and, of course, retirement
benefits.
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It was, and is, funded through payroll taxes
rather than general tax revenue, and while
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state and local governments retained a lot
of discretion over how benefits would be distributed,
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Social Security still represented a transformation
in the relationship between the federal government
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and American citizens.
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Like, before the New Deal, most Americans
didn’t expect the government to help them
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in times of economic distress.
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After the New Deal the question was no longer
if the government should intervene, but how
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it should.
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For a while, the U.S. government under FDR
embraced Keynesian economics, the idea that
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the government should spend money even if
it means going into deficits in order to prop
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up demand.
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And this meant that the state was much more
present in people’s lives.
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I mean for some people that meant relief or
social security checks.
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For others, it meant a job with the most successful
government employment program, the Works Progress
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Administration.
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The WPA didn’t just build post offices,
it paid painters to make them beautiful with
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murals, it paid actors and writers to put
together plays, and ultimately employed more
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than 3 million Americans each year until it
ended in 1943.
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It also, by the way, payed for lots of photographers
to take amazing photographs, which we can
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show you for free because they are owned by
the government so I’m just going to keep
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talking about how great they are.
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Oh, look at that one, that’s a winner.
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Okay.
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Equally transformative, if less visually stimulating,
was the change that the New Deal brought to
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American politics.
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The popularity of FDR and his programs brought
together urban progressives who would have
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been Republicans two decades earlier, with
unionized workers - often immigrants, left
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wing intellectuals, urban Catholics and Jews.
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FDR also gained the support of middle class
homeowners, and he brought African Americans
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into the Democratic Party.
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Who was left to be a Republican, Stan?
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I guess there weren’t many, which is why
FDR kept getting re-elected until, you know,
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he died.
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But, fascinatingly, one of the biggest and
politically most important blocs in the New
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Deal Coalition was white southerners, many
of whom were extremely racist.
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Democrats had dominated in the South since
the end of reconstruction, you know since
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the other party was the party of Lincoln.
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And all those Southern democrats who had been
in Congress for so long became important legislative
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leaders.
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In fact, without them, FDR never could have
passed the New Deal laws, but Southerners
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expected whites to dominate the government
and the economy and they insisted on local
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administration of many New Deal programs.
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And that ensured that the AAA and the NLRA
would exclude sharecroppers, and tenant farmers,
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and domestic servants, all of whom were disproportionately
African American.
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So, did the New Deal end the depression?
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No.
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I mean, by 1940 over 15% of the American workforce
remained unemployed.
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But, then again, when FDR took office in 1933,
the unemployment rate was at 25%.
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Maybe the best evidence that government spending
was working is that when FDR reduced government
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subsidies to farms and the WPA in 1937, unemployment
immediately jumped back up to almost 20%.
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And many economic historians believe that
it’s inaccurate to say that government spending
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failed to end the Depression because in the
end, at least according to a lot of economists,
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what brought the Depression to an end was
a massive government spending program called
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World War II.
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So, given that, is the New Deal really that
important?
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Yes.
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Because first, it changed the shape of the
American Democratic Party.
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African Americans and union workers became
reliable Democratic votes.
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And secondly, it changed our way of thinking.
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Like, liberalism in the 19th century meant
limited government and free-market economics.
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Roosevelt used the term to refer to a large,
active state that saw liberty as “greater
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security for the average man.”
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And that idea that liberty is more closely
linked to security than it is to, like, freedom
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from government intervention is still really
important in the way we think about liberty
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today.
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No matter where they fall on the contemporary
political spectrum, politicians are constantly
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talking about keeping Americans safe.
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Also our tendency to associate the New Deal
with FDR himself points to what Arthur Schlessinger
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called the “imperial presidency.”
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That is, we tend to associate all government
policy with the president.
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Like, after Jackson and Lincoln’s presidencies
Congress reasserted itself as the most important
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branch of the government.
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But that didn’t happen after FDR.
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But above all that, the New Deal changed the
expectations that Americans had of their government.
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Now, when things go sour, we expect the government
to do something.
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We’ll give our last words today to Eric
Foner, who never Foner-s it in, the New Deal
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“made the government an institution directly
experienced in Americans’ daily lives and
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directly concerned with their welfare.”[3]
Thanks for watching.
00:14:23
I’ll see you next week.
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00:14:27
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00:14:31
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00:14:35
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00:14:41
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00:14:43
Thanks so much for watching Crash Course and
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be awesome.
00:14:46
________________
[1] Foner.
00:14:47
Give me Liberty ebook version p. 870
[2] Foner.
00:14:48
Give me Liberty ebook version p. 873
[3] Give me Liberty ebook version p. 898
