Subtitles section Play video Print subtitles Episode 34 – The New Deal Hi, I'm John Green, this is CrashCourse U.S. history, and today we're going to get a little bit controversial, as we discuss the FDR administration's response to the Great Depression: the New Deal. That's the National Recovery Administration, by the way, not the National Rifle Association or the No Rodents Allowed Club, which I'm a card-carrying member of. Did the New Deal end the Depression (spoiler alert: mehhh)? More controversially, did it destroy American freedom or expand the definition of liberty? In the end, was it a good thing? Mr. Green, Mr. Green. Yes. Ohh, Me from the Past, you are not qualified to make that statement. What? I was just trying to be, like, provocative and controversial. Isn't that what gets views? You have the worst ideas about how to make people like you. But anyway, not EVERYTHING about the New Deal was controversial. This is CrashCourse, not TMZ. intro The New Deal redefined the role of the federal government for most Americans and it led to a re-alignment of the constituents in the Democratic Party, the so-called New Deal coalition. (Good job with the naming there, historians.) And regardless of whether you think the New Deal meant more freedom for more people or was a plot by red shirt wearing Communists, the New Deal is extremely important in American history. Wait a second. I'm wearing a red shirt. What are you trying to say about me, Stan? As the owner of the means of production, I demand that you dock the wages of the writer who made that joke. So after his mediocre response to the Great Depression, Herbert Hoover did not have any chance of winning the presidential election of 1932, but he also ran like he didn't actually want the job. Plus, his opponent was Franklin Delano Roosevelt, who was as close to a born politician as the United States has ever seen, except for Kid President. The phrase New Deal came from FDR's campaign, and when he was running FDR suggested that it was the government's responsibility to guarantee every man a right to make a comfortable living, but he didn't say HOW he meant to accomplish this. Like, it wasn't gonna come from government spending, since FDR was calling for a balanced budget and criticizing Hoover for spending so much. Maybe it would somehow magically happen if we made alcohol legal again and one thing FDR did call for was an end to Prohibition, which was a campaign promise he kept. After three years of Great Depression, many Americans seriously needed a drink, and the government sought tax revenue, so no more Prohibition. FDR won 57% of the vote and the Democrats took control of Congress for the first time in a decade. While FDR gets most of the credit, he didn't actually create the New Deal or put it into effect. It was passed by Congress. So WTFDR was the New Deal? Basically, it was a set of government programs intended to fix the depression and prevent future depressions. There are a couple of ways historians conceptualize it. One is to categorize the programs by their function. This is where we see the New Deal described as three R's. The relief programs gave help, usually money, to poor people in need. Recovery programs were intended to fix the economy in the short run and put people back to work. And lastly, the Run DMC program was designed to increase the sales of Adidas shoes. No, alas, it was reform programs that were designed to regulate the economy in the future to prevent future depression. But some of the programs, like Social Security, don't fit easily into one category, and there are some blurred lines between recovery and reform. Like, how do you categorize the bank holiday and the Emergency Banking Act of March 1933, for example? FDR's order to close the banks temporarily also created the FDIC, which insures individual deposits against future banking disasters. By the way, we still have all that stuff, but was it recovery, because it helped the short-term economy by making more stable banks, or was it reform because federal deposit insurance prevents bank runs? A second way to think about the New Deal is to divide it into phases, which historians with their A number one naming creativity call the First and Second New Deal. This more chronological approach indicates that there has to be some kind of cause and effect thing going on because otherwise why would there be a second New Deal if the first one worked so perfectly? The First New Deal comprises Roosevelt's programs before 1935, many of which were passed in the first hundred days of his presidency. It turns out that when it comes to getting our notoriously gridlocked Congress to pass legislation, nothing motivates like crisis and fear. Stan can I get the foreshadowing filter? We may see this again. So, in a brief break from its trademark obstructionism, Congress passed laws establishing the Civilian Conservation Corps, which paid young people to build national parks, the Agricultural Adjustment Act, the Glass Stegall act, which barred commercial banks from buying and selling stocks, and the National Industrial Recovery Act. Which established the National Recovery Administration, which has lightening bolts in its claws. The NRA was designed to be government planners and business leaders working together to coordinate industry standards for production, prices, and working conditions. But that whole public-private cooperation idea wasn't much immediate help to many of the starving unemployed, so the Hundred Days reluctantly included the Federal Emergency Relief Administration, to give welfare payments to people who were desperate. Alright. Let's go to the ThoughtBubble. Roosevelt worried about people becoming dependent on relief handouts, and preferred programs that created temporary jobs. One section of the NIRA created the Public Works Administration, which appropriated $33 billion to build stuff like the Triborough Bridge. So much for a balanced budget. The Civil Works Administration, launched in November 1933 and eventually employed 4 million people building bridges, schools, and airports. Government intervention reached its highest point however in the Tennessee Valley Authority. This program built a series of dams in the Tennessee River Valley to control floods, prevent deforestation, and provide cheap electric power to people in rural counties in seven southern states. But, despite all that sweet sweet electricity, the TVA was really controversial because it put the government in direct competition with private companies. Other than the NIRA, few acts were as contentious as the Agricultural Adjustment Act. The AAA basically gave the government the power to try to raise farm prices by setting production quotas and paying farmers to plant less food. This seemed ridiculous to the hungry Americans who watched as 6 million pigs were slaughtered and not made into bacon. Wait, Stan, 6 million pigs? But…bacon is good for me... Only property owning farmers actually saw the benefits of the AAA, so most African American farmers who were tenants or sharecroppers continued to suffer. And the suffering was especially acute in Oklahoma, Texas, Kansas, and Colorado, where drought created the Dust Bowl. All this direct government intervention in the economy was too much for the Supreme Court. In 1936 the court struck down the AAA in U.S. v. Butler. Earlier in the Schechter Poultry case (AKA the sick chicken case - finally a Supreme Court case with an interesting name) the court invalidated the NIRA because its regulations “delegated legislative powers to the president and attempted to regulate local businesses that did not engage in interstate commerce.” Thanks, ThoughtBubble. So with the Supreme Court invalidating acts left and right, it looked like the New Deal was about to unravel. FDR responded by proposing a law that would allow him to appoint new Supreme Court justices if sitting justices reached the age of 70 and failed to retire. Now, this was totally constitutional – you can go ahead at the Constitution, if Nicolas Cage hasn't already swiped it – but it seemed like such a blatant power grab that Roosevelt's plan to “pack the court” brought on a huge backlash. Stop everything. I've just been informed that Nicolas Cage stole the Declaration of Independence not the Constitution. I want to apologize to Nic Cage himself and also everyone involved in the National Treasure franchise, which is truly a national treasure. Anyway, in the end, the Supreme Court began upholding the New Deal laws, starting a new era of Supreme Court jurisprudence in which the government regulation of the economy was allowed under a very broad reading of the commerce clause. Because really isn't all commerce interstate commerce? I mean if I go to Jimmy John's, don't I exit the state of hungry and enter the state of satisfied? Thus began the Second New Deal shifting focus away from recovery and towards economic security. Two laws stand out for their far-reaching effects here, the National Labor Relations Act, also called the Wagner Act, and the Social Security Act. The Wagner Act guaranteed workers the right to unionize and it created a National Labor Relations Board to hear disputes over unfair labor practices. In 1934 alone there were more than 2,000 strikes, including one that involved 400,000 textile workers. Oh, it's time for the Mystery Document? Man, I wish there were a union to prevent me from getting electrocuted. The rules here are simple. I guess the author of the Mystery Document. And I'm usually wrong and get shocked. “Refusing to allow people to be paid less than a living wage preserves to us our own market. There is absolutely no use in producing anything if you gradually reduce the number of people able to buy even the cheapest products. The only way to preserve our markets is an adequate wage.” Uh I mean you usually don't make it this easy, but I'm going to guess that it's Franklin Delano Roosevelt. Dang it! Eleanor Roosevelt? Eleanor. Of course it was Eleanor. Gah! The most important union during the 1930s was the Congress of Industrial Organizations, which set out to unionize entire industries like steel manufacturing and automobile workers. In 1936 the United Auto Workers launched a new tactic called the sit-down strike.