The First Hundred Days

The First Hundred Days

The emergency banking bill was merely the first of many sweeping changes the Roosevelt administration guided through Congress in the one hundred days between March 9 and June16, 1933. Together with other bills passed during the subsequent sessions of Congress between 1934 and 1936, Roosevelt created the basis of what would later be known as the New DealA series of economic reforms and programs that were supported by the Roosevelt administration and approved by Congress during Roosevelt’s first term. These programs sought to stabilize the banking industry and monetary and agricultural markets and provide temporary jobs.. For the first one hundred days of his administration, and for his first three years in office, nearly every proposal Roosevelt endorsed and sent to the floor of Congress was passed by large majorities. Not since George Washington had a US president enjoyed such influence over his nation’s government. For some, even the depths of the Great Depression could not justify the concentration of so much power into the hands of one man.

Part of the reason Congress went along with Roosevelt was that the changes his administration introduced were not as radical as his critics had feared. Roosevelt refused to consider having the federal government take direct control of banks or factories—a strategy known as nationalization that would become common in Socialist nations and dictatorships. Roosevelt sought advice from a rather conservative-minded group of well-educated and successful individuals. Known informally as the “Brains Trust,” Roosevelt’s informal advisers shared the perspective and background of other influential leaders in business and hoped to reform rather than replace the nation’s economic system.

Representing the best and the brightest in many fields, Roosevelt’s advisers offered a variety of ideas. The president tried nearly all of them in one form or another. In addition to this informal advisory team, Roosevelt appointed a number of well-qualified individuals to his cabinet. Secretary of Labor Frances Perkins and Interior Secretary Harold IckesSecretary of the Interior and one of the most influential members of the Roosevelt administration, Ickes was overseer of various federal works projects and supported greater autonomy for Native American tribes. were two of the most influential cabinet members, and many of the strategies the president attempted were those supported by Perkins and Ickes.

Figure 7.4

Frances Perkins was an influential member of Roosevelt’s cabinet and one of the architects of the New Deal as the secretary of labor.

Frances PerkinsThe longest-serving Secretary of Labor and the first woman in the cabinet, Perkins skillfully represented the concern of labor leaders within the administration. Although she often worked to secure the support of business leaders, she was consistent in her belief of the right of workers to bargain collectively with their employers. was able to secure the support of organized labor behind the president’s plans while also finding support among the leading business men of her day. Ickes administered the public face of the New Deal—government-funded construction projects meant to provide jobs while developing the nation’s infrastructure. Although each of the New Deal Programs Roosevelt’s advisers championed represented a fundamental change in the expectations of the federal government, many of them were also similar to those being considered by the Hoover administration in the year before Roosevelt’s inauguration. The crucial difference was that under Roosevelt, federal programs to stimulate the economy operated on a much more ambitious scale.

By the mid-1930s, the federal government was borrowing hundreds of millions of dollars each year. One-third of the federal budget was spent on public employment projects and relief for the poor. At the same time, federal budget deficits still represented a relatively small percentage of the GDP (gross domestic product)—the total market value of all goods and services produced each year. Federal spending during the Depression was certainly greater than any peacetime period in the nation’s history, but it still represented only a fraction of what the government spent during World War I. In addition, the US government would spend more in one year fighting World War II than was spent funding every New Deal program combined.

However, throughout its history the nation had tolerated large deficits and the expansion of government power during wartime and expected contraction and thrift during peacetime. The idea that the government should borrow money and provide direct employment during recessions and depressions had been raised since the 1830s but had never been seriously considered by federal leaders until the beginning of the Great Depression. For example, during a recession at the turn of the century, a group of men called Coxey’s Army marched to Washington asking the government to borrow money to provide jobs for the unemployed. These men were branded as radicals, and leaders such as Jacob Coxey were arrested. Keeping this background in mind, one can see why each of the following programs approved during Roosevelt’s first one hundred days reflected a very different way of viewing the role of the federal government.

• March 20: The Economy Act sought to reduce the budget deficit by reducing government salaries by an average of 15 percent and also enacted cuts to pensions of federal employees including veterans.
• March 22: The Beer and Wine Revenue Act amended the Volstead Act by permitting the production and sale of wine and beer that possessed alcohol content no greater than 3.2 percent. These products were subjected to special taxes, thereby increasing government revenue and decreasing the expense related to federal enforcement of prohibition. Congress also approved the Twenty-First Amendment, which repealed the Eighteenth Amendment and officially ended prohibition when the last state required to ratify the amendment did so in December 1933.
• March 31: The Emergency Conservation Work Act created the Civilian Conservation Corps (CCC), which provided a total of 2 million jobs for young men from 18 to 25 between its creation and America’s entry into World War II. The CCC usually employed 250,000 men at any point in its history and developed state and national parks. CCC workers also worked on hundreds of conservation projects and planted an estimated 3 billion trees. Many participants were able to take vocational courses or earn their high-school diplomas. The men earned wages of $30 per month and most expenses associated with room and board. Of their wages, $25 was sent directly home to their families.

Figure 7.5

Young men at work building a trail as part of a Civilian Conservation Corps project. The CCC employed young men between the ages of eighteen and twenty-five, as well as a number of veterans of all ages who needed work.

• April 19: The United States temporarily abandoned the gold standard, which permitted more money to be circulated. This action helped to stabilize commodity prices, which pleased farmers and helped to ensure stability in food production and distribution. At the same time, critics suggested that abandoning the gold standard would reduce domestic and international faith in the strength of the dollar and lead to inflation. However, consumer prices remained low throughout the Depression.
• May 12: The Federal Emergency Relief Act created the Federal Emergency Relief Administration (FERA), which increased the funds available to states under Hoover’s plan. It also altered these funds from loans that must be repaid to federal grants. Although some FERA funds were used for direct cash payments, most of the $3 billion that was provided to the states was used to provide jobs in various public works projects. Roosevelt and those in Congress hoped to avoid creating a regular schedule of direct cash payments to individuals, a practice that was known as “the dole” in the states and cities that offered such payments. The dole was similar to modern welfare payments and carried the same negative stigma during the 1930s as it would in modern times. However, creating jobs required a much larger initial investment, and it would not be until the creation of the Works Progress Administration of 1935 (WPA) that the federal government would offer substantial funding for public works projects as the primary source of direct relief to the unemployed. FERA operated between 1933 and 1935.
• May 12: The Agricultural Adjustment Act (AAA) farm income had declined substantially between 1929 and 1932 as a result of overproduction and declining prices. The AAA sought to stabilize prices by offering payments to farmers who agreed to not maximize their production. The funds for these payments were to be raised by a tax on processors of agricultural commodities such as cotton gins or mills. Congress also passed the Emergency Farm Mortgage Act, which facilitated the refinancing of farm loans.
• May 18: The Tennessee Valley Authority Act created the Tennessee Valley Authority (TVA) and authorized federal funds for the creation of hydroelectric dams and other projects meant to provide employment and promote development within one of the most economically distressed regions.
• May 27: The Federal Securities Act established legal standards for disclosure of information relevant to publicly traded securities such as stocks and bonds. Together with subsequent legislation, the federal government established the Securities and Exchange Commission, which regulated the investment industry.
• June 13: The Home Owners’ Loan Corporation Act established the Home Owners’ Loan Corporation, which provided refinancing for home mortgages much like the government offered to farmers. This agency refinanced one in five US homes, providing lower interest rates and lower monthly payments that permitted millions of American families to avoid foreclosure and possible homelessness.
• June 16: The Glass-Steagal Banking Act established the Federal Deposit Insurance Commission (FDIC) that regulated the banking industry and provided federal insurance for many kinds of bank deposits. The act also separated commercial banking, investment banking, and insurance by prohibiting any single company from providing all of these services and prohibiting officers of an investment firm to also have a controlling interest in a bank or insurance company. These conflict of interest provisions were repealed in 1999.
• June 16: The National Industrial Recovery Act was a two-part law creating the Public Works Administration (PWA) and the National Recovery Administration (NRA). The PWA allocated a total of $6 billion in private contracts to build bridges, dams, schools, hospitals, and vessels for the navy during the Depression. The NRA was much more controversial as it established trade unions in various industries that drafted their own rules regarding prices and production. These trade unions often operated as cartels that were controlled by the largest corporations in each industry, despite the ostensible government regulation and participation of labor representatives. The Supreme Court declared the NRA to be an unconstitutional use of government power in May 1935.