Dq__5_(chapter_26)[1]

Student Name AP US History Period 2 January 31, 2008

Chapter 26: The New Deal DQ #5: FDR was overwhelming re-elected in 1936 yet by 1938, the New Deal has sputtered to nearly a complete halt. Explain the forces which caused such by focusing on the economic situation and FDR’s own political blunders. I. Economic Situation of 1937~1938 A. Economic Conditions b/w 1935~1937 • a rise in economy  improvement in national income ($40 billion in 1932 to $72 billion in 1937)  unemployment fallen to 9.2 percent (1937)  average earnings of employed risen from $1,195(1935) to $1,341(1937) • (2) huge federal deficits---(1936) deficit of $4.4 billion in a budget of $8.5 billion B. Causes of Recession of 1937 • debatable causes of the recession: social security tax (reduced consumer spending), fiscal Total Employment from policies, monetary policies of the government 1920s to 1940s • Federal Reserve double reserve requirements in belief that banks had recovered enough & it would have no effect on money supply  (according to Doir Friedman & Andrew Schwartz) banks wanted to hold large excess reserves as protection against runsresponded by reducing deposits by making fewer loans lowered money supplystart of recession • Roosevelt---thought it right time for retrenchment: attempt to balance federal budget  convinced by Treasury secretary Henry Morgenthau and other economists that the greatest problem was inflation  b/w July 1937~June 1938--- budget of fiscal 1938 reduced to $6.8 million  b/w January ~August 1937--- cut WPA in half, laying off 1.5 million relief workers C. “Roosevelt Recession” • believed, at the time, to be the direct results of fed. gov’t decision to reduce spending • index of industrial production dropped from 117(Aug. 1937) to 76 (May 1938) • 4 million workers left unemployed---percentage of jobless rose to 12.5 % • president asked Congress for emergency appropriation of $5 billion for public works & relief programs (adopting Keynesian economics) • FDR unleashed campaign against monopoly power (casted as reason for depression)- result: (1) Thurman Arnold (head of antitrust division of Justice Department) (2) Temporary National Economic Committee (TNEC) • economy began recover in 1938---restored to 1937 level in 1939 II. FDR’s Political Blunders A. Court-packing • Roosevelt believed that all New Deal programs were at risk of Supreme Court’s attacks • February 1937- Judicial Reorganization Bill- proposal of general overhaul of federal court system  allowed president to appoint new federal judge for each judge over the age of 70.5  appointments limited to 50, no more than six in Supreme Court  stated that reasons for such actions were (1) infirmity of judicial incumbents (2) need for modern outlook • strong oppositions from both Democrats & Republicans---evidence of president’s “hunger for power” • ended only by Supreme Court becoming more liberal and supporting New Deal legislations [National Labor Relations Acts, Social Security Act (1937)] B. Inability for the New Deal to completely End the Great Depression • program unable to appease and solve crucial economic collapse for over a decade---people begin growing weary III. Consequences of FDR’s Mistakes and Economic Setback A. Defeat of the New Deal the highlighted part is my example of when there is no choice but to write a complete sentence---Clarification • FDR antagonized many conservatives as well as those of his own party with the “courtpacking” plan

• recession shaken and arouse skepticism & doubt in the efficiency of New Deal programs--also reminder that the Great Depression had not ceased---no longer automatically followed FDR B. Loss of Support---Midterm Elections of 1938 • FDR isolated middle-class nonunionists w/ federal denial to assist employers during sitdown strikes & Fair Labor Standards Act---mid. class viewed gov’t promoting industrial unionism • Republicans again regain ground in Congress (8 Senate seats, 79 HoR)---reduced Demo. majority C. Roosevelt’s Attention away from Reform to World Crisis in Europe---Rise of Nazi Germany CONCLUSION: Despite of Franklin Roosevelt’s vast popularity and support prior and during the Election of 1935, his subsequent subversive economic policies and notorious court-packing decision took a toll on the public support and public view of the New Deal. Consequently, at the end of his second presidential term, after mistakenly leading the nation into a recession, isolating himself from his former supporters, and diverting the national attention to world crisis abroad, Roosevelt’s tenyear-long New Deal program came to an end.