HIS 122--U.S. Since 1865
Lecture # 8
A New Deal for a Depressed Country
I. New Deal Takes Shape
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FDR takes office
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At first glance, FDR seemed to have little in common with most Americans--the
former governor of N.Y. came from privileged upper class background, could
trace roots back to earliest Dutch settlers in New Holland
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Still, FDR finds ways to inspire the American public
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among his strengths were:
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bulldog determination to succeed
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talent for surrounding himself with capable people and getting most out
of them (the Brain Trust)
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One of his greatest contributions to the politics of the decade was to
instill hope and courage in the people
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Beginning with his inaugural address, FDR lifts the spirit of the people--"We
have nothing to fear but fear itself"
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"The Hundred Days"
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Roosevelt was a pragmatist rather than and ideologue--"Take a method and
try it. If it fails, admit it frankly and try another"
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The pragmatic approach became very evident in FDR's first months in office,
which became known as the "Hundred Days"
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Legislation of the Hundred Days
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first step was to strengthen the financial structure
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ordered a 4 day bank holiday
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during this time, he got Congress to pass the Emergency Banking Relief
Act, which permitted sound banks to reopen under direction of the Treasury
Dept.
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in his first 'fireside chat,' Roosevelt told Americans it was safer to
keep money in a reopened bank than under the mattress
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Later, in June, Congress created the FDIC, which guaranteed bank deposits
of up to $5,000
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At about the same time, the Federal Securities Act was passed to help strengthen
confidence in the stock market--the SEC also created to regulate the stock
and bond markets
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FDR also officially abandoned the gold standard to help raise stock and
commodity prices and ease the debt burden of farmers and investors
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FDR next got Congress to pass the 21st Amendment, ending prohibition--ratified
by Dec. 1933
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Congress then passed laws to help ease the acute debt problem for farmers
and homeowners--the Farm Credit Administration and the Home Owner's Loan
Act--which gave low-interest rates on refinancing mortgages
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Relief measures
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March, CCC created to provide useful jobs for young men aged 18-25
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nearly 3 million men took to woods and fields in national forests, parks,
and recreation areas, and to help with soil conservation projects
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pay only $30/month, but that was more than many people got at the time
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directed by army officers and foresters, the men worked under a semi-military
atmosphere--discipline and living in a camp
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May, Federal Emergency Relief Administration passed, headed by Harry L.
Hopkins (who became the second most powerful person in administration)
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Hopkins spent $5 million within 2 hours of taking office
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FERA aimed at working through states
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$500 million in FERA funds supported state construction projects--over
5,000 public buildings and 7,000 bridges, organized adult literacy programs,
financed college education for poor students, and set up day-care centers
for low-income families
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Rebuilding economic infrastructure
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TVA
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1916, U.S. government had built power and nitrate (explosives and fertilizer)
plants at Muscle Shoals, Alabama--designed to produce cheap public power
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May 1933, Congress created the TVA to help bring electricity to one of
the poorest regions of the nation (Tenn., Ala., Ga., Miss., and N.C.)
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TVA brought more than power though, it also opened the rivers to navigation,
helped foster soil conservation and forestry, experimented with fertilizers,
and drew new industry into the area
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heavily criticized by some for government entering into private enterprise
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AAA (May 1933)
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AAA attempted to bring aid to farmers
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sought to raise prices by reducing production--getting farmers not to follow
natural inclination to produce more
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govt. paid farmers to plow under crops and slaughter livestock rather than
send them to market--became a public relations fiasco for New Deal when
so many in country were going hungry
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During the summer of 1933, AAA began to pay farmers to take acreage out
of production
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this helped raise price of farm products
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hurt those on the fringe--sharecroppers and tenant farmers
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National Industrial Recovery Act (June 1933)
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attempted to create a spirit of purpose and cooperation among businessmen
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granted immunity from antitrust prosecutions for major industries
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Also attempted to regulate labor conditions--outlawing child labor in some
industries and affirming workers' rights to organize and bargain collectively
(Section 7a)
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the National Recovery Administration (NRA) with help of business leaders
drafted codes of "fair competition" for each industry--setting production
limits, wages, and working conditions; also forbade price cutting and unfair
competitive practices
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NRA attempted to help spur recovery by breaking cycle of wage cuts, layoffs,
and falling prices
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Gen. Hugh Johnson (who had worked with War Industries Board in WWI) led
NRA
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NRA also launched huge publicity program (complete with Blue Eagle), urging
consumers to buy only from companies that adhered to the NRA's codes of
conduct
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the Public Works Administration (PWA), part of the NIRA also approved $3.3
billion dollars for a public-works program to create work for the jobless,
thus pumping money back into the economy
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program headed by Harold Ickes
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PWA spent $4 billion (in all) on nearly 35,000 projects--constructing dams,
bridges, and public buildings (post offices in particular)
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Reconstruction Finance Company (created under Hoover) remains active, loaning
several billion dollars to banks, insurance companies, and railroads to
help keep them stable
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Legislation after the Hundred Days
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In November, Harry Hopkins convinces Roosevelt to fund work relief projects
under the Civil Works Administration
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Between November 1933-Feb. 1934, CWA spends $1 billion on short-term projects
to provide immediate work for 4 million unemployed
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Roosevelt ends CWA in March, but as the PWA is taking too long to distribute
money for public works, FDR turns increasingly to Hopkins to help shape
relief policy
II. Problems for the New Deal
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New Deal doesn't help many people
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Southern Tenant Farmers' Union
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poorer tenant farmers and sharecroppers try to fight back against being
kicked off land by AAA policies, but landowners crush movement
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FDR's braintrust is split between concentrating on pulling up the agricultural
section as a whole versus helping the rural poor
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In 1935, Congress passes several pieces of legislation to help aid farm
laborers, tenants, and sharecroppers
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New Deal has not ended depression--most people enthusiastically support
FDR's programs but some challenge it
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As New Deal stalls in summer of 1934, FDR faces number of challenges from
conservatives and from radicals
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1934, number of corporate leaders organize American Liberty League--accuse
New Deal of leading to socialism
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Father Charles Coughlin and Huey Long
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Both Coughlin and Long support FDR at first, then turn against his policies
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Coughlin
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Catholic priest with radio program broadcast out of Detroit, large following
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after turning against Roosevelt, Coughlin tells his listeners that capitalism
is dying, and that a new system based on "social justice" should be created
(not always clear on what "social justice" exactly means)
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Coughlin forms the National Union of Social Justice in Nov. 1934
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He argues that nation's problems were caused by bankers--and that the banks
should be controlled by the national government
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Arguments against banks took a steadily increasing anti-Semitic tone as
time goes on
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Coughlin's support wanes by mid-1935, and he is censured for his political
activities by Catholic church
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Huey Long ("Kingfish")
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Governor of Louisiana (then U.S. Senator)--very ambitious
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starts a Share Our Wealth program in Jan. 1934
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Long proposed to:
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liquidate all personal fortunes above a certain amount
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give every family enough money to buy a home, an automobile, and a radio
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elderly would receive pensions
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worthy boys would be sent to college
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would establish a minimum wage, shortened work week, a balanced farm program,
and immediate payment of soldiers' bonuses
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Long's program drew immense following nationwide--claimed more than 27,000
Share Our Wealth clubs and 7.5 million followers
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Long assassinated in 1935--Share Our Wealth continues but declines swiftly
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Biggest challenge to New Deal programs comes from the U.S. Supreme Court
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Court strikes two blows to New Deal in 1935
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Both the AAA and the NIRA were ruled unconstitutional by the Court
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These two programs at heart of FDR's plan for economic recovery
III. A New Direction for the Second New Deal
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Despite the challenges from the left and right, FDR remains popular with
most Americans and easily wins reelection in 1936
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Reason for FDR's continued popularity comes from a shift in New Deal policy--what
is called the Second New Deal
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By the middle of 1935, FDR is fed up with his critics in business and industry--refuses
to try and please everyone
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2d New Deal focuses on needs of urban and rural poor and the workers
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These new programs greatly expand federal relief efforts to American workers
and pump money into economy
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Driving idea behind many of 2d New Deal programs is deficit spending
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Proposed by British economist John Maynard Keynes
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argues that deficit spending in a positive way will pump money into the
economy and combat the depression
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Second New Deal programs
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WPA, 1935
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Headed by Harry Hopkins
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spends $5 billion dollars immediately ($11 billion over 9 years) to put
people to work
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8 million people work in construction (34,000 construction projects), clerical,
professional, and arts
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murals, photographs
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Slave narratives
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LeConte, Park, and Baldwin Halls on campus constructed under WPA
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National Labor Relations Act (Wagner Act), 1935
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stimulates union growth
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requires employers to recognize and bargain with their employees' unions
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establishes the National Labor Relations Board to act as a watchdog in
labor-management relations
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Resettlement Administration (1935)
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RA loans money to small farmers, tenants, and sharecroppers so they can
acquire their own farms on productive land
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also creates the Rural Electrification Administration (REA)--provides power
to rural America
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RA replaced in 1937 by the Farm Security Administration to make loans to
prevent marginal farmers from sinking further.
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Social Security Act, 1935
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provisions
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provides for old-age pensions (main thrust of act)
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survivors' benefits for families of deceased workers
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unemployment insurance
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aid to dependent mothers and children and to the handicapped
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businessmen dislike the act--imposed taxes to finance the old-age and survivors'
benefits
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Revenue Act, 1935
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Raised tax rates on incomes over $50,000
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created federal estate and gift taxes
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established federal tax on corporations
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Fair Labor Standards Act, 1938
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Set minimum wage and maximum work-week
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also prohibited child labor under age of 16
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FDR argues that Second New Deal saves the capitalist system by "reforming
its excesses and adressing its less desirable social consequences"
III. New Deal Draws to a Close
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Court-packing
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In 1937, FDR tires of Supreme Court striking down New Deal programs
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Proposes a court-reform bill allowing president to appoint a new SC justice
to sit alongside any justice over 70 who will not retire--aimed at neutralizing
those justices who oppose his programs
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Congress kills this "court-packing" plan
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Still, some justices evidently see the light because no more New Deal programs
struck down
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This move hurt FDR's standing among American public badly for a time
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New economic slumps
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Roosevelt suffers another setback when economy slumps in fall of 1937
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Recession caused by
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reduced consumer spending power because of social-security deductions
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cutbacks in New Deal work and relief programs as federal government tries
to balance the budget
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1938, FDR and Congress authorize new spending to revive and expand the
PWA, WPA, and other work programs
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revival of economy begins and unemployment declines
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New Deal's end
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During FDR's second term, Congress passes only a few reforms--notably the
Fair Labor Standards Act and the AAA of 1938 (also struck down by the Supreme
Court)
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Coalition of conservative southern Democrats and Republicans blocks further
reform and attacks some of New Deal agencies
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Roosevelt attempts to break up anti-New Deal coalition by asking voter
to defeat conservatives in 1938 elections, but voters elect even more conservatives
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By 1939, FDR and Congress begin to turn attention to foreign affairs--WWII--no
new domestic reforms attempted
IV. A Shadow over the World
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Gathering fears about the world
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Americans feel more positive about their own country by the late 1930s,
but fear gathering war clouds abroad
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These underlying worries were highlighted on Halloween 1938 with Orson
Welles radio broadcast of the War of the Worlds--caused nationwide
panic
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Rise of fascism
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Americans had good reason to be concerned about world affairs
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Rise of fascism in Europe
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in 1922, Benito Mussolin leads fascists to power in Italy
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Jan. 1933, Hitler becomes chancellor of Germany
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quickly establishes absolute dictatorship
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persecutes Jews
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embarks on program of military buildup and conquest
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1936, Hitler's troops reoccupy Rhineland, two years later Germany annexes
Austria into a "greater Germany"
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Also in 1938, at Munich Conference, France and Britain agree to allow Hitler
to take over the Sudetenland in western Czechoslovakia
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in 1935, Italy invade Ethiopia--world does nothing
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Asia
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1931-33, Japan invades and conquers Chinese province of Manchuria--sets
up a puppet state there (one favorable to Japan)
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1937, Japan begins conquest of rest of China
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1936--Germany, Italy, and Japan form Axis Alliance
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This war is not ours
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Most Americans critical of U.S. involvement in WWI, resolve not to become
embroiled in international war again
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Congressional investigative committes during 1934-36 determine that bankers
and manufacturers in U.S. made huge fortunes off of WWI, findings reinforce
anti-war sentiment
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1935-1937, Congress passes series of Neutrality Acts that embody anti-war
feelings
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prohibit U.S. from making loans or selling arms to warring nations
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ban American travel on ships of warring nations