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Tennessee Valley Authority
Administrator: David Lilienthal
Dates: 1933--present
| President Franklin
Roosevelt needed innovative solutions if the New Deal was to lift the
nation out of the depths of the Great Depression. And TVA was one of
his most innovative ideas. Roosevelt envisioned TVA as
a totally different kind of agency. He asked Congress to create
“a corporation clothed with the power of government but possessed
of the flexibility and initiative of a private enterprise.” On
May 18, 1933, FDR signed the Tennessee Valley Authority Act. Even by Depression standards, the Tennessee Valley was in sad shape in 1933. Much of the land had been farmed too hard for too long, eroding and depleting the soil. Crop yields had fallen along with farm incomes. The best timber had been cut. TVA developed fertilizers, taught farmers how to improve crop yields, and helped replant forests, control forest fires, and improve habitat for wildlife and fish. The most dramatic change in Valley life came from the electricity generated by TVA dams. Electric lights and modern appliances made life easier and farms more productive. Electricity also drew industries into the region, providing desperately needed jobs. In spite of its laudable goals, the TVA drew harsh criticism from many quarters. Businessmen, particularly the electric utility companies, condemned the federal government through TVA for competing unfairly with private enterprise. They pointed out that the government did not have to make a profit or pay taxes--burdens that private businesses bore. The government retorted that it wasn't competing with business in the Teneessee Valley because no private companies served the area because it was unprofitable. Nevertheless, the congtroversy over the TVA was one of the hottest and longest lasting of the entire New Deal. (Indeed, the controversy, like the TVA, continues up to the present day.) |
  Top: FDR signs the TVA Act. Bottom: One of the TVA dams under construction. |
Home Owners Loan Corporation (HOLC)
Dates: 1933-1936
| Congress helped the middle class with the
formation of the Home Owners Loan Corporation (HOLC). HOLC
provided low-interest refinancing of mortgages to help people retain
their homes. HOLC also offered home-improvement loans—both to
improve the value of property, and also to give employment to
contractors and laborers. Politically, the formation of the HOLC was a
great boon to FDR, who needed the support of the middle class for his
New Deal. (Symbolically, there was no greater symbol of
middle-class status in America than owning your own home.)
So here again was an example of FDR's political acumen during the First
New Deal. However, as with the TVA, private banks protested that
the federal government was unfairly competing with private enterprise.
Thus, in 1934, Congress created the National
Housing Authority which established the Federal Housing
Administration.
The FHA continued many of the functions of HOLC (which ceased
operations
in 1936), but operated through private banks (which naturally took a
portion
of the funds for their efforts). |
Reform
| Thus far, most of the programs from the
First Hundred Days dealt with the first two of our "three r's":
relief and recovery. Now we come top the third leg of that
triangle: reform. Here's where the Brains Trusters sat down
and examined the circumstances that led to the Stock Market Crash of
1929, and searched for ways to prevent this event from happening again.
Having identified what they believed were the problems, they
then constructed solutions. It is important for us to remember that these men (and they were almost exclusively men) had to work with the data they had on hand. They did not have computers or any of the devices we take for granted today to give them information and process it. They were still living very closely to events, which inevitably affected their judgment of the causes of the Depression. Still, even with these limitations, the solutions they offered were very sound and actually quite conservative. By reforming banking and stock trading practices, these New Dealers helped stabilize--and thus save--capitalism. |
Federal Securities Act (1933)
| While FDR and Congress debated measures for
public relief and economic recovery, all agreed on swift action to
reform the way Wall Street did business. On May 27, 1933,
Congress
passed the Federal Securities Act--often referred to as the "truth in
securities" act--which established laws governing how stocks were
traded. It had two basic objectives: (1) it
required that investors receive financial and other significant
information concerning securities being offered for sale; and (2)
prohibited deceit, misrepresentations, and other fraud in the sale of
securities. |
Banking Act of 1933 (aka Glass-Steagall )
| One of the final reforms passed before the
73rd Congress adjourned was the Banking Act. This act created the
Federal Deposit Insurance Corporation (FDIC), which insured deposits up
to $1,000 in approved, sound banks. This act also
separated investment banking from commercial (i.e., "regular") banking.
In other words, it would not allow, say, Bank of America, to use
Mr. Jones' life savings to help finance Hewlett-Packard's merger with
Compaq. (Click on the above link to read about
Glass-Steagall.) (You'll rest easy, I'm sure, in the knowledge that Congress repealed this act in 1999 with Texas Senator Phil Gramm's Banking Reform Act. Your friendly local bank is now free to mix your money with those of the Big Boys.) |
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