Rosenfeld Susan. Encyclopedia of American Historical Documents

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Franklin Roosevelt, Message to Congress

on the Tennessee Valley Authority, 1933

Message of April 10, 1933, to Congress accompanying Presi-

dent Franklin D. Roosevelt’s proposal for legislation to create

the Tennessee Valley Authority (TVA). The Roosevelt adminis-

tration sought to expand the federally owned project at Mus-

cle Shoals on the Tennessee River in Alabama into an

ambitious program for the economic and social development

of the Tennessee River Valley, an area covering seven states

that was frequently ravaged by floods. The TVA envisioned in

FDR’s message was to be a publicly owned corporation

charged with directing the development of the Tennessee River

drainage basin for the region’s social and economic benefit.

The regional planning authority’s mandate included rural elec-

trification, flood control, reforestation, fertilizer production,

agricultural development, and soil preservation. Roosevelt

asserted that the welfare of millions of Americans depended

on the enactment of his bold proposal. Congress passed legis-

lation creating the TVA on May 18, 1933. TVA brought full

employment, cheap electric power, low-cost housing, soil

restoration, and reforestation to the area.

________________________

_______________________

The continued idleness of a great national investment in

the Tennessee Valley leads me to ask the Congress for leg-

islation necessary to enlist this project in the service of the

people.

It is clear that the Muscle Shoals development is but a

small part of the potential public usefulness of the entire

Tennessee River. Such use, if envisioned in its entirety,

transcends mere power development: it enters the wide

fields of flood control, soil erosion, afforestation, elimina-

tion from agricultural use of marginal lands, and distribu-

tion and diversification of industry. In short, this power

development of war days leads logically to national plan-

ning for a complete river water shed involving many States

and the future lives and welfare of millions. It touches and

gives life to all forms of human concerns.

I, therefore, suggest to the Congress legislation to cre-

ate a Tennessee Valley Authority—a corporation clothed

with the power of government but possessed of the flexi-

bility and initiative of a private enterprise. It should be

charged with the broadest duty of planning for the proper

use, conservation and development of the natural

resources of the Tennessee River drainage basin and its

adjoining territory for the general social and economic

welfare of the nation. This Authority should also be

clothed with the necessary power to carry these plans into

effect. Its duty should be the rehabilitation of the Muscle

Shoals development and the coordination of it with the

wider plan.

Many hard lessons have taught us the human waste

that results from lack of planning. Here and there a few

wise cities and counties have looked ahead and planned.

But our nation has “just grown.” It is time to extend plan-

ning to a wider field, in this instance comprehending in

one great project many States directly concerned with the

basin of one of our greatest rivers.

This in a true sense is a return to the spirit and vision

of the pioneer. If we are successful here we can march on,

step by step, in a like development of other great natural

territorial units within our borders.

Source:

Landmark Documents in American History, Facts On File, Inc.

Agricultural Adjustment Act (AAA), 1933

New Deal legislation enacted by the U.S. Congress on May

12, 1933, to raise farm income and commodity prices—and

to reduce surpluses of basic commodities—by curtailing

production. This act replaced the Federal Farm Board created

by the Agricultural Marketing Act of June 15, 1929, that

implemented the farm relief policy of President Herbert

Hoover’s administration. The board consisted of eight mem-

bers and the U.S. secretary of agriculture and was to pro-

mote the marketing of agricultural products through

cooperatives and stabilization corporations. The act replaced

the subsidy and price-fixing proposals of the McNary-

Haugen Bill.

Its efforts proved unsuccessful and was replaced in 1933

by the Agricultural Adjustment Act. Farmers who voluntarily

reduced their production of various staples were to receive

payments derived from taxes levied on the processors of cer-

tain farm products. Restricted commodities included hogs,

corn, wheat, cotton, rice, dairy items, and tobacco. In 1934

the list was enlarged to include cattle, sugar, flax, grain

sorghums, peanuts, barley, and rye. The act established the

Agricultural Adjustment Administration to oversee the pro-

gram. In 1936, in

United States v. Butler

(297 U.S. 1), the

Supreme Court declared parts of the act invalid.

Shortly after the AAA was enacted, June 16, 1933, the

Farm Credit Act was passed. It centralized all farm credit ser-

vices into the Farm Credit Administration, allowing American

farmers to refinance their mortgages on long terms at low

interest rates. The legislation completed action begun by

President Franklin D. Roosevelt’s executive order of March

27, which had consolidated several federal agencies—

among them the Federal Farm Board and the Federal Farm

Loan Board—dealing with farm credit. It established produc-

tion credit corporations in 12 regional districts to provide

long-term financing for farmers. This act was followed Jan-

1362 ERA 8: The Great Depression and World War II

uary 31, 1934, by the Farm Mortgage Refinancing Act, which

established the Federal Farm Mortgage Corporation (FFMC)

to assist in the refinancing of farm debts. The FFMC was to

advance the loan operations of the federal land banks by

issuing fully guaranteed tax-exempt bonds and exchanging

the proceeds for land-bank bonds. The FFMC, set up under

the Farm Credit Corporation, was authorized to issue up

to $2 million in bonds, whose principal and interest were

guaranteed.

On June 28, 1934, a bill was enacted sponsored by Sen-

ator Lynn Frazier and Representative William Lemke to assist

farmers threatened with foreclosures on their mortgages by

enabling them to get credit extensions. This act allowed

bankrupt farmers to repurchase their properties at a lower

appraised value, with an interest rate of 1 percent paid over a

five-year period. Where creditors refused a settlement, the act

allowed farmers to retain possession of the properties, at rea-

sonable rents, by suspending bankruptcy proceedings for five

years in certain cases. The Supreme Court, in

Louisville Joint

Stock Land Bank v. Radford

(May 27, 1935), declared the act

unconstitutional, but similar legislation was enacted later that

year.

On February 29, 1936, Congress enacted the Soil Con-

servation and Domestic Allotment Act to control not only soil

erosion but also agricultural production, in order to prevent

the accumulation of unmarketable surpluses. After the judicial

invalidation of the U.S. Agricultural Adjustment Act of 1933,

the 1936 act used indirect control of production, by authoriz-

ing benefit payments to farmers who practiced soil conser-

vation under government programs. The programs shifted

millions of acres from the cultivation of soil-depleting

crops (such as corn, cotton, tobacco, wheat, and oats, which

had also contributed to the production surpluses) to soil-

conserving crops (such as clover and soybeans), or to soil-

building efforts.

On February 16, 1938, after the Supreme Court began to

affirm New Deal legislation, Congress passed a new Agricul-

tural Adjustment Act that authorized the Agricultural Adjust-

ment Administration to fix national acreage allotments for

staple crops in order to reduce farm surpluses and stabilize

farm prices. It established an “ever-normal granary” plan to

store surpluses for use in bad years. The U.S. government

encouraged farmers to operate within the allotments by offer-

ing them loans based on the “parity” price (a figure based on

the 1909–14 farm purchasing power) of the stored surpluses;

these surpluses would be sold in lean years and the loans

repaid. If two-thirds of participating farmers agreed, the secre-

tary of agriculture was authorized to fix marketing quotas

when a surplus of an export commodity threatened price lev-

els. The act also established a permanent soil conservation

program.

________________________

_______________________

An Act

To relieve the existing national economic emergency by

increasing agricultural purchasing power, to raise revenue

for extraordinary expenses incurred by reason of such

emergency, to provide emergency relief with respect to

agricultural indebtedness, to provide for the orderly liqui-

dation of joint-stock land banks, and for other purposes.

Be it enacted by the Senate and House of Represen-

tatives of the United States of America in Congress assem-

bled,

Title I—Agricultural Adjustment

Declaration of Emergency

That the present acute economic emergency being in

part the consequence of a severe and increasing disparity

between the prices of agricultural and other commodities,

which disparity has largely destroyed the purchasing

power of farmers for industrial products, has broken down

the orderly exchange of commodities, and has seriously

impaired the agricultural assets supporting the national

credit structure, it is hereby declared that these conditions

in the basic industry of agriculture have affected transac-

tions in agricultural commodities with a national public

interest, have burdened and obstructed the normal cur-

rents of commerce in such commodities, and render

imperative the immediate enactment of title I of this Act.

Declaration of Policy

Sec. 2. It is hereby declared to be the policy of

Congress—

(1) To establish and maintain such balance between

the production and consumption of agricultural commodi-

ties, and such marketing conditions therefor, as will

reestablish prices to farmers at a level that will give agri-

cultural commodities a purchasing power with respect to

articles that farmers buy, equivalent to the purchasing

power of agricultural commodities in the base period. The

base period in the case of all agricultural commodities

except tobacco shall be the prewar period, August 1909-

July 1914. In the case of tobacco, the base period shall be

the postwar period, August 1919-July 1929.

(2) To approach such equality of purchasing power by

gradual correction of the present inequalities therein at as

rapid a rate as is deemed feasible in view of the current

consumptive demand in domestic and foreign markets.

(3) To protect the consumers’ interest by readjusting

farm production at such level as will not increase the per-

centage of the consumers’ retail expenditures for agricul-

tural commodities, or products derived therefrom, which

is returned to the farmer, above the percentage which was

returned to the farmer in the prewar period, August 1909-

July 1914.

Part 1—Cotton Option Contracts

The New Deal 1363

Sec. 3. The Federal Farm Board and all departments

and other agencies of the Government, not including the

Federal intermediate credit banks, are hereby directed—

(a) To sell to the Secretary of Agriculture at such price

as may be agreed upon, not in excess of the market price,

all cotton now owned by them.

* * *

Sec 5. The Reconstruction Finance Corporation is hereby

authorized and directed to advance money and to make

loans to the Secretary of Agriculture to acquire such cot-

ton and to pay the classing, carrying, and merchandising

costs thereon, in such amounts and upon such terms as

may be agreed upon by the Secretary and the Reconstruc-

tion Finance Corporation, with such warehouse receipts as

collateral security. . . .

* * *

Sec. 6. (a) The Secretary of Agriculture is hereby autho-

rized to enter into option contracts with the producers of

cotton to sell to any such producer an amount of cotton to

be agreed upon not in excess of the amount of reduction in

production of cotton by such producer below the amount

produced by him in the preceding crop year, in all cases

where such producer agrees in writing to reduce the

amount of cotton produced by him in 1933, below his pro-

duction in the previous year, by not less than 30 per cen-

tum, without increase in commercial fertilization per acre.

(b) To any such producer so agreeing to reduce pro-

duction the Secretary of Agriculture shall deliver a non-

transferable-option contract agreeing to sell to said

producer an amount, equivalent to the amount of his

agreed reduction, of the cotton in the possession and con-

trol of the Secretary.

ton at the average price paid by the Secretary for the cot-

ton procured under section 3, and is to have the right at

any time up to January 1, 1934, to exercise his option, upon

proof that he has complied with his contract and with all

the rules and regulations of the Secretary of Agriculture

with respect thereto, by taking said cotton upon payment

by him of his option price and all actual carrying charges

on such cotton; or the Secretary may sell such cotton for

the account of such producer, paying him the excess of the

market price at the date of sale over the average price

above referred to after deducting all actual and necessary

carrying charges: Provided, That in no event shall the pro-

ducer be held responsible or liable for financial loss

incurred in the holding of such cotton or on account of the

carrying charges therein: Provided further, That such

agreement to curtail cotton production shall contain a fur-

ther provision that such cotton producer shall not use the

land taken out of cotton production for the production for

sale, directly or indirectly, of any other nationally produced

agricultural commodity or product.

(d) If any cotton held by the Secretary of Agriculture

is not disposed of under subsection (c), the Secretary is

authorized to enter into similar option contracts with

respect to such cotton, conditioned upon a like reduction

of production in 1934, and permitting the producer in

each case to exercise his option at any time up to January

1, 1935.

Sec. 7. The Secretary shall sell the cotton held by him

at his discretion, but subject to the foregoing provisions:

Provided, That he shall dispose of all cotton held by him by

March 1, 1936: Provided further, That the Secretary shall

have authority to enter into additional option contracts for

so much of such cotton as is not necessary to comply with

the provisions of section 6, in combination with benefit

payments as provided for in part 2 of this title.

Part 2—Commodity Benefits

General Powers

Sec. 8. In order to effectuate (1) the declared policy,

the Secretary of Agriculture shall have power—

(1) To provide for reduction in the acreage or reduc-

tion in the production for market, or both, of any basic

agricultural commodity, through agreements with produc-

ers or by other voluntary methods, and to provide for

rental or benefit payments in connection therewith or

upon that part of the production of any basic agricultural

commodity required for domestic consumption, in such

amounts as the Secretary deems fair and reasonable, to be

paid out of any moneys available for such payments. Under

regulations of the Secretary of Agriculture requiring ade-

quate facilities for the storage of any non-perishable agri-

cultural commodity on the farm, inspection and

measurement of any such commodity so stored, and the

locking and sealing thereof, and such other regulations as

may be prescribed by the Secretary of Agriculture for the

protection of such commodity and for the marketing

thereof, a reasonable percentage of any benefit payment

may be advanced on any such commodity so stored. In any

such case, such deduction may be made from the amount

of the benefit payment as the Secretary of Agriculture

determines will reasonably compensate for the cost of

inspection and sealing, but no deduction may be made for

interest.

1 So in original.

(2) To enter into marketing agreements with proces-

sors, associations of producers, and others engaged in the

handling, in the current of interstate or foreign commerce

of any agricultural commodity or product thereof, after

due notice and opportunity for hearing to interested par-

ties. The making of any such agreement shall not be held

to be in violation of any of the antitrust laws of the United

States, and any such agreement shall be deemed to be law-

1364 ERA 8: The Great Depression and World War II

ful: Provided, That no such agreement shall remain in

force after the termination of this Act. For the purpose of

carrying out any such agreement the parties thereto shall

be eligible for loans from the Reconstruction Finance Cor-

poration under section 5 of the Reconstruction Finance

Corporation Act. Such loans shall not be in excess of such

amounts as may be authorized by the agreements.

(3) To issue licenses permitting processors, associa-

tions of producers, and others to engage in the handling, in

the current of interstate or foreign commerce, of any agri-

cultural commodity or product thereof, or any competing

commodity or product thereof. Such licenses shall be sub-

ject to such terms and conditions, not in conflict with exist-

ing Acts of Congress or regulations pursuant thereto, as

may be necessary to eliminate unfair practices or charges

that prevent or tend to prevent the effectuation of the

declared policy and the restoration of normal economic

conditions in the marketing of such commodities or prod-

ucts and the financing thereof. The Secretary of Agricul-

ture may suspend or revoke any such license, after due

notice and opportunity for hearing, for violations of the

terms or conditions thereof. Any order of the Secretary

suspending or revoking any such license shall be final if in

accordance with law. Any such person engaged in such

handling without a license as required by the Secretary

under this section shall be subject to a fine of not more

than $1,000 for each day during which the violation con-

tinues.

(4) To require any licensee under this section to fur-

nish such reports as to quantities of agricultural commodi-

ties or products thereof bought and sold and the prices

thereof, and as to trade practices and charges, and to keep

such systems of accounts, as may be necessary for the pur-

pose of part 2 of this title.

(5) No person engaged in the storage in a public ware-

house of any basic agricultural commodity in the current

interstate or foreign commerce, shall deliver any such

commodity upon which a warehouse receipt has been

issued and is outstanding, without prior surrender and can-

cellation of such warehouse receipt. Any person violating

any of the provisions of this subsection shall, upon convic-

tion, be punished by a fine of not more than $5,000, or by

imprisonment for not more than two years, or both. The

Secretary of Agriculture may revoke any license issued

under subsection (3) of this section, if he finds, after due

notice and opportunity for hearing, that the licensee has

violated the provisions of this subsection.

Processing Tax

Sec. 9. (a) To obtain revenue for extraordinary

expenses incurred by reason of the national economic

emergency, there shall be levied processing taxes as here-

inafter provided. When the Secretary of Agriculture deter-

mines that rental or benefit payments are to be made with

respect to any basic agricultural commodity, he shall pro-

claim such determination, and a processing tax shall be in

effect with respect to such commodity from the beginning

of the marketing year therefor next following the date of

such proclamation. The processing tax shall be levied,

assessed, and collected upon the first domestic processing

of the commodity, whether of domestic production or

imported, and shall be paid by the processor. The rate of

tax shall conform to the requirements of subsection (b).

Such rate shall be determined by the Secretary of Agricul-

ture as of the date the tax first takes effect, and the rate so

determined shall, at such intervals as the Secretary finds

necessary to effectuate the declared policy, be adjusted by

him to conform to such requirements. The processing tax

shall terminate at the end of the marketing year current at

the time the Secretary proclaims that rental or benefit pay-

ments are to be discontinued with respect to such com-

modity. The marketing year for each commodity shall be

ascertained and prescribed by regulations of the Secretary

of Agriculture: Provided, That upon any article upon

which a manufacturers’ sales tax is levied under the

authority of the Revenue Act of 1932 and which manufac-

turers’ sales tax is computed on the basis of weight, such

manufacturers’ sales tax shall be computed on the basis of

the weight of said finished article less the weight of the

processed cotton contained therein on which a processing

tax has been paid.

(b) The processing tax shall be at such rate as equals

the difference between the current average farm price for

the commodity and the fair exchange value of the com-

modity. . . .

c) For the purposes of part 2 of this title, the fair

exchange value of a commodity shall be the price therefor

that will give the commodity the same purchasing power,

with respect to articles farmers buy, as such commodity

had during the base period specified in section 2; and the

current average farm price and the fair exchange value

shall be ascertained by the Secretary of Agriculture from

available statistics of the Department of Agriculture.

* * *

Appropriation

Sec. 12. (a) There is hereby appropriated, out of any

money in the Treasury not otherwise appropriated, the

sum of $100,000,000 to be available to the Secretary of

Agriculture for administrative expenses under this title and

for rental and benefit payments made with respect to

reduction in acreage or reduction in production for market

under part 2 of this title. Such sum shall remain available

until expended.

(b) In addition to the foregoing, the proceeds derived

from all taxes imposed under this title are hereby appro-

priated to be available to the Secretary of Agriculture for

The New Deal 1365

expansion of markets and removal of surplus agricultural

products and [various administrative] purposes. . . .

* * *

Termination of Act

Sec. 13. This title shall cease to be in effect whenever

the President finds and proclaims that the national eco-

nomic emergency in relation to agriculture has been

ended; and pending such time the President shall by

proclamation terminate with respect to any basic agricul-

tural commodity such provisions of this title as he finds are

not requisite to carrying out the declared policy with

respect to such commodity. The Secretary of Agriculture

shall make such investigations and reports thereon to the

President as may be necessary to aid him in executing this

section.

Separability of Provisions

Sec. 14. If any provision of this title is declared uncon-

stitutional, or the applicability thereof to any person, cir-

cumstance, or commodity is held invalid the validity of the

remainder of this title and the applicability thereof to other

persons, circumstances, or commodities shall not be

affected thereby.

* * *

Title II—Agricultural Credits

Part 1—Amendments to Federal Farm Loan Act

Issuance of Bonds by Land Banks

Section 21. Section 32 of the Federal Farm Loan Act,

as amended (U.S.C., title 12, sec. 991), is amended by

adding at the end thereof the following new paragraph:

“Until such time as the Farm Loan Commissioner

determines that Federal farm-loan bonds (other than

those issued under this paragraph) are readily salable in

the open market at a yield not in excess of 4 per centum

per annum, but in no case more than two years after this

paragraph takes effect, Federal land banks may issue farm-

loan bonds as authorized under this Act, for the purpose of

making new loans, or for purchasing mortgages or

exchanging bonds for mortgages. . . .

* * *

Reduction of Interest on Loans and Deferment of

Principal

Sec. 24. Section 12 of the Federal Farm Loan Act, as

amended (U.S.C., title 12, secs. 771-772), is amended by

adding at the end thereof the following new paragraph:

“Twelfth. Notwithstanding the provisions of paragraph

Second,’ the rate of interest on any loans on mortgage

made through national farm-loan associations or through

agents as provided in section 15, or purchased from joint-

stock land banks, by any Federal land bank, outstanding on

the date this paragraph takes effect or made through

national farm-loan associations within two years after such

date, shall not exceed 4 1/2 per centum per annum for all

interest payable on installment dates occurring within a

period of five years commencing sixty days after the date

this paragraph takes effect; and no payment of the princi-

pal portion of any installment of any such loan shall be

required during such five-year period if the borrower shall

not be in default with respect to any other condition or

covenant of his mortgage. The foregoing provisions shall

apply to loans made by Federal land banks through

branches, except that the rate of interest on such loans for

such five-year period shall be 5 per centum in lieu of 4 1/2

per centum. The Secretary of the Treasury shall pay each

Federal land bank, as soon as practicable after October 1,

1933, and after the end of each quarter thereafter, such

amount as the Farm Loan Commissioner certifies to the

Secretary of the Treasury is equal to the amount by which

interest payments on mortgages held by such bank have

been reduced, during the preceding quarter. . . .

* * *

Direct Loans

Sec. 26. Section 7 of the Federal Farm Loan Act, as

amended, is amended by striking out the last paragraph

and inserting in lieu thereof the following new paragraphs:

“Whenever it shall appear to the Farm Loan Commis-

sioner that national farm-loan associations have not been

formed in any locality in the continental United States, or

that the farmers residing in the territory covered by the

charter of a national farm-loan association are unable to

apply to the Federal land bank of the district for loans on

account of the inability of the bank to accept applications

from such association, the Farm Loan Commissioner shall

authorize said bank to make direct loans to borrowers

secured by first mortgages on farm lands situated within

any such locality or territory. Except as herein otherwise

specifically provided, all provisions of this Act applicable

with respect to loans made through national farm-loan

associations shall, insofar as practicable, apply with respect

to such direct loans, and the Farm Loan Commissioner is

authorized to make such rules and regulations as he may

deem necessary with respect to such direct loans.

* * *

Part 2—Joint-Stock Land Banks

* * *

Loans to Joint-Stock Land Banks to Provide for Orderly

Liquidation

Sec. 30. (a) The Reconstruction Finance Corporation

is authorized and directed to make available to the Farm

1366 ERA 8: The Great Depression and World War II

Loan Commissioner, out of the funds of the Corporation,

the sum of $100,000,000, to be used, for a period not

exceeding two years from the date of enactment of this

Act, for the purpose of making loans to the joint-stock land

banks organized and doing business under the Federal

Farm Loan Act, as amended, at a rate of interest not to

exceed 4 per centum per annum, payable annually. Such

loans shall be made upon application therefor by such

banks and upon compliance with the requirements of this

section. The amount which may be loaned hereunder to

any such bank shall not exceed an amount having the same

proportion to the said $100,000,000 as the unpaid princi-

pal of the mortgages held by such bank on the date of

enactment of this Act bears to the total amount of the

unpaid principal of the mortgages held by all the joint-

stock land banks on such date.

* * *

Part 3—Loans to Farmers by Farm Loan Commissioner

Reduction of Debts and Redemption of Foreclosed

Farms

Sec. 32. The Reconstruction Finance Corporation is

authorized and directed to allocate and make available to

the Farm Loan Commissioner the sum of $200,000,000, or

so much thereof as may be necessary, to be used for the

purpose of making loans as hereinafter provided to any

farmer, secured by a first or second mortgage upon the

whole or any part of the farm property, real or personal,

including crops, of the farmer. . . .

* * *

Part 8: Short Title

Sec. 42. This title may be cited as the “Emergency

Farm Mortgage Act of 1933.”

Title III—Financing—And Exercising Power

Conferred by Section 8 of Article I of the

Constitution: To Coin Money and to Regulate the

Value Thereof

Sec. 43. Whenever the President finds, upon investiga-

tion, that (1) the foreign commerce of the United States

is adversely affected by reason of the depreciation in the

value of the currency of any other government or gov-

ernments in relation to the Present standard value of

gold, or (2) action under this section is necessary in order

to regulate and maintain the parity of currency issues of

the United States, or (3) an economic emergency

requires an expansion of credit, or (4) an expansion of

credit is necessary to secure by international agreement

a stabilization at proper levels of the currencies of vari-

ous governments, the President is authorized, in his

discretion—

(a) To direct the Secretary of the Treasury to enter

into agreements with the several Federal Reserve banks

and with the Federal Reserve Board whereby the Federal

Reserve Board will, and it is hereby authorized to, notwith-

standing any provisions of law or rules and regulations to

the contrary, permit such reserve banks to agree that they

will, (1) conduct, pursuant to existing law, throughout

specified periods, open market operations in obligations of

the United States Government or corporations in which

the United States is the majority stockholder, and (2) pur-

chase directly and hold in portfolio for an agreed period or

periods of time Treasury bills or other obligations of the

United States Government in an aggregate sum of

$3,000,000,000 in addition to those they may then hold,

unless prior to the termination of such period or periods

the Secretary shall consent to their sale. No suspension of

reserve requirements of the Federal Reserve banks, under

the terms of section 11(c) of the Federal Reserve Act,

necessitated by reason of operations under this section,

shall require the imposition of the graduated tax upon any

deficiency in reserves as provided in said section 11(c).

Nor shall it require any automatic increase in the rates of

interest or discount charged by any Federal Reserve bank,

as otherwise specified in that section. The Federal Reserve

Board, with the approval of the Secretary of the Treasury,

may require the Federal Reserve banks to take such action

as may be necessary, in the judgment of the Board and of

the Secretary of the Treasury, to prevent undue credit

expansion.

(b) If the Secretary, when directed by the President, is

unable to secure the assent of the several Federal Reserve

banks and the Federal Reserve Board to the agreements

authorized in this section, or if operations under the above

provisions prove to be inadequate to meet the purposes of

this section, or if for any other reason additional measures

are required in the judgment of the President to meet such

purpose, then the President is authorized—

(1) To direct the Secretary of the Treasury to cause to

be issued in such amount or amounts as he may from

time to time order, United States notes, as provided in

the Act entitled “An Act to authorize the issue of United

States notes and for the redemption of funding thereof

and for funding the floating debt of the United States,”

approved February 25, 1862, and Acts supplementary

thereto and amendatory thereof, in the same size and of

similar color to the Federal Reserve notes heretofore

issued and in denominations of $1, $5, $10, $20, $50,

$100, $500, $1,000, and $10,000; but notes issued under

this subsection shall be issued only for the purpose of

meeting maturing Federal obligations to repay sums bor-

rowed by the United States and for purchasing United

States bonds and other interest-bearing obligations of

The New Deal 1367

the United States: Provided, That when any such notes

are used for such purpose the bond or other obligation so

acquired or taken up shall be retired and canceled. Such

notes shall be issued at such times and in such amounts

as the President may approve but the aggregate amount

of such notes outstanding at any time shall not exceed

$3,000,000,000. . . .

(2) By proclamation to fix the weight of the gold dol-

lar in grains nine tenths fine and also to fix the weight of

the silver dollar in grains nine tenths fine at a definite fixed

ratio in relation to the gold dollar at such amounts as he

finds necessary from his investigation to stabilize domestic

prices or to protect the foreign commerce against the

adverse effect of depreciated foreign currencies, and to

provide for the unlimited coinage of such gold and silver at

the ratio so fixed. . . .

sions of this section shall be deposited in the Treasury of

the United States, to be held, used, and disposed of as in

this section provided.

(d) The Secretary of the Treasury shall cause silver

certificates to be issued in such denominations as he

deems advisable to the total number of dollars for which

such silver was accepted in payment of debts. Such

silver certificates shall be used by the Treasurer of the

United States in payment of any obligations of the United

States.

(e) The silver so accepted and received under this sec-

tion shall be coined into standard silver dollars and sub-

sidiary coins sufficient, in the opinion of the Secretary of

the Treasury, to meet any demands for redemption of such

silver certificates issued under the provisions of this sec-

tion, and such coins shall be retained in the Treasury for

the payment of such certificates on demand. . . .

* * *

Sec. 46. Section 19 of the Federal Reserve Act, as

amended, is amended by inserting immediately after para-

graph (c) thereof the following new paragraph:

“Notwithstanding the foregoing provisions of this

section, the Federal Reserve Board, upon the affirmative

vote of not less than five of its members and with the

approval of the President, may declare that an emergency

exists by reason of credit expansion, and may by regula-

tion during such emergency increase or decrease from

time to time, in its discretion, the reserve balances

required to be maintained against either demand or time

deposits.”

Approved, May 12, 1933.

Source:

Statutes at Large, Vol. 47, pp. 31–54.

National Industrial Recovery Act

(NIRA), 1933

Federal legislation enacted on June 16, 1933, intended to

encourage industrial and business recovery, reduce unem-

ployment, foster fair competition, and provide for the con-

struction of public works. The centerpiece of President

Franklin D. Roosevelt’s New Deal legislation, the NIRA cre-

ated the National Recovery Administration (NRA) to supervise

industrial self-regulation under codes of fair competition. The

codes, which had the force of law, gave workers the right to

organize and bargain collectively and, thus, have a direct in-

fluence on minimum wages, maximum hours, and other

working conditions. It also created the Public Works Admin-

istration to increase employment and business activity by

building roads, public buildings, and similar projects. The

NRA’s sign was a blue eagle, and businesses that subscribed

to NRA codes displayed it. By 1935 more than 750 NRA

codes had been adopted, affecting some 23 million people.

However, they were hastily drawn and often favored business

over the workers.

The act gave the president broad powers to manage the

national economy based on the president’s declared national

emergency. On May 27, 1935, the Supreme Court unani-

mously declared the NIRA unconstitutional in

Schecter Poul-

try Corporation v. United States

(295 U.S. 495). The case arose

from alleged violations by a New York slaughterhouse of the

city’s code for fair competition for the live poultry industry. In

his decision, Chief Justice Charles Evans Hughes declared that

the NIRA improperly delegated legislative power to the exec-

utive branch lacked constitutional authority and regulated

purely intrastate (not interstate) commerce, which was outside

the authority of Congress. “Extraordinary conditions [the Great

Depression] do not create or enlarge constitutional powers.”

This decision, though unanimous, set the stage for the many

5-4 rulings that would occur in the next two years against New

Deal legislation.

________________________

_______________________

AN ACT to encourage national industrial recovery, to

foster fair competition, and to provide for the construc-

tion of certain useful public works, and for other pur-

poses.

Be it enacted by the Senate and House of Represen-

tatives of the United States of America in Congress

assembled,

Title I—Industrial Recovery

Declaration of Policy

Section 1. A national emergency productive of

widespread unemployment and disorganization of indus-

try, which burdens interstate and foreign commerce,

1368 ERA 8: The Great Depression and World War II

affects the public welfare, and undermines the standards

of living of the American people, is hereby declared to

exist. It is hereby declared to be the policy of Congress to

remove obstructions to the free flow of interstate and for-

eign commerce which tend to diminish the amount

thereof; and to provide for the general welfare by promot-

ing the organization of industry for the purpose of cooper-

ative action among trade groups, to induce and maintain

united action of labor and management under adequate

governmental sanctions and supervision, to eliminate

unfair competitive practices, to promote the fullest possi-

ble utilization of the present protective capacity of indus-

tries, to avoid undue restriction of production (except as

may be temporarily required), to increase the consump-

tion of industrial and agricultural products by increasing

purchasing power, to reduce and relieve unemployment,

to improve standards of labor, and otherwise to rehabilitate

industry and to conserve natural resources.

Source:

United States Statutes at Large, Vol. 47, pp. 195–211.

Indian Reorganization Act, 1934

Federal legislation enacted on June 18, 1934, that restored

some Native American lands to tribal ownership and autho-

rized federal funds to encourage Native American businesses.

Sponsored by Senator Burton K. Wheeler of Montana and Rep-

resentative Edgar Howard of Nebraska, the act gave Native

Americans residing on reservations the right to adopt constitu-

tions for self-government or to petition the secretary of the

interior for a charter of incorporation. The Bureau of Indian

Affairs retained a veto power over tribal decisions. To conserve

and develop tribal lands, the act ended land allotments in sev-

eralty and restored to tribal ownership “surplus lands” that had

previously been open for sale to homesteaders. The act also

authorized funds to enlarge tribal land holdings, to support

Native American education, and to encourage economic

development through federal loans.

________________________

_______________________

An Act

To conserve and develop Indian lands and resources; to

extend to Indians the right to form business and other

organizations; to establish a credit system for Indians; to

grant certain rights of home rule to Indians; to provide for

vocational education for Indians; and for other purposes.

Be it enacted by the Senate and House of Representa-

tive of the United States of America in Congress assembled,

That hereafter no land of any Indian reservation, created

or set apart by treaty or agreement with the Indians, Act of

Congress, Executive order, purchase, or otherwise, shall

be allotted in severalty to any Indian.

Sec. 2. The existing periods of trust placed upon any

Indian lands and any restriction on alienation thereof are

hereby extended and continued until otherwise directed

by Congress.

Sec. 3. The Secretary of the Interior, if he shall find it

to be in the public interest, is hereby authorized to restore

to tribal ownership the remaining surplus lands of any

Indian reservation heretofore opened, or authorized to be

opened, to sale, or any other form of disposal by Presiden-

tial proclamation, or by any of the public-land laws of the

United States: Provided, however, That valid rights or

claims of any persons to any lands so withdrawn existing on

the date of the withdrawal shall not be affected by this Act:

Provided further, That this section shall not apply to lands

within any reclamation project heretofore authorized in

any Indian reservation: Provided further, That the order of

the Department of the Interior signed, dated, and

approved by Honorable Ray Lyman Wilbur, as Secretary of

the Interior, on October 28, 1932, temporarily withdraw-

ing lands of the Papago Indian Reservation in Arizona

from all forms of mineral entry or claim under the public

land mining laws, is hereby revoked and rescinded, and the

lands of the said Papago Indian Reservation are hereby

restored to exploration and location, under the existing

mining laws of the United States, in accordance with the

express terms and provisions declared and set forth in the

Executive orders establishing said Papago Indian Reserva-

tion: Provided further, That damages shall be paid to the

Papago Tribe for loss of any improvements on any land

located for mining in such a sum as may be determined by

the Secretary of the Interior but not to exceed the cost of

said improvements: Provided further, That a yearly rental

not to exceed five cents per acre shall be paid to the

Papago Tribe for loss of the use or occupancy of any land

withdrawn by the requirements of mining operations, and

payments derived from damages or rentals shall be

deposited in the Treasury of the United States to the credit

of the Papago Tribe: Provided further, That in the event

any person or persons, partnership, corporation, or associ-

ation, desires a mineral patent, according to the mining

laws of the United States, he or they shall first deposit in

the Treasury of the United States to the credit of the

Papago Tribe the sum of $1.00 per acre in lieu of annual

rental, as hereinbefore provided, to compensate for the

loss or occupancy of the lands withdrawn by the require-

ments of mining operations: Provided further, That paten-

tee shall also pay into the Treasury of the United States to

the credit of the Papago Tribe damages for the loss of

improvements not heretofore paid in such a sum as may be

determined by the Secretary of the Interior, but not to

The New Deal 1369

exceed the cost thereof; the payment of $1.00 per acre for

surface use to be refunded to patentee in the event that

patent is not acquired.

Nothing herein contained shall restrict the granting or

use of permits for easements or rights-of-way; or ingress or

egress over the lands for all proper and lawful purposes;

and nothing contained herein, except as expressly pro-

vided, shall be construed as authority for the Secretary of

the Interior, or any other person, to issue or promulgate a

rule or regulation in conflict with the Executive order of

February 1, 1917, creating the Papago Indian Reservation

in Arizona or the Act of February 21, 1931 (46 Stat. 1202).

Sec. 4. Except as herein provided, no sale, devise, gift,

exchange or other transfer of restricted Indian lands or of

shares in the assets of any Indian tribe or corporation orga-

nized hereunder, shall be made or approved: Provided,

however, That such lands or interests may, with the

approval of the Secretary of the Interior, be sold, devised,

or otherwise transferred to the Indian tribe in which the

lands or shares are located or from which the shares were

derived or to a successor corporation; and in all instances

such lands or interests shall descend or be devised, in

accordance with the then existing laws of the State or Fed-

eral laws where applicable, in which said lands are located

or in which the subject matter of the corporation is

located, to any member of such tribe or of such corpora-

tion or any heirs of such member: Provided further, That

the Secretary of the Interior may authorize voluntary

exchanges of lands of equal value and the voluntary

exchange of shares of equal value whenever such

exchange, in his judgment, is expedient and beneficial for

a compatible with the proper consolidation of Indian lands

and for the benefit of cooperative organizations.

Sec. 5. The Secretary of the Interior is hereby autho-

rized, in his discretion, to acquire through purchase, relin-

quishment, gift, exchange, or assignment, any interest in

lands, water rights or surface rights to lands, within or

without existing reservations, including trust or otherwise

restricted allotments whether the allottee be living or

decreased, for the purpose of providing land for Indians.

For the acquisition of such lands, interests in lands,

water rights, and surface rights, and for expenses incident

to such acquisition, there is hereby authorized to be appro-

priated, out of any funds in the Treasury not otherwise

appropriated, a sum not to exceed $2,000,000 in any one

fiscal year: Provided, That no part of such funds shall be

used to acquire additional land outside of the exterior

boundaries of Navajo Indian Reservation for the Navajo

Indians in Arizona and New Mexico, in the event that the

proposed Navajo boundary extension measures now pend-

ing in Congress and embodied in the bills (S. 2499 and

H.R. 8927) to define the exterior boundaries of the Navajo

Indian Reservation in Arizona, and for other purposes, and

the bills (S. 2531 and H.R. 8982) to define the exterior

boundaries of the Navajo Indian Reservation in New Mex-

ico and for other purposes, or similar legislation, become

law.

The unexpended balances of any appropriations made

pursuant to this section shall remain available until

expended.

Title to any lands or rights acquired pursuant to this

Act shall be taken in the name of the United States in trust

for the Indian tribe or individual Indian for which the land

is acquired, and such lands or rights shall be exempt from

State and local taxation.

Sec. 6. The Secretary of the Interior is directed to

make rules and regulations for the operation and manage-

ment of Indian forestry units on the principle of sustained-

yield management, to restrict the number of livestock

grazed on Indian range units to the estimated carrying

capacity of such ranges, and to promulgate such other

rules and regulations as may be necessary to protect the

range from deterioration, to prevent soil erosion, to assure

full utilization of the range, and like purposes.

Sec. 7. The Secretary of the Interior is hereby autho-

rized to proclaim new Indian reservations on lands

acquired pursuant to any authority conferred by this Act,

or to add such lands to existing reservations: Provided,

That lands added to existing reservations shall be desig-

nated for the exclusive use of Indians entitled by enroll-

ment or by tribal membership to residence at such

reservations.

Sec. 8. Nothing contained in this Act shall be con-

strued to relate to Indian holdings of allotments or home-

steads upon the public domain outside of the geographic

boundaries of any Indian reservation now existing or estab-

lished hereafter.

Sec. 9. There is hereby authorized to be appropriated,

out of any funds in the Treasury not otherwise appropri-

ated, such sums as may be necessary, but not to exceed

$250,000 in any fiscal year, to be expended at the order of

the Secretary of the Interior, in defraying the expenses of

organizing Indian chartered corporations or other organi-

zations created under this Act.

Sec. 10. There is hereby authorized to be appropri-

ated, out of any funds in the Treasury not otherwise

appropriated, the sum of $10,000,000 to be established as

a revolving fund from which the Secretary of the Interior,

under such rules and regulations as he may prescribe,

may make loans to Indian chartered corporations for the

purpose of promoting the economic development of

such tribes and of their members, and may defray the

expenses of administering such loans. Repayment of

amounts loaned under this authorization shall be cred-

ited to the revolving fund and shall be available for the

purposes for which the fund is established. A report shall

1370 ERA 8: The Great Depression and World War II

be made annually to Congress to transactions under this

authorization.

Sec. 11. There is hereby authorized to be appropri-

ated, out of any funds in the United States Treasury not

otherwise appropriated, a sum not to exceed $250,000

annually, together with any unexpended balances of previ-

ous appropriations made pursuant to this section, for loans

to Indians for the payment of tuition and other expenses in

recognized vocational and trade schools: Provided, That

not more than $50,000 of such sum shall be available for

loans to Indian students in high schools and colleges. Such

loans shall be reimbursable under rules established by the

Commissioner of Indian Affairs.

Sec. 12. The Secretary of the Interior is directed to

establish standards of health, age, character, experience,

knowledge, and ability for Indians who may be appointed,

without regard to civil-service laws, to the various positions

maintained, now or hereafter, by the Indian Office, in the

administration of functions or services affecting any Indian

tribe. Such qualified Indians shall hereafter have the pref-

erence to appointment to vacancies in any such positions.

Sec. 13. The provisions of this Act shall not apply to

any of the Territories, colonies, or insular possessions of

the United States, except that sections 9, 10, 11, 12, and

16, shall apply to the Territory of Alaska: Provided, That

Sections 2, 4, 7, 16, 17 and 18 of this Act shall not apply to

the following-named Indian tribes, the members of such

Indian tribes, together with members of other tribes affil-

iated with such named tribes located in the State of Okla-

homa, as follows: Cheyenne, Arapaho, Apache,

Comanche, Kiowa, Caddo, Delaware, Wichita, Osage,

Kaw, Otoe, Tonkawa, Pawnee, Ponca, Shawnee, Ottawa,

Quapaw, Seneca, Wyandotte, Iowa, Sac and Fox, Kick-

apoo, Pottawatomi, Cherokee, Chickasaw, Choctaw,

Creek, and Seminole. Section 4 of this Act shall not apply

to the Indians of the Klamath Reservation in Oregon.

Sec. 14. The Secretary of the Interior is hereby

directed to continue the allowance of the articles enumer-

ated in section 17, of the Act of March 2, 1889 (23 Stat. L.

894), or their commuted cash value under the Act of June

10, 1896 (29 Stat. L. 334), to all Sioux Indians who would

be eligible, but for the provisions of this Act, to receive

allotments of lands in severalty under section 19 of the Act

of May 29, 1908 (25 Stat.L. 451), or under any prior Act,

and who have the prescribed status of the head of a family

or single person over the age of eighteen years, and his

approval shall be final and conclusive, claims therefor to be

paid as formerly from the permanent appropriation made

by said section 17 and carried on the books of the Treasury

for this purpose. No person shall receive in his own right

more than one allowance of the benefits, and application

must be made and approved during the lifetime of the

allottee or the right shall lapse. Such benefits shall con-

tinue to be paid upon such reservation until such time as

the lands available therein for allotment at the time of the

passage of this Act would have been exhausted by the

award to each person receiving such benefits of an allot-

ment of eighty acres of such land.

Sec. 15. Nothing in this Act shall be construed to

impair or prejudice any claim or suit of any Indian tribe

against the United States. It is hereby declared to be the

intent of Congress that no expenditures for the benefit of

Indians made out of appropriations authorized by this Act

shall be considered as offsets in any suit brought to recover

upon any claim of such Indians against the United States.

Sec. 16. Any Indian tribe, or tribes, residing on the

same reservation, shall have the right to organize for its

common welfare, and may adopt an appropriate constitu-

tion and bylaws, which shall become effective when rati-

fied by a majority vote of the adult members of the tribe,

or of the adult Indians residing on such reservation, as the

case may be, at a special election authorized and called by

the Secretary of the Interior under such rules and regula-

tions as he may prescribe. Such constitution and bylaws

when ratified as aforesaid and approved by the Secretary

of the Interior shall be revocable by an election open to the

same voters and conducted in the same manner as herein-

above provided. Amendments to the constitution and

bylaws may be ratified and approved by the Secretary in

the same manner as the original constitution and bylaws.

In additions to all powers vested in any Indian tribe or

tribal council by existing law, the constitution adopted by

said tribe shall also vest in such tribe or its tribal council

the following rights and powers: To employ legal counsel,

the choice of counsel and fixing of fees to be subject to the

approval of the Secretary of the Interior; to prevent the

sale, disposition, lease, or encumbrance of tribal lands,

interests in lands, or other tribal assets without the consent

of the tribe; and to negotiate with the Federal, State, and

local Governments. The Secretary of the Interior shall

advise such tribe or its tribal council of all appropriation

estimates or Federal projects for the benefit of the tribe

prior to the submission of such estimates to the Bureau of

the Budget and the Congress.

Sec. 17. The Secretary of the Interior may, upon peti-

tion by at least one-third of the adult Indians, issue a char-

ter of incorporation to such tribe: Provided, That such

charter shall not become operative until ratified at a spe-

cial election by a majority vote of the adult Indians living

on the reservation. Such charter may convey to the incor-

porated tribe the power to purchase, take by gift, or

bequest, or otherwise, own, hold, manage, operate, and

dispose of property of every description, real and personal,

including the power to purchase restricted Indian lands

and to issue in exchange therefor interests in corporate

property, and such further powers as may be incidental to

The New Deal 1371