The New Deal

The New Deal

The aim of Franklin D. Roosevelt’s New Deal was to save America’s economy following the Great Depression. Historians separate the New Deal into two stages: The First New Deal and the Second Deal. During his First Hundred Days, Roosevelt implemented economic measures to alleviate the depression, boost confidence and reinvigorate the economy. The Second New Deal aimed to bring about radical and reforming policies.

Roosevelt took office on 4 March 1933. He immediately put in place measures to alleviate the banking crisis. One of his first successes was the Banking Act of 1933, which ended the panic that gripped the nation. Its success relied completely on people’s willingness to put their money in local banks. FDR boosted this confidence through his “fireside chats” on the radio, where he convinced listeners that the crisis was over. The importance of this confidence is illustrated in FDR’s 1932 campaign song - ‘Happy Days are Here Again’.

The New Deal had an enduring effect on society. In his Second New Deal, FDR reacted to the needs of different social groups; forming policies that would give them lasting security. In particular, in the 1935 Social Security Act led to the creation of a national system of old-age pensions and unemployment compensation. As a result of these sorts of policies, 90 per cent of unskilled workers supported the New Deal. Additionally, African Americans and farmers favoured FDR’s policies.

Franklin D. Roosevelt
Franklin D. Roosevelt

However, the effectiveness of the New Deal is still debated. Many historians argue that its measures did not go far enough in restoring the nation to full employment or reforming the role of federal government. On the other hand, conservatives argued that it led to too much government intervention.

Most importantly, the New Deal boosted the confidence of the American people. Acts such as the Wagner Act and the Social Security Act increased the role of federal government in protecting its population. Moreover, FDR’s First Hundred Days were critical in saving American capitalism.

The Acts

Emergency Banking Act 1933 The Federal government began insuring the money people stored in banks to protect against big losses in the case of panic selling. This safety net was an important factor in restoring the public's confidence in the nation's banking system while also enhancing the government’s control over the banking industry.
Agricultural Adjustment Act May 1933

This act paid farmers to limit the amount of crops they grew or simply to dig back into the ground crops already grown. The federal government bought farm animals and then slaughtered then to raise the price of farm products.

Between 1933 and 1937, farm prices doubled but in 1936 the AAA was declared unconstitutional.

National Industrial Recovery Act June 1933

This act was split into three parts. Firstly it was responsible for establishing the Public Works Administration (PWA), which would manage all public works projects. By spending $7 billion on new projects the PWA helped inject new life into the US economy and it also helped find employment for millions

Secondly the National Industrial Recovery Act created the National Recovery Administration. This organisation was responsible for establishing codes of practices for things like working hours, outlawing child labour and wages. These codes covered around 16 million workers - it saw workers move to an eight-hour and also introduced a minimum wage of $1.25.

Thirdly, it gave trade unions the legal right to bargain with employers. With trade unions now having more power, membership of the unions increased throughout the 1930s.

NIRA was declared unconstitutional in 1935.

Tennessee Valley Development Act 1933

As the names suggests, this act was passed to develop the Tennessee Valley, an area spanning seven states and 40,000 square miles, which is did through the creation of the Tennessee Valley Authority (TVA).

Soil conservation and flood defences were built.

Social Security Act 1935

This act set up the first national old age pensions scheme. Workers and employers had to pay into a federal pension fund. Each state was also expected to work out a plan for unemployment insurance.

This one act covered 35 million people despite opposition from Republicans who felt the whole idea smacked of socialism.

National Labour Relations Act 1935

This act forced employers to deal with trade unions. Workers were also given the right to form and join trade unions and to take part in collective bargaining. A board was set up to investigate and punish those companies bosses who did not abide by the rules of the NLRA.

In 1935 trade union membership stood at 3.6 million. By 1941 it was 8.6 million. In 1935 the CIO (Congress of Industrial Organisations) came into being.

Soil Conservation Act 1936 Under this act, the federal government invested money in soil conservation research and also announced that it would pay subsidies to farmers who agreed to soil conservation tactics such as leaving their land fallow or planting crops that put nitrogen back into the soil.
Agricultural Adjustment Act 1938 The act introduced the Federal government subsidising the price of many farm products. The aim was to gradually increase the subsidy until farm prices reached their pre-1914 figure to give all farmers a guaranteed minimum income.
Fair Labour Standards Act 1938

This act reduced the number of hours an American could work (a maximum of 40) and also raised the minimum wage for those employed in inter-state trade (40 cents an hour).

More than 13 million people benefitted from the changes.

The Agencies

Reconstruction Finance Corporation This agency loaned money to state and local governments to assist the poor. It also lent money to firms which were in debt or wanted to invest.
Home Owners Loan Corporation 1933 This agency used Federal money to pay off mortgages so that homeowners did not lose their homes.
Reconstruction Finance Corporation This agency loaned money to state and local governments to assist the poor. It also lent money to firms which were in debt or wanted to invest.
Civilian Conservation Corps of 1933 This employed jobless single men between the ages of 18 and 25. They worked for six months in mountains and forests where they were taught forestry, flood control and fire prevention. Nearly 3 million men took part in the scheme which ran from 1933 to 1941.
Works Progress Administration of 1935 The WPA coordinated all public works schemes. It spent over $10.5 billion of Federal money and employed 3.8 million men from 1935 to 1941. It had built 77,000 bridges, 24,000 miles of sewers, 664,000 miles of road, 285 airports, 122,000 public buildings and 11,000 schools.

See also: Opposition to the New Deal

MLA Citation/Reference

"The New Deal". HistoryLearning.com. 2015. Web.