FDR and the New Deal
INTRODUCTION
Franklin Delano Roosevelt (FDR) was sworn in as president in March of 1933.
During his campaign, he had promised America a New Deal. Basically, he meant that
the government would try new ways to stop the Depression. Unlike his predecessor,
Herbert Hoover, FDR felt that the role of government should be more active in this battle.
FDR felt that Hoover’s laissez faire (economic policy which government takes a “handsoff” approach to economic matters and plays a limited role in business) approach would
not solve the problem. FDR believed in the economic principles described by John
Maynard Keynes. When an economy was struggling, it was best for the government to
spend money, rather than save it. He felt the government should try to put money into
the hands of consumers, or the average person. It was believed that consumers would
increase their spending and generate more economic activity.
FDR’S FIRST PROGRAMS TO END THE DEPRESSION
FDR’s New Deal was based upon what were labeled the “three R’s:” Relief,
Recovery, and Reform. Relief meant giving immediate aide to the millions who were
suffering. Recovery meant coming up with ways to improve the economy. Reform
meant passing new laws that would change the government and economy to hopefully
prevent another depression. FDR began his program immediately after entering office in
what became known as the First Hundred Days. FDR managed to guide 15 major laws
through Congress in that period.
One of the first things he did was to close all banks for a short period of time so
they could be inspected and make sure they were in good financial health. He wanted the
American people to have confidence that their money would be safe. He also established
the Federal Depositors Insurance Company (FDIC). This insured the deposits
individuals made in banks up to $5,000. Today, the FDIC still exists and insures
accounts up to $100,000.
FDR also set up organizations to put people back to work. The idea was that
when people had money, they’d spend it and create more jobs. Some people were hired
by the government to work building new roads, parks, and airports while other worked on
projects to preserve the environment. FDR also implemented policies to help businesses
to cut down on their overproduction of goods. When too many products exist, prices
must be lowered. This reduces profits. When profits fall, businesses are force to lay off
workers.
The stock market also became regulated or monitored by the Securities
and Exchange Commission (SEC). FDR didn’t want people investing in overpriced
stocks or borrowing too much money to invest in the first place. Farmers were also
helped. Laws were passed encouraging farmer to produce fewer crops. FDR felt that if
he could reduce the supply of agricultural products, the prices would rise and farmers
would be better off. Many Americans were confused by the fact that some farmers began
destroying crops and farm animals while so many Americans were going hungry.
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One of the most effective reform measures taken during the Hundred Days was
the establishment of the Tennessee Valley Association (TVA). The Tennessee Valley
had been one of the poorest and least modernized regions in the United States. The TVA
put Americans to work in the region building dams that would prevent flooding and
provide residents with electricity.
Perhaps the most lasting reform was the passage of the Social Security Act in
1935. The law provided unemployment insurance to individuals who lost their jobs for
periods of time. It created a welfare system (a system where government provides
assistance to those in need) that gave money to help the disabled, women and children. It
also provided pensions (a fixed amount of money) to retired Americans.
A big supporter and promoter of the New Deal was Eleanor Roosevelt-the wife of
FDR. The first lady took an active role in supporting social causes such as women’s
rights and civil rights for African Americans. Eleanor surprised many Americans by her
activism, and non-traditional role as first lady.
At the end of FDR’s first term, the economy had improved, but the Depression
lingered on. Still, FDR was elected to a second term by a landslide.
CRITICS OF THE NEW DEAL
FDR and the New Deal had their critics. Women, African-Americans, and other
minority groups weren’t included in many of the programs. In regard to women, for
instance, it was acceptable to pay a woman less than a man for the same job. Women
were still expected to support their families as wives and mothers, not as “breadwinners.”
For African Americans, New Deal programs often encouraged discrimination. African
Americans were paid less than their white counterparts. They were limited in their
advancement and they were often the first to be fired when a business needed to lay
workers off. There were no federal laws in place to prevent these discriminatory
practices. Despite these shortcomings, most African Americans supported the New Deal
because FDR had appointed more African Americans to policy-making positions than
any other president, and he expressed a sincere concern for the civil liberties of African
Americans.
Others felt that FDR had expanded the role of government and the president
beyond the limits of the Constitution. They felt government was hindering American's
ability to be responsible for themselves and destroying the industrious American spirit
that had built the country. They accused FDR of creating or attempting to create a
communist society. Still, other critics accused FDR of not doing enough, though, and
they wanted even more government programs.
LEGACY OF THE NEW DEAL
While the New Deal did not end the Depression, it did have a major impact on
America. Americans generally began to accept a larger role for government in helping it
to solve economic and social programs. Americans also began to specifically expect a
larger role for their President and First Lady. Eleanor Roosevelt traveled extensively
advocating the New Deal. She also was a champion of civil rights. While some felt the
First Lady went “too far” at times, Americans slowly began to accept her larger role.
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Another legacy is the fact that some New Deal programs still exist today such as
Social Security and FDIC, although they have been modified. In addition, many of the
roads, bridges, dams, tunnels, buildings, and other creations of the public works projects
are still used today. Because of this larger role and responsibility of government, the
United States spent more money than it took in during much of the 1930s. The United
States still carries this national debt (the total amount of money the federal government
has borrowed and not paid back).
Even though the New Deal did not completely end the Depression, it did offer
hope to many Americans that change could happen. What would finally pull the U.S. out
of the Depression, though, was World War II.
MAJOR CONCEPTS TO KNOW:
New Deal
laissez-faire
welfare system
national debt
DETAILS TO KNOW:
Franklin Delano Roosevelt
First Hundred Days
FDIC
SEC
TVA
Social Security Act
Pensions
Eleanor Roosevelt
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