How did Roosevelt's New Deal go about fixing the problems of the
Great Depression?
FDR came into office with no clear or specific plan for what to
do. Roosevelt used to say "try something, if it doesn't work try
something else." He and his brain trust recognized, at least,
that they must try to do something. These attempts at least gave
Americans the hope that something was being done. Roosevelt's
basic philosophy of Keynesian economics manifested itself in
what became known as the three "R's" of relief, recovery and
reform. The programs created to meet these goals generated jobs
and more importantly, hope. They also generated what refer to
today as "alphabet soup;" a series of acts and agencies that
created a huge federal bureaucracy.
I. The New Deal
A. What did Roosevelt mean by relief, recovery and reform?
1. Relief - Immediate action taken to halt the economies
deterioration.
2. Recovery - "Pump - Priming" Temporary - programs to
restart the flow of consumer
demand.
3. Reform - Permanent programs to avoid another depression
and insure citizens
against economic disasters.
New Deal Programs:
FAIR LABOR STANDARDS ACT -- provided minimum wage for
workers.
CIVILIAN CONSERVATION CORPS -- provided work for jobless
males between 18 & 25 in reforestation, road construction,
prevention of forest erosion. Ended in 1941.
AGRICULTURAL ADJUSTMENT ACT -- established principle of
government price support for farmers and guaranteed farm
purchasing power.
TENNESSEE VALLEY AUTHORITY ACT -- federal construction and
ownership of power plants regional development of Tennessee
Valley (7 State Area)
FEDERAL SECURITIES ACT -- required full disclosure of
information related to new stock issues.
NATIONAL EMPLOYMENT SYSTEM ACT -- created US employment
service.
HOME OWNERS REFINANCING ACT -- use of government bonds to
guarantee mortgages.
BANKING ACT OF 1933 -- created Federal Deposit Insurance
Corp., guaranteeing the safety of bank deposits.
NATIONAL INDUSTRIAL RECOVERY ACT -- minimum wages and self
regulation of industry --- ended in 1935.
PUBLIC WORKS ADMINISTRATION -- appropriated funds to
construct roads and other federal projects.
SECURITY AND EXCHANGE ACT -- federal regulation of the
operation of stock exchange.
NATIONAL HOUSING ACT -- federal housing administration
insured loans of private banks and trust companies for
construction of homes.
COMMUNICATIONS ACT -- federal housing administration
insured loans of private banks and trust companies for
construction of homes.
HOME OWNERS LOAN ACT -- government financing of home
mortgages.
NATIONAL HOUSING ACT -- construction of low cost public
housing and slum clearance.
SOIL CONSERVATION ACT -- established federal soil
conservation services.
RESETTLEMENT ADMINISTRATION -- built new model communities
for low income city workers
RURAL ELECTRIFICATION ADMINISTRATION -- created and
administered program of bringing electricity to rural
areas.
NATIONAL YOUTH ADMINISTRATION -- federal work relief and
employment for young people.
NATIONAL LABOR RELATIONS ACT -- encouraged collective
bargaining and formation of unions to be supervised by the
National Labor Relations Board.
SOCIAL SECURITY ACT -- created Social Security System -old age and survivors insurance; aid to dependent children
etc
Alphabet Soup Programs of the New Deal
Relief
Immediate action
taken to halt the
economies
deterioration.
Recovery
"Pump
Temporary
to restart
of consumer
Bank Holiday
Declared so that
panic
would
stopped.
Agricultural
Adjustment Act (AAA)
Taxed food processors
and gave the money
directly to farmers as
a
payment
for
not
growing
food.
This
decreased
supply
so
price would go up.
National Industrial
Recovery Act (NIRA)
Created
the
NRA
(National
Recovery
Administration)
a
consortium
of
businesses
organized
by the government and
given the power to set
rules and regulations
for
the
economy.
Members of the
NRA
displayed
a
blue
the
be
Emergency Banking Act
Closed the insolvent
banks
and
only
reopened the solvent
ones.
Priming"
programs
the flow
demand.
Reform
Permanent
to
avoid
depression
insure
against
disasters.
programs
another
and
citizens
economic
Securities & Exchange
Commission (SEC)
Permanent Agency set
up to monitor stock
market
activity
and
ensure that no fraud
or insider trading was
taking place.
Federal Deposit
Insurance Corporation
(FDIC)
Permanent
Agency
designed
to
insure
depositors
money
in
savings
banks.
Originally insured up
to
$5,000
per
depositor today it has
increased to $100,000.
eagle.
Civil Works
Works Progress
National Labor
Administration (CWA) Administration (WPA)
Relations Act and
National Labor
Provided
temporary Provided long term
Relations Board
jobs repairing roads government
jobs
(NLRA/NLRB)
and bridges.
building schools and
other public works Otherwise known as
projects.
the Wagner Act it
helped
unions
and
thus helped workers.
This acted created
the NLRB (National
Labor
Relations
Board)
which
enforced labor law
and made sure that
fair
business
practices
where
upheld.
Civilian
Tennessee Valley
Soil Conservation
Conservation Corps
Authority (TVA)
Act
(CCC)
Agency
created
to Laws
mandating
Temporary
jobs
to build dams in the proper
soil
unmarried
single Tennessee
river maintenance to make
adults filling sand valley. These dams sure
that
another
bags and helping out provided more stable Dust Bowl did not
at
disaster
type irrigation and cheap occur.
situations.
hydroelectric power.
Participants
lived
in
barracks
type
housing.
To what extent did FDR's New Deal end the Depression?
As the concluding lesson on the New Deal it is necessary to step
back and evaluate the impact of the New Deal. After all, the
government spent billions of dollars on the New Deal; was it
worth it? Did the New Deal achieve it's desired goals? Did it
end the depression? These are the questions we must ask.
Economists and historians still argue about just when the
depression ended. Some can show charts and graphs to prove it
was over by 1937, when substantial gains had been made. Business
activity had been cut almost in half. Roosevelt, like Hoover and
most other believed that balancing the budget was important. The
policies of the first and second New Deals had resulted in
enormous government deficits. While this was a price Roosevelt
was willing to pay, as soon as signs of improvement appeared in
1937 Roosevelt reduced government spending and programs. As a
result another depression (or a continuation of the first)
struck in 1937 and 1938. Unemployment rose from 6 million to 10
million and the economy slumped again.
Pointing to the economic problems after 1937, some economists
argue that the depression ended in 1940 when business activity
again reached the level of early 1937. Still, after seven years
of heavy government spending - 20 billion dollars worth - and
the creation of an enormous federal bureaucracy that supervised
the new programs, millions remained unemployed.
Considering these facts, other economists feel that the
depression did not really end until World War II. Only in 1942,
with millions of Americans in uniform and many more in factories
that produced war materials, did massive unemployment end.
What of Roosevelt himself? Perhaps he did not end the
depression. Even so, his years in the White House were so
important that his record and his personality remain
controversial. For many he was a great leader. He helped
millions of needy people. He revolutionized the role of
government. His measures pulled the nation out of the worst of
the depression and night have finished the job if World War II
had not occurred. He provided hope to the hopeless, help to the
helpless and courage to a nation desperate for leadership. In
the chilling atmosphere of fear that gripped the nation before
Roosevelt's first term people seemed eager to follow any leader
who promised action and an end to suffering. At a time when
dictators around the world were persuading the masses to try
fascism, Roosevelt tried to control the abuses of capitalism
while preserving the American democratic system. By a
combination of relief, recovery and reform, Roosevelt may have
prevented a revolution.
Whether FDR did too much or too little, he changed the ways in
which Americans viewed their nation. The country had at last
accepted the fact that the old theories of laissez faire no
longer worked in a modern industrial society men, women and
children might starve for lack of work, not unwillingness to
work.
In the decades since the New Deal American politicians continue
to argue over how much or how little the government should
regulate the economy and aid the needy but neither side argues
that the federal government should donothing. Americans have
accepted the fact that their national government must play a
positive and active role in protecting the equality of
opportunity and freedom that they called the American Dream.