New Deal America

Essay submitted by Jalisec@aol.com

The stock market crash of 1929 helped launch the United States and many other

nations into the worst economic depression in history. The severity of the Great

Depression called for federal government programs to protect the general welfare of

citizens. The New Deal programs created by Franklin D. Roosevelt provided the

framework for the welfare state that still serves as a basis for American public policy.

All aspects of American society suffered during the Great Depression. By 1932, there

were thirteen million people unemployed. There was no security for the millions who lost

all of their savings in the bank failure or stock market crash. Volunteer organizations

attempted to help the needy, but their resources were simply not adequate (Madaras

and SoRelle 218). Hope seemed non-existent. Americans had never seen such a severe

depression. They could not look to history for guidance. The New Deal was Roosevelt's

attempt to restore the economy. His willingness to act decisively and experiment with

new policies set him apart from previous presidents. He often said, "I have no

expectation of making a hit every time I come to bat. What I seek is the highest

possible batting average"(Tindall and Shi 1238).

In the first years of Roosevelt's term he worked hard to empower the federal branch.

The New Deal set the precedent for 20th century liberalism. The first order of business

for the Roosevelt administration was financial reform. Banking is a crucial aspect of

capitalism and Roosevelt was very aware of this fact. On his second day in office,

Roosevelt called Congress to meet in a special session. The outcome was the

Emergency Banking Relief Act, which permitted stable banks to reopen and provided

managers to those who remained in trouble. The Glass-Steagall Act separated

commercial and investment banking and created the Federal Deposit Insurance

Corporation. These actions all helped restore banking confidence within American

people. Roosevelt ensured that it was safer to "keep your money in a reopened bank

than under the mattress"(Tindall and Shi 1238). After accomplishing this task, the new

administration was ready to solve other problems.

Other financial programs included the Securities and Exchange Commission (SEC),

National Industrial Recovery Act (NIRA), and the Agriculture Adjustment Administration

(AAA). The SEC functioned in regulating the stock and bond markets. The NIRA and

AAA were aimed at recovery through regulation. The NIRA played a big role in restoring

faith and confidence in the system and helped to increase demand and wages, but

realistically it was impractical; it abandoned the American market system. The NIRA did

work for a short time, perhaps because a new air of confidence had overcome the

depression blues and the downward spiral of wages and prices had subsided. But as

soon as economic recovery began, the honeymoon ended (Tindall and Shi 1248). The

AAA was set up to help farmers with the costs of harvesting their crops. The AAA

achieved success in boosting the overall farm economy, but unfortunately, someone

had to pay for the success. That someone was the taxpayers and consumers.

Relieving the widespread distress was another major priority of the new administration.

Roosevelt once remarked, " The test of our progress is not whether we add to the

abundance of those who have much. It is whether we provide enough for those who

have too little" (Tindall and Shi 1241). Congress' first step in accomplishing this goal

was the creation of the Civilian Conservation Corps (CCC). The CCC was designed to

give work to unmarried young men aged eighteen to twenty-five. The Federal

Emergency Relief Administration (FERA) gave money to states in the form of grants.

The money was then handed out to relief clients in the form of direct cash payments.

The types of relief offered during the first New Deal were temporary. There were no

entitlements, once the money was gone…. it was gone.

The Second New Deal focused on long-term maintenance whereas the original New

Deal's purpose was short-term relief. Roosevelt called the legislation passed during the

Second New Deal "must" legislation (Tindall and Shi 1254). The Wagner Act prohibited

employers from interfering with union activities and gave workers the right to bargain

through unions of their own choice. The Social Security Act of 1935, was the New

Deal's "supreme achievement", according to Roosevelt (1255). Before the Great

Depression, progressives proposed aid to elderly, disabled, and unemployed, but

America was intent on being a nation of self-reliance. After seeing the destruction of

the Great Depression, many opted to try out the new forms of legislation. The inability

of capitalism to stabilize the market and the failure of the private sector to restore

prosperity enhanced the consideration of stronger executive leadership and centralized

planning (Biles 225). The Social Security Act was (is) financed by taxes on the earnings

of current workers. By taking money from the workers the government slowed the

increase in public consumption needed to restore the health of the economy (1256). In

addition to the Social Security Act, a bill was passed providing work to relief to the

unemployed. These programs were managed by the Works Progress Administration

(WPA). The measures Roosevelt took during the Second New Deal seemed very radical,

but actually they were all programs that had been floating around in Congress for many

years (1259).

Capitalism is effective only if consumers and investors have confidence. The depression

destroyed the confidence of both the investors and the consumers. The consumers lost

trust in the banks due to the dramatic bank failure rate; the investors did not have the

confidence to maintain and keep their businesses productive. The New Deal did not

restore the economy to the levels of 1929, but it was an extreme political and

psychological accomplishment. Roosevelt played a huge role in helping to restore the

economy during the Great Depression. He interacted with the people; he convinced

them that things were not as bad as they seemed.

Works Cited

Biles, Roger. A New Deal for the American People (Northern Illinois University Press,

1991)

Madaras, Larry, and James SoRelle. Taking Sides. Connecticut: McGraw-Hill Companies

Inc. 2000.

Tindall, George, and David Shi. America-A Narrative History. New York: W.W. Norton,

1999