How Successful was the New Deal? | History for GCSE/IGCSE - Year 11 PDF Download

What was the New Deal as introduced in 1933?

The First Hundred Days – between March and June 1933

Three main aims of the New Deal:

• Relief or assistance for the unemployed or poor
• Rebuilding the American economy
• Reforms to create a fair and just society

Roosevelt's Initiatives:

• Roosevelt's actions during the first 100 days, known as the 100-day deal, represented a departure from the government's previous hands-off approach to the economy.
• The government took on a more active role and increased its size and power permanently.
• Legislation under the New Deal focused on Relief, recovery, and reform in a specific order.
• In his 1932 inaugural address, Roosevelt instilled confidence in the American public with his famous quote, “We have nothing to fear but fear itself.”
• During this period, FDR pushed Congress to pass a multitude of laws, resulting in the establishment of various alphabet agencies.

Relief

Recovery

• FDR's approach to recovery involved boosting demand for goods
• FDR's strategy differed from Hoover's by focusing on putting money directly into consumers' hands to stimulate spending and increase demand

Reform

• Reforms aimed to address structural issues in the American economy to prevent future depressions
• These reforms were based on the idea that the government should safeguard individuals from risks they couldn't manage independently
• These measures would expand the role and influence of the national government in the lives of all Americans

Banks

• The emphasis was on restructuring the banking system to prevent future economic crises
• Measures were directed at enhancing the stability and reliability of the banking sector
• Relief Measures During the Great Depression:
  • Government provided relief to all banks
  • Implemented a 4-day national bank holiday, closing all banks temporarily
  • Bank closures decreased as people were given time to process and regain trust
  • Public confidence in the banking system was restored through these measures
  • President Franklin D. Roosevelt (FDR) communicated these actions through national radio broadcasts
• Establishment of the Federal Deposit Insurance Corporation (FDIC):
  • FDIC was set up to insure banks, ensuring people wouldn't lose their savings in case of a bank failure
  • This move significantly restored faith in the banking system
• Emergency Banking Act:
  • 5% of banks were shut down completely, while the remainder were assisted with grants and guidance

Unemployment

In 1933, around 13 million people were unemployed, representing 25% of the workforce

• Civilian Conservation Corporation (CCC): Provided voluntary employment to young men
  • Tasks included tree planting, park cleanup, and residing in government camps
  • Although wages were low, it offered jobs to 2 million men
• Public Works Administration (PWA): Initiated major public construction projects
  • Invested $7 billion in job creation
• Civil Works Administration (CWA): Offered temporary work during winters of 1933-34
  • Created 4 million jobs, concluding in April 1934
• The New Deal
  • National Labour Relation Act: This act granted employees the right to form trade unions.
  • Norris-La Guardia Act: This act prohibited courts or the government from intervening in peaceful union strikes.

Farmers

• Agricultural Adjustment Act: This initiative incentivized farmers to reduce crop production in order to increase crop prices.
• As a result, millions of acres of cultivated land were left unplanted, and a substantial number of piglets were slaughtered.
• Consequently, crop prices surged, leading to a doubling of farmers' incomes. However, this also caused a rise in unemployment among farm laborers.

Industry

• National Industrial Recovery Act: This legislation established the National Recovery Administration (NRA) to regulate production, prices, and labor conditions across various industries.
• The NRA introduced voluntary codes for businesses to stabilize the economy by improving working conditions and pay.
• Consumers were urged to support businesses adhering to these codes, resulting in a reduction in child labor and enhanced working conditions.
• Despite these benefits, the NRA's policies favored larger corporations, leading to the closure of many smaller firms. The Supreme Court eventually deemed the scheme unconstitutional, and it was not reinstated.

The Poor

• Federal Emergency Relief Administration (FERA) provided financial aid for emergency relief to those in need. It had a budget of $500 million.
• The FERA funded soup kitchens and implemented work schemes and nursery schools.

What was the TVA?

• Tennessee Valley Authority (TVA) was established to revive the prosperity of the Tennessee Valley region, which had been severely affected by floods. Approximately 4.5 million individuals relied on government aid programs.
• The TVA initiative included the planting of forests, construction of dams, and implementation of flood prevention strategies.
• New industries were attracted to the area, turning it into a model for the New Deal.

How far did the character of the New Deal change after 1933?

• Following 1933, further developments were necessary to address the ongoing challenges.
• The Second New Deal was implemented between 1935 and 1937 to introduce additional reforms.
• Emphasis was placed on aiding the victims of the Great Depression and fostering a more equitable American society.

The Wagner Act, 1935

• Replacing the National Recovery Administration (NRA), the Wagner Act, introduced by Senator Wagner, safeguarded employees' rights to establish trade unions.
• It prohibited unfair employer practices aimed at hindering union participation, such as unjustly dismissing union members.
• The National Labor Board was established to arbitrate disputes between trade unions and employers.

Social Security Act, 1935

• The Social Security Act of 1935 provided a safety net for citizens through unemployment insurance, pensions for the elderly, and assistance for the sick and disabled.
• Funding for these programs was derived from taxes imposed on both employers and workers.

Work Progress Administration (WPA), 1935

• The New Deal initiatives tackled the issue of unemployment by introducing various projects and work programs.
• Projects included the construction of essential infrastructure like schools, hospitals, and highways.
• Special schemes were devised to provide employment opportunities for artists, actors, and writers.
• The National Youth Administration was established to offer part-time work and vocational training for young individuals.

Resettlement Administration (RA), 1935

• The RA, founded in 1935, focused on assisting farm laborers, sharecroppers, and tenant farmers who had lost their jobs.
• Its primary goal was to relocate 500,000 families to regions with more fertile and promising land for agriculture.

Why did the New Deal encounter opposition?

• The New Deal did not advocate for communist or socialist measures to combat the economic downturn.
• There were no plans for nationalization or significant wealth redistribution, which caused discontent among certain groups.
• Critics argued that President FDR's efforts were insufficient in addressing the crisis adequately.
• On the other hand, conservative factions believed that FDR's policies were excessively radical for the time.

Radical Opposition

• The “Radio Priest” and the National Union for Social Justice:
  • Father Coughlin from Detroit shared his ideas on the radio every Sunday evening, reaching an audience of 40 million Americans.
  • Initially a supporter of the New Deal, he later felt it wasn't doing enough for the poor.
• Townsend Clubs:
  • Dr. Francis Townsend authored the Townsend Plan.
  • The plan proposed that people over 60 receive a $200 monthly pension, provided they spent it within the month, funded by taxation.
  • This initiative aimed to support older people, create jobs for the young, and stimulate the economy.
• Huey Long’s “Share Our Wealth” scheme:
  • Senator Huey Long proposed redistributing wealth to boost the economy.
  • His plan included confiscating large fortunes, providing lump sums for families, pensions, minimum wages, and free education.
  • By 1935, he had 7.5 million supporters.
  • He was assassinated in September 1935 by the son-in-law of his political opponents.

Conservative Opposition

• Republicans:
  • Republicans, part of the conservative opposition, advocated for minimal government intervention, low taxes, limited government spending, self-reliance, and individual responsibility.
  • They criticized the New Deal for allegedly eroding fundamental American principles.
  • The Tennessee Valley Authority (TVA) and the National Recovery Administration (NRA) were likened to the centralized economic planning of the Soviet Union under Stalin.
  • Opponents accused President Roosevelt of amassing excessive power and behaving dictatorially.

• The Liberty League of 1934:

  • Business leaders orchestrated opposition to the New Deal.
  • FDR faced accusations of promoting socialism and undermining American free enterprise.
  • Businessmen particularly disapproved of his pro-union stance and the regulations under NIRA.

• States’ Rights Campaigners:

  • State governors contended that New Deal policies infringed upon states' rights.
  • They objected to the TVA as it encroached on states' autonomy by necessitating federal cooperation.

• Supreme Court's Role:

  • The Supreme Court's primary duty was to evaluate the constitutionality of measures enacted by the President and Congress.
  • Most justices were elderly, conservative, and aligned with the Republican Party.
  • There was a prevalent ideological aversion towards the New Deal, leading to the validation of NRA and AAA.
  • In 1936, FDR's attempt to appoint sympathetic judges was criticized as a scheme to influence court decisions, known as court-packing.
  • The Supreme Court gradually shifted its stance, eventually supporting crucial New Deal provisions in 1937, such as the Social Security Act's pension segment.

Why did unemployment persist despite the New Deal?

• When Franklin D. Roosevelt assumed office, the number of unemployed individuals stood at 12.8 million, constituting a staggering 25% of the workforce.
• By the year 1941, the unemployment figures had reduced by 5.6 million.
• Despite the concerted efforts of Roosevelt's New Deal initiatives, throughout the 1930s, unemployment figures never dropped below 5 million.

Reasons

• The Home Market:
  • The economic downturn of the 1930s resulted in reduced consumer spending on American products due to low incomes. This pattern was particularly prominent in rural areas, heavily reliant on the recovery of the agricultural sector. It wasn't until the onset of World War II that wheat and cattle prices rebounded to levels seen in 1929.
• The Foreign Market:
  • Overseas markets also experienced the brunt of the economic depression, constraining the expansion of export industries. Stringent tariffs further limited opportunities for international growth.
• Improved Production Methods:
  • Technological advancements in agriculture, such as the increased use of machinery including assembly line production and automated tools, led to decreased labor demands, subsequently reducing job opportunities.

• The Business Cycle:

  • The global economy showed improvement between 1933 and 1937 but faced a recession in 1938.

• Self-Inflicted Unemployment:

  • During a recession, business efficiency becomes crucial for survival.
  • Overproduction leads to the necessity of reducing production capacity, resulting in job losses.
  • This scenario was notably observed in the farming industry.

• The Limitations of the New Deal:

  • Due to constraints from Congress, Roosevelt couldn't exert full control over the economy.
  • Consequently, he addressed specific issues piecemeal rather than comprehensively, leading to a slow economic recovery.

Did the fact that the New Deal did not solve unemployment mean that it was a failure?

The New Deal was a failure

The New Deal was a success