New Deal is a program created by Franklin Delano Roosevelt during the Great Depression to counteract various effects of it. New Deal created many agencies and legislation to help the United States pull itself out of the Great Depression. Some of these agencies have tremendous effect even today.
When Roosevelt was elected as the president, he faced many problems such as banking failure and unemployment. Almost immediately, he called on Congress and began what is known as Hundred Days Congress. During this period of time, many legislation was passed to help banks recover, create jobs for the unemployed, and set up many agencies to help these causes. National Recovery Administration and Public Works Administration were created to help industries, labor, and the unemployed. Glass-Steagall Act created Federal Deposit Insurance Corporation. Unemployment Relief Act created Civilian Conservation Corps which hired many uniformed young men to do public works such as fire fighting and reforestation. Agriculture Adjustment Act also helped to solve overproduction of crops. Tennessee Valley Authority (TVA) was created, which would build dams and power plants and in many other ways salvage a vast impoverished region. This agency was heavily criticized, although it did provide jobs for the unemployed and once completed, it would supply cheap source of electricity. The New Deal shifted more toward reform in 1935-1936. New Deal during this time is known as the second New Deal. Major second New Deal measures included Social Security Act, National Housing Act which created Federal Housing Administration, and Works Progress Administration. “…between 1935-1941 the WPA employed an annual average of 2,100,000 workers, including artists and writers, who built or improved schools, hospitals, airports, and other facilities by the tens of thousands” (Mortimer, p115). However even the great New Deal had to end sometime. Culmination of the New Deal was triggered by “court packing” of Roosevelt. The Supreme Court was very conservative at the time and was declaring many New Deal laws unconstitutional. Roosevelt tried to neutralize the court by proposing to the Congress to permit him to appoint up to six new justices, thus giving the court a liberal majority. Roosevelt was opposed furiously even by his Democrats-dominated Congress. He further lost more prestige when the United States plundered into sharp recession. By the time New Deal was over in 1939, it had permanently expanded the role of federal government, particularly in economical regulation, resource development and income maintenance.
Contrast to what people believe, New Deal did not end the Great Depression. However, through New Deal, Roosevelt sought to solve the immediate problems that threatened the United States. Author Kenneth S. Davis states, “…New Dealers pointed out that relief- not economy- had been the primary object of their multi-front war on the depression.” ( Davis, p147) Although long term goal of New Deal was to end the depression it really never did. Unemployment rates were down from before the election, but statistics show that it was steadily going up even after the New Deal recovery until the World War II.
Many economists believed that its greatest failure was its inability to bring about complete economic recovery. Many economists called for massive deficit spending to promote recovery. However Roosevelt remained unpersuaded. There were even more farm surpluses under Roosevelt than under Hoover. Also the national debt had skyrocketed from the already enormous figure of $19,000,000,000 in 1932 to $40,440,000,000 by 1939. This is an outrageous spending considering the nation was going through economic troubles. “Despite some $20,000,000,000 poured out in six years of deficit spending and lending, of leaf raking and pump priming, the gap was not closed between production and consumption” (Parrish, p195). After all that trouble to get consumption to match the production, New Deal really didn’t do much to close the gap. There were still overproduction of goods and not enough consumption to match the productions.
New Deal also became the template for the modern welfare system. For example, housing is a very important par of both programs. New Deal created FHA ( Federal Housing Administration ) to encourage improving or building new houses. Now, there is New York City housing projects where people without sufficient income can live in by paying very little rent. Also there is the Social Security program. Social Security was created by New Deal. Not much really changed since 1935 when this act was passed. Social Security was designed to guarantee the retired workers to receive regular payments from Washington and these payments were to financed by payroll tax on both employers and employees. Now Social Security includes: 1) old age, survivor’s, disability insurance, 2) Medicare 3) Supplemental security income 4) Unemployment compensation 5)Aid to families with children, and 6) Medicaid. Another similarity between them is the social service to help the unemployed to find jobs. New Deal really focused on this problem. National Recovery Administration set maximum hours of labor so that employment could be spread over more people. Now there are social services to help unemployed financially and to find jobs. Under New Deal, more specifically, Social Security Act, unemployment insurance was created. Initially an eligible worker had to wait for up to 2 weeks before receiving benefits. Unemployment insurance in present day guarantees benefits given for period of up to 20 weeks with little or no waiting period.
New Deal definitely played an important role in rescuing the United States from the grasps of the Great Depression. Great Depression really devastated the United States. However through this program it was really able to regroup itself and make efforts to end the depression. “… it provided federal government not only with increased control over money supply and federal policies but also with increased understanding of economic consequences of its spending, borrowing, and taxing” (Davis, p189). Through this program the United States learned how to manage itself when another such disaster happens. Also New Deal changed the relationship between people and the government. Government became more involved in people’s lives. In addition, the agencies setup by this program really have huge impact on people’s lives even today. One good example of such agency is the Security Exchange Commission which was created to watch over the stock market. Prior to the Great Depression, stock market was kind of like a casino where many speculators just gambled. However through the creation of this agency, stock market became more of a controlled trade market.
New Deal was also important because it was responsible for the rise of organized labor. When the depression struck, only 5 percent of the work force was unionized, compared to 12 percent in 1920. However things began to change, when the American Federation of Labor’s Committee for Industrial Organization broke away. As the Congress of Industrial Organizations, CIO began unionizing the mass production industries after 1938. Strikes were successful because of the combination of the reluctance of authorities to act against the labor and unique method of strikes CIO used. They would close the factories down from inside so that the employers cannot hire other non-union workers. By 1941 some 10,500,000 workers were unionized, three times as much from a decade before. Fair Labor Standards Act (Wages and Hours Bill) was passed in 1938, to protect the labor. This act required industries that are involved in interstate commerce to set the maximum hours of labor and minimum wage. It also prohibited all labor by children under the age 16; under 18 if it was dangerous. New Deal really tried to clean the issue of labor. However new rise of unions did have negative impact on Roosevelt. Middle class Americans really despised the strikes and Roosevelt was attacked for it.
In conclusion, New Deal was and still is an essential part of the nations. Agencies and acts still existing have tremendous effects on us. Even though it was criticized for an enormous expenditures, every dime spent on it was worth it. It also paved the way for new programs such as Truman’s Fair Deal. New Deal was a great program because it acted in a way as a first aid to the dying United States. It helped the United States just enough so that it would slowly recover. New Deal’s greatest achievement was to restore faith in American democracy at a time when many people believed that the only choice left was between communism and fascism.