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The New Deal

Franklin D Roosevelt

New Deal: Franklin D Roosevelt was the 32nd American President who served in office from March 4, 1933 to April 12, 1945. One of the most important events during his presidency was the New Deal.

Definition and Summary of the New Deal
Summary and definition:
The New Deal was a series of programs and policies of Relief, Recovery and Reform to combat the effects of the Great Depression during the presidency of Franklin D. Roosevelt. The New Deal fell into two stages relating to the dates the programs were initiated. The First New Deal encompassed national planning laws and programs for the impoverished from 1933 - 1934.

The Second New Deal covered the period from 1935 - 1939 and focused on social reform together with policies and programs to speed up the nation's recovery. The New Deal programs helped all Americans and provided jobs for millions of people. Many New Deal programs still continue today.

What was the New Deal in the Great Depression? The New Deal was a series of programs introduced during the Great Depression by President Franklin D. Roosevelt to address the problems of mass unemployment, homelessness and the nation's economic crisis.

What were the goals of the New Deal? The goals of the New Deal were to pass laws and introduce federal programs aimed at providing RELIEF to the needy during the Great Depression, RECOVERY of the economy and industries and REFORM of the financial system (banks and Stock Market). Relief, Recovery and Reform

What were the New Deal Programs? The New Deal Programs were diverse relief schemes and 'alphabet soup agencies' such as the Tennessee Valley Authority (TVA), Public Works Administration (PWA), Civil Works Administration and the National Recovery Administration (NRA)

Where was the Second New Deal? The Second New Deal covered the period from 1935 - 1939 as FDR's administration reacted to criticisms and focused on social reform together with policies and programs to speed up the nation's recovery. Refer  to the Second New Deal Programs.

What was the New Deal Coalition?: The New Deal Coalition was the alliance of voters from different walks of life and ethnic groups with differing needs who supported FDR's New Deal programs.

Was the New Deal successful?
The FDR's New Deal was successful in many ways:

  • President Roosevelt inspired a new level of confidence in Americans. FDR kept the nation informed of important events with his series of radio broadcasts called Fireside Chats. He was a reassuring and powerful leader whose fearless approach provided the psychological support that helped Americans get through the Great Depression

  • The banking system was stabilized and the Stock Market and banks were regulated

  • The New Deal programs created millions of jobs and government sponsored public works projects rebuilt the infrastructure of the US

    • The PWA completed 34,000 heavy construction projects, improving the infrastructure of America, building highways, airports, bridges, dams, irrigation and sewage systems

    • The WPA became the nation's biggest employer and provided light construction jobs for millions of unskilled workers who built schools, hospitals, libraries, post offices and houses

    • The Civilian Conservation Corps (CCC) employed young men who produced impressive conservation achievements planting over three billion trees, building 97,000 miles of forest trails and roads, stocking  rivers with nearly a billion fish which resulted in an increase of wildlife population

    • The Tennessee Valley Authority (TVA) rejuvenated the region bringing cheap, hydroelectric power (electricity) into rural areas

  • Workers were guaranteed the right to organize Unions and to collective bargaining for the negotiation of wages, hours and working conditions in the Wagner Act

  • The Fair Labor Standards Act abolished child labor and limited working hours for employees

  • The Social Security Act established an unemployment insurance system, a national pension fund and benefits for victims of industrial accidents

  • The Rural Electrification Administration (REA) was established to supply electricity to rural agricultural communities and resulted in 98% of American farms being equipped with electricity

What were the Failures of the New Deal?
The failures of the New Deal included:

  • The Agricultural Adjustment Act (AAA) adopted the policy of the destruction of crops and livestock that resulted in the increase of food prices of up to 50%

  • The 1937-1938 'Roosevelt Recession', triggered by significant federal government spending cuts during the period of the Second New Deal, resulted in a massive surge in unemployment. The 'Roosevelt Recession' also saw Industrial production decline by 33% and wages drop by 35%

  • The business world viewed the New Deal as hostile to business interests by encouraging strikes and the power of unions

  • Large scale unemployment continued throughout the Great Depression. Many of the jobs created by the New Deal were only temporary and implemented as short-term policies

Facts about New Deal
The following fact sheet contains interesting facts and information on New Deal.

During the 1932 Presidential election campaign Democrat Franklin D Roosevelt promised "A new deal for the American people."

When FDR came to office the nation was in the grip of the Great Depression, it was the most severe economic recession in the history of America. Over 1 million were homeless and 12 million people (25% of the population) were unemployed.

FDR promised to take action and made the famous quote "the only thing we have to fear is fear itself..."

He had no clear agenda strategy to tackle the massive task that faced him but surrounded himself with many trusted advisors, who were referred to as the "Brains Trust". These men had boundless energy and ideas and President Roosevelt took the approach best explained in the following quote "the country need bold, persistent experimentation...above all, try something".

FDR was true to his word and the First Hundred Days of his presidency, between March 9, 1933 and June 16, 1933 saw a flurry of activity as FDR presented his plan for national recovery, which would later become known as the First New Deal. The First New Deal ushered in an unprecedented era of government intervention in the economy.

President Roosevelt was an excellent communicator and he used the power of the radio to reach millions of Americans in his Fireside Chats that he used to in times of crisis and national importance to convey important information and reassure the nation.

The first thing the president needed to do was to fix the banks and the Stock Market. FDR declared a National Bank Holiday and temporarily closed all the banks from March 6, 1933 until March 13, 1933, when the banks re-opened. On March 9, 1933 the Emergency Banking Relief Act was passed which addressed the banking crisis followed by the Glass-Steagall Act, he then took the nation off of the gold standard. The Federal Securities Act established the SEC to regulate trading on Wall Street.

During the first Hundred Days of his presidency 15 major pieces of legislation were passed to combat the economic crisis and the Great Depression.  Federal government agencies, nicknamed 'alphabet soup agencies', were established incorporating the strategy of Relief, Recovery and Reform to bring about Industrial and agricultural recovery, tackling unemployment and providing relief from poverty. Refer to the New Deal Programs for details .

FDR abandoned a balanced budget and adopted a temporary policy of deficit spending to finance his relief programs. This economic strategy used a theory called Keynesianism which was based on the view that in the short term the government should spend heavily, even if it had to run a deficit, to jump-start employment and production.

Under the New Deal, the country gained from public works projects. The Public Works Administration (PWA) was created by the National Industrial Recovery Act of 1933 (NIRA) and heavy construction public works programs such as building bridges, dams, highways, airports, irrigation and sewage systems. 

The Tennessee Valley Authority (TVA) constructed dams and power plants rejuvenating the Tennessee Valley area.

The Reforestation Relief Act established the Civilian Conservation Corps CCC that employed young men to contribute to the conservation of the nationís natural resources.

The Agricultural Adjustment Act (AAA) aimed at reducing farm production to boost farm prices.

The National Recovery Administration (NRA) established voluntary business codes and rules of fair competition. The NRA introduced the "Blue Eagle" campaign for businesses who joined the scheme as a sign of patriotism and as a "seal of approval"

At the start of 1934 there was still over 11 million people out of work. The period known as the First New Deal dealt with emergency measures but many Americans believed that progress was too slow. The 1936 presidential election was on the horizon and the New Deal began to change direction and entered the period known as the Second New Deal.

The Second New Deal Programs focused on social reform together with policies to speed up the nation's recovery.

Major programs included the Works Progress Administration (WPA) that combated unemployment by providing light construction jobs for millions of unskilled workers.

The Social Security Act established an unemployment insurance system and a national pension fund.

The 1935 Wagner Act created the National Labor Relations Board (NLRA) to protect the rights or organized labor and to organize collective bargaining

People, such as Huey Long, Father Coughlin, Gerald Smith and Dr. Francis Townsend began criticizing the New Deal. Political opposition came from followers of both left and right wing politics and the Supreme Court but voters from different walks of life backed FDR who won the 1936 election in a landslide victory due to New Deal Coalition of voters.

FDR was furious that the Supreme Court had ruled that major New Deal legislation had been declared unconstitutional and feared other acts would go the same way. The conflict led to the Court Packing Plan by which FDR tried to change the political balance on the Supreme Court.

In 1937 the economy was improving and although unemployment was still high, production, profits, and wages had regained their 1929 levels.

FDR, worried about inflation and the size of the federal deficit, decided it was time to balance the government budget and reduce federal spending.

The PWA and the WPA were cut significantly resulting in a massive rise in unemployment. Industrial production declined by 33%, wages dropped by 35% and and the stock market crashed. FDR had inadvertently caused a second, serious economic downturn that became known as the "Roosevelt recession".

FDR reverted to the Keynesian Economics and the policy of deficit spending to stabilize the economy. The Roosevelt Recession lasted about 13 months from mid-1937 to 1938 but had seriously delayed the nation's recovery.

Despite the numerous positive effects the New Deal had failed to end the Great Depression and millions of Americans were still unemployed and homeless.

World War II erupted in Europe in 1939 and the effects of the Great Depression began to subside in December 1941 when the United States entered World War II. Economic output surged and unemployment fell as the United States saw a surge in demand for war-related goods such as ships, tanks, airplanes and munitions.

The New Deal Programs by FDR were admired by a later president, Lyndon B. Johnson who introduced additional programs to fight poverty called the Great Society.

US American History
1929-1945: Depression & WW2

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