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The New Deal

During the 1930’s, America witnessed a breakdown of the Democratic and free enterprise system as the United States fell into the worst Depression in history. The effects of the depression were being felt everywhere in the United States. In 1933, sixteen million people were unemployed. Americans wanted and needed a change. They proved this by electing Franklin D. Roosevelt in 1932. This was the beginning of a new period in time for Americans, as Roosevelt would introduce his course of action with the New Deal. Would Roosevelt’s New Deal be what Americans needed to counteract the effects of the epression?

In Roosevelt’s first inaugural address he declared, “In the event that Congress hall fail to take these courses and in the event that the national emergency is still critical I shall not evade the clear course or duty that will then confront me. ” Roosevelt’s course of action came to be known as the New Deal. The New Deal describes the innovative measures that President Roosevelt took to try to restore the American economy, give Americans pride again, and have faith in the government. The New Deal started in 1933 and lasted until 1938. The New Deal was based on relief, recovery, and eform.

The New Deal included federal action of unprecedented scope to stimulate industrial recovery, assist victims of the Depression, guarantee minimum living standards, and prevent future economic crises. Many economic, political, and social factors lead up to the implementation of the New Deal. In the first two years, the New Deal was concerned mainly with relief, setting up shelters and soup kitchens to feed the millions of unemployed. On March 6, 1933 Roosevelt called a nationwide bank holiday, and on March 9 Congress passed the Emergency Banking Act, which provided for federal bank nspections.

In the summer of 1933, the Glass-Steagall Act set much more stringent rules for banks and provided insurance for depositors through the newly formed Federal Deposit Insurance Corporation (FDIC). These acts helped to restore the confidence in the wake of widespread bank failures. Two acts, one in 1933 and one in 1934, required detailed regulations for the securities market, enforced by the new Securities and Exchange Commission (SEC). Several bills provided mortgage relief for farmers and homeowners and offered loan guarantees for home purchasers through the Federal Housing Administration, or FHA.

The Federal Emergency Relief Administration expanded existing relief grants to the states and resulted in assistance for more than 20 million people. The Civilian Conservation Corps (CCC) provided work relief for thousands of young men under a type of military discipline. The CCC emphasized reforestation, among other projects. Congress established the Tennessee Valley Authority (TVA) to develop the Tennessee River in the interest of navigation and flood control and to provide electric power to a wide area of the southeastern United States.

The most important legislation of 933 involved the major economic sectors. As a climax to a decade of wrangling, Congress in 1933 enacted a complex new farm bill, the Agricultural Adjustment Act. It provided several mechanisms to help raise agricultural prices, but the one most extensively used provided for government payments to farmers who destroyed or did not grow surplus crops. At a time when economic hardship was leaving people in other areas in need of food, the act invited criticism. The Agricultural Adjustment Act was declared unconstitutional by the Supreme Court of the United States in 1936.

As time progressed, he focus shifted towards recovery. In order to accomplish this monumental task, several agencies were created. The National Recovery Administration (NRA) was the keystone of the early New Deal program launched by Roosevelt. It was created in June 1933 under the terms of the National Industrial Recovery Act. The National Recovery Administration (NRA) approved and enforced a set of competitive codes for each industry to help ensure fair competition in each. This act, with presidential approval, regulated prices, wages, working conditions, and credit terms.

Businesses that complied with the codes were xempted from antitrust laws, and workers were given the right to organize unions and bargain collectively. After that, the government set up long-range goals, which included permanent recovery, and a reform of current abuses. The NRA gave the President power to regulate interstate commerce. This power was originally given to Congress. While the NRA was effective, it was bringing America closer to socialism by giving the President unconstitutional powers.

In May 1935 the US Supreme Court unanimously declared the NRA unconstitutional on the grounds that the code-drafting process was unconstitutional. Another New Deal measure under Title II of the National Industrial Recovery Act of June 1933, the Public Works Administration (PWA) was designed to stimulate US industrial recovery by pumping federal funds into large-scale construction projects. The head of the PWA exercised extreme caution in allocating funds, and this did not stimulate the rapid revival of US industry that New Dealers had hoped for.

The PWA spent $6 billion enabling building contractors to employ approximately 650,000 workers who might otherwise have been jobless. The PWA built everything from schools and libraries to roads nd highways. The agency also financed the construction of cruisers, aircraft carriers, and destroyers for the navy. Beginning in 1935, Roosevelt took new measures and started another flood of legislation. The New Deal program founded the Works Projects Administration in 1935 replacing the Federal Emergency Relief Administration, which had dispensed money to states in an effort of relief.

It was the most important New Deal work-relief agency. The WPA developed relief programs to preserve people’s skills and self-respect by providing useful work during a period of massive unemployment. From 935 to 1943 the WPA provided approximately nine million people with jobs at a cost of more than $11 billion. It had also provided approximately four million students. This funded the construction of thousands of public buildings and facilities. In addition, the WPA sponsored the Federal Theatre Project, Federal Art Project, and Federal Writers’ Project providing work for people in the arts.

Perhaps of greatest enduring significance, Congress in 1935 enacted the Social Security Act, which contained three major programs- a retirement fund, unemployment insurance, and welfare grants for local distribution, ncluding aid for dependent children. These programs, coupled with a new subsidized public housing program, began what some now refer to as a welfare state. Other new measures implemented focused on strict regulations for private utilities, subsidies for rural electrification, and what amounted to a bill of rights for organized labor.

The National Labor Relations Act of 1935 gave federal protection to the bargaining process for workers and established a set of fair employment standards. The National Labor Relations Act, also known as the Wagner Act for its sponsor, Robert Wagner, guaranteed workers the right o organize and bargain through unions. The federal Fair Labor Standards Act of 1938, the last major domestic program launched by the Roosevelt administration, mandated maximum hours and minimum wages for most categories of workers.

The law was intended to prevent competitive wage cutting by employers during the Depression. After the law was passed, wages began to rise as the economy turned to war production. Wages and prices continued to rise, and the original minimum wage ceased to be relevant. However, this new law still excluded millions of working people, as did social security. However, a severe recession led many people to turn against New Deal policies. In addition, World War II erupted in September 1939. Causing an enormous growth in the economy as war goods were once again in great demand.

No major New Deal legislation was enacted after 1938. By 1939 public attention focused increasingly on foreign policy and national defense. The New Deal was over, but it had permanently expanded the role of the federal government, particularly in economic regulation, resource development, and income maintenance. Although in itself the New Deal failed to stimulate full economic ecovery, it provided the federal government not only with increased controls over money supply and Federal Reserve policies.

It also with increased understanding of the economic consequences of its own taxing, borrowing, and spending, helping the government to limit the impact of later recessions. The New Deal changed the relationship between the government and the people of the United States. In addition to increasing the involvement of the government in people’s lives, the New Deal created a number of agencies that still exist, and it stimulated the growth of the Democratic Party.

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Home » United States » The New Deal

The New Deal

The New Deal was a political and social plan that was the presidential campaign platform of Franklin Delano Roosevelt. Although Roosevelt was very vague about what it was and actual measures to be taken while running for president, the New Deal was the shinning hope for many Americans who had lost their jobs or were living in poverty. After the United States had plummeted into the greatest depression to face this country while Herbert Hoover lead the country, many voters were looking for anyone with a promising plan and a bright outlook.

As banks closed and unemployment rates soared, Roosevelt promised a balanced budget, and spoke of Hoovers rash and excessive spending. The election of 1932 was a landslide in Roosevelts favor, and he quickly took over as soon as he began his term. Roosevelt called a special session of Congress lasting from March 9 until June 16 in 1933. Roosevelt began to put his New Deal into action. With a democratic majority in Congress on his side, Roosevelt churned out legislation rapidly from the generally sluggish machine of Congress. Banks had been closing all over the country due to frightened citizens withdrawing all of their money.

In order to increase trust in them, Congress passed the Emergency Banking Relief Act of 1933, which allowed the government to reopen closed banks, and regulate banking and foreign exchange. The Glass-Steagall Banking Reform Act was later passed in order to form the Federal Deposit Insurance Corporation, insurance to civilians for their banking deposits up to $5,000, which was later raised. These to bills encouraged the public to once again trust their banks, and to deposit money in the banks instead of hiding it under their mattresses.

Compared to the more than 4,000 bank failures of 1933, there were only 57 in 1934 because of these actions. The Agricultural Adjustment Act and the Home Owners Loan Corporation were both formed to help farmers and other households with paying their mortgages, as well as helping the mortgage-holding banks to stay in business. The Frazier-Lemke Farm Bankruptcy Act suspended mortgage foreclosures for three years, and moved farmers with small amounts of poor land to better areas. Trees were planted in the deserted areas in an attempt to prevent soil erosion and block the wind.

Moving on from this, Roosevelt decreed that all privately owned gold be turned in to the Treasury and to be paid back in paper money. He then took the nation off of the gold standard and cancelled the gold payment clause for all contracts. After this, Roosevelt reduced the gold content of the dollar to 59. 06 cents. All of these measures were taken as an attempt to control inflation and to start up businesses. More difficult than either of the other problems addressed by Roosevelt was unemployment. Many Americans searched for jobs that simply did not exist.

Poverty levels soared, especially in the mid-west, where many families lost their farms due to falling prices of crops and a drought that had lasted for years. The first bill passed by Congress to aid the unemployed was the Civilian Conservation Corps. About 3 million uniformed men were employed in such occupations as flood control, reforestation, swamp drainage, and fire fighting. In order to help the older of the unemployed, the Federal Emergency Relief Act was passed to form the Federal Emergency Relief Administration.

This agency gave about $3 billion to states for wages, work projects, or direct dole payments. The Civil Works Administration was formed as a temporary source of jobs such as leaf raking during the particularly cold winter of 1933. All of these actions were still not enough to completely defeat the monster of unemployment. In 1935, the Works Progress Administration was formed, and spent about $11 billion employing people to construct public buildings, bridges, and hard-surfaced roads.

Part-time jobs were also found for white collar workers; artists painted murals in public buildings and people like John Steinbeck counted dogs. Trying for a national comeback, the National Recovery Administration was formed in order to help with industry, labor, and unemployment. Workers were guaranteed the right to organize and bargain together with their own representative and also forbade businesses from forcing workers to sign an anti-union contract before they were hired.

The Agricultural Adjustment Administration attempted to form as artificial scarcity by giving farmers compensation for growing less acreage. However, the intentional destruction of crops and the use of slaughtered pigs as fertilizer increased scrutiny of a plan that wasted food while so many went hungry. This particular plan failed, but a revision of the original idea succeeded with the Soil Conservation and Domestic Allotment Act of 1936. This planned to remove acreage from production while conserving the soil from erosion that had taken so much of the topsoil during drought and high winds.

In order to accomplish this, farmers were paid to plant soil conserving crops or to let the land lie fallow. This was much more successful than its predecessor. The Second Agricultural Adjustment Act, passed two years later, continued conservation payments to farmers for growing less acreage, but also provided parity payments for farmers who conformed to restrictions on specific crops like cotton and wheat. In one of the areas in America hit hardest by the Depression, the Tennessee River Valley, an act named after the valley was formed to create a planned economy.

The Tennessee River was to be dammed up in several places to prevent flooding in the area, create jobs in building the dams, and to provide large amounts of inexpensive hydroelectric power. Low-cost housing, lots of cheap nitrates, restoration of eroded soil, improved navigation, flood control, and reforestation were other effects of the Tennessee Valley Act. The Federal Housing Administration began to stimulate the building industry by giving homeowners small loans for improving their home or constructing new ones.

The United States Housing Authority lent money to states and communities for more low cost construction. These two actions caused the size of slums in America to not only stop growing, but to decrease in number. The Social Security Act of 1935, one of the most important acts passed by Roosevelt and his New Dealers, provided for unemployment insurance and old-age pensions, as well as pensions for other dependents such as the handicapped or the blind. This act has outlasted the New Deal Administration and the Great Depression, and remains one of the legacies of Roosevelt.

The National Labor Relations Act and the National Labor Relations Board reasserted the labor forces rights of self-organization and chosen representatives. Labor rights continued to improve with the Fair Labor Standards Act, or the Wages and Hours Bill. Any inter-state industry was given regulated minimum-wage and maximum hour levels. Children under sixteen were not allowed to work and sixteen to eighteen year olds were barred from dangerous work. All of these bills were part of Roosevelts complicated, experimental, and radical plan, supported by his three Rs, Relief, Recovery, and Reform.

Roosevelts ideas of a big government were opposed by conservatives and businesses, who had enjoyed years of laissez-faire. However, most Americans gladly embraced the New Deal as saving the country. Roosevelt was criticized for spending so much, but now some economists say that he should have spent more. Roosevelts New Deal was a brand new approach to government that greatly limited states rights, strongly favored workers and unions, and formed programs that for many critics were borderline socialist.

The New Deal had Progressive roots in labor, and some plans similar to Hoovers attempts at helping the country before Roosevelt came into office, but at a much grander scale. The New Deal was evolutionary, but needed a brilliant man such as Roosevelt to guide and lead the movement in order to achieve the success that it did. Without Roosevelt, a plan similar to the New Deal would have occurred, but may not have ever reached the greatness and success without the genius and charisma of the man.

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