Promoting Economic Recovery After the Great Depression

The Success of the New Deal In 1933 when Franklin D. Roosevelt had become president, the United States had been at its lowest point of the Depression. Twenty-five percent of the workforce was unemployed, half of the citizens who had home mortgages had failed to pay back their loans, Americans had lost nearly $2.5 billion in bank failures, and the entire banking system had appeared to be on the verge of collapse (Keene, p.662, 666). Roosevelt had empathy for the common people, and he devoted massive legislation to fix the economy and better the lives of these people. He was quoted as saying “I pledge you, I pledge myself, to a new deal for the American people,” during his campaign (662). In the end, the New Deal and its programs were a success in helping promote economic recovery and lift the weight of the Great Depression from its victims. The New Deal was the bold action that the United States needed so badly during this time, right in the midst of the Depression when Roosevelt took office. There were eleven key parts of the New Deal legislation, and all of these acts and programs had been established to solve the economic problems which members of Roosevelt’s Brain Trust had believed were caused by underconsumption, unequal distribution of income, the farm crisis, the rigidity of prices, and low wages (Keene, p.662). In order to resolve the many economic issues, confidence in the banking system must be restored, people had to be put to work and maintain their jobs, and businesses had to be kept afloat. Roosevelt knew he was capable of achieving this because he was willing to provide jobs through widespread public work programs and fund temporary relief to average citizens, things Hoover would not guarantee. Roosevelt also encouraged Americans to write to him so he could better understand the true problems of the common folk. He connected well with the public, most likely due to his polio, and infused hope into a time of trouble and confusion. Roosevelt told his radio listeners that it was the government’s job to straighten out the economic situation, and he attempted to use the government’s power through the New Deal to achieve this. On March 6, 1933, he declared a bank holiday in which the nation’s banks were closed for a week straight. To make up for the stock market crash of 1929, a series of laws were created to establish the Securities and Exchange Commission (SEC) and reform the practices of buying and selling stocks. The Gladd-Steagall Act of 1933 created the Federal Deposit Insurance Corporation (FDIC) which insures the accounts of small accountholders in member banks, and the FDIC still exists today. The Federal Housing Authority (FHA) was founded in 1934 and offered insurance to private lenders who financed home mortgages for newly purchased houses. These government-supported programs helped to form the modern mortgage lending practices that enabled the percentage of American citizens that owned their own homes to increase by one-third over the next forty years (Keene, p.666). Another major goal of the New Deal was to help reform the workforce and get people jobs. The National Recovery Administration (NRA) was established by the 1933 National Industrial Recovery Act, and was the foundation of Roosevelt’s efforts to devise a Hoover-like cooperative resolution to the crisis. The NRA also established industrial boards for each subdivision of the economy that brought competitors together to set prices, production quotas, and salaries. Supporters of the NRA believed this would stop manufacturers from cutting wages to subsidize lower prices. However, the NRA quickly became unfavorable to many Americans, and was declared unconstitutional by the Supreme Court in 1935 (Keene, p.667). Even though it was short-lived, it showed that improving the workplace was an objective of Roosevelt’s and showed that there were efforts being made to achieve this goal. The Civil Works Administration (CWA) provided jobs that helped more than four million workers endure the winter of 1933-1934 and stemmed growing unrest among the jobless. The Civilian Conservation Corps (CCC) gave economically disadvantaged young men the opportunity to gain work experience through projects such as reforestation, the construction of campgrounds, the renovation of historic battlefields, and supplying rivers and lakes with fish. The Public Works Administration (PWA) funded public works projects such as roads and buildings to help recover the construction industry. The Works Progress Administration employed more than eight million workers from 1935 to 1943; these eight million workers made up one-fifth of the workforce at this time. Throughout the years the WPA constructed 200,000 buildings and bridges as well as 600,000 miles of road. Because of the massive New Deal spending on work-relief, along with the strengthening of the power of consumer spending, the economy had begun its road to recovery in the mid-1930s (Keene, p.668). Roosevelt also worked to handle the farm crisis through the New Deal. Farmers had received more direct aid than anyone else throughout the Depression, but Americans from all walks of life had still questioned the government’s aspiration to help displaced farm workers. The Agricultural Adjustment Act (AAA) of 1933 tried to guarantee that farmers earned a satisfactory income by paying them to take land out of cultivation, which the government hoped would cause a rise in the prices of crops. However, the Supreme Court ruled the AAA unconstitutional in 1936, so the government had to shy away from this approach temporarily. Though the AAA itself was not a success, it was an attempt at a cure for the problem. This was enough to give farmers hope that the government would someday give farmers a guaranteed income that they deserved. The New Deal improved the quality of life for the rural poor by bringing electricity to rural areas. The Tennessee Valley Authority (TVA), a government-owned utility company, provided thousands of jobs and built a series of dams which provided flood relief, generated power, and created recreational lakes throughout seven states which the Tennessee River ran through. Overall, the New Deal did succeed in improving the lives of farm workers and owners. Farm income doubled from $2 billion to $4.6 billion over ten years (Keene, p.671). Roosevelt at this time also created the Social Security system due to political pressures from the left. Dr. Francis Townsend was a physician and critic of Roosevelt who organized a campaign for pensions for the elderly. His call for old-age pensions from the government set into motion a powerful grassroots movement. Petitions with over 10 million signatures had been submitted to Congress which resulted in Roosevelt drafting a bill for pensions for the elderly (Keene, p.676). These same forces were also what influenced him in the clash between business and labor. He was prompted to ally himself with labor, and proposed a heavy tax on the upper class which resulted in the business elite declaring him a “traitor to his class” (Keene, p.677). The National Industrial Recovery Act gave the first glimpse of things to come by stating that workers had the right to organize and bargain collectively. The Wagner Act created the National Labor Relations Board (NLRB) to oversee unions’ elections for their collective bargaining agents. The law prevented employers from firing or blacklisting workers who joined a union, which resulted in a dramatic increase in union popularity. Union membership rose from 2.9 million in 1933 to 8.7 million in 1941 (677).
Roosevelt went even further in 1938 with the Fair Labor Standards Act, which established a national minimum hourly wage, maximum hours for the workweek, and outlawed labor by children under sixteen. The minimum wage was initially set at twenty-five cents, rising gradually to forty cents, and forty-four hours was the initial amount of hours set for the work week (Keene, p.677). This was successful in establishing a fair, safe, and healthy workplace for all employed citizens. No children were forced to give up their childhood to work, people did not get paid less than minimum wage, and people were not forced to work more than the set hours in the work week. This is the framework for how the American workforce is today, which still holds standards for minimum wage as well as child labor laws. The New Deal also helped African Americans advance in society and become valued members of the New Deal coalition, a political partnership whose strength increased the president’s freedom to pursue his legislative agenda. In fact, the New Deal programs offered African Americans more federal and state aid than they had ever received before (Keene, p.679). Democratic campaigners in the 1936 election even emphasized the benefits the New Deal had brought to African Americans. Eleanor Roosevelt, FDR’s wife and first-lady, even helped draw many black voters to support her husband because of her well-known interest in civil rights. A popular phrase spoken by African American preachers is “Let Jesus lead you and Roosevelt feed you” (Keene, p.680).
Despite having its critics, the New Deal was successful over its five year run. Its accomplishments include: alleviating human suffering, strengthening the capitalist market structure, and providing economic security to ordinary Americans. The New Deal reforms had bolstered financial institutions, protected the housing market, kept farmers afloat, improved industrial wages, and created pensions for the elderly. The legacy of the New Deal and its accomplishments outlived the Depression crisis and has improved the lives of Americans, as well as future generations that have come to be since.