Successes and Failures of the New Deal

The New Deal

Write your own balanced account of the successes and failures of the New Deal, reaching your own conclusion as to whether it was a success or not.

Roosevelt was faced with many problems, all of them vitally needed to be addressed. First of all, the stock market had ruined millions of investors who had paid high prices for their shares and had been forced to sell them for next to nothing. Millions of investors had bought shares with money borrowed from creditors, and the latter had no hope of receiving payment and so lost heavily as well. Secondly, banks were also in a shaky position, due to the fact that they had speculated unsuccessfully. Plus the fact that many of the banks were overwhelmed by the millions who tried to withdraw their savings thinking they would be safer at home. Many of these banks were forced to close down, and out of the 25 000 banks in the country in 1929, 10 000 had closed down by 1933. This meant that lots of ordinary people who had had nothing to do with the speculation had been ruined when their life savings literally vanished.
Thirdly, demand for goods of all types disappeared, and a lot of people were laid off and many factories had to close. Industrial production of 1933 was half of that in 1929, and unemployment stood at approximately 14 million people, about a quarter of the total workforce. One in eight farmers lost all their property, and living standards fell, with bread queues, charity soup kitchens, evictions when tenants could not afford the rent and near starvation for many. The ‘great American dream’ of prosperity that millions believed in had practically turned into a nightmare. As Mr. McCoy put it, ‘the American people were affected as though a war had been fought from coast to coast.’ Not to mention the absence of unemployment and sickness benefits to help people out. There were large camps, nicknamed Hoovervilles (after president Hoover, who was blamed for the Depression) outside every major city.

To counter these problems, Franklin Roosevelt took several actions:
From his first day in office (March 4 1932), he set to the task of tackling the banking crisis. He ordered all bank to close until government officials had checked them over. This was to make sure only secure banks would be open. After a few days (March 9 1932), 5000 trustworthy banks opened up again, and they were additionally supported by government money should it become necessary. Meanwhile, Roosevelt had his advisers come up with a set of regulations and rules to prevent the reckless speculation which had led to the Wall Street Crash. These rules and regulations resulted in the Emergency Banking Act, and also the Security Exchange Commission. These gave the Americans a bit of a taste of what the New Deal was going to be like, and one of Roosevelt’s adviser’s said ‘During the while Hundred Days Congress, people didn’t know what was going on, but they knew something was happening , something good for them.’ In these Hundred Days, Congress adopted all 15 proposals that Roosevelt sent. He added something new to American politics by broadcasting on the radio to the nation every Sunday to explain what he was doing and why. About 60 million Americans tuned in to these ‘fireside chats’ as Franklin liked to call them. The Federal Emergency Relief Administration was given the task of meeting the urgent needs of the poor. A sum of 500 million dollars was spent on soup kitchens, blankets, employment schemes and nursery schools. The Civilian Conservation Corps was aimed at young men who were unemployed in particular. The Corps mostly did environmental projects in national parks. They could sign on for six months, and if they failed to find work at the end of their contract they could renew it. Around two and a half million men were helped by this scheme, and the money generally went back to their families.
The Agricultural Adjustment Administration took a longer term view of the problems facing farmers. It set quotas to reduce farm production so that prices were gradually forced upwards. At the same time, the Administration aided farmers to modernize and use farming methods that would conserve and protect the soil. In the cases of extreme hardship, some farmers received help with their mortgages. The Administration helped enormously, but the modernization of farming methods led to the putting out of work of more farm laborers.
The National Industry Recovery Act set up two vital organizations: The Public Works Administration, which used government money to build schools, roads, dams, bridges, highways and airports. It created millions of jobs in the short term. The National Recovery Administration improved working conditions in industry and outlawed child labor. It set fair wages and sensible levels of production. The main idea was to stimulate the economy by giving workers enough money to spend without overproducing and causing another slump. Over two million employers joined the scheme.
The Tennessee Valley Authority’s main focus was to build a series of dams on the Tennessee River. These transformed the region: the dams made irrigation of dried-out lands possible, they provided electricity in this underdeveloped area of America, and above all, the construction of the dams created thousands of jobs in an area hard hit by the Depression.
All these measures introduced in the Hundred Days had an immediate effect. They restored confidence in the government, and journalists who travelled around the country brought back reports of the new spirit to be seen in the USA. Banking measures saved 20 per cent of home owners and farmers from repossession. Farmers were 50 per cent better off under the AAA by 1936. The TVA brought electrical power to the underdeveloped areas of the Tennessee Valley. The Public Works Administration created 600 000 jobs and built landmarks like San Francisco’s well known Golden Gate.
But by May 1935, Roosevelt was facing a large amount of criticism despite his achievements. Some critics complained he was doing too little, and others, notably in the wealthy business sector, too much. The USA was recovering slower than Europe from the Depression, and businesses were losing their enthusiasm for the NRA (for example, Henry Ford had cut wages). Roosevelt was unsure about what to do. He had been hoping to transform America, but it didn’t look like it was working. So on Tuesday May 14th 1935, he met with a group of close advisers and senators who shared his view and aims, and they persuaded him to take radical steps to achieve his goal. On June 14, he summoned the leaders of Congress, and presented them with a huge range of laws he wanted to have passed. This became known as the Second New Deal.
The Wagner Act forced all employers to allow trade unions to operate in their companies and to let them negotiate with employers for better pay and conditions. The new Act also made it illegal to put workers out of work just because they were part of a trade union.
The Social Security Act provided state pensions for widows and the elderly. It also allowed state governments to work with the federal one to provide help for the sick and disabled. More importantly, the Act set up a plan for unemployment insurance. This meant that employers and workers made small contributions to a special fund each week so that if the workers became unemployed, they would receive a small amount of benefit to help them until they could find another job.
The Works Progress Administration brought together all the organizations whose aims had been to create jobs. It also extended this work beyond building projects to create jobs for office workers and even unemployed artists like actors or photographers.

The Resettlement Administration helped smallholders and tenant farmers who had not been helped by the AAA. This organization moved 500 000 families to better farming land and housing. It was later replaced by the Farm Security Administration in 1937. It gave special loans to small farmers to help them buy their land and also built camps to provide decent living conditions and work for migrant workers.
All in all, the New Deal did what it was meant to do: it got millions of Americans back to work. It protected their savings and their property and helped others get these back. It provided relief for the sick and unemployed. It got American industry and agriculture back up on their feet. It stabilized the banking system. Projects like the TVA brought improved living standards to deprive parts of America. But most importantly of all, it restored the average American’s confidence in the government.

Though despite all these successes, some were opposed to the New Deal:
There were those who were of the opinion that the New Deal was not doing enough to help the poor. Mostly high-profile figures raised this complaint, mostly because despite the New Deal’s achievements, many Americans remained very poor, notably the black population and the poor in farming areas. Huey Long was a key figure in arguing on behalf of these people. He had quite a remarkable character. He became governor of Louisiana in 1928 and a senator in 1932. Though his methods of gaining power were unordinary, and sometimes even illegal, like intimidation and even bribery. Once he was in power though, he used it to help the poor. He taxed big corporations and businesses over and over again in Louisiana so that he could build roads, schools and hospitals. He employed black people on the same terms as whites and often clashed with the Ku Klux Klan. He had at first supported the New Deal, but he was criticizing it for being too complicated by 1934 and not doing enough. He put forward a plan called Share Our Wealth. Personal fortunes would be reduced to 3 million dollars maximum, and maximum income would be 1 million per year. Government taxes would be shared between all Americans. He equally proposed pensions for over 60s, but also free washing machines and radios. Huey Long was an aggressive a forceful character with many friends and enemies, and Roosevelt regarded him as one of the two most dangerous men in the USA. Long was assassinated in 1935. Others also criticized the New Deal for not doing enough. Dr Francis Townsend found some Townsend Clubs to campaign for a pension of 200 dollars a month for people of over 60, provided they spend it that month (stimulating therefore the economy). Father Coughlin, a Catholic priest had his own radio program and attacked Roosevelt through it. He set up the National Union for Social Justice, and this had many members. But by the early 1940s, this movement had lost its importance.
Then there were others who were of the opinion that the New Deal was doing too much. It was mostly the sections of the businesses community and the Republicans that believed this. They claimed that the New Deal was complicated with too many codes and regulations. They criticized the Government for supporting trade unions and calls for higher wages, they thought that the market should have dealt with those issues. They also believed that plans like the Tennessee Valley Authority created unfair competition for private companies. Others thought that the New Deal plans were like the economic plans that were being used in the USSR and were therefore unsuitable for the democratic, free-market USA. Some believed that Roosevelt was acting like a dictator. Some claimed that the wealthy were wealthy because they had worked hard. The high taxes discouraged people from working hard and gave money to people for doing nothing or doing unnecessary jobs.
Roosevelt was upset by these criticisms, and also by the tactics used against him by big businesses and the Republicans. They conducted a smear campaign against and anyone connected with. They said he was disabled because of a sexually transmitted disease rather than polio. Employers put messages in their workers’ pay packets saying that the New Deal plans would never come into effect. Roosevelt retorted bitterly to his enemies, and the American people seemed to be with him. In the 1936 election, he won 27 million votes, the highest margin of victory ever achieved by a US president. He was then able to joke “Everyone is against the New Deal except the voters.”
Roosevelt also met opposition from the Supreme Court after the 1936 elections. The Court was dominated by Republicans who were opposed to the New Deal, and they could overturn laws if they thought they were unconstitutional. In May 1935, a strange case came up before the Court. The Schechter Poultry Corporation had been found guilty of breaking National Recovery Administration regulations because it had sold diseased chickens for human consumption, filed false sales claims, exploited workers and threatened government inspectors. The Corporation appealed the Court, which ruled that the government had no right to prosecute the company, because the NRA was unconstitutional. It undermined too much of the power of the local states. This angered Roosevelt, that a group of old republicans should deny democracy to deny laws that he had been elected to pass. He then asked Congress to give him the power to appoint six more Supreme Court judges. But Roosevelt had misjudged the mood of the American public, who became alarmed when they saw him attacking the system of government. He had to back down and his plan was rejected. But his actions were not completely pointless, the Supreme Court had been shaken by them and was less obstructive in the future. Most of the main measures in Roosevelt’s Second New Deal were approved by the court from 1937 onwards.

Personally, I think the New Deal was, and wasn’t a success:
Firstly, it was a success because it restored the faith of the American people in their government. But it also divided the USA. Roosevelt and his official were often accused of being communists and of undermining American values. Also, the New Deal handled billions of dollars of public, but there were no cases of corruption scandals. One example is that of the head of the Civil Works Administration, Harold Hopkins, distributed 10 million dollars in plans and programs, but never earned more than his 15 thousand dollar salary. Harold Ickes, the Secretary of the Interior, actually tapped the phones of his own employees to ensure there was no corruption. He also employed black Americans, supported the cause of native Americans and campaigned against anti-Semitism. But then again, the New Deal undermined local government, like the case of the Schechter Poultry Corporation.
Secondly, the NRA and Second New Deal measures strengthened the position of labor unions against the large American industrial giants. Roosevelt’s government generally tried to support unions and make large corporations negotiate with them. Some labor unions combined forces to form the Committee for Industrial Organization in 1935 with the help of New Deal forces. This union was big enough to bargain with some of the bigger corporations. The Union of Automobile Workers was recognized by General Motors after a sit-down strike in 1936 and Ford after a ballot in 1941, the two most anti-union corporations. But big businesses remained immensely powerful in America, despite being challenged by the American government. Employers treated unions with suspicion and sometimes with hostility (the paycheck incidents). A lot of strikes were broken up using violence in the 1930s, and some companies like Ford, Republic Steel or Chrysler employed their own thugs or even controlled local police forces.
Thirdly, the New Deal created millions of jobs and reduced the percentage of the total labor force unemployed from 24.9 per cent in 1933 to 14.3 per cent in 1937 (following that, Roosevelt cut the New Deal budget and unemployment rose to 19 per cent). It also stabilized the banking system and cut the number of business failures. Projects like the TVA brought work and a better standard of living to a deprived part of the USA. The New Deal projects provided America with valuable resources like schools, roads and power stations or dams. But the New Deal never solved the underlying economic issues, and the American economy took longer to recover than that of most European countries. Confidence in the economy remained low, and throughout the 1930s, Americans and invested around 75 per cent of what they had before 1929. There were still six million unemployed in 1941, and only America’s entry into the war solved unemployment.

Then there were the racial aspects of the New Deal. Around 200 thousand black Americans gained benefits from the Civilian Conservation Corps and other New Deal Agencies, like the slum clearance and housing projects. But many of the New Deal agencies discriminated black people: either they gave them no work, or they received worse treatment or lower wages. And Roosevelt failed to pass laws against the lynching of blacks, he feared that southern state democrat senators would stop supporting him. There were also Native Americans who were provided with money by the Indian Reorganization Act of 1934 to buy and improve land. They were helped by the Indian Reservation Act of 1934 to preserve and practice their traditions, laws and culture. But Native Americans continued to be a poor and excluded section of society.
Finally, the New Deal saw some women reach some important positions. First Lady Eleanor Roosevelt was an important campaigner on social issues. Mary Macleod Bethune headed the National Youth Administration even though she was black. Frances Perkins was the Secretary of Labor and removed 59 corrupt officials from the Labor department and was a key figure in the functionality of the Second New Deal. But most of the New Deal programs were aimed to help male manual workers rather than women. Local governments avoided paying social security payments to women by introducing special qualifications and conditions. Frances Perkins was viciously criticized by the press and accused of being a Jew and a Soviet spy. Even her cabinet colleagues had a tendency to ignore her at social gatherings.
I don’t think it is possible to draw an appropriate conclusion on whether or not the New Deal was a success. This is because the New Deal’s successes were often opposed by its failures or weaknesses.