New Deal: Difference between revisions

From Citizendium
Jump to navigation Jump to search
imported>João Prado Ribeiro Campos
(→‎Secondary sources: add bibliography)
imported>Russell D. Jones
(→‎The New Deal programs: Financial Sector)
 
(132 intermediate revisions by 14 users not shown)
Line 1: Line 1:
The '''New Deal''' was the name President [[Franklin D. Roosevelt]] gave to the series of programs between 1933–1938 with the goal of relief, recovery and reform of the United States economy during the [[Great Depression in the United States|Great Depression]].
{{subpages}}


Dozens of [[alphabet agencies]] were created as a result of the New Deal. Historians distinguish between the "First New Deal" of 1933, which had something for almost every group, and the "Second New Deal" (1935–36), which introduced class conflict, especially between business and labor unions.   The opponents of the New Deal, complaining of the cost and the shift of power to Washington, stopped its expansion by 1937, and abolished many of its programs by 1943. The Supreme Court ruled several programs unconstitutional (some parts of them were soon replaced, except for the NRA). The main New Deal programs still in existence today are [[Social Security (United States)|Social Security]], and the [[Securities and Exchange Commission]] (SEC), which is one of the regulators of Wall Street.<ref> Other major programs that still exist under their original names include the [[Federal Deposit Insurance Corporation]] (FDIC), the [[Federal Housing Administration]] (FHA), and the [[Tennessee Valley Authority]] (TVA). </ref>
The '''New Deal''' was [[President Franklin Delano Roosevelt]]'s legislative program. As implemented during the 1933-1938 period, it included numerous congressional enactments and presidential orders that were intended to provide economic relief, recovery, and reform. Its purposes were to relieve the suffering of the American people in the throes of the [[Great Depression]], and its execution 


[[Image:Gdp20-40.jpg|thumb|550px|Chart 1: GDP annual pattern and long-term trend, 1920-40, in billions of constant dollars<ref> based on data in Susan Carter, ed. ''Historical Statistics of the US: Millennial Edition'' (2006) series Ca9  </ref>]]
:''(For an annotated list of New Deal measures and institutions see [[/Addendum|the addendum subpage]])''
:''(For the sequence of New Deal legislative measures see [[/Timelines|the timelines subpage]])''


==Relief, Recovery, and Reform==
==Background==
The New Deal had three components: direct relief, economic recovery, and financial reform; these were also called the 'Three Rs'.


''Relief'' was the immediate effort to help the one-third of the population that was hardest hit by the depression.  Roosevelt expanded Hoover's [[Federal Emergency Relief Administration]] (FERA) work relief program, and added the [[Civilian Conservation Corps]] (CCC), [[Public Works Administration]] (PWA), and (starting in 1935) the [[Works Progress Administration]] (WPA).  In 1935 the social security and unemployment insurance programs were added.  Separate programs were set up for relief in rural America, such as the [[Resettlement Administration]] (RA) and [[Farm Security Administration]] (FSA).  These work relief programs have been praised by most economists in retrospect.<ref> Parker 2002</ref>[[Milton Friedman]] who after taking a graduate degree in economics was employed by the WPA to analyze family budgets and studied the hardships of families said that, at the time, he and his wife "regarded [these job-creation progams] appropriate responses to the critical situation" but not "the price- and wage-fixing measures of the National Recovery Administration and the Agricultural Adjustment Administration."<ref>Friedman, ''Two Lucky People''  (1998) p. 59.</ref>
Roosevelt first promised "a new deal for the American people" in his acceptance speech at the 1932 Democratic National Convention.


''Recovery'' was the effort in numerous programs to restore the economy to normal health.  By most economic indicators this was achieved by 1937--except for unemployment, which remained stubbornly high until World War II began.
:''(The background to the New Deal is described in the article on the [[Great Depression in the United States]] and its economic implications and international context are described in the article on the [[Great Depression]].)''


''Reform'' was based on the assumption that the depression was caused by the inherent instability of the market and that government intervention was necessary to rationalize and stabilize the economy, and to balance the interests of farmers, business and labor. It included the [[National Recovery Administration]] (NRA, 1933) (which ended in 1935), regulation of [[Wall Street]] ([[SEC]], 1934), the [[Agricultural Adjustment Act]] (AAA) farm programs (1933 and 1938), insurance of bank deposits ([[Federal Deposit Insurance Corporation]] 1933) and the [[Wagner Act]] encouraging labor unions (1935). Despite urgings by some New Dealers, there was no major anti-trust program.  Roosevelt rejected the opporunity to take over banks and railroads. He did not support socialism (in the sense of state ownership of factories), and only one major program, the [[Tennessee Valley Authority]] (1933), involved government ownership of the means of production. 
==Overview: the three Rs==
The New Deal had three components: relief, recovery, and  reform - ''The Three RS''.


Two old words now took on new meaning. "Liberal" no longer referred to [[classical liberalism]] but now meant a supporter of the New Deal; conservative meant an opponent.  Whether the New Deal was successful in achieving the three Rs is usually approached not as a historical problem but as a current debate over whether the program should be a model for government action today. Liberals continue to battle conservatives. The term "New Deal" is also used to describe the liberal [[New Deal Coalition]] that Roosevelt created to support his programs, including the Democratic party, big city machines, labor unions, Catholic and Jewish minorities, African Americans, farmers, and most Southern whites.  
The ''Relief'' component was intended to put the unemployed to work and  help those hardest hit by the depression.  It expanded the previous administration's  work relief program, and added an extensive further sequence of employment-generating schemes, followed by the introduction of a number of social security and unemployment insurance systems.


By 1934, the Supreme Court began declaring significant parts of the New Deal [[Constitutionality|unconstitutional]].  The programs were quickly fixed to pass muster, but in 1937 Roosevelt stunned the nation by a surpise proposal to [[Court-packing Bill|pack the Supreme Court by adding five new justices]]. The proposal failed and Roosevelt permanently alienated many conservative Democrats; however the Supreme Court started upholding New Deal laws. Justices then started retiring, allowing Roosevelt to selected a majority of the Court. By 1942, the Supreme Court had almost completely abandoned its "judicial activism" of striking down congressional laws. The Supreme Court ruled in ''[[Wickard v. Filburn]]'' that the [[Commerce Clause]] covered almost all such regulation allowing the necessary expansion of federal power to make the New Deal "constitutional".
The ''Recovery'' component was intended to restore confidence in the banks and otherwise to return the country to prosperity by restricting  competition, controlling  prices and raising real wages, by industrial and farming subsidies, and by infrastructure  investment.


==The Origins of the New Deal==
The ''Reform'' component consisted mainly legislation designed to regulated the conduct of the banks and of the remainder of the financial system.
On the 29th of October, 1929, the crash of the U.S. stock market set off a worldwide downward spiral in every part of the globe. In 1929&ndash;1933, unemployment in the U.S. increased from the original 4% to 25%, manufacturing output plunged by approximately a third.  Prices everywhere fell, making the burden of the repayments of debts much harder.  Heavy industry, mining, lumbering and agriculture were hard hit.  The impact was much less severe in white collar and service sectors, but every city and state was hit hard.


Upon accepting the 1932 [[U.S. Democratic Party, History|Democratic]] nomination for president, Roosevelt promised "a new deal for the American people."<ref> The phrase came from the title of popular writer Stuart Chase's book ''A New Deal'' published earlier in 1932. </ref> Roosevelt entered office with no single ideology or plan for dealing with the depression. He was willing to try anything, and, indeed, in the "First New Deal" (1933-34) virtually every organized group (except the Socialists and Communists) gained much of what they demanded. This "First New Deal" thus was self-contradictory, pragmatic, and experimental. The economy eventually recovered from the deep pit of 1932, and started heading upward again until 1937, when the [[Recession of 1937]] sent the economy back to 1934 levels of unemployment. Whether the New Deal was responsible for the recovery, or whether it even slowed the recovery, is a subject of debate.  
==The New Deal programs==
===The Financial Sector===
The New Deal addressed the financial sector as the first, and probably most important, area for recovery.  As the nation was enduring yet another bank crisis at the time of Roosevelt's inauguration, Roosevelt addressed the emergency first with relief measures.  Reform measures for both the banking and securities industries followed in June. As recovery measures, these acts were successful in ending the banking crisis and restoring public confidence in U.S. banks.


The New Deal drew from many different sources over the previous half-century.  Some New Dealers, led by [[Thurman Arnold]], went back to the anti-monopoly tradition in the Democratic party that stretched back a century.  Monopoly was bad for America, [[Louis Brandeis]] kept insisting, because it produced waste and inefficiency. However, the anti-monopoly group never had a major impact on New Deal policy.
===="Bank Holiday" and the Emergency Banking Relief Act====
The exceptionally severe banking crises of 1931-33 led to the failure of large numbers of banks and by March 1933 many of the survivors were on the point of closing their doors to depositors.<ref>for details, see "Bottom" in ''Time Magazine'' (March 13, 1933) online at [http://www.time.com/time/printout/0,8816,745289,00.html]</ref>  Just one day into his presidency, Roosevelt declared a "bank holiday," effectively putting all financial transactions to a halt.  Four days later, when Congress convened, it passed the [[Emergency Banking Relief Act]] in just seven hours.  Much of the law had been drafted by [[Herbert Hoover|Hoover]] administration officials and provided for reopening sound banks under Treasury Department supervision. Three-quarters of the remaining banks in the [[Federal Reserve System]] reopened within the next three days and currency and gold flowed back into them within a month, thus stabilizing the banking system.  


From the Wilson administration, other New Dealers, such as [[Hugh Samuel Johnson|Hugh Johnson]] of the [[National Recovery Administration|NRA]], were shaped by efforts to mobilize the economy for [[World War I]],  They brought ideas and experience from the government controls and spending of 1917-18. And from the policy experiments of the 1920s, New Dealers picked up ideas from efforts to harmonize the economy by creating cooperative relationships among its constituent elements. Roosevelt brought together a [[Brain Trust]] of academic advisers to assist in his recovery efforts. They sought to introduce extensive government intervention in the economy instead of allowing laisser-faire run its course. New Dealers such as Donald Richberg, as the replacment head of the NRA, said "A nationally [[planned economy]] is the only salvation of our present situation and the only hope for the future."<ref>Leuchtenburg p. 58</ref> Historian Clarence B. Carson says:
====Economy Act====
<blockquote>
As a result of pressure from "deficit-hawks" among its members (who feared that the government's would cause a large departure from the President's election promise of a balanced budget) as well as being a plank in the Democratic Party's 1932 campaign platform, Congress passed the ''Economy Act'' which cut the salaries of government employees and cutting pensions to veterans  and reduced government expenditure by about $500 million a year.
At this remove in time from the early days of the New Deal, it is difficult to recapture, even in imagination, the heady enthusiasm among a goodly number of intellectuals for a government [[planned economy]]. So far as can now be told, they believed that a bright new day was dawning, that national planning would result in an organically integrated economy in which everyone would joyfully work for the common good, and that American society would be freed at last from those antagonisms arising, as General Hugh Johnson put it, from “the murderous doctrine of savage and wolfish individualism, looking to dog-eat-dog and devil take the hindmost.<ref>Carson, Clarence B. [http://www.libertyhaven.com/theoreticalorphilosophicalissues/economichistory/relicsdeal.shtml ''The Relics of Intervention'' part 4. ''New Deal Collective Planning'']</ref>
</blockquote>


The New Deal faced some very vocal conservative opposition. The first organized opposition in 1934 came from the [[American Liberty League]] led by Democrats such as 1924 and 1928 presidential candidates [[John W. Davis]] and [[Al Smith]]. There was also a large loose grouping of opponents of the New Deal who have come to be known as the [[Old Right (United States)|Old Right]] which included politicians, intellectuals, writers, and newspaper editors of various philosophical persuasions including [[classical liberals]], conservatives, Democrats and Republicans.
====Banking Act====
Many Americans believed that the financial system needed reform and regulation in order to preserve public confidence and maintain economic stability. The [[Banking Act of 1933]] created the [[Federal Deposit Insurance Corporation]] which insured individual depositors for up to $5,000.  Banks and thrifts need not have been member of the [[Federal Reserve System]] in order to participate. The Banking Act also incorporated the [[Glass-Steagall Act]] of 1933 which sought to further protect commercial depositors by prohibiting commercial banks from engaging in the more risky activity of investment banking.  Lastly, the Banking Act created the [[Federal Open Market Committee]] which gave to the Federal Reserve Board of Governors greater powers over monetary policy.


===World Comparisons===
====Federal Securities Act====
The [[Federal Securities Act]] required that financial information in stocks and bonds be fully disclosed. This was at first regulated by the [[Federal Trade Commission]] but Congress later created the [[Securities and Exchange Commission]] to regulate this market.
[[United Kingdom|Britain]] was unable to adopt major programs to stop its depression.  That led to collapse of Labor and replacement in 1931 by a National coalition (predominantly Conservative). Partially as a result there was no equivalent "New Deal" in Britain. In Canada, Prime Minister [[R. B. Bennett]] pushed for a program similar to the New Deal but failed. In New Zealand a series of economic and social policies similar to the New Deal were adopted after the election of the first Labour Government in 1935 [http://www.teara.govt.nz/1966/H/HistoryEconomic/LabourPolicy/en]. In [[Nazi Germany]], economic recovery was pursued through wage controls, suppression of unions, and spending programs such as [[public works]]; large-scale rearmament came later in the 1930s. In [[Mussolini]]'s Italy, the economic controls of his corporate state were tightened.


==The First Hundred Days==
[[Image:FDR0415.JPG|framed|Roosevelt's energetic public personality--"the only thing we have to fear is fear itself," and his "[[fireside chats]]" helped restore confidence.]]


Having won a decisive victory in the [[United States presidential election, 1932|United States presidential election of 1932]], and with his party having decisively swept Congressional elections across the nation, Roosevelt entered office with unprecedented political capital. Many Congressmen had their favorite projects, like the TVA plan of Senator George Norris, which the administration adopted and treated as its own.  Finally there were numerous Hoover plans that he could not get passed but were ready to go, such as the emergency banking laws. Americans of all political persuasions were demanding immediate action, and Roosevelt responded with a remarkable series of new programs in the “first hundred days” of the administration.
===Relief programs===
The administration launched a series of programmes and agencies to provide work for the unemployed, the largest of which were the ''Civilian Conservation Corps'', the ''Civil Works Administration'', the ''Federal Emergency Relief Administration'' the ''National Youth Administration'', and largest of all, the ''Works Progress Administration'' (WPA).  (The numbers employed by  last-mentioned reached  3.3 million in November 1938.<ref>According to Nancy Rose' Put to Work.</ref> and although there had by then been a major reduction in level of  unemployment even then amounted to 12.5% of the working population<ref>Darby, Michael R.''Three and a half million U.S. Employees have been mislaid: or, an Explanation of Unemployment, 1934-1941.'' Journal of Political Economy 84, no. 1 (1976): 1-16.</ref>.)


===The "Bank Holiday" and the Emergency Banking Act===
Other programmes established the concept of a minimum wage, created insurance for the unemployed, sick and old, established  healthcare support systems, and abolished child labor. However, it  is often claimed that the most important  of the relief  measures that were introduced was  the ''Social Security Act of 1935''.
Roosevelt hurled the blame at businessmen and bankers with religious rhetoric: "Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men....The money changers have fled from their high seats in the temple of our civilization."


By March 4, all banks in the country were virtually closed by their governors, and Roosevelt kept them all closed until he could pass new legislation.<ref> for details see "Bottom" in ''Time Magazine'' (March 13, 1933) online at [http://www.time.com/time/printout/0,8816,745289,00.html]</ref> On March 9, Roosevelt sent to Congress the [[Emergency Banking Act]], drafted in large part by Hoover's administration; the act was passed and signed into law the same day. It provided for a system of reopening sound banks under Treasury supervision, with federal loans available if needed.  Three-quarters of the banks in the [[Federal Reserve System]] reopened within the next three days. Billions of dollars in "hoarded" currency and gold flowed back into them within a month, thus stabilizing the banking system. All was normal by April. During all of 1933, 4,004 small local banks were permanently closed and were merged into larger banks.  (Their depositors eventually received 85 cents on the dollar of their deposits.)  Congress created the [[Federal Deposit Insurance Corporation]] in June, which insured deposits for up to $5,000, although Roosevelt opposed it support was overwhelming.  The establishment of the FDIC virtually ended the era of "runs" on banks.   
===Recovery programmes===
====The Farm Programs====
Several measures were introduced to arrest the fall in agricultural prices that had been causing hardship in the country's farming industry.  The first [[Agricultural Adjustment Act]], which was passed on May 12, 1933, created the [[Agricultural Adjustment Administration]].  This agency negotiated restrictions on the production of corn, cotton, dairy products, hogs, rice, tobacco, and wheat, and compensated farmers for the crops and livestock that they did not produce from funds raised by a tax on food processing. Since the law went into effect after the 1933 crops had been sown and animals born, the agency had to order that crops be destroyed and livestock slaughtered in order to meet the 1933 production restrictions.   


The economy had hit rock bottom in March 1933 and now it started to expand.  As historian Broadus Mitchell notes, "Most indexes worsened until the summer of 1932, which may be called the low point of the depression economically and psychologically."<ref>Mitchell p 404.</ref> Economic indicators show the economy reached nadir in the first days of March, then began a steady, sharp upward recovery. Thus the Federal Reserve Index of Industrial Production hit its lowest point of 52.8 in July 1932 (with 1935-39 = 100) and was practically unchanged at 54.3 in March 1933; however by July 1933, it reached 85.5, a dramatic rebound of 57% in four months. Recovery was steady and strong until 1937. Except for nagging unemployment, the economy by 1937 surpassed the levels of the late 1920s. The [[Recession of 1937]], was a temporary downturn.  Private sector emplyment especially in manufacturing, recovered to the level of the 1920s but failed to advance further until the war.
In 1935, the Supreme Court in ''[[United States v. Butler]]'' ruled the Agricultural Adjustment Act unconstitutional for having one segment of the population directly supported by taxes paid by a different segment. But as this program was working to improve farm profitability, Roosevelt and Congress rewrote the law to meet the Court's scruples. During the program's first three years because of the restrictions on supply, food prices rose and farm incomes increased significantly.  The Agricultural Adjustment Act has not been repealed by Congress and has been many times amended, the latest being in the 1990s.


[[Image:US-jobs2040.jpg|thumb|450px|Chart 2: total employment in US, excluding farms and WPA]]
In spite of the success of the program for addressing farm profitability, a Gallup Poll printed in the ''Washington Post'' revealed that a majority of the American public opposed the AAA.<ref>Barry Cushman, ''Rethinking the New Deal Court'' (New York: Oxford University Press, 1998), 34.</ref>


===The Economy Act===
Several other agencies were also introduced to help farmers and rural America, including the [[Resettlement Administration]], the [[Farm Security Administration]], the [[Rural Electrification Administration]], and the [[Tennessee Valley Authority]]. The government also sponsored rural welfare projects such as the provision of school lunches, the building of new schools, the opening of roads in remote areas, and the transfer of marginal lands to national forests.
The [[Economy Act]], drafted by Budget Director [[Lewis Douglas]] was passed on March 20, 1933. The act proposed to balance the "regular" (non-emergency) federal budget by cutting the salaries of government employees and cutting pensions to veterans by 40 percent. It saved $500 million a year and reassured deficit hawks such as Douglas that the new president was fiscally conservative.  Roosevelt argued there were two budgets: the "regular" federal budget, which he balanced, and the "emergency budget," which was needed to defeat the depression.  It was imbalanced on a temporary basis.


Roosevelt was initially in favor of balancing the budget, but he soon found himself running spending deficits in order to fund the numerous programs he created. Douglas, however, rejecting the distinction between a regular and emergency budget, resigned in 1934, and became an outspoken critic of the New Deal. Roosevelt strenuously opposed the [[Bonus Bill]] that would give World War I veterans a cash bonus.  Finally, Congress passed it over his veto in 1936, and the Treasury distributed $1.5 billion in cash to 4 million of bonus welfare benefits to veterans just before the 1936 election.
====Infrastructure Projects====
A number of infrastructure projects were created by the [[PWA|Public Works Administration (PWA)]] <ref name=PWA>[http://www.bartleby.com/65/pu/PublicWo.html PWA - Public Works Administration,The Columbia Encyclopedia, Sixth Edition, 2001-05]]</ref>, that had been  established by  the ''National Industrial Recovery Act'', and the ''Tennessee Valley Authority'' <ref name=TVA>[http://www.tva.gov/abouttva/history.htm TVA - Tennessee Valley Authority: From the New Deal to a New Century]]</ref>. By June 1934 the Public Works Administration  had created over 13,000 federal projects and over2,000 non-federal projects, including rural electrification, canals, tunnels, bridges, highways, streets, sewage systems, and housing areas, as well as hospitals, schools, and universities.<ref name=ROOSELVELT1>[http://www.kansaspress.ku.edu/mcjfdr.html McJIMSEY, George. ''The Presidency of Franklin Delano Roosevelt'', American Presidency Series. University Press of Kansas, April 2000. ISBN 978-0-7006-1012-9]</ref>.


At least until [[John Kennedy]] in 1960, New Dealers never fully recognized the [[Keynesian  economics|Keynesian]] argument for government spending as a vehicle for recovery. Most economists of the era, along with [[Henry Morgenthau, Jr.|Henry Morgenthau]] of the Treasury Department,  rejected Keynesian solutions and favored balanced budgets.
====Industrial Policies====
The cornerstone of New Deal industrial policy was the [[National Industrial Recovery Act]] (NIRA).  This law followed the same logic that underpinned the farm programs: excessive competition and overproduction was driving prices down and making producers unprofitable.  Business unprofitably lowered wages and employment, which, in turn, reduced demand.<ref name=Cole>Harold L. Cole, "[http://www.economics.hawaii.edu/research/seminars/02-03/02-21.pdf New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis]," Federal Reserve Bank of Minneapolis Research Department Staff Report XXX, February 2003.</ref> To reverse this situation, the NIRA encouraged collusive agreements to refrain from price competition and to strengthen the bargaining power of labor unions.  


===The Farm Programs ===
To manage the collusive agreements among business, the NIRA created the [[National Recovery Agency]] (NRA).  The NRA worked with business [[trade association]]s to develop codes of production for each industry.  These codes set production and price limits, quality levels, and other measures for products. Businesses were also asked to accept a "blanket code" covering all industries which set a minimum wage of between 20 and 40 cents an hour, and a maximum working week of 35 to 40 hours.  By 1934, National Recovery Agency's codes covered over 500 industries, and nearly 80 percent of private, non-agricultural employment.
Roosevelt was keenly interested in farm issues, and emphasized that true prosperity would not return until farming was prosperous.  Many different programs were directed at farmers. The first hundred days produced a federal program to protect commercial farmers from the uncertainties of the depression through subsidies and production controls. This program began with the [[Agricultural Adjustment Act]], creating the [[Agricultural Adjustment Administration]] (AAA), which Congress passed in May 1933.  The Act reflected the demands of leaders of major farm organizations, especially the Farm Bureau, and reflected debates among Roosevelt's farm advisers such as [[Henry A. Wallace]], [[Rexford Tugwell]], and [[George Peek]]. The AAA implemented a provision for crop reductions known as the "domestic allotment" system of the act. Under this system producers of corn, cotton, dairy products, hogs, rice, tobacco, and wheat would decide on production limits for their crops. The AAA would then pay land owners subsidies for leaving some of their land idle with funds provided by a new tax on food processing. Farm prices were to be subsidized up to the point of parity.  Some crops were ordered to be destroyed and some livestock slaughtered to maintain prices. The idea was that the less produced, the higher the price, and the farmer would benefit.  Farm incomes increased significantly in the first three years of the New Deal. However, consumers bore the brunt of higher food prices and were "horrified with its policy of enforced scarcity."<ref>Cushman, Barry (1998). Rethinking the New Deal Court. Oxford University Press. p. 34</ref> A Gallup Poll printed in the Washington Post revealed that a majority of the American public opposed the AAA.<ref>Cushman, Barry (1998). Rethinking the New Deal Court. Oxford University Press. p. 34</ref>
The AAA established an important and long-lasting federal role in the planning on the entire agricultural sector of the economy. The AAA did not provide for any [[sharecroppers]] or [[tenants]] or farm laborers who might become unemployed, but there were other New Deal programs especially for them.


Roosevelt, [[Eleanor Roosevelt]], and many New Dealers were highly sympathetic to the marginal farmers who lived on the land in severe poverty, especially in the South.  Major programs addressed to their needs included the [[Resettlement Administration]] (RA), the [[Farm Security Administration]] (FSA), the [[Rural Electrification Administration]] (REA), the [[Tennessee Valley Authority]] (TVA) and rural welfare projects sponsored by the WPA, NYA, Forest Service and CCC, including school lunches, building new schools, opening roads in remote areas, reforestation, and purchase of marginal lands to enlarge national forests.
NIRA also established the [[Public Works Administration]] to employ millions of workers not finding jobs in industry.  The NIRA's section 7(a) also required businesses to recognized labor unions when workers organized them and to negotiate collective bargaining agreements with them.


The AAA was the first program on such a scale on behalf of the troubled agricultural economy, and it established an important and long-lasting federal role in the planning on the entire agricultural sector of the economy.
On May 27, 1935, the Supreme Court ruled in ''[[Schechter Poultry Corp. v. United States]]'', 295 U.S. 495 (1935) that the National Industrial Recovery Act was an unconstitutional delegation of legislative power, mainly because of Congress had delegated its lawmaking power to NRA to write national economic policy and because of its suspension of the antitrust laws.  President Roosevelt objected to the Court’s decision, declaring that "The fundamental purposes and principles of the NIRA are sound.  To abandon them is unthinkable.  It would spell the return to industrial and labor chaos." 


In 1936, the Supreme Court declared the AAA to be [[Constitutionality|unconstitutional]], stating that "a statutory plan to regulate and control agricultural production, [is] a matter beyond the powers delegated to the federal government..." The AAA was replaced by a similar program that did win Court approval. Federal regulation of agricultural production has been modified many times since then, but together with large subsidies it is still in effect in 2007.
However, in practice the NIRA was an abysmal failure.  The trade associations did not write fair and impartial production codes aiming towards overall industrial recovery.  Since many trade associations were led by single dominant businesses, the codes tended to favor them to the detriment of the smaller and less powerful producers, and the NRA was powerless to redress this situation.  Additionally, some major manufacturers, such as the [[Ford Motor Company]], simply refused to participate at all.  Thus when the law was declared unconstitutional and in spite of his public protestations, Roosevelt proposed no wholesale replacement for the act as he had done for the AAA.


===Relief ===
Some other aspects of the act, however, were successful to Roosevelt's eyes. As a partial replacement for Section 7(a), Congress passed the [[National Labor Relations Act]] also known as the "Wagner Act" which made negotiations with labor unions compulsory, and created the [[National Labor Relations Board]] with the duty to enforce the provisions of the Act.  In 1938, Congress passed the [[Fair Labor Standards Act]], which created a minimum wage and standard work hours.
The administration launched a series of relief measures and welfare agencies to give meaningful jobs to the unemployed, especially unskilled laborers. The largest programs were the [[Civilian Conservation Corps]] (CCC), the [[Civil Works Administration]] (CWA), the [[Federal Emergency Relief Administration]] (FERA), the [[National Youth Administration]] (NYA), and above all, the [[Works Progress Administration]] (WPA).  The WPA employed a maximum of 3.3 million in November 1938.<ref>According to Nancy Rose' Put to Work.</ref> However, even at this level of WPA employment, unemployment (counting WPA as employment) was still 12.5% in 1938 according to figures from Micheal Darby.<ref>Darby, Michael R.''Three and a half million U.S. Employees have been mislaid: or, an Explanation of Unemployment, 1934-1941.'' Journal of Political Economy 84, no. 1 (1976): 1-16.</ref> All these emergency programs were terminated in 1942-43, when unemployment had vanished due to World War II related employment offers.


[[Image:Wpa1.JPG|thumb|275px|WPA employed 2 to 3 million unemployed at unskilled labor]]
==The effects of the New Deal programs==
===Social implications===
It is widely accepted, however, that - in the short term, at least - the New Deal averted, a great deal of poverty-induced suffering. Before the  creation of the New Deal, America did not have a national social security system such as were then common in  Europe, but only scattered locally-administered provisions comparable to the Elizabethan poor law <ref>[http://www.baas.ac.uk/resources/pamphlets/pamphdets.asp?id=7#ch1 James  Patterson: '' The Welfare State in America, 1930-1980'', British Association for American Studies 1981]</ref>. By 1933, the incomes of millions of American families had fallen below subsistence level. and but for New Deal relief, many would have died of starvation. Objective evidence on the subject is scarce, but studies using such statistics as had been available at the time suggest that the New Deal  raised  fertility rates, reduced death rates <ref>[http://d.scribd.com/docs/27j9x4nrydolrk3f4dj5.pdf Price  Fishback, Michael Haines, and Shawn Kantor: ''Births, Deaths, and New Deal Relief During the Great Depression'', NBER Working Paper 11246, September 2002]</ref> and crime rates <ref>[http://ideas.repec.org/p/nbr/nberwo/12825.html Ryan Johnson, Shawn Kantor and Price V. Fishback: ''Striking at the Roots of Crime: The Impact of Social Welfare Spending on Crime During the Great Depression''.  NBER Working Paper 12825, January 2007]</ref> compared with what would have happened without it.


In 1933 the administration launched the [[Tennessee Valley Authority]], a project involving dam construction planning on an unprecedented scale in order to curb flooding, generate electricity, and modernize the very poor farms in the [[Tennessee Valley]] region of the [[US South|Southern United States]].
===Political implications===


===Repeal of prohibition===
====The New Deal's constitutionality====
In a measure that garnered substantial popular support, Roosevelt, in his first days of office, moved to put to rest one of the most divisive cultural issues of the 1920s.  He supported and signed a bill to legalize the manufacture and sale of beer, an interim measure pending the repeal of [[Eighteenth Amendment to the United States Constitution|Prohibition]], for which a constitutional amendment (the Twenty-first) was already in process. The amendment was ratified later in 1933. Prohibition had been a rather unpopular amendment and led to bootlegging, the illegal manufacture (or importation) and sale of liquor within the United States.
The rationale of the National Industrial Recovery Act, in particular implied the permanent <ref> The President introduced it as a change "for all time" as reported in the article on the [[National Recovery Administration]]</ref> abandonment of the existing system of free-market capitalism. It encountered bitter opposition by the business community, and it was frequently challenged as unconstitutional.


===Communists in New Deal===
In 1935, in the landmark case of ''[[Schechter Poultry Corp. v. United States]]'',<ref>295 U.S. 495 (1935)</ref> the Supreme Court ruled unanimously that the National Industrial Recovery Act was an unconstitutional delegation of congressional authority. The following year, in ''[[United States v. Butler]]'',<ref>297 U.S. 1 (1936)</ref> it declared the Agricultural Adjustment Act of 1933 to be "a matter beyond the powers delegated to the federal government." In addition, on the same day that it handed down the ''Schechter'' decision, the Court ruled against Roosevelt's firing of a [[Federal Trade Commission]] official Hoover had appointed in the case of ''[[Humphrey's Executor v. United States]]''.<ref>295 U.S. 602 (1935)</ref> While this was not a ruling on the constitutionality of any New Deal initiative directly, it undermined the program's assumption of an expansive role for the federal executive branch and threatened the president's capacity to press forward with his programmatic agenda.
Right wing critics complained that the New Deal was infiltrated with Communists.  The most important group (in the Department of Agriculture) was fired in 1934, but [[Whittaker Chambers]] and [[Alger Hiss]] went deeper underground.<ref>
[[Ellen Schrecker]], ''The Age of McCarthyism: A Brief History With Documents'' (2002); [[Sam Tanenhaus]]. ''Whittaker Chambers: A Biography'' (1997)</ref>
Outside government, the far left was  exerting considerable influence in the labor movement (it dominated the new [[Congress of Industrial Organizations|CIO]]), and was building a network of membership organizations. Thus the [[American League Against War and Fascism]] was formed in 1933 and, in 1937, became the American League for Peace and Democracy.  There followed the America Youth Congress, 1934; League of American Writers, 1935; National Negro Congress, 1936; and the American Congress for Democracy and Intellectual Freedom, 1939. All had significant Communist connections, and fought furious battles with the anti-Communist left.<ref>
Leuchtenburg (1963) 281-3; Irving Howe, Lewis A. Coser, and Julius Jacobson, ''The American Communist Party: a critical history, 1919-1957'' (1957); James R. Barrett, ''William Z. Foster and the Tragedy of American Radicalism'' (2002).</ref>


===Puerto Rico===
In 1937, President Roosevelt responded with a proposal to "pack" the Supreme Court by adding five new justices. The court packing proposal failed, but the Court subsequently began upholding New Deal legislation, and by 1942 it had nearly  abandoned its  earlier [[judicial activism]].
A separate set of programs operated in [[Puerto Rico]], headed by the Puerto Rico Reconstruction Administration. It promoted [[land reform]] and helped small farms; it set up farm cooperatives, promoted crop diversification, and helped local industry. The Puerto Rico Reconstruction Administration was directed by [[Ernest Gruening]] from 1935 to 1937.


==Reform: (NIRA)==
===Economic implications===
===Business, labor, and government cooperation===


Besides programs for immediate 'relief' the New Deal embarked quickly on an agenda of long-term 'reform' aimed at avoiding another depression. The New Dealers responded to demands to inflate the currency by a variety of means. Another group of reformers sought to build consumer and farmer co-ops as a counterweight to big business. The consumer co-ops did not take off, but the [[Rural Electrification Administration]] used co-ops to bring electricity to rural areas. (As of 2007, many still operate.)
====Recovery====
The extent to which the New Deal hastened or hampered America's recovery from the Great Depression is a matter of continuing controversy. There are, nevertheless, a few aspects of the question on which there is some semblance of a consensus. For example, few would now question the proposition that the restoration of confidence in the banking system was a necessary condition for recovery, or the success of  Roosevelt's actions in that respect. But there is evidence to suggest that the effect of the National Industrial Recovery Act was to delay recovery <ref name=Cole/> by introducing a seriously damaging reinforcement into the "stickiness" of wage-determination. Opinions differ concerning the effectiveness of the New Deal's fiscal stimulus, but since that stimulus was in any case, small by comparison with the downturn <ref>[http://krugman.blogs.nytimes.com/2008/11/08/new-deal-economics/, Paul Krugman: ''New Deal economics'', New York Times February 20, 2009]</ref>, that question is not now considered to be of overwhelming  importance compared with the other issues that arise.  


Roosevelt realized that these initial actions were nothing but short term solutions, and that more comprehensive government programs would be necessary. In the roughly three years between the Great Crash and Roosevelt's First Hundred Days, the industrial economy had been suffering from a vicious cycle of [[deflation (economics)|deflation]]. Since 1931, the [[U.S. Chamber of Commerce]], then and now the voice of the nation's organized business, had been urging the Hoover administration to adopt an anti-deflationary scheme that would permit trade associations to cooperate in stabilizing prices within their industries. While existing antitrust laws clearly forbade such practices, organized business found a receptive ear in the Roosevelt administration. 


The Roosevelt administration, packed with reformers aspiring to forge all elements of society into a cooperative unit (a reaction to the worldwide specter of business-labor "class struggle"), was fairly amenable to the idea of cooperation among producers.


The Roosevelt administration insisted that business would have to ensure that the incomes of workers would rise along with their prices.  The product of all these impulses and pressures was the [[National Industrial Recovery Act]] (NIRA) which was passed by  Congress in June 1933. The NIRA established the [[National Planning Board]], also called the National Resources Planning Board (NRPB), to assist in planning the economy by providing recommendations and information. Fredric A. Delano was appointed head of the NRPB.
:''(For a more detailed examination of the economic consequences of the New Deal, see the article on the [[Great Depression]], and its Tutorials subpage [http://en.citizendium.org/wiki/Great_Depression/Tutorials] and for a summary of the relevant economic statistics see the Tutorials subpage of the article on the Great Depression in the United States [http://en.citizendium.org/wiki/Great_Depression_in_the_United_States/Tutorials].)''


The NIRA guaranteed to workers the right of collective bargaining and helped spur some union organizing activity, but much faster growth of union membership came after the 1935 Wagner Act. The NIRA established the [[National Recovery Administration]] (NRA), which attempted to stabilize prices and wages through cooperative "code authorities" involving government, business, and labor. The NRA included a multitude of regulations imposing the pricing and production standards for all sorts of goods and services. Some ridiculed it as the "National Run Around."  Most economists were dubious because it was based on fixing prices to reduce competition.<ref>Parker</ref> Historian Jim Power, in ''FDR's Folly'' says that the above-market wage rates dictated by the NRA made it more expensive for employers to hire people, and therefore unnecessarily maintained high unemployment and prolonged the Depression.
==References==
 
{{reflist}}
To prime the pump and cut unemployment, the NIRA created the [[Public Works Administration]] (PWA), a major program of public works. From 1933 to 1939 PWA spent $6 billion with private companies to build 34,500 projects, many of them quite large.
 
===The NRA "Blue Eagle" campaign===
[[Image:Blue_eagle.jpg|thumb|left|NRA [[Blue Eagle]]]]
 
At the center of the NIRA was the National Recovery Administration (NRA), headed by former General [[Hugh Samuel Johnson]]. Johnson called on every business establishment in the nation to accept a stopgap "blanket code": a minimum wage of between 20 and 40 cents an hour, a maximum workweek of 35 to 40 hours, and the abolition of child labor. Johnson and Roosevelt contended that the "blanket code" would raise consumer purchasing power and increase employment.
 
To mobilize political support for the NRA, and the administrations "blanket code", Johnson launched the "NRA [[Blue Eagle]]" publicity campaign to boost his bargaining strength to negotiate the codes with business and labor. The NRA negotiated specific sets of codes with leaders of the nation's major industries; the most important provisions were anti-deflationary floors below which no company would lower prices or wages, and agreements on maintaining employment and production. In a remarkably short time, the NRA won agreements from almost every major industry in the nation. Six months after the NRA went into effect industrial production dropped 25 percent. According to some economists, the NRA increased the cost of doing business by 40 percent.<ref name="Reed">Reed, Lawrence W. [http://www.mackinac.org/archives/1998/sp1998-01.pdf ''Great Myths of the Great Depression''] Mackinac Center for Public Policy.</ref> Donald Richberg, who soon replaced Johnson as the head of the NRA said:
<blockquote>
There is no choice presented to American business between intelligently planned and uncontrolled industrial operations and a return to the gold-plated anarchy that masqueraded as "rugged individualism."...Unless industry is sufficiently socialized by its private owners and managers so that great essential industries are operated under public obligation appropriate to the public interest in them, the advance of political control over private industry is inevitable.<ref>Arthur Meier
Schlesinger, Jr. The Coming of the New Deal, Houghton Mifflin Books (2003), p. 115</ref>
</blockquote>
 
By the time it ended in May 1935, industrial production was 22% higher than in May 1933. On May 27 1935, the NRA was found to be unconstitutional by a unanimous decision of the [[U.S. Supreme Court]] in the case of [[Schechter v. United States]]. On that same day, the Court unanimously struck down the Frazier-Lemke Act portion of the New Deal as unconstitutional.
[[Image:US-mfg20-40.jpg|thumb|400px|Chart 3: employment in manufacturing 1920-1940, in millions]]
 
Employment in private sector factories recovered to the level of the late 1920s by 1937 (see chart 2), but did not grow much bigger until the war came and manufacturing employment leaped from 11 million in 1940 to 18 million in 1943.
 
==Second New Deal==
===Legislative successes and failures===
In the spring of 1935, responding to the setbacks in the Court, a new skepticism in Congress, and the growing popular clamor for more dramatic action, the administration proposed or endorsed several important new initiatives. Historians refer to them as the "Second New Deal" and note that it was more radical, more pro-labor and anti-business than the "First New Deal" of 1933-34. The [[National Labor Relations Act]] (July 5), also known as the Wagner Act, revived and strengthened the protections of collective bargaining contained in the original (and now unconstitutional) NIRA. The result was a tremendous growth of membership in the labor unions comprising the [[American Federation of Labor]]. Labor thus became a major component of the New Deal political coalition.  Roosevelt nationalized unemployment relief through the [[Works Progress Administration]] (WPA), headed by close friend [[Harry Hopkins]].  It created hundreds of thousands of low-skilled blue collar jobs for unemployed men (and some for unemployed women and white collar workers).  Applicants for WPA jobs did not have to be Democrats, but their foremen quickly explained that Roosevelt created their paychecks and that conservative Republicans wanted to abolish the program.{{Fact|date=February 2007}} The [[National Youth Administration]] was the semi-autonomous WPA program for youth. Its Texas director, [[Lyndon Baines Johnson]], later used the NYA as a model for some of his [[Great Society]] programs in the 1960s.
 
In the very long run, the most important program of 1935, and perhaps the New Deal as a whole, was the [[Social Security (United States)|Social Security Act]] (August 14), which established a system of universal retirement pensions, unemployment insurance, and welfare benefits for poor families and the handicapped. It established the framework for the U.S. welfare system. Roosevelt insisted that it should be funded by payroll taxes rather than from the general fund; he said, "We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program."  One of the last New Deal agencies was the [[United States Housing Authority]], created in 1937 with some Republican support to abolish slums.
 
===Defeat: Court Packing and Executive Reorganization===
Roosevelt, however, emboldened by the triumphs of his first term, set out in 1937 to consolidate authority within the government in ways that provoked powerful opposition. Early in the year, he asked Congress to [[Judiciary Reorganization Bill of 1937|expand the number of justices on the Supreme Court]] so as to allow him to appoint members sympathetic to his ideas and hence tip the ideological balance of the Court.  This proposal provoked a storm of protest.
 
In one sense, however, it succeeded; Justice [[Owen Josephus Roberts|Owen Roberts]], switched positions and began voting to uphold New Deal measures, effectively creating a liberal majority in ''[[West Coast Hotel Co. v. Parrish]]'' and ''[[National Labor Relations Board v. Jones & Laughlin Steel Corporation]]'' thus departing from the ''[[Lochner v. New York]]'' era and giving the government more power in questions of economic policies. Journalists called this change "[[the switch in time that saved nine]]." Recent scholars have noted that since the vote in Parrish took place several months before the court-packing plan was announced, other factors, like evolving jurisprudence, must have contributed to the Court's swing.  The opinions handed down in Spring 1937, favorable to the government, also contributed to the downfall of the plan. In any case, the "court packing plan," as it was known, did lasting political damage to Roosevelt and was finally rejected by Congress in July.
 
At about the same time, the administration proposed a plan to reorganize the executive branch in ways that would significantly increase the president's control over the bureaucracy. Like the Court-packing plan, executive reorganization garnered opposition from those who feared a "Roosevelt dictatorship" and it failed in Congress; a watered-down version of the bill finally won passage in 1939.
 
===Attacks Right and Left ===
Historians on the left denounce Roosevelt for rescuing capitalism when the opportunity was at hand to nationalize banking, railroads and other industries.[Conkin] Liberal historians argue that Roosevelt restored hope and self-respect to tens of millions of desperate people, built labor unions, upgraded the national infrastructure and saved capitalism in his first term when he could have destroyed it and easily nationalized the banks and the railroads. [Sitkoff]
 
Historians on the right complain that he enlarged the powers of the federal government, built up labor unions, slowed long-term economic growth, and weakened the business community.
 
[[Image:Gop-plank.JPG|thumb|275px|A 1936 cartoon shows the GOP building its platform from the conservative planks abandoned by the Democrats.]]
 
Historians on the left have denounced the New Deal as a conservative phenomenon that let slip the opportunity to radically reform capitalism. Since the 1960s, "[[New Left]]" historians have been among the New Deal's harsh critics. (''For a list of relevant works, see the list of suggested readings appearing toward the bottom of the article.'') Barton J. Bernstein, in a 1968 essay, compiled a chronicle of missed opportunities and inadequate responses to problems. The New Deal may have saved capitalism from itself, Bernstein charged, but it had failed to help&mdash;and in many cases actually harmed&mdash;those groups most in need of assistance. Paul K. Conkin in ''The New Deal'' (1967) similarly chastised the government of the 1930s for its policies toward marginal farmers, for its failure to institute sufficiently progressive tax reform, and its excessive generosity toward select business interests. [[Howard Zinn]], in 1966, criticized the New Deal for working actively to actually preserve the worst evils of capitalism.
 
Since the 1970s research on the New Deal has been less interested in the question of whether the New Deal was a "conservative," "liberal" or "revolutionary" phenomenon than in the question of constraints within which it was operating. Political sociologist [[Theda Skocpol]], in an influential series of articles, has emphasized the issue of "state capacity" as an often-crippling constraint. Ambitious reform ideas often failed, she argued because of the absence of a government bureaucracy with significant strength and expertise to administer them. Other more recent works have stressed the political constraints that the New Deal encountered. Both in Congress and among certain segments of the population conservative inhibitions about government remained strong; thus some scholars have stressed that the New Deal was not just a product of its liberal backers, but also a product of the pressures of its conservative opponents.
 
==Government Role: balance labor, business and farming==
Despite the dismal record in aiding marginal farmers and African Americans, among others--  contrasted with its often frequent generosity toward certain business interests--the New Deal was to elevate and strengthen new interest groups so as to allow them to compete more effectively for the interests by having the federal government evolve into an arbitrator in competition among all elements and classes of society, acting as a force that could mediate when necessary to help some groups and limit the power of others. By the end of the 1930s, business found itself competing for influence with an increasingly powerful labor movement, one that was engaged in mass mobilization and sometimes militant action; with an organized agricultural economy, and occasionally with aroused consumers. The New Deal accomplished this by creating a series of state institutions that greatly, and permanently, expanded the role of the federal government in American life. The government was now committed to providing at least minimal assistance to the poor and unemployed; to protecting the rights of labor unions; to stabilizing the banking system; to building low-income housing; to regulating financial markets; to subsidizing agricultural production; and to doing many other things that had not previously been federal responsibilities.
 
Thus, perhaps the strongest legacy of the New Deal, in other words, was to make the federal government a protector of interest groups and a supervisor of competition among them. As a result of the New Deal, political and economic life became politically more competitive than before, with workers, farmers, consumers, and others now able to press their demands upon the government in ways that in the past had been available only to the corporate world. Hence the frequent description of the government the New Deal created as the "broker state," a state brokering the competing claims of numerous groups.  If there was more political competition, there was less market competition. Farmers were not allowed to sell for less than the official price. The transportation industry (especially airlines, trucking and railroads) was tightly regulated so that every firm had a guaranteed market and management and labor had high profits and high wages, all at the cost of high prices and much inefficiency.  Quotas in the oil industry were fixed by the [[Railroad Commission of Texas]] with the federal [[Tom Connally|Connally]] Hot Oil Act of 1935<ref>The Handbook of Texas Online: [http://www.tsha.utexas.edu/handbook/online/articles/CC/mlc3.html Connally Hot Oil Act of 1935]</ref> guaranteeing that illegal "hot oil" would not be sold.  To the New Dealers, the free market meant "cut-throat competition" and they considered that evil.  Not until the 1970s and 1980s would most of the New Deal regulations be relaxed.
 
Thus, it did not transform American capitalism in any genuinely radical way. Except in the field of labor relations, corporate power remained nearly as free from government regulation in 1939 as it had been in 1933, but that changed dramatically during the war, as Washington took control over wage rates, prices, and allocation of raw materials, and sent military officers into munitions plants. All the relief programs were closed down during the war, but one major program survived--Social Security--to become the liberal hallmark of the New Deal into the 21st century.
 
==African Americans==
The New Deal set up numerous agencies to help impoverished farmers, but in the long run they had to move to the cities to become better off.  Many leading New Dealers, including [[Eleanor Roosevelt]], [[Harold L. Ickes]], [[Aubrey Williams]] and [[Harry Hopkins]] worked hard to ensure Blacks received at least 10% of welfare assistance payments.  Economic uplift was one thing but political revolution was another: the New Deal did not try to undercut segregation or change the second class political status of Blacks in the South. Roosevelt did appoint an unprecedented number of African Americans to second-level positions in his administration that collectively were called the Black Cabinet, perhaps due to the influence of Eleanor Roosevelt, a vocal advocate of easing discrimination. Roosevelt and Hopkins worked with big city mayors to welcome Black political organizations that made the transition from the GOP to the Democratic party in 1934-36.
 
The WPA, NYA, and CCC relief programs allocated 10% of their budgets to blacks (who comprised about 10% of the total population, and 20% of the poor). They operated separate all-black units with the same pay and conditions as white units. The African American community responded favorably, so that by 1936 the majority who voted (usually in the North) were voting Democratic. This was a sharp realignment from 1932, when most African Americans preferred the Republican ticket. The New Deal thus established a political alliance between African Americans and the Democratic Party that survives into the 21st century.
 
Some liberal historians argue the New Deal laid the ground work for black breakthroughs during World War II, the civil rights movement and the [[Great Society]] of the 1960s.  Militaant African Americans insist that the Civil Rights movement owed everything to black activists, and very little to the New Deal.  Note that the New Deal was especially beneficial to white ethnic minorities, who responded with 80-90% of their votes for Roosevelt's reelection.
 
==The recession of 1937 and recovery==
[[Image:Newdealcartoon.GIF|thumb|left|250px| Some conservatives, like this cartoonist, argued that the New Deal was all package and little content. Others charged it went much too far. ]]
 
The Roosevelt administration was under assault during FDR's second term, which presided over a new dip in the Great Depression in the fall of 1937 that continued through most of 1938. Production declined sharply, as did profits and employment. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938. Keynesian economists speculated that this was a result of a premature effort to curb government spending and balance the budget, while conservatives said it was caused by attacks on business and by the huge strikes caused by the organizing activities of the [[Congress of Industrial Organizations|CIO]] and the [[American Federation of Labor]] (AFL).
 
Roosevelt rejected the advice of Morgenthau to cut spending, and decided big business was trying to ruin the New Deal by causing another depression that voters would react against by voting Republican. It was a "capital strike" said Roosevelt, and he ordered the FBI to look for a criminal conspiracy (they found none).  Roosevelt moved left and unleashed a rhetorical campaign against monopoly power, which was cast as the cause of the new crisis. Ickes attacked automaker Henry Ford, steelmaker Tom Girdler, and the superrich "Sixty Families" who supposedly comprised "the living center of the modern industrial oligarchy which dominates the United States." Left unchecked, Ickes warned, they would create "big-business Fascist America -- an enslaved America." The president appointed Robert Jackson as the aggressive new director of the antitrust division of the Justice Department, but this effort lost its effectiveness once World War II began and big business was urgently needed to produce war supplies. [Kennedy p 352]
 
But the administration's other response to the 1937 deepening of the Great Depression had more tangible results. Ignoring the vitriolic pleas of the Treasury Department and responding to the urgings of the converts to Keynesian economics and others in his administration, Roosevelt embarked on an antidote to the depression, reluctantly abandoning his efforts to balance the budget and launching a $5 billion spending program in the spring of 1938, an effort to increase mass purchasing power. The New Deal had in fact engaged in deficit spending since 1933, but it was apologetic about it, because a rise in the national debt was opposite of what the Democratic party had always preached.  Now they had a theory to justify what they were doing.  Roosevelt explained his program in a [[Fireside chats|fireside chat]] in which he finally acknowledged that it was therefore up to the government to "create an economic upturn" by making "additions to the purchasing power of the nation."
 
Business-oriented observers explained the recession and recovery in very different terms from the Keynesians.  They argued that the New Deal had been very hostile to business expansion in 1935-37, had encouraged massive strikes which had a negative impact on major industries such as automobiles, and had threatened massive anti-trust legal attacks on big corporations.  All those threats diminished sharply after 1938.  For example, the antitrust efforts fizzled out without major cases. The CIO and AFL unions started battling each other more than corporations, and tax policy became more favorable to long-term growth.
 
==World War II and the end of the New Deal ==
Prosperity had returned by 1938 for most people--but not for the bottom third, who remained plagued by structural unemployment. The impact of war mobilization and massive war spending doubled the GNP.  Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output as an expression of patriotism.  Patriotism drove most people to voluntarily work overtime and give up leisure activities to make money after so many hard years. Patriotism meant that people accepted rationing and price controls for the first time.  "Cost-plus" pricing in munitions contracts guaranteed that businesses would make a profit no matter how many mediocre workers they employed, no matter how inefficient the techniques they used.  The demand was for a vast quantity of war supplies as soon as possible, regardless of cost.  Business hired every person in sight, even driving sound trucks up and down city streets begging people to apply for jobs. New workers were needed to replace the 12 million working-age men serving in the military.  These events magnified the role of the federal government in the national economy. In 1929, federal expenditures accounted for only 3% of [[GNP]]. Between 1933 and 1939, federal expenditure tripled, and Roosevelt's critics charged that he was turning America into a [[socialism|socialist]] state. However, spending on the New Deal was far smaller than on the war effort.
 
In the first peacetime year of 1946, federal spending still amounted to $62 billion, or 30% of GNP. Wartime spending and other measures were able to provide an enormous output. Between 1939 and 1944, the peak of wartime production, the nation's total output almost doubled. This, along with the conscription and removal of soldiers, meant that civilian unemployment plummeted&mdash;from 14% in 1940 to less than 2% in 1943 as the labor force grew by ten million.  Millions of farmers left marginal operations, students quit school, and housewives returned to the labor force.  The war economy was not run on the basis of free enterprise, but was the result of government/business cooperation, with government bankrolling business.
 
A major result of the full employment at high wages was a sharp, permanent decrease in the level of income inequality.  The gap between rich and poor narrowed dramatically in the area of nutrition, because food rationing and price controls guaranteed a reasonably priced diet to everyone.  Large families that had been poverty-stricken in the 1930s had four or five or more workers, and shot to the top one-third income bracket.  Overtime made for huge paychecks in the munitions factories; white collar workers were fully employed too, but they did not receive overtime and their salary scale was no longer much higher than the blue collar wage scale.
 
Economist Robert Higgs (1987), argues that the War did not end the Great Depression. Rather, a return to normality after the war, as the government relaxed wage controls, price controls, capital controls, reduced tariffs and other trade barriers, and eliminated the rationing of goods and the relaxing of Federal control over American industries, ended it.
 
==Conflicting interpretation of the New Deal economic policies==
=== Depression Statistics ===
"Most indexes worsened until the summer of 1932, which may be called the low point of the depression economically and psychologically."<ref>Mitchell, p. 404.</ref> Economic indicators show the American economy reached nadir in summer 1932 to February 1933, then began recovering until the Roosevelt recession of 1937-1938. Thus the Federal Reserve [[Industrial Production Index]] hit its low of 52.8 on [[1932-07-01]] and was practically unchanged at 54.3 on [[1933-03-01]]; however by [[1933-07-01]], it reached 85.5 (with 1935-39 = 100, and for comparison 2005 = 1,342).<ref>[http://research.stlouisfed.org/fred2/data/INDPRO.txt Industrial Production Index]</ref>
In Roosevelt's twelve years in office the economy had an 8.5% compound annual growth of GDP,<ref>''Historical Statistics of the United States'' (1976) series F31</ref> the highest growth rate in the history of any industrial country,<ref> Angus Maddison, ''The World Economy: Historical Statistics'' (OECD 2003); Japan is close, see p 174</ref> however, recovery was slow --by 1939 GDP per adult was still 27% below trend.<ref name="Cole">Cole, Harold L and Ohanian, Lee E. [http://www.economics.hawaii.edu/research/seminars/02-03/02-21.pdf ''New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis''], 2004.</ref>  And, throughout the New Deal the median joblessness rate was 17.2 percent and never went below 14 percent.
 
{| class="wikitable"
!width="100%" style="background:#eeeeee;" |Table 1: Statistics<ref>U.S. Dept of Commerce, National Income and Product Accounts [http://www.huppi.com/kangaroo/GDPreal.htm Real GDP and GNP]; Mitchell 446, 449, 451; [http://home.att.net/~rdavis2/cpi_m2.html Consumer Price Index AND M2 Money Supply: 1800-2003]</ref>
!width="9%" style="background:#eeeeee;" |1929
!width="6%" style="background:#eeeeee;" |1931
!width="6%" style="background:#eeeeee;" |1933
!width="5%" style="background:#eeeeee;" |1937
!width="6%" style="background:#eeeeee;" |1938
!width="3%" style="background:#eeeeee;" |1940
|-
|align="center"|Real Gross National Product (GNP) (1)
|align="center"|101.4
|align="center"| 84.3
|align="center"| 68.3
|align="center"|103.9
|align="center"|96.7
|align="center"|113.0
|-
|align="center"|Consumer Price Index (2)
|align="center"|122.5
|align="center"|108.7
|align="center"| 92.4
|align="center"|102.7
|align="center"| 99.4
|align="center"|100.2
|-
|align="center"|Index of Industrial Production (2)
|align="center"|109
|align="center"| 75
|align="center"| 69
|align="center"|112
|align="center"| 89
|align="center"|126
|-
|align="center"|Money Supply M2 ($ billions)
|align="center"|46.6
|align="center"|42.7
|align="center"|32.2
|align="center"|45.7
|align="center"|49.3
|align="center"|55.2
|-
|align="center"|Exports ($ billions)
|align="center"|5.24
|align="center"|2.42
|align="center"|1.67
|align="center"|3.35
|align="center"|3.18
|align="center"|4.02
|-
|align="center"|Unemployment (% of civilian work force)
|align="center"| 3.1
|align="center"|16.1
|align="center"|25.2
|align="center"|13.8
|align="center"|16.5
|align="center"|13.9
|}
 
(1) in 1929 dollars
(2) 1935-39 = 100
 
<TABLE BORDER="0">
<TR> <TH colspan="3" align="center">
      Table 2: Unemployment (% labor force)</TH> </TR>
<TR> <TD>Year
      </TD><TD>
      Lebergott</TD><TD>
      Darby</TD> </TR>
<TR> <TD>
      1933</TD> <TD QP::NUMFORMAT:="97,-1,24.9">
      24.9</TD><TD QP::NUMFORMAT:="97,-1,20.6">
      20.6</TD> </TR>
<TR> <TD>
      1934</TD> <TD QP::NUMFORMAT:="97,-1,21.7">
      21.7</TD><TD QP::NUMFORMAT:="97,-1,16">
      16.0</TD> </TR>
<TR> <TD>
      1935</TD> <TD QP::NUMFORMAT:="97,-1,20.1">
      20.1</TD><TD QP::NUMFORMAT:="97,-1,14.2">
      14.2</TD> </TR>
<TR> <TD>
      1936</TD> <TD QP::NUMFORMAT:="97,-1,16.9">
      16.9</TD><TD QP::NUMFORMAT:="97,-1,9.9">
      9.9</TD> </TR>
<TR> <TD>
      1937</TD> <TD QP::NUMFORMAT:="97,-1,14.3">
      14.3</TD><TD QP::NUMFORMAT:="97,-1,9.1">
      9.1</TD> </TR>
<TR> <TD>
      1938</TD> <TD QP::NUMFORMAT:="97,-1,19">
      19.0</TD><TD QP::NUMFORMAT:="97,-1,12.5">
      12.5</TD> </TR>
<TR> <TD>
      1939</TD> <TD QP::NUMFORMAT:="97,-1,17.2">
      17.2</TD><TD QP::NUMFORMAT:="97,-1,11.3">
      11.3</TD> </TR>
<TR> <TD>
      1940</TD> <TD QP::NUMFORMAT:="97,-1,14.6">
      14.6</TD><TD QP::NUMFORMAT:="97,-1,9.5">
      9.5</TD> </TR>
<TR> <TD>
      1941</TD> <TD QP::NUMFORMAT:="97,-1,9.9">
      9.9</TD><TD QP::NUMFORMAT:="97,-1,8">
      8.0</TD> </TR>
<TR> <TD>
      1942</TD> <TD QP::NUMFORMAT:="97,-1,4.7">
      4.7</TD><TD QP::NUMFORMAT:="97,-1,4.7">
      4.7</TD> </TR>
<TR> <TD>
      1943</TD> <TD QP::NUMFORMAT:="97,-1,1.9">
      1.9</TD><TD QP::NUMFORMAT:="97,-1,1.9">
      1.9</TD> </TR>
<TR> <TD>
      1944</TD> <TD QP::NUMFORMAT:="97,-1,1.2">
      1.2</TD><TD QP::NUMFORMAT:="97,-1,1.2">
      1.2</TD> </TR>
<TR> <TD>
      1945</TD> <TD QP::NUMFORMAT:="97,-1,1.9">
      1.9</TD><TD QP::NUMFORMAT:="97,-1,1.9">
      1.9</TD> </TR>
</TABLE>
Darby counts WPA workers as employed; Lebergott as unemployed
source: ''Historical Statistics US'' (1976)  series D-86; Smiley 1983<ref> Smiley, Gene, "Recent Unemployment Rate Estimates for the 1920s and 1930s," ''Journal of Economic History,'' June 1983, 43, 487-93.</ref>
 
===Relief Statistics===
 
Table 3: Families on Relief 1936-41:
===Prolonged/Worsened the Depression===
A 1995 survey of economic historians and economists asked "Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression."  Of the economists 27% agreed and 51% disagreed. Of the economic historians, only 6% agreed and 74% disagreed. (the rest were in the partly agree/disagree group). See [http://eh.net/lists/archives/eh.res/feb-1997/0010.php]
 
The minority view is represented by Harold L. Cole and Lee E. Ohanian who conclude that the "New Deal labor and industrial policies did not lift the economy out of the Depression as President Roosevelt and his economic planners had hoped," but that the "New Deal policies are an important contributing factor to the persistence of the Great Depression." They conclude that the New Deal "cartelization policies are a key factor behind the weak recovery." They say that the "abandonment of these policies coincided with the strong economic recovery of the 1940s."<ref>Cole, Harold L and Ohanian, Lee E. [http://www.economics.hawaii.edu/research/seminars/02-03/02-21.pdf ''New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis''], 2004.</ref> Lowell E. Gallaway and Richard K. Vedder conclude that the "Great Depression was very significantly prolonged in both its duration and its magnitude by the impact of New Deal programs." They argue that without Social Security, work relief, unemployment insurance, and especially without the labor unions, business would have hired more workers and the unemployment rate would have been lower. <ref>''Gallaway, Lowell E. and Vedder, Richard K. ''Out of Work: Unemployment and Government in Twentieth-Century America'', New York University Press; Updated edition (July 1997).</ref>
 
===National Debt===
[[Image:Debt1929-50.jpg|thumb|400px|national debt/ GNP climbs from 20%  to 40% under Hoover; levels off under FDR; soars during WW2  from ''Historical States US'' (1976)]]
 
The New Deal tried public works, farm subsidies and other devices to reduce unemployment, but FDR never completely gave up trying to balance the budget.  Unemployment remained high throughout the New Deal years; business simply would not hire more people, especially the low skilled and supposedly "untrainable" men who had been unemployed for years and lost any job skill they once had. [[Keynesian]]s later argued that by spending vastly more money--using [[fiscal policy]]--the government could provide the needed stimulus through the "multiplier" effect.  Critics of Keynesianism said that would just take money out of the private sector, causing a negative multiplier effect there. However, no economist has written a full-scale Keynesian analysis of the depression, so it is difficult to evaluate how that model would work. 
 
[[Image:Tax-spend.JPG|thumb|380px|Although Hopkins denied saying "Spend-Spend-Spend; Tax-Tax-Tax; Elect-Elect-Elect," conservative critics thought it fit the New Deal very well]]
 
In recent years more influential among economists has been the monetarist interpretation of [[Milton Friedman]], which did include a full-scale monetary history of what he calls the "Great Contraction."  Friedman concentrated on the failures before 1933, and in his memoirs said the relief programs were an appropriate response. From 1935 to 1943, Friedman was himself a Keynesian who was (1941-43) an official spokesman for the New Deal before Congress; he did not at that time criticize any New Deal or Federal Reserve policies. 
 
Apart from building up labor unions, the New Deal did not substantially alter the distribution of power within American [[capitalism]].
 
Keynes visited to the White House in 1934 to urge President Roosevelt to do more deficit spending. Roosevelt complained to Labor Secretary [[Frances Perkins]], "He left a whole rigmarole of figures--he must be a mathematician rather than a political economist."  That is, Keynes had an abstract theory but no useful suggestions about what to do.
 
===Fiscal Conservatism===
Fiscal conservatism was a key component of the New Deal, as Zelizer (2000) demonstrates.  It was supported by Wall Street and local investors and most of the business community;  mainstream academic economists believed in it, as apparently did the majority of the public. Conservative southern Democrats, who favored balanced budgets and opposed new taxes, controlled Congress and its major committees.  Even liberal Democrats at the time regarded balanced budgets as essential to economic stability in the long run, although they were more willing to accept short-term deficits.  Public opinion polls consistently showed public opposition to deficits and debt.  Throughout his terms, Roosevelt recruited fiscal conservatives to serve in his administration, most notably [[Lewis Douglas]] the Director of Budget from 1933 to 1934, and [[Henry Morgenthau Jr.]], Secretary of the Treasury from 1934 to 1945.  They defined policy in terms of budgetary cost and tax burdens rather than needs, rights, obligations, or political benefits.  Personally the president embraced their fiscal conservatism.  Politically, he realized that fiscal conservatism enjoyed a strong wide base of support among voters, leading Democrats, and businessmen.  On the other hand there was enormous pressure to act–and spending money on high visibility programs attracted Roosevelt, especially if it tied millions of voters to him, as did the WPA. 
 
Douglas proved too inflexible, and quit in 1934.  Morgenthau made it his highest priority to stay close to Roosevelt, no matter what.  Douglas' position, like many of the [[Old Right]] was grounded in a basic distrust of politicians and the deeply ingrained fear that government spending always involved a degree of patronage and corruption that offended his Progressive sense of efficiency.  The Economy Act of 1933, passed early in the Hundred Days, was Douglas' great achievement. It  reduced federal expenditures by $500 million, to be achieved by reducing veterans’ payments and federal salaries.  Douglas cut government spending through executive orders that cut the military budget by $125 million, $75 million from the Post Office, $12 million from Commerce, $75 million from government salaries, and $100 million from staff layoffs.  As Freidel concludes, "The economy program was not a minor aberration of the spring of 1933, or a hypocritical concession to delighted conservatives. Rather it was an integral part of Roosevelt's overall New Deal."<ref>Freidel 1990, p. 96</ref> Revenues were so low that borrowing was necessary (only the richest 3% paid any income tax before 1942.)  Douglas therefore hated the relief programs, which he said reduced business confidence, threatened the government’s future credit, and had the "destructive psychological effects of making mendicants of self-respecting American citizens."<ref>Zelizer</ref> Roosevelt was pulled toward greater spending by Hopkins and Ickes, and as the 1936 election approached he decided to gain votes by attacking big business. 
 
Morgenthau shifted with FDR, but at all times tried to inject fiscal responsibility; he deeply believed in balanced budgets, stable currency, reduction of the national debt, and the need for more private investment .  The Wagner Act met Morgenthau’s requirement because it strengthened the party’s political base and involved no new spending.  In contrast to Douglas, Morgenthau accepted Roosevelt’s  double budget as legitimate–that is a balanced regular budget, and an “emergency” budget for agencies, like the WPA, PWA and CCC, that would be temporary until full recovery was at hand.  He fought against the veterans’ bonus until Congress finally overrode Roosevelt’s veto and gave out $2.2 billion in 1936.  His biggest success was the new Social Security program; he managed to reverse the proposals to fund it from general revenue and insisted it be funded by new taxes on employees.  It was Morgenthau who insisted on excluding farm workers and domestic servants from Social Security because workers outside industry would not be paying their way.<ref>Zelizer 2000; Savage 1998</ref>
 
===Claims the New Deal adopted or resembled Fascist economic models===
 
The term "fascism" in the 21st century has very strong connotations of mass murder and death camps, however, in the 1930s it meant the [[planned economy]] and [[corporativism]] exemplified by the economic plans of Benito Mussolini in Italy. And, comparisons have been made between the economic systems of Fascist Italy and the New Deal programs. Communists, classical liberals, conservatives, and [[Herbert Hoover]] used the term fascism in that manner at that time. Likewise, modern-day [[paleoconservatives]] argue that the New Deal was a major milestone in the rise of America's [[managerial state]].
 
Journalist [[John T. Flynn]], a former socialist, in his 1944 book ''As We Go Marching'', said that "the New Dealers...began to flirt with the alluring pastime of reconstructing the capitalist system...and in the process of this new career they began to fashion doctrines that turned out to be the principles of fascism."  Former President Herbert Hoover argued that some (but not all) New Deal programs were "fascist," and that there was a presidential dictatorship. [''Memoirs'' 3:420]
<blockquote>
"Among the early Roosevelt fascist measures was the National Industry Recovery Act (NRA) of June 16, 1933 .... These ideas were first suggested by Gerald Swope (of the General Electric Company)....[and] the United States Chamber of Commerce. During the campaign of 1932, Henry I. Harriman, president of that body, urged that I agree to support these proposals, informing me that Mr. Roosevelt had agreed to do so. I tried to show him that this stuff was pure fascism; that it was a remaking of Mussolini's "corporate state" and refused to agree to any of it. He informed me that in view of my attitude, the business world would support Roosevelt with money and influence. That for the most part proved true."
</blockquote>
Whatever Hoover was told, Roosevelt had ''not'' agreed to any such plan. In 1934, Roosevelt himself warned his "fireside chat" radio audiences against linguistic confusion. Some people, he said:
<blockquote>
will try to give you new and strange names for what we are doing. Sometimes they will call it 'Fascism,' sometimes 'Communism,' sometimes 'Regimentation,' sometimes 'Socialism.' But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical. . . . Plausible self-seekers and theoretical die-hards will tell you of the loss of individual liberty. Answer this question out of the facts of your own life. Have you lost any of your rights or liberty or constitutional freedom of action and choice?<ref>Kennedy 1999, p 246.</ref>
</blockquote>
In September 1934 Roosevelt defended a more powerful national government as he believed was necessary to control the economy, by quoting conservative Republican Elihu Root:
<blockquote>
The tremendous power of organization [Root had said] has combined great aggregations of capital in enormous industrial establishments . . . so great in the mass that each individual concerned in them is quite helpless by himself. . . . The old reliance upon the free action of individual wills appears quite inadequate. . . . The intervention of that organized control we call government seems necessary. . . . Men may differ as to the particular form of governmental activity with respect to industry or business, but nearly all are agreed that private enterprise in times such as these cannot be left without assistance and without reasonable safeguards lest it destroy not only itself but also our process of civilization.<ref>Kennedy 1999, p 246.</ref>
</blockquote>
 
Other scholars reject linking the New Deal to Fascism as overly simplistic. As a leading historian of fascism explains, "What Fascist corporatism and the New Deal had in common was a certain amount of state intervention in the economy. Beyond that, the only figure who seemed to look on Fascist corporatism as a kind of model was [[Hugh Samuel Johnson|Hugh Johnson]], head of the National Recovery Administration."<ref>Stanley Payne, ''History of Fascism'' (1995) p 230.</ref> Johnson strenuously denied any association with Mussolini, saying the NRA "is being organized almost as you would organize a business. I want to avoid any Mussolini appearance -- the President calls this Act industrial self-government."<ref>Hugh S. Johnson, ''The Blue Eagle, from Egg to Earth'' (1935), p 223</ref> Donald Richberg eventually replaced General Hugh Johnson as head of NRA and speaking before a Senate committee said "A nationally [[planned economy]] is the only salvation of our present situation and the only hope for the future."<ref>Leuchtenburg p. 58</ref> Historians such as Hawley (1966) have examined the origins of the NRA in detail, showing the main inspiration came from Senators [[Hugo Black]] and [[Robert F. Wagner]] and from American business leaders such as the Chamber of Commerce. The main model was Woodrow Wilson's [[War Industries Board]], in which Johnson had been involved.
 
==Art and music==
 
The [[Works Progress Administration]] subsidized artists, musicians, painters and writers on relief with a group of projects called [[Federal One]].  While the WPA program was by the most widespread, it was preceded by three programs administered by the [[United States Department of the Treasury|US Treasury]] which hired commercial artists at usual commissions to add murals and sculptures to federal buildings. The first of these efforts was the [[Public Works of Art Project]], organized by [[Edward Bruce (New Deal)|Edward Bruce]], an American businessman and artist.  The [[Resettlement Administration]] (RA) and [[Farm Security Administration]] (FSA) had major photography programs.  The New Deal arts programs emphasized [[regionalism]], [[socialist realism]], [[class conflict]], [[proletarian]] interpretations, and audience participation. The unstoppable collective powers of common man, contrasted to the failure of [[individualism]], was a favorite theme.<ref>Mathews 1975</ref>
 
The FSA photography project is most responsible for creating the image of the Depression in the USA. Many of the images appeared in popular magazines. The photographers were under instruction from Washington as to what overall impression the New Deal wanted to give out. Director [[Roy Stryker]]'s agenda focused on his faith in [[social engineering]], the poor conditions among cotton tenant farmers, and the very poor conditions among migrant farm workers; above all he was committed to social reform through New Deal intervention in people's lives. Stryker demanded photographs that "related people to the land and vice versa" because these photographs reinforced the RA's position that poverty could be controlled by "changing land practices." Though Stryker did not dictate to his photographers how they should compose the shots, he did send them lists of desirable themes, e.g., "church", "court day", "barns".<ref> Cara A. Finnegan. ''Picturing Poverty: Print Culture and FSA Photographs'' (Smithsonian Books, 2003) pp 43-44 </ref>  New Deal era films such as ''[[Citizen Kane]]'' ridiculed so-called "great men", while class warfare appeared in numerous movies, such as ''[[Meet John Doe]]'' and ''[[The Grapes of Wrath]]''.
 
By contrast there was also a smaller but influential stream of anti-New Deal art.  Thus [[Gutzon Borglum]]'s sculptures on [[Mount Rushmore]] emphasized great men in history (his designs had the approval of [[Calvin Coolidge]]).  [[Gertrude Stein]] and [[Ernest Hemingway]] disliked the New Deal and celebrated the [[Organic (model)|organic]] [[autonomy]] of perfected written work in opposition to the New Deal [[trope]] of writing as performative labor.  The [[Southern Agrarians]] celebrated a premodern regionalism and opposed the TVA as a modernizing, disruptive force.  Under Chief Justice [[Charles Evans Hughes]], the [[Supreme Court of the United States|Supreme Court]] built one of the most architecturally striking buildings; its classical lines and small size contrasted sharply with the gargantuan [[Modernism|modernistic]] federal buildings in Washington.  Hollywood managed to synthesize both streams, as in [[Busby Berkeley]]'s ''Gold Digger'' musicals, where the storylines exalt individual autonomy while the spectacular musical numbers show abstract populations of interchangeable dancers securely contained within patterns beyond their control.<ref>Szalay 2000</ref>
 
==The legacies of the New Deal==
[[Image:FDR-LBJ.png|thumb|left|250px|The New Deal was the inspiration for [[LBJ]]'s [[Great Society]] in 1960s. Johnson (on right) headed the Texas NYA and was elected to Congress in 1938.]]
 
Some economists argue that although the New Deal did not end the depression, all in all it helped to prevent the economy from decaying further by increasing the regulatory functions of the federal government in ways that helped stabilize previous trouble areas of the economy: the stock market, the banking system, and others. Others argue that it worsened the depression. All analysts agree the New Deal produced a new political coalition that sustained the Democratic Party as the majority party in national politics for more than a generation after its own end.
 
Roosevelt's 12 years in office saw a dramatic increase in the power of the federal government as a whole. Roosevelt also established the presidency as the preeminent center of authority within the federal government. By creating a large array of agencies protecting various groups of citizens&mdash;workers, farmers, and others&mdash;who suffered from the crisis, enabling them to challenge the powers of the corporations, the Roosevelt administration generated a set of political ideas&mdash;known to later generations as New Deal liberalism&mdash;that remained a source of inspiration and controversy for decades and that helped shape the next great experiment in liberal reform, the [[Great Society]] of the 1960s.  The wartime [[FEPC]] executive orders that forbade job discrimination against African Americans, women and ethnic groups was a major breakthrough that brought better jobs and pay to millions of minority Americans. Historians usually treat FEPC as part of the war effort and not part of the New Deal itself.
 
==="New Deal" as Political Metaphor===
Since 1933 politicians and pundits have often called for a "new deal" regarding this or that political object.  That is, they demand a completely new, large-scale approach to a project.  As Arthur A. Ekirch Jr. (1971) has shown, the New Deal stimulated utopianism in American political and social thought on a wide range of issues.
In Canada Conservative Prime Minister [[Richard B. Bennett]] in 1935 proposed a "new deal" of regulation , taxation, and social insurance that was a copy of the American program; Bennett's proposals were not enacted and he was defeated for reelection in October 1935.
In accordance with the rise of the use of U.S. political phraseology in Britain, the Labour Government of Tony Blair has termed some of its employment programs 'New Deal', in contrast to the Conservative Party's promise of the 'British Dream'.
 
==Notable New Deal programs==
[[Image:Stamp-ctc-newdeal.png|thumb|right|The [[alphabet agencies|"alphabet soup" agencies]] of the New Deal included the TVA, CCC, WPA, FDIC, SEC and IRA.]]
The New Deal was composed by president Franklin D Roosevelt and had countless programs, labeled an "alphabet soup" by its detractors. Among the New Deal acts were the following, most of them passed within the first 100 days of FDR's administration. Most were abolished around 1943, others remain in operation in 2007:
*[[Reconstruction Finance Corporation]] a Hoover agency expanded under [[Jesse Holman Jones]] to make large loans to big business.  Ended in 1954.
*[[Federal Emergency Relief Administration]] (FERA) a Hoover program to create unskilled jobs for relief; replaced by WPA in 1935.
* [[United States bank holiday]], [[1933]]: closed all banks until they became certified by federal reviewers
* Abandonment of gold standard, 1933: gold reserves no longer backed currency; still exists
* [[Civilian Conservation Corps]] (CCC), 1933: employed young men to perform unskilled work in rural areas; under Army supervision; separate program for Native Americans
* [[Tennessee Valley Authority]] (TVA), 1933: effort to modernize very poor region (most of Tennessee), centered on dams that generated electricity on the [[Tennessee River]]; still exists
* [[Agricultural Adjustment Act]] (AAA), 1933: raised farm prices by cutting total farm output of major crops (and hogs)
* [[National Recovery Act]] (NRA), 1933: industries set up codes to reduce unfair competition, raise wages and prices;
* [[Public Works Administration]] (PWA), 1933: built large public works projects; used private contractors (did not directly hire unemployed)
* [[Federal Deposit Insurance Corporation]] (FDIC) / [[Glass-Steagall Act]]: insures deposits in banks in order to restore public confidence in banks; still exists
* [[Securities Act of 1933]], created the SEC, 1933: codified standards for sale and purchase of stock, required risk of investments to be accurately disclosed; still exists
* [[Civil Works Administration]]  (CWA), 1933-34: provided temporary jobs to millions of unemployed
* [[Indian Reorganization Act]], [[1934]] moved away from assimilation
* [[Social Security (United States)|Social Security Act]] (SSA), 1935: provided financial assistance to: elderly, handicapped, paid for by employee and employer payroll contributions; required years contributions, so first payouts were 1942; still exists
* [[Works Progress Administration]] (WPA), 1935: a national labor program for 2+ million unemployed; created useful construction work for unskilled men; also sewing projects for women and arts projects for unemployed artists, musicians and writers.
* [[National Labor Relations Act]] (NLRA) / Wagner Act, 1935: set up National Labor Relations Board to supervise labor-management relations; In 1930s it strongly favored [[trade union|labor union]]s. Modified by the [[Taft-Hartley Act]] (1947); still exists
* [[Judicial Reorganization Bill]], [[1937]]: gave President power to appoint a new Supreme Court judge for every judge 70 years or older; failed to pass Congress
* [[Fair Labor Standards Act]] ([http://www.finduslaw.com/fair_labor_standards_act_flsa_29_u_s_code_chapter_8 29 U.S. Code Chapter 8]), 1938: established a maximum normal work week of 40 hours, and a minimum pay of 40 cents/hour; still exists
 
 
==Bibliography==
===Secondary sources===
* Allswang, John. ''The New Deal and American Politics'' (1978), voting analysis
* Alter, Jonathan. ''The Defining Moment: FDR's Hundred Days and the Triumph of Hope'' (2006), popular account
* Badger, Anthony J. ''The New Deal: The Depression Years, 1933-1940.'' (2002) general survey from British perspective
* Beasley, Maurine H., Holly C. Shulman, Henry R. Beasley. ''The Eleanor Roosevelt Encyclopedia'' (2001)
* Bernstein, Barton J. "The New Deal: The Conservative Achievements of Liberal Reform." In Barton J. Bernstein, ed., ''Towards a New Past: Dissenting Essays in American History'', pp. 263-88. (1968), an influential New Left attack on the New Deal.
* Bernstein, Irving. ''Turbulent Years: A History of the American Worker, 1933-1941'' (1970), cover labor unions
* Best, Gary Dean. ''The Critical Press and the New Deal: The Press Versus Presidential Power, 1933-1938'' (1993) looks at conservative papers and magazines
* Best, Gary Dean. ''Pride, Prejudice, and Politics.'' (1990), a conservative critique.
* Blumberg Barbara. ''The New Deal and the Unemployed: The View from New York City'' (1977).
* Bremer William W. "Along the American Way: The New Deal's Work Relief Programs for the Unemployed."  ''Journal of American History'' 62 (December 1975): 636-652. online at JSTOR in most academic libraries
* Brock William R. ''Welfare, Democracy and the New Deal'' (1988), a British view
* Brinkley, Alan. ''The End Of Reform: New Deal Liberalism in Recession and War.'' (1995) what happened after 1937
* Burns, Helen M. ''The American Banking Community and New Deal Banking Reforms, 1933-1935'' (1974)
* Chafe, William H. ed. ''The Achievement of American Liberalism: The New Deal and its Legacies'' (2003)
* Charles, Searle F. ''Minister of Relief: Harry Hopkins and the Depression'' (1963)
*Cobb, James and Michael Namaroto , eds. ''The New Deal and the South'' (1984).
* Conkin, Paul K. ''The New Deal.'' (1967), a brief New Left critique.
* Dubofsky, Melvyn, ed. ''The New Deal: Conflicting Interpretations and Shifting Perspectives.'' (1992), reader
* Eden, Robert, ed. ''New Deal and Its Legacy: Critique and Reappraisal'' (1989), essays by scholars
* Ekirch Jr., Arthur A. ''Ideologies and Utopias: The Impact of the New Deal on American Thought'' (1971)
* Fraser, Steve and Gary Gerstle, eds., ''The Rise and Fall of the New Deal Order,'' (1989), essays focused on the long-term results.
*  Garraty, John A. "The New Deal, National Socialism, and the Great Depression," ''American Historical Review,'' 78, 4 (1973), pp. 907-44. in JSTOR
* Gordon, Colin. ''New Deals: Business, Labor, and Politics, 1920-1935'' (1994)
* Graham, Otis L. and Meghan Robinson Wander, eds. ''Franklin D. Roosevelt: His Life and Times.'' (1985). An encyclopedic reference.
* Grant, Michael Johnston. ''Down and Out on the Family Farm: Rural Rehabilitation in the Great Plains, 1929-1945'' (2002)
* Hawley, Ellis W. ''The New Deal and the Problem of Monopoly''  (1966)
* Higgs, Robert. ''Crisis and Leviathan: Critical Episodes in the Growth of American Government'' (1987), libertarian critique
* Howard, Donald S. ''The WPA and Federal Relief Policy'' (1943)
* Ingalls, Robert P. ''Herbert H. Lehman and New York's Little New Deal'' (1975)
* Jensen, Richard J. "The Causes and Cures of Unemployment in the Great Depression," ''Journal of Interdisciplinary History'' 19 (1989) 553-83. online at JSTOR
* Kennedy, David M. ''Freedom From Fear: The American People in Depression and War, 1929-1945.'' (1999), survey
* Richard S. Kirkendall. "The New Deal As Watershed: The Recent Literature," ''The Journal of American History,'' Vol. 54, No. 4. (Mar., 1968), pp. 839-852. [http://links.jstor.org/sici?sici=0021-8723%28196803%2954%3A4%3C839%3ATNDAWT%3E2.0.CO%3B2-F in JSTOR], historiography
* Ladd, Everett Carll and Charles D. Hadley. ''Transformations of the American Party System: Political Coalitions from the New Deal to the 1970s'' (1975), voting behavior
* Leff, Mark H. ''The Limits of Symbolic Reform: The New Deal and Taxation'' (1984)
* Leuchtenberg, William E. ''Franklin D. Roosevelt and the New Deal, 1932-1940''. (1963). A standard interpretive history.
* Lindley, Betty Grimes  and Ernest K. Lindley. ''A New Deal for Youth: The Story of the National Youth Administration'' (1938)
* Lowitt,  Richard. ''The New Deal and the West'' (1984).
* McElvaine Robert S. ''The Great Depression'' 2nd ed (1993), social history
* [http://www.kansaspress.ku.edu/mcjfdr.html McJIMSEY, George. ''The Presidency of Franklin Delano Rooselvelt'', American Presidency Series. University Press of Kanasas, April 2000. ISBN 978-0-7006-1012-9]
* Manza; Jeff. "Political Sociological Models of the U.S. New Deal" ''Annual Review of Sociology: 2000'', 26 (2000): 297-322.
* Mathews, Jane De Hart.  "Arts and the People: The New Deal Quest for a Cultural Democracy," ''Journal of American History'' 62 (1975): 316-39, in JSTOR
* Malamud; Deborah C. "'Who They Are - or Were': Middle-Class Welfare in the Early New Deal" ''University of Pennsylvania Law Review'' v 151 #6  2003. pp 2019+.
* McKinzie,  Richard. ''The New Deal for Artists'' (1984), well illustrated scholarly study
* Meriam; Lewis. ''Relief and Social Security'' The Brookings Institution. 1946. Highly detailed analysis and statistical summary of all New Deal relief programs
* Milkis, Sidney M. and Jerome M. Mileur, eds. ''The New Deal and the Triumph of Liberalism'' (2002)
* Mitchell, Broadus. ''Depression Decade: From New Era through New Deal, 1929-1941'' (1947), survey by economic historian
* Parker, Randall E. ''Reflections on the Great Depression'' (2002) interviews with 11 leading economists
* Patterson, James T. ''The New Deal and the States: Federalism in Transition'' (Princeton UP, 1969).
* Powell, Jim ''FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression'' (2003)
* Rosenof, Theodore. ''Economics in the Long Run: New Deal Theorists and Their Legacies, 1933-1993'' (1997)
* Rosen, Elliot A.  ''Roosevelt, the Great Depression, and the Economics of Recovery'' (2005) argues productivity gains were more responsible for long-term recovery than New Deal 
* [http://www.mises.org/rothbard/agd.pdf Rothbard, Murray. ''America's Great Depression'' (1963)], critique by a libertarian.
* Saloutos, Theodore. ''The American Farmer and the New Deal'' (1982).
* Savage, James D. ''Balanced Budgets & American Politics.'' Cornell University Press. 1988.
* Schlesinger, Arthur M. Jr., ''The Age of Roosevelt'', 3 vols, (1957-1960), the classic narrative history. Online at [http://image.ulib.org/cgi-bin/handlers/handle8?call=15522.20704 vol 2] [http://delta.ulib.org/zoom/record.html?id=15523 vol 3]
* Singleton, Jeff. ''The American Dole: Unemployment Relief and the Welfare State in the Great Depression'' (2000)
* Sitkoff, Harvard. ''A New Deal for Blacks'' (1978).
* Sitkoff, Harvard. ed. ''Fifty Years Later: The New Deal Evaluated.'' (New York; McGraw Hill, 1984).  A friendly liberal evaluation.
* Skocpol, Theda, and Kenneth Finegold. "State Capacity and Economic Intervention in the Early New Deal." ''Political Science Quarterly'' 97 (1982): 255-78. Online at JSTOR .
* Skocpol, Theda, and Kenneth Finegold. "Explaining New Deal Labor Policy" ''American Political Science Review'' (1990) 84:1297-1304 online at JSTOR
* Smith, Jason Scott. ''Building New Deal Liberalism: The Political Economy of Public Works, 1933-1956'' (2005).
* Sternsher, Bernard ed., ''Hitting Home: The Great Depression in Town and Country'' (1970), essays by scholars on local history
* Szalay, Michael. ''New Deal Modernism: American Literature and the Invention of the Welfare State'' (2000)
* Tindall George B. ''The Emergence of the New South, 1915-1945'' (1967). survey of entire South
* Trout Charles H. ''Boston, the Great Depression, and the New Deal'' (1977)
* Ware, Susan. ''Beyond Suffrage: Women and the New Deal'' (1981)
* Wecter, Dixon. ''The Age of the Great Depression, 1929-1941'' (1948), social history
* Zelizer; Julian E. "The Forgotten Legacy of the New Deal: Fiscal Conservatism and the Roosevelt Administration, 1933-1938" ''Presidential Studies Quarterly'' . Volume: 30. Issue: 2. pp: 331+. (2000)
 
===Primary sources===
* Bureau of the Census, ''Statistical Abstract of the United States: 1951'' (1951) full of useful data; [http://www2.census.gov/prod2/statcomp/documents/1951-01.pdf online]
* Bureau of the Census, ''Historical Statistics of the United States: Colonial Times to 1970'' (1976)
* Cantril, Hadley and Mildred Strunk, eds. ''Public Opinion, 1935-1946'' (1951), massive compilation of many public opinion polls
* Carter, Susan B.  et al eds. ''The Historical Statistics of the United States'' (6 vol: Cambridge UP, 2006); huge compilation of statistical data; online at some universities 
* Gallup, George Horace, ed. ''The Gallup Poll; Public Opinion, 1935-1971''  3 vol (1972)  summarizes results of each poll.
* Lowitt, Richard and Beardsley Maurice, eds. ''One Third of a Nation: Lorena Hickock Reports on the Great Depression'' (1981)
* Moley, Raymond. ''After Seven Years'' (1939), conservative memoir by ex-Brain Truster
* Nixon, Edgar B. ed. ''Franklin D. Roosevelt and Foreign Affairs'' (3 vol 1969), covers 1933-37. 2nd series 1937-39 available on microfiche and in a 14 vol print edition at some academic libraries.
* Roosevelt, Franklin D.; Rosenman, Samuel Irving, ed. ''The Public Papers and Addresses of Franklin D. Roosevelt'' (13 vol, 1938, 1945); public material only (no letters); covers 1928-1945.
*[http://www.lexisnexis.com/academic/2upa/Aph/fdrDocumentary.asp ''Documentary History of the Franklin D. Roosevelt Administration''] 20 vol. available in some large academic libraries.
* Zinn, Howard, ed. ''New Deal Thought'' (1966), a compilation of primary sources.
<div/>
==External links==
* [http://newdeal.feri.org/ New Deal Network] massive collection of photos and primary sources
*[http://www.nisk.k12.ny.us/fdr/ FDR cartoon archive]
-------------------
<references/>

Latest revision as of 20:46, 25 June 2010

This article is developing and not approved.
 Main Article
 Discussion
Related Articles  [?]
Bibliography  [?]
External Links  [?]
Citable Version  [?]
Timelines [?]
Addendum [?]
 
https://en.citizendium.org/wiki/index.php?title=New_Deal&printable=yes
This editable Main Article is under development and subject to a disclaimer.

The New Deal was President Franklin Delano Roosevelt's legislative program. As implemented during the 1933-1938 period, it included numerous congressional enactments and presidential orders that were intended to provide economic relief, recovery, and reform. Its purposes were to relieve the suffering of the American people in the throes of the Great Depression, and its execution

(For an annotated list of New Deal measures and institutions see the addendum subpage)
(For the sequence of New Deal legislative measures see the timelines subpage)

Background

Roosevelt first promised "a new deal for the American people" in his acceptance speech at the 1932 Democratic National Convention.

(The background to the New Deal is described in the article on the Great Depression in the United States and its economic implications and international context are described in the article on the Great Depression.)

Overview: the three Rs

The New Deal had three components: relief, recovery, and reform - The Three RS.

The Relief component was intended to put the unemployed to work and help those hardest hit by the depression. It expanded the previous administration's work relief program, and added an extensive further sequence of employment-generating schemes, followed by the introduction of a number of social security and unemployment insurance systems.

The Recovery component was intended to restore confidence in the banks and otherwise to return the country to prosperity by restricting competition, controlling prices and raising real wages, by industrial and farming subsidies, and by infrastructure investment.

The Reform component consisted mainly legislation designed to regulated the conduct of the banks and of the remainder of the financial system.

The New Deal programs

The Financial Sector

The New Deal addressed the financial sector as the first, and probably most important, area for recovery. As the nation was enduring yet another bank crisis at the time of Roosevelt's inauguration, Roosevelt addressed the emergency first with relief measures. Reform measures for both the banking and securities industries followed in June. As recovery measures, these acts were successful in ending the banking crisis and restoring public confidence in U.S. banks.

"Bank Holiday" and the Emergency Banking Relief Act

The exceptionally severe banking crises of 1931-33 led to the failure of large numbers of banks and by March 1933 many of the survivors were on the point of closing their doors to depositors.[1] Just one day into his presidency, Roosevelt declared a "bank holiday," effectively putting all financial transactions to a halt. Four days later, when Congress convened, it passed the Emergency Banking Relief Act in just seven hours. Much of the law had been drafted by Hoover administration officials and provided for reopening sound banks under Treasury Department supervision. Three-quarters of the remaining banks in the Federal Reserve System reopened within the next three days and currency and gold flowed back into them within a month, thus stabilizing the banking system.

Economy Act

As a result of pressure from "deficit-hawks" among its members (who feared that the government's would cause a large departure from the President's election promise of a balanced budget) as well as being a plank in the Democratic Party's 1932 campaign platform, Congress passed the Economy Act which cut the salaries of government employees and cutting pensions to veterans and reduced government expenditure by about $500 million a year.

Banking Act

Many Americans believed that the financial system needed reform and regulation in order to preserve public confidence and maintain economic stability. The Banking Act of 1933 created the Federal Deposit Insurance Corporation which insured individual depositors for up to $5,000. Banks and thrifts need not have been member of the Federal Reserve System in order to participate. The Banking Act also incorporated the Glass-Steagall Act of 1933 which sought to further protect commercial depositors by prohibiting commercial banks from engaging in the more risky activity of investment banking. Lastly, the Banking Act created the Federal Open Market Committee which gave to the Federal Reserve Board of Governors greater powers over monetary policy.

Federal Securities Act

The Federal Securities Act required that financial information in stocks and bonds be fully disclosed. This was at first regulated by the Federal Trade Commission but Congress later created the Securities and Exchange Commission to regulate this market.


Relief programs

The administration launched a series of programmes and agencies to provide work for the unemployed, the largest of which were the Civilian Conservation Corps, the Civil Works Administration, the Federal Emergency Relief Administration the National Youth Administration, and largest of all, the Works Progress Administration (WPA). (The numbers employed by last-mentioned reached 3.3 million in November 1938.[2] and although there had by then been a major reduction in level of unemployment even then amounted to 12.5% of the working population[3].)

Other programmes established the concept of a minimum wage, created insurance for the unemployed, sick and old, established healthcare support systems, and abolished child labor. However, it is often claimed that the most important of the relief measures that were introduced was the Social Security Act of 1935.

Recovery programmes

The Farm Programs

Several measures were introduced to arrest the fall in agricultural prices that had been causing hardship in the country's farming industry. The first Agricultural Adjustment Act, which was passed on May 12, 1933, created the Agricultural Adjustment Administration. This agency negotiated restrictions on the production of corn, cotton, dairy products, hogs, rice, tobacco, and wheat, and compensated farmers for the crops and livestock that they did not produce from funds raised by a tax on food processing. Since the law went into effect after the 1933 crops had been sown and animals born, the agency had to order that crops be destroyed and livestock slaughtered in order to meet the 1933 production restrictions.

In 1935, the Supreme Court in United States v. Butler ruled the Agricultural Adjustment Act unconstitutional for having one segment of the population directly supported by taxes paid by a different segment. But as this program was working to improve farm profitability, Roosevelt and Congress rewrote the law to meet the Court's scruples. During the program's first three years because of the restrictions on supply, food prices rose and farm incomes increased significantly. The Agricultural Adjustment Act has not been repealed by Congress and has been many times amended, the latest being in the 1990s.

In spite of the success of the program for addressing farm profitability, a Gallup Poll printed in the Washington Post revealed that a majority of the American public opposed the AAA.[4]

Several other agencies were also introduced to help farmers and rural America, including the Resettlement Administration, the Farm Security Administration, the Rural Electrification Administration, and the Tennessee Valley Authority. The government also sponsored rural welfare projects such as the provision of school lunches, the building of new schools, the opening of roads in remote areas, and the transfer of marginal lands to national forests.

Infrastructure Projects

A number of infrastructure projects were created by the Public Works Administration (PWA) [5], that had been established by the National Industrial Recovery Act, and the Tennessee Valley Authority [6]. By June 1934 the Public Works Administration had created over 13,000 federal projects and over2,000 non-federal projects, including rural electrification, canals, tunnels, bridges, highways, streets, sewage systems, and housing areas, as well as hospitals, schools, and universities.[7].

Industrial Policies

The cornerstone of New Deal industrial policy was the National Industrial Recovery Act (NIRA). This law followed the same logic that underpinned the farm programs: excessive competition and overproduction was driving prices down and making producers unprofitable. Business unprofitably lowered wages and employment, which, in turn, reduced demand.[8] To reverse this situation, the NIRA encouraged collusive agreements to refrain from price competition and to strengthen the bargaining power of labor unions.

To manage the collusive agreements among business, the NIRA created the National Recovery Agency (NRA). The NRA worked with business trade associations to develop codes of production for each industry. These codes set production and price limits, quality levels, and other measures for products. Businesses were also asked to accept a "blanket code" covering all industries which set a minimum wage of between 20 and 40 cents an hour, and a maximum working week of 35 to 40 hours. By 1934, National Recovery Agency's codes covered over 500 industries, and nearly 80 percent of private, non-agricultural employment.

NIRA also established the Public Works Administration to employ millions of workers not finding jobs in industry. The NIRA's section 7(a) also required businesses to recognized labor unions when workers organized them and to negotiate collective bargaining agreements with them.

On May 27, 1935, the Supreme Court ruled in Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935) that the National Industrial Recovery Act was an unconstitutional delegation of legislative power, mainly because of Congress had delegated its lawmaking power to NRA to write national economic policy and because of its suspension of the antitrust laws. President Roosevelt objected to the Court’s decision, declaring that "The fundamental purposes and principles of the NIRA are sound. To abandon them is unthinkable. It would spell the return to industrial and labor chaos."

However, in practice the NIRA was an abysmal failure. The trade associations did not write fair and impartial production codes aiming towards overall industrial recovery. Since many trade associations were led by single dominant businesses, the codes tended to favor them to the detriment of the smaller and less powerful producers, and the NRA was powerless to redress this situation. Additionally, some major manufacturers, such as the Ford Motor Company, simply refused to participate at all. Thus when the law was declared unconstitutional and in spite of his public protestations, Roosevelt proposed no wholesale replacement for the act as he had done for the AAA.

Some other aspects of the act, however, were successful to Roosevelt's eyes. As a partial replacement for Section 7(a), Congress passed the National Labor Relations Act also known as the "Wagner Act" which made negotiations with labor unions compulsory, and created the National Labor Relations Board with the duty to enforce the provisions of the Act. In 1938, Congress passed the Fair Labor Standards Act, which created a minimum wage and standard work hours.

The effects of the New Deal programs

Social implications

It is widely accepted, however, that - in the short term, at least - the New Deal averted, a great deal of poverty-induced suffering. Before the creation of the New Deal, America did not have a national social security system such as were then common in Europe, but only scattered locally-administered provisions comparable to the Elizabethan poor law [9]. By 1933, the incomes of millions of American families had fallen below subsistence level. and but for New Deal relief, many would have died of starvation. Objective evidence on the subject is scarce, but studies using such statistics as had been available at the time suggest that the New Deal raised fertility rates, reduced death rates [10] and crime rates [11] compared with what would have happened without it.

Political implications

The New Deal's constitutionality

The rationale of the National Industrial Recovery Act, in particular implied the permanent [12] abandonment of the existing system of free-market capitalism. It encountered bitter opposition by the business community, and it was frequently challenged as unconstitutional.

In 1935, in the landmark case of Schechter Poultry Corp. v. United States,[13] the Supreme Court ruled unanimously that the National Industrial Recovery Act was an unconstitutional delegation of congressional authority. The following year, in United States v. Butler,[14] it declared the Agricultural Adjustment Act of 1933 to be "a matter beyond the powers delegated to the federal government." In addition, on the same day that it handed down the Schechter decision, the Court ruled against Roosevelt's firing of a Federal Trade Commission official Hoover had appointed in the case of Humphrey's Executor v. United States.[15] While this was not a ruling on the constitutionality of any New Deal initiative directly, it undermined the program's assumption of an expansive role for the federal executive branch and threatened the president's capacity to press forward with his programmatic agenda.

In 1937, President Roosevelt responded with a proposal to "pack" the Supreme Court by adding five new justices. The court packing proposal failed, but the Court subsequently began upholding New Deal legislation, and by 1942 it had nearly abandoned its earlier judicial activism.

Economic implications

Recovery

The extent to which the New Deal hastened or hampered America's recovery from the Great Depression is a matter of continuing controversy. There are, nevertheless, a few aspects of the question on which there is some semblance of a consensus. For example, few would now question the proposition that the restoration of confidence in the banking system was a necessary condition for recovery, or the success of Roosevelt's actions in that respect. But there is evidence to suggest that the effect of the National Industrial Recovery Act was to delay recovery [8] by introducing a seriously damaging reinforcement into the "stickiness" of wage-determination. Opinions differ concerning the effectiveness of the New Deal's fiscal stimulus, but since that stimulus was in any case, small by comparison with the downturn [16], that question is not now considered to be of overwhelming importance compared with the other issues that arise.


(For a more detailed examination of the economic consequences of the New Deal, see the article on the Great Depression, and its Tutorials subpage [2] and for a summary of the relevant economic statistics see the Tutorials subpage of the article on the Great Depression in the United States [3].)

References

  1. ↑ for details, see "Bottom" in Time Magazine (March 13, 1933) online at [1]
  2. ↑ According to Nancy Rose' Put to Work.
  3. ↑ Darby, Michael R.Three and a half million U.S. Employees have been mislaid: or, an Explanation of Unemployment, 1934-1941. Journal of Political Economy 84, no. 1 (1976): 1-16.
  4. ↑ Barry Cushman, Rethinking the New Deal Court (New York: Oxford University Press, 1998), 34.
  5. ↑ PWA - Public Works Administration,The Columbia Encyclopedia, Sixth Edition, 2001-05]
  6. ↑ TVA - Tennessee Valley Authority: From the New Deal to a New Century]
  7. ↑ McJIMSEY, George. The Presidency of Franklin Delano Roosevelt, American Presidency Series. University Press of Kansas, April 2000. ISBN 978-0-7006-1012-9
  8. ↑ 8.0 8.1 Harold L. Cole, "New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis," Federal Reserve Bank of Minneapolis Research Department Staff Report XXX, February 2003.
  9. ↑ James Patterson: The Welfare State in America, 1930-1980, British Association for American Studies 1981
  10. ↑ Price Fishback, Michael Haines, and Shawn Kantor: Births, Deaths, and New Deal Relief During the Great Depression, NBER Working Paper 11246, September 2002
  11. ↑ Ryan Johnson, Shawn Kantor and Price V. Fishback: Striking at the Roots of Crime: The Impact of Social Welfare Spending on Crime During the Great Depression. NBER Working Paper 12825, January 2007
  12. ↑ The President introduced it as a change "for all time" as reported in the article on the National Recovery Administration
  13. ↑ 295 U.S. 495 (1935)
  14. ↑ 297 U.S. 1 (1936)
  15. ↑ 295 U.S. 602 (1935)
  16. ↑ Paul Krugman: New Deal economics, New York Times February 20, 2009
Retrieved from "https://citizendium.org/wiki/index.php?title=New_Deal&oldid=24642"