How successful was the First New Deal in tackling the economic and social problems of the USA?

FDR defeated Hoover in the 1932 election with an astounding percentage of the popular vote. Upon becoming President at his inauguration in March 1933, FDR was faced with tackling the worst depression in American History, which had propelled 15 million citizens into unemployment, and even those who were employed were suffering due to weekly wages being so low it became a struggle to survive. The thousands of Investors in banks lost all of their hard earned savings because of the banks closing down at a rate of 40 per day.

Also, global trade had come to a standstill, and in a simple act of retaliation to high American tariffs, international traders placed high tariffs on American goods which meant there was no market for the goods abroad. Despite FDR being faced with these terrible facts, at his inauguration in March 1933, FDR stated, “Our greatest primary task is to put people to work”1. Hoover had allowed the Depression to spin out of control, and demonstrated his helplessness, as no new measures were introduced to help combat it in the ‘Lame Duck’ months.

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In 1933, the American public took a desperate chance on FDR and his,”… New Deal for the American people2”, despite many not understanding what this new ‘proposal’ was. The intended goal of the New Deal was to create ‘relief, recovery and reform’ for the devastated American economy, and was intended to create and carry out specific measures in response to the masses of problems felt by the nation. The influential journalist Walter Lippmann even wrote, “The danger we have to fear is not that Congress will give FDR too much power but… eny him the power he needs”.

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3 Congress rapidly produced many Federal agencies, which soon became recognised as alphabet agencies, which were originally set up to help resolve the disastrous circumstances that the Govt and citizens faced. FDR used his Brain Trusters for their expertise, and informed his advisors to “take a method and try it. If it fails, admit it frankly, and try another. But by all means, try something,” It soon became evident that the previous statement is replicated during ‘the First Hundred days’ of his Administration.

Roosevelt gained many concepts for the New Deal from the writings of British economist John Maynard Keynes, who believed that a government’s deficit spending could improve the economic cycle, and therefore jump-start the economy. Initially, FDR was concerned with the collapse of the American banking system. So in light of this, FDR ordered the closing of all banks in the country for four days, to allow treasury officials sufficient time to draft in emergency legislation.

FDR accomplished what he had intended to do and quickly passed the Emergency Banking Relief Act (EBRA), this acts was simply to restore confidence in the American banking system. FDR addressed the nation in his first radio ‘fireside’ chats and reassured citizens there money was now safe and told them how to help. His message was simple; place your money in the bank rather than under your mattress. This proved very successful, and by April $1 billion had returned to bank deposits, this is more than enough evidence that confidence had been restored.

The Brains Truster Raymond Moley felt, “American Capitalism was saved in 8 days”4. Shortly following this, FDR drew up further pieces of legislation which would complement the enhanced banking system and put it on a sounder long-term footing. Firstly, The Glass-Steagall act would stop commercial banks from being involved in investment banking and made sure all deposits were insured up to the figure of $2500.

Secondly, the Truth-in-Securities act required brokers’ to offer clients realistic information about securities they were selling, which proved successful simply because investors received financial information, which allowed them to make an informed decision; and overall boosted peoples trust in American markets. If the economy was ever going to be revitalized, the FDR administration would have to undertake the crisis of mass unemployment. Unemployment had reached over 25% of the working population, and with winter approaching, these figures had to drastically change!

FDR’s first step in his ‘relief’ programme consisted of the Federal Emergency Relief Administration (FERA). It was headed by Harry Hopkins who said his task was “to feed the hungry and goddam fast”5. FERA distributed about $4 billion in aid to unemployed families, and to local governments so they were able to fund public projects. However, in spite of this, on average, families received $25, which was only 1/4 of what they needed for subsistence. According to Hopkins, the unemployed should receive work, rather than dole, as it gives the workers self-respect and could also result in completion of socially useful projects.

However in a conflicting view, those who opposed the whole idea argued that work relief was more costly than paying dole. FERA however, was regarded as a success in the example that it set. Through it public work schemes were set up work for young unemployed men, and believed this would stimulate economic growth. The Civilian Conservation Corps (CCC), was seen as one of the great symbols of the New Deal, it left a legacy of outdoor recreational areas, and Young men sent home $25 of their $30 a month to their families.

During its 10 years the CCC provided jobs for 3 million young men. Despite these simple achievements, slight failures became evident as employment in the CCC was short-term, as the average length of employment was just 6 months, which confirms that the CCC was no guarantee to prevent men from returning to the ranks of those on relief when it was over. It was seen as an opportunity for young white men, and seemed to leave the deprived ethnic minorities trapped in poverty. FDR was supposedly taken by the whole idea, and according to Frances Perkins, ‘exaggerated its benefits’.

A further temporary scheme was the Civil Works Administration’s (CWA) main task was to primarily provide emergency relief to the unemployed through the hard winter of 1933-34. This it did, as it soon employed over 4 million people were put to work on public works projects. Nevertheless, this system was disbanded after the winter, and once again the 4 million workers were without work. One successful viewpoint by many is that it helped many people survive winter, which they might not have otherwise.

It was also a priority for FDR to try to create sparks of Industrial growth, and also to increase purchasing power so consumers could buy more, which would in turn speed the recovery up. The passing of the National Industrial Recovery Act, which itself set up the National Recovery Administration (NRA) which aimed to address the industrial problems, by restoring employment and then regenerating the industry. The NRA was successful in achieving a general improvement in working conditions, and improved the rights of workers to a minimum wage, shorter working hours and the right to join a Trade Union.

Also it aimed to prevent overproduction, which would allow prices to rise, and to stamp out cartels in the business world, so there would be no price-fixing in the market. Despite bringing some Industrial stability to the industry, the NRA is looked upon as a failure because it didn’t achieve what it had set out to do, “the NRA helped to prop up manufacturing industry at a time when it needed support… but it did not deliver industrial recovery”6. Furthermore, the NRA favoured big corporations, as smaller businesses could not comply with all of the NRA’s inconsiderate regulations.

Critics have said that ‘in practice, they did little except give large firms the opportunity to indulge in unfair practices’, which was the opposite of what the scheme had sought to do! It can be looked upon as a huge failure as companies began to fix prices, which often caused sales to fall, and consequently caused workers to lose their jobs, which further held up the recovery from the G. Depression. The second clause of the NIRA was the Public Works Administration, which broke the temporary public work trend, and introduced a desired long-term measure which was headed by Harold Ickes, who believed the schemes purpose was ‘pump priming’.

He was a firm believer that Hopkins and the CWA had wasted millions of dollars of public money. Ickes intended do the exact opposite and ‘would only fund worthwhile projects’ and ‘demanded value for money’. This can be looked upon as sensible; however, each plan of action he had would be examined in depth which is why he only spent $110 million in 6 months and made progress very slowly. Therefore Doug/Susan Willoughby stated the, “… money available was extremely slow to trickle into the economy” and “… as really the opposite of what the New Deal had intended”. Another Act, the Agricultural Adjustment Act (AAA), proved a very successful measure, in which the Government would support farmers to voluntarily reduce their acreage and production, and overall, to raise commodity prices to pre-1914 levels. With land being un-cultivated and crops/produce being destroyed, most farm incomes doubled between 1932-’36, due to reductions in production, which caused prices to rise! The Agricultural market was soon saved in 1939, because of WW2.

However, critics have seen the actions taken as devastatingly ironic, because Crops and animals were wasted and destroyed despite millions of Americans starving in dreadful poverty. Doug/Susan Willoughby stated, “the AAA had limited success in dealing with the problems faced by American farmers… the AAA did nothing to improve the lives of millions… many were black, and continued to exist in… poverty and starvation”7. Also it added that the AAA, like other schemes favoured big businesses and ‘forgot’ the smaller tenant farmers. The Tennessee Valley Authority, created in 1933, was an especially significant New Deal accomplishment.

It created thousands of jobs and stimulated the recovery of the whole region as dams were created that in turn created cheap electricity for the regions homes, and this created a ‘boom’ in jobs as factories opened in the area soon after. Doug/Susan Willoughby stated, “there is considerable evidence to suggest that the TVA was one of the most successful agencies of the New Deal”. Despite it upsetting many people in the USA; they complained that a government agency should not compete with private companies in the production and distribution of electric power.

They became bitter as the unit cost of TVA power became cheaper than that of the private companies. In conclusion, despite all of the guarantees promised in his election campaigns of 1932 and the ‘First Hundred days’ of his office, FDR mainly failed to help the ‘forgotten man’. Many of the public at some point referred to FRD as their ‘friend in the Whitehouse’, this was because of FDR’s psychological effect on the population of the USA, with his New Deal, which gave all citizens a motive to have hope for the future, Clements describes how, “FDR, with his silver tongue brought hope”

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How successful was the First New Deal in tackling the economic and social problems of the USA?. (2020, Jun 02). Retrieved from https://studymoose.com/successful-first-new-deal-tackling-economic-social-problems-usa-new-essay

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