New Deal - U.

New Deal - U.S. History. I INTRODUCTION New Deal, name given to the peacetime domestic program of United States president Franklin D. Roosevelt, and especially to the innovative measures taken between 1933 and 1938 to counteract the effects of the Great Depression. Both Roosevelt and the Congress of the United States, in trying to reduce unemployment and restore prosperity, endorsed a wide spectrum of new federal programs and agencies, most popularly identified by acronym titles. Roosevelt, a skillful political leader, helped win support for an unprecedented array of new services, regulations, and subsidies. Yet no single political philosophy or set of coherent goals ever unified these disparate programs, most of which he developed with the aid of an informal group of advisers known as the Brain Trust. These individuals from outside government included professors, lawyers, and others who came to Washington to advise Roosevelt, in particular on economic affairs. The central legacy of the New Deal was increased government involvement in the lives of the people. II BACKGROUND The stock market crash in October 1929 marked the beginning of the Great Depression, a difficult economic period for the United States and other countries. Unemployment increased and the economic security of many people was threatened. Farmers lost their land, homeowners their homes, and workers their jobs. In the years following the stock market crash, thousands of banks closed and many Americans lost their savings. The incumbent president, Herbert Hoover, lost the election of 1932 to Democrat Franklin D. Roosevelt. Roosevelt campaigned on promises of a new deal for the American people. In his first inaugural address he declared: ...in the event that Congress shall fail to take these courses and in the event that the national emergency is still critical I shall not evade the clear course or duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis--broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact to be invaded by a foreign foe. Roosevelt's course of action became known as the New Deal. III EARLY LEGISLATION Roosevelt's overwhelming victory in the 1932 election, coupled with the urgency of the worst economic collapse in U.S. history, opened the way for a flood of legislation in 1933. Almost immediately after taking office, Roosevelt called on Congress to convene and began what would be known as the Hundred Days, which lasted until June 16, 1933. On March 6 Roosevelt called a nationwide bank holiday, and on March 9 Congress passed the Emergency Banking Act, which provided for federal bank inspections. In the summer of 1933, the Glass-Steagall Act set much more stringent rules for banks and provided insurance for depositors through the newly formed Federal Deposit Insurance Corporation (FDIC). These acts helped to restore popular confidence in the wake of widespread bank failures. Two acts, one in 1933 and one in 1934, mandated detailed regulations for the securities market, enforced by the new Securities and Exchange Commission (SEC). Several bills provided mortgage relief for farmers and homeowners and offered loan guarantees for home purchasers through the Federal Housing Administration, or FHA (see Housing). The Federal Emergency Relief Administration which was headed by Harry Hopkins, a social worker appointed by Roosevelt, expanded existing relief grants to the states and resulted in assistance for more than 20 million people. The Civilian Conservation Corps (CCC) provided work relief for thousands of young men under a type of military discipline. The CCC emphasized reforestation, among other projects. Congress established the Tennessee Valley Authority (TVA) to develop the Tennessee River in the interest of navigation and flood control and to provide electric power to a wide area of the southeastern United States. The most important legislation of 1933 involved the major economic sectors. As a climax to a decade of wrangling, Congress in 1933 enacted a complex new farm bill, the Agricultural Adjustment Act. It provided several mechanisms to help raise agricultural prices, but the one most extensively used provided for government payments to farmers who destroyed or did not grow surplus crops. At a time when economic hardship was leaving people in other areas in need of food, the act invited criticism. The Agricultural Adjustment Act was declared unconstitutional by the Supreme Court of the United States in 1936. The National Industrial Recovery Act (NIRA) was the most innovative early New Deal measure. It provided for two major recovery programs--a vastly expanded public works effort, carried out by the Public Works Administration, and a complex program to regulate American business and ensure fair competition. The National Recovery Administration (NRA) approved and enforced a set of competitive codes for each industry to help ensure fair competition in each. IV THE SECOND NEW DEAL The hopes of 1933 for early recovery proved illusory. Many of the hastily drafted early bills were declared unconstitutional by the Supreme Court. Roosevelt now exploited developing class divisions, formed closer alliances with organized labor, and increasingly castigated the big-business groups that opposed his New Deal programs. These reverses, plus increasingly political opposition to Roosevelt, triggered a second flood of legislation, beginning in 1935, which some observers called the Second New Deal. Among the new measures were higher taxes for the rich, strict regulations for private utilities, subsidies for rural electrification (see Rural Electrification Administration), and what amounted to a bill of rights for organized labor. Under the guidance of Secretary of Labor Frances Perkins, the National Labor Relations Act of 1935 gave federal protection to the bargaining process for workers and established a set of fair employment standards. The National Labor Relations Act, also known as the Wagner Act for its sponsor, Robert Wagner, guaranteed workers the right to organize and bargain through unions. The federal Fair Labor Standards Act of 1938, the last major domestic program launched by the Roosevelt administration, mandated maximum hours and minimum wages for most categories of workers. By 1935, several Roosevelt advisers welcomed massive new federal expenditures to induce more private demand, even at the price of budget deficits. A huge relief appropriation of almost $5 billion reinvigorated several programs and funded a new federalized work relief program administered by the Works Progress Administration (WPA; see Work Projects Administration). Perhaps of greatest enduring significance, Congress in 1935 enacted the Social Security Act (see Social Security), which contained three major programs--a retirement fund, unemployment insurance, and welfare grants for local distribution (including aid for dependent children). These programs, coupled with a new subsidized public housing program, began what some now refer to as a welfare state. Social security was developed in the United States later than in many European countries, which had developed social security programs before World War I (1914-1918). In 1937, after a resounding victory in the 1936 election, Roosevelt sought to increase support for his ideas on the Supreme Court. He proposed legislation that would add more judges to the Supreme Court, but Congress rejected this "court-packing" attempt. The pressures for new legislation abated after 1937, and opposition to extending the New Deal mounted rapidly, especially in the South. By 1939 public attention focused increasingly on foreign policy and national defense. The New Deal was over, but it had permanently expanded the role of the federal government, particularly in economic regulation, resource development, and income maintenance. Although in itself the New Deal failed to stimulate full economic recovery, it provided the federal government not only with increased controls over money supply and Federal Reserve policies but also with increased understanding of the economic consequences of its own taxing, borrowing, and spending--thus helping the government to limit the impact of later recessions. In addition, the New Deal coalition dominated the electorate and the nation for years thereafter. The New Deal changed the relationship between the government and the people of the United States. In addition to increasing the involvement of the government in people's lives, the New Deal created a number of agencies that still exist, and it stimulated the growth of the Democratic Party. Contributed By: Paul K. Conkin Microsoft ® Encarta ® 2009. © 1993-2008 Microsoft Corporation. All rights reserved.