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The New Deal: A Brief Overview

President Roosevelt’s New Deal

 

On October 29, 1929, the crash of the U.S. stock market—known as “Black Tuesday”—reflected a move toward a worldwide economic crisis. In 1929-1933, unemployment in the U.S. soared from 3 percent of the workforce to 25 percent, while manufacturing output collapsed by one-third. Prices declined, especially for farm products. Heavy industry, mining, lumbering and agriculture were badly hit. The impact was much less severe in white collar and service sectors, but every city and state was hit hard.

Upon accepting Democratic nomination for president on July 2, 1932, Roosevelt promised “a new deal for the American people,” a phrase borrowed from the title of Stuart Chase’s book A New Deal published earlier that year, and which has endured as a label for his administration and its many domestic changes.

The New Deal, drawing heavily on the experiences of its leaders, reflected the ideas, and was influenced by the programs, that FDR and most of his original associates had absorbed in their political youths early in the progressive era; had absorbed while serving in the Woodrow Wilson administration; and had absorbed holding other offices in the 1920s.

From the progressive era, some New Dealers, led by Louis Brandeis and Thurmond Arnold, borrowed the era’s opposition to monopoly and moves toward government regulation of the economy They were influenced by the dispelling of age long notions that poverty was a personal moral failure, rather than a product of impersonal social and economic forces.

From the Wilson administration, other New Dealers, such as Hugh Johnson of the 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.

The New Deal had three components: direct relief, economic recovery, and financial reform.

  • Relief was the immediate effort to help the one-third of the population that was hardest hit by the depression. Roosevelt expanded Hoover’s FERA work relief program, and added the CCC, PWA, and (starting in 1935) the 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 RA and FSA.
  • Recovery was the goal of restoring the economy to pre-depression levels. (That did not necessarily mean 1929, which many economists considered an artificially inflated bubble.) It involved “pump priming” (deficit spending), dropping the gold standard, efforts to re-inflate farm prices that were too low, and efforts to increase foreign trade. Much of the New Deal’s efforts to help corporate America was channeled through a Hoover program, the Reconstruction Finance Corporation (RFC).
  • 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. 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). All these emergency programs were terminated in 1942-43, when unemployment had vanished due to World War II related employment offers.

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How to Cite this Article (APA Format): New deal. (2014). Retrieved [date accessed] from http://en.wikipedia.org/wiki/New_Deal.

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