New Deal

The New Deal, introduced by F D Rooseveltwas to transform America'seconomy which had been shattered by the Wall Street Crash. The economic downturn that followed the Wall Street Crash also had a major psychological impact on America and that Roosevelt was actually doing something did a great deal to boost America's self-esteem.

In Roosevelt's first Hundred Days many acts were introduced which were to form the basis of the New Deal. The New Deal was to cover as many issues as could be imagined - be they social, economic, financial etc. The wave of popularity that had swept Roosevelt into power meant that parts of the New Deal were passed without too much scrutiny. In later years many acts in the New Deal were deemed unconstitutional by the Supreme Court of America.

The New Deal introduced acts that became part of the law and numerous agencies that worked with the Federal government in ensuring that the acts were enacted.

On March 15th 1933, Roosevelt asked Congress to pass the Economy Act. This cut the pay of everybody who worked for the government and the armed forces by 15%. Government departmental spending was also cut by 25%. The saved money, about $1 billion, was to go towards financing his New Deal.

On March 20th 1933, Roosevelt asked Congress to pass the Beer Act which finally killed off prohibition. The sold beer would raise revenue for the government by tax and it would also introduce a fee-good factor in that perfectly normal people who wanted an alcoholic drink would no longer be criminalised simply because they wanted a drink.

The Acts

Emergency Banking Act 1933 / The Federal government insured people's deposits in banks against losses caused by public panic. This helped restore the public's confidence in the nation's banking system
National Industrial Recovery Act '33 / This act had three parts to it. It set up the Public Works Administration (PWA) to manage public works projects; The PWA spent $7 billion and employed millions of men.
It set up the National Recovery Administration to set up codes of practices for such things as hours worked, wages, unfair competition and outlawing child labour. 16 million workers were covered by these code and child labour was outlawed. Workers went on to a 8 hours week and a minimum wage of $1.25 was introduced.
The third strand of the NIRA was to give trade unions the legal right to bargain with employers. Membership of trade unions increased after the introduction of this act.
NIRA was declared unconstitutional in 1935.
Agricultural Adjustment Act 1933 / This act paid farmers to limit the amount of crops they grew or simply to dig back into the ground crops already grown. The federal government bought farm animals and then slaughtered then to raise the price of farm products.
Between 1933 and 1937, farm prices doubled but in 1936 the AAA was declared unconstitutional.
TennesseeValley Development Act '33 / This set up the TennesseeValley Authority (TVA). Its sole task was to re-develop the TennesseeValley which encompassed 7 states and 40,000 square miles.
HEP stations were built, flood control was introduced as was soil conservation. The valley was regenerated.
National Labour Relations Act '35 / This act forced employers to deal with trade unions. Workers were also given the right to form and join trade unions and to take part in collective bargaining. A board was set up to investigate and punish those companies bosses who did not abide by the rules of the NLRA.
In 1935 trade union membership stood at 3.6 million. By 1941 it was 8.6 million. In 1935 the CIO (Congress of Industrial Organisations) came into being.
Social Security Act 1935 / This act set up the first national old age pensions scheme. Workers and employers had to pay into a federal pension fund. Each state was also expected to work out a plan for unemployment insurance.
This one act covered 35 million people despite opposition from Republicans who felt the whole idea smacked of socialism.
Soil Conservation Act 1936 / The federal government paid subsidies to farmers who agreed to leave land fallow or planted crops that put nitrogen back into the soil. The federal government also financed research into soil conservation.
Fair Labour Standards Act 1938 / The FLSA sort to cut the maximum hours someone could work and to raise the minimum wage for those who worked in inter-state trade.
This act gave protection to over 13 million people. It introduced a 40 hour week and a minimum wage of 40 cents an hour.
Agricultural Adjustment Act 1938 / The act introduced the Federal government subsidising the price of many farm products. The aim was to gradually increase the subsidy until farm prices reached their pre-1914 figure to give all farmers a guaranteed minimum income.

The Agencies

Civilian Conservation Corps of 1933 / This employed jobless single men between the ages of 18 and 25. They worked for 6 months in mountains and forests where they were taught forestry, flood control and fire prevention. Nearly 3 million men took part in the scheme which ran from 1933 to 1941.
Works Progress Administration of 1935 / The WPA coordinated all public works schemes. It spent over $10.5 billion of Federal money and employed 3.8 million men from 1935 to 1941. It had built 77,000 bridges, 24,000 miles of sewers, 664,000 miles of road, 285 airports, 122,000 public buildings and 11,000 schools.
Reconstruction Finance Corporation / This agency loaned money to state and local governments to assist the poor. It also lent money to firms which were in debt or wanted to invest.
Farm Credit Administration / This agency used Federal money to pay off farm creditors and save farmers from bankruptcy.
Home Owners Loan Corporation 1933 / This agency used Federal money to pay of mortgages so that home owners did not lose their homes.

Farmers and the New Deal

Farmers in America did well out of the New Deal. The farmers of America did not prosper in the so-called Roaring Twenties. They were simply too successful in that they produced far too much for the American market. With western Europe as a market effectively closed to them as a result of a tariff war, the farmers could only sell in America. Too much product for too few people caused prices to plummet. Farmers had to sell to whoever would offer a price for their goods. Bankruptcy followed bankruptcy among farmers in the mid-West.

In January 1933, Ed O’Neal, the farmers union leader had said:

"Unless something is done for the American farmer we will have a revolution in the countryside within less than 12 months."

The Hoover administration had done little to help the farmers. Hoover’s "prosperity is just around thecorner" must have sounded very hollow to mid-West farmers. The attack and attempted lynching of a judge by Iowan farmers in April 1933 (he was signing eviction orders to be served on farmers) lead to the Governor of Iowa putting the state under martial law. Roosevelt had to be seen to be doing something as for nearly 13 years the federal government had done little to assist the farmers.

In May 1933 the Agricultural Adjustment Act (AAA) was passed. This act encouraged those who were still left in farming to grow fewer crops. Therefore, there would be less produce on the market and crop prices would rise thus benefiting the farmers – though not the consumers.

The AAA paid farmers to destroy some of their crops and farm animals. In 1933 alone, $100 million was paid out to cotton farmers to plough their crop back into the ground! Six million piglets were slaughtered by the government after it had bought them from the farmers. The meat was canned and given away for free to the unemployed. Though this all made perfect sense in terms of economically stabilising the farming market, many Americans could not accept this policy of destruction. Opponents of the New Deal created a simple chant for people to express their views on the AAA - "Poor Little Piggies".

Regardless of this, the Act did make a marked improvement in the life of farmers as prices rose, evictions markedly dropped and the farmers’ income increased.

In 1936, the Supreme Court declared that the AAA was unconstitutional in that it had allowed the federal government to interfere in the running of state issues. This effectively killed off the AAA.

The AAA did not help the sharecroppers though. These people, and there were three million sharecroppers, did not own their land. Many sharecroppers were African American and they lived lives of poverty. In the immediate aftermath of the AAA, they got employment from farmers to destroy the farmers' crops. Once this had been done, they had nothing to do and many left the land and moved to the ghettos in the cities where they faced similar poverty.

In 1934, the farmers who had benefited from the AAA, hit another major problem – dust storms. These storms destroyed farms especially in Oklahoma and Arkansas and throughout the 1930’s over 350,000 farmers left for the west especially California where the weather created a more friendly farming environment. The AAA could not cope with this.

Further assistance for the farmers' was planned by the Roosevelt administration. The TennesseeValley had frequently flooded ruining farming land and destroying the hopes of the farmers who tried to work the land there. The result of the government's initiative was the Tennessee Valley Authority.