New Deal

New Deal (USA) The term used to describe President F. D. Roosevelt's programme to deal with the effects of the Great Depression in 1933–9. There are at least two claimants for coining the term, Roosevelt's adviser Raymond Moley and speech-writer Samuel Rosenman. It was first used in the 1932 election. The First New Deal Program (1933–5) aimed to restore public confidence and to relieve the plight of some fourteen million unemployed. Immediate measures of the First Hundred Days included an Emergency Banking Act (March 1933), an Economy Act (March 1933), and the establishment of a Federal Emergency Relief Administration (March 1933), to be followed in June by the creation of a National Recovery Administration (NRA), dedicated to such industrial issues as child labour, working hours and practices, and collective bargaining. In May 1933 an Agricultural Adjustment Administration (AAA) was established, aiming to limit production of staple crops and to stabilize prices by a policy of federal subsidies. The legislation for this as well as for the NRA was invalidated by the Supreme Court. These measures together ended the immediate crisis.

At the same time there was a programme of public works legislation:

1. The Public Works Administration (PWA), with an endowment of $3.3 billion, became engaged in various public building projects such as schools, hospitals, roads, and bridges. 2. The Tennessee Valley Authority was created in May 1933. An independent corporation backed by federal funds, it built dams and hydroelectric installations in seven states. It also took over a project begun in 1916, the Muscle Shoals project in Alabama extracting nitrate, and in addition to providing cheap electricity engaged in reforestation to check soil erosion throughout the Tennessee River Basin. 3. A Civilian Conservation Corps (CCC) was established in November 1933. Between 1933 and 1941 it found work for some two million young men in reforestation and other projects. 4. A Civil Works Administration, established in February 1934, also gave work to millions on a variety of public works projects.

 These measures of the ‘first phase’ of the New Deal were complemented in 1935 by the largest public works programme ever undertaken, the Works Progress Administration, which replaced earlier emergency relief measures. It provided poor relief through the provision of work on public projects. In its eight-year history it cost over $11 billion and employed a total of over eight million people. Other legislation during this second phase included the 1935 Social Security Act (a scheme of unemployment insurance, disability insurance, and old-age pensions), and the 1935 Wealth Tax Act, which increased income tax rates as well as taxation on profits. The National Labor Relations Act of 1935 (also dubbed the Wagner Act, after its proponent, Senator R. F. Wagner) sought to harmonize labour relations by involving workers in decision-making processes at their workplace. In 1938, the Fair Labor Standards Act was passed, but Congress significantly lowered its stipulations on a minimum wage.

The New Deal represented some of the most interventionist, far-reaching, and stunning reforms of US government ever undertaken by an administration. However, it failed to end comprehensively US economic problems. By 1937, another recession had taken hold which Roosevelt sought to combat with pump-priming and government job creation. The New Deal greatly improved the power of workers and organized labour, and encouraged some minorities, e.g. through the Indian Reorganization Act. Its records on civil rights, however, was less positive, as Roosevelt did not want to expose his legislation to new fronts. In the end, it was defence production in the run-up to and during World War II which transformed the American economy and banished memories of the slump completely.