New Deal

views updated May 23 2018


The United States in the 1920s, argued William E. Leuchtenburg, "had almost no institutional structure to which Europeans would accord the term 'the State.'" As one journalist had observed, "nobody would have thought of calling the sleepy inconsequential Southern town that Washington was in Calvin Coolidge's day the center of anything very important." An economist noted that "The only business a citizen had with the government was through the Post Office. No doubt he saw a soldier or a sailor now and then, but the government had nothing to do with the general public."


Franklin D. Roosevelt confronted the worst economic depression in American history with this feeble state apparatus. A generation before, Grover Cleveland had responded to a similar crisis. As in 1933, the president had been faced in 1893 with armies of the unemployed, desperate farmers, and frightened financiers. Cleveland had resolutely maintained a policy of sound money and strict economy, and he steadfastly resisted demands for government assistance. His courage won Cleveland the praise of conservatives everywhere, but it split his Democratic Party, brought it electoral disaster, and condemned the Democrats to national minority status until the 1930s.

Roosevelt ignored this model. Instead, he drew on the Progressive traditions of the need for government to confront the problems of modern industrial society and to protect the disadvantaged—what Daniel Rodgers has called a "new social politics." Roosevelt also drew on the model of what the federal government had done during World War I when it mobilized men and resources to fight a European war. Herbert Hoover had drawn on many of the same traditions and had mobilized government agencies to check the deflationary spiral after 1929, just as he had as secretary of commerce in 1921 to combat recession. But Hoover's activism was to promote voluntary cooperation. Roosevelt's was not so constrained: He cheerfully, albeit unsystematically, sought federal government remedies and, if necessary, federal government coercion to tackle the Depression.

As a result, American citizens who had had so little experience with the federal government now saw it deeply interwoven in their daily lives. Between 1933 and 1938 the New Deal that Roosevelt had promised the American people when he accepted the Democratic nomination in 1932 profoundly altered the relationship between individuals and their government and shaped the political economy of the United States for the next fifty years.

American farmers were told what they could and could not plant by federal officials. They received checks for not planting crops, or even for destroying what they had already planted. Many had access to electricity for the first time. Farm owners, like homeowners across the nation, renegotiated their mortgages with federal agencies. Tenants could borrow to buy their own farms. Millions of workers were employed by the government on public works and work relief projects. They voted in federal elections for union representation. Their minimum wage was determined by the government. They were eligible for unemployment compensation and received old-age pensions. Most Americans paid income taxes to the federal government for the first time in the 1930s and 1940s. Businessmen could no longer fight unions with every weapon at their disposal and could no longer simply ignore them. They were told what they had to pay their workers, and, for a short time, how much they could produce. Their banking and securities operations were strictly monitored. At the same time, they had unprecedented access to cheap credit from the Reconstruction Finance Corporation (RFC) and had their bank deposits underwritten. Virtually every community in the United States bore the physical imprint of the New Deal: a public housing project, a new high school stadium, a new airport, a new road, a new dam.

This transformation of the role of the federal government and the notions of the legitimate function of government was eventually accepted by the federal courts. The exact timing of the "Constitutional Revolution" of the 1930s, and the motivation of the judges who appeared to switch sides, remains open to dispute, but the constitutional consequences were clear. The restrictions on what the federal government could regulate under the commerce clause were largely removed. In 1942 the U.S. Supreme Court ruled that an Ohio chicken farmer growing twenty-three acres of wheat, all of which would be fed to his chickens and consumed in his backyard, so affected interstate commerce that the secretary of agriculture could impose marketing penalties on him. Before 1937 the Court had savaged economic and social legislation, notably the great industrial and farm recovery acts of 1933. Since 1937 it has never overturned legislation involving economic regulation and between 1937 and 1946 it reversed thirty-two of its earlier decisions in the economic and social arena.

The American people made the same decision as the judges. The majority of Americans welcomed this assumption of active responsibility by the federal government for the welfare of ordinary Americans and responded by electing Roosevelt as president four times. American voters made the Democratic Party the national majority party for a generation and supported presidents—Harry Truman, John F. Kennedy, and Lyndon Johnson—who campaigned in the shadow of Roosevelt and sought to complete the unfinished business of the New Deal. Until the 1960s most Americans believed that the federal government could be relied on to do the right thing.


The first generation of New Deal historians (Tugwell, Freidel, Burns, Schlesinger, Leuchtenburg) largely shared this perspective. They were mainly liberal activists for whom the Depression and World War II were their formative political experiences. Because of Roosevelt's sense of history and the creation of the presidential library in Hyde Park, New York, historians could accomplish archive-based work on the Roosevelt presidency far more quickly than on any previous president. By 1950, 85 percent of Roosevelt's papers had been cleared and could be studied—some five years before the Library of Congress was able to release some of its Lincoln papers and seventeen years before serious archival assessments of the Hoover presidency started. It was inevitable that these historians should put Roosevelt at center stage: The need to establish a coherent narrative of the vast array of legislation and the agencies that proliferated dictated their emphasis on the president and the dynamics of policy formulation. Their tone was largely celebratory. "Something magical," recalled one historian, happened in the 1930s when the federal government came to the rescue of ordinary Americans. They were not uncritical: They regretted the lack of greater planning and coherence in the New Deal, felt that Roosevelt was sometimes too clever by half and sacrificed long-term strategic goals for short-term political gains, and noted that many who needed help most were excluded from the benefits of the New Deal. Nevertheless the overall portrait of Roosevelt and the New Deal was heroic. At a time of unprecedented prosperity after 1945, the New Deal legacy of economic management through fiscal activism seemed successful. At a time when ideology and mass movements—fascism, communism, McCarthyism—seemed so dangerous, these historians could see great value in the apparently pragmatic, non-ideological New Deal that "brokered" the demands of the competing interests groups who mediated between the government and the people.

Radical historians (Zinn, Bernstein, Conkin, Kolko) of the 1960s lamented what the liberals had celebrated. The one-third of a nation that Roosevelt had identified in 1937 as ill-housed, ill-clothed, and ill-fed remained poor. Neither racism nor the power of capitalism had been checked. To these historians the New Deal, like other reform movements in twentieth century, had merely served to sustain the hegemony of corporate capitalism. To the radical historians of the 1960s, the New Deal failure was particularly tragic because, echoing the radicals of the 1930s, they believed that there had never been a better time for a radical overhaul of the American economic and political system. Capitalism had collapsed. American workers and farmers were more disillusioned than ever before or since with traditional business leadership. For once corporate leaders could not solve their problems through overseas economic expansion, since foreign markets had collapsed. They feared that the alternative domestic remedies for depression in a mature economy, therefore, would involve the radical redistribution of wealth and power if America's persistent overproduction were to be solved. To forestall that radical change, New Left historians argued, corporate leaders were not the targets of New Deal reform; rather they were the driving force behind the New Deal. These corporate leaders sought to patch up, not tear down, the old economic system to ensure that power remained largely in traditional hands. Shrewd business leaders supported industrial stabilization, labor legislation, and social security legislation because they could afford increased labor costs that would drive under their smaller competitors. To defuse the angry discontent of workers, farmers, and the poor, they supported the most minimal welfare measures possible. Limited concessions would avert the threat of disorder and undercut the appeal of radicals. This interpretation continued to resonate in graduate schools in the United States, even though it did not yield a major overview of the New Deal. In the 1990s historians of American business like Colin Gordon resurrected a more sophisticated version of the analysis.

If New Left historians lamented the limited nature of New Deal change and viewed it as a decisive "missed opportunity" for radical change, critics on the right lamented that the New Deal had initiated entirely too much change and that the 1930s had marked the "Big Bang" of the federal government. Critics from Herbert Hoover to economic historians such as Robert Higgs in the 1980s and 1990s argued that Roosevelt artificially created a crisis in 1933, then used the analogy of wartime powers and foisted economic regimentation and government control on the American people. The New Deal was a decisive wrong turn in American history that set the nation firmly on the road to collectivism and the creation of a Leviathan—the modern, insatiable, bureaucratic state. As a result, conservative critics and historians argued, the commitment of both ordinary Americans and their leaders to individualism, free markets, and limited government suffered a blow from which the nation has never recovered.

In fact, few New Deal programs were implemented by an army of federal officials faithfully carrying out orders from Washington. Programs were often administered by state administrators, by local officials more sensitive to local mores than to Washington diktat, or by people, such as farmers and businessmen themselves, whom the programs were intended to regulate. State and local case studies of the New Deal and particular agencies have shown that change that looked impressive in Washington did not necessarily have the same impact at the local level. Studies that focus on social groups rather than on their leaders and politicians, "the inarticulate many" rather than "the articulate few," show grassroots radicalism and the agency of ordinary Americans, but they also show the persistence of conservative traditions of deference and individualism amid extraordinary economic distress. Studies that focus on policymaking rarely show the enlightened capitalists as the driving force behind New Deal reforms. Historians who have attempted overviews that take advantage of these studies (McElvaine, Badger, Biles) have tended to emphasize the limitations of the changes wrought by the New Deal. In that sense they resemble the New Left historians. But, unlike those historians, they tend to stress not the conservative intent of policy-makers or the malign influence of corporate capitalists, but the external constraints imposed by the political and economic environment: the lack of a sufficient state apparatus, the strong forces of localism, the great difficulty of policymaking in an economic emergency, and entrenched conservative leadership in Congress.


What judgments on the New Deal can be made against this background? The overriding imperative in 1933 was to produce economic recovery quickly—to reopen the banks and to check the downward deflationary spiral of wages and prices. The microeconomic intervention in agriculture and industry aimed to restore purchasing power to farmers by controlling production under the Agricultural Adjustment Administration (AAA) and to eliminate destructive competition in industry by setting a floor under wages and prices through National Recovery Administration (NRA) codes. Various schemes of "quick fixes" by currency manipulation, to which Roosevelt was always attracted, had little effect. The NRA codes may have checked the deflationary spiral, but they did not generate additional purchasing power that would create extra jobs. Public works spending by the slow moving Public Works Administration (PWA) did not compensate. Microeconomic policies were largely abandoned after the end of the NRA in 1935. Unemployment figures never fell below 10 percent until well into 1941. It would take the demands of preparedness and the defense industries during the war to generate the purchasing power to create new jobs and full employment.

In agriculture, the mix of credit, production control programs, parity payments, and price support loans under the 1933 and 1938 Farm Acts rescued rural America. Federal assistance enabled farm owners to stay on the land in the 1930s when there were no alternative economic prospects off the land. But those on the land who were always poor—tenants and sharecroppers in the South, migratory farm workers in Florida and California, small farmers in the Appalachians—did not receive proportionate assistance from the AAA or the cash-strapped Resettlement Administration (RA) and its successor, the Farm Security Administration (FSA). Farm programs, which were largely to remain in place for the next fifty years, eliminated much of the risk of unpredictable weather and markets for American farmers but they did not in themselves bring prosperity. It was World War II that solved the farm problem: It produced the urban demand that absorbed surplus farm production and the non-farm jobs that absorbed the surplus rural population.

Nevertheless, there were important New Deal economic legacies. The reforms in banking and securities eliminated most of the excesses that had produced financial instability in the 1920s. The stabilization of the financial system lasted until deregulation in the 1980s. The New Deal was also a "laboratory of economic learning." Roosevelt did not allow unbalanced budgets before 1937 as a conscious economic policy: They were emergency measures and he hoped to balance the budget in fiscal 1937. The defense buildup and the need to escape the 1937 to 1938 recession once more made deficit spending an imperative. By now a version of Keynesian economics had influential backers in the administration. Previously they had believed that the mature American economy did not have the capacity to expand dramatically: Unemployment would always be with them. Now they believed that the necessary injection of purchasing power through government spending could create the demand to put all Americans back to work. The war showed that government spending could indeed create full employment. The New Deal left a legacy of macroeconomic tools that would produce nearly full employment until the late 1960s.


The mixed record on the economy was not what brought the New Deal overwhelming electoral endorsement. What more than anything bound lower-income voters to the Democratic Party, including for the first time African-American voters in the northern cities, were the welfare programs of the New Deal. Before 1933 the United States was a welfare "outlier" in the Western industrial world: Private charity and county poor-law provision all too often constituted the sum total of assistance to the unemployed. There was no social insurance—no unemployment compensation in operation at the state or federal level, no old-age insurance, no health insurance. Under the Federal Emergency Relief Administration (FERA) the federal government made grants, not loans, to the states for relief. The Civil Works Administration (CWA) in 1933 and 1934 and the Works Progress Administration (WPA) after 1935 provided jobs for as many as four million of the unemployed. The Social Security Act of 1935 provided unemployment compensation, old-age insurance, and matching funds for categorical assistance to the needy aged, the blind, and dependent children. The New Deal, as James Patterson concluded, "responded with a level of public aid scarcely imaginable in 1929."

The welfare state the New Deal launched was, however, in many ways a ramshackle affair. New Dealers disliked welfare and wanted to replace the dole with jobs and social insurance. But work relief programs never provided jobs for more than 40 percent of the unemployed and welfare did not wither away: Indeed, aid to dependent children would in time be unrecognizable as a program that was aimed at the children of worthy widows. Relief programs, whether under federal direction from 1933 to 1935 or under state control thereafter, were always handicapped by occasionally incompetent, sometimes corrupt, often niggardly state and county administrators. Social insurance was funded by the contributions of the workers themselves and not by general tax revenues. The immediate impact of payroll taxes was deflationary and regressive. There were wide variations in state generosity and eligibility requirements, and Social Security failed to cover many of the most needy in the United States—agricultural laborers and domestic servants, who were disproportionately African American. The emerging welfare state offered nothing for health care and very little for low-income housing—staples of the welfare state in western European countries.


The New Deal may not have achieved a dramatic redistribution of wealth, but there was a radical edge and a class base to politics in the 1930s. American workers flocked to unions in the 1930s: Union membership tripled. Even more important, the great majority of unskilled and semiskilled, often immigrant, workers in the mass production, basic manufacturing industries were organized. Before 1933 organized labor had been hemmed into sick industries and into craft unions of skilled workers. By 1940 the great primary industries of autos, steel, rubber, and electrical goods, which were dominated by hostile open shop national corporations, had been organized in industrial unions under the Congress of Industrial Organizations (CIO). These new unions were overtly and aggressively political in contrast to the traditional nonpartisan stance of the American Federation of Labor (AFL). By 1940 labor funds made the largest contribution to the Democratic Party's campaign chest, union members were a crucial element of a class-based New Deal electoral coalition, and in many northern cities union organizing drives and Democratic election campaigns were virtually inter-changeable. Labor leaders could demand representation at the highest levels of government policymaking.

These labor gains owed much to a newfound militancy on the part of American workers, a militancy that was developed and channeled by union organizers, many of whom were Communists and Socialists. Before 1933 vulnerable immigrant workers, no matter how much they resented their job insecurity or the arbitrary power of foremen on the shop floor, had been no match for the unfettered power of employers determined to smash unions. But the Depression solidified class solidarity and subordinated ethnic divisions. Any loyalty to employers from the benefits of welfare capitalism disappeared when those benefits were eliminated as employers cut costs. Explosions of militancy in 1933 and 1934 were in part stimulated by the rising expectations encouraged by the NRA. But rank-and-file militancy was not enough to secure long-term organization. What workers needed was the protection afforded by the Wagner Act of 1935, which outlawed many of the traditional anti-union practices of the employers, and by the political power exercised by labor within the Democratic Party, which meant sympathetic federal, state, and local governments. Governors and sheriffs no longer inevitably protected strikebreakers or used troops or the courts to defeat labor. The sit-down strikes were allowed to succeed. Even defeats during the 1937 to 1938 recession did not mean the complete destruction of unions, as in the past. Employers bitterly resisted and seldom realistically bargained, even after union recognition. But faced with the determined stance of government and the need to maintain production and profits during the war, they did come to terms with unions. They continued to seek to protect managerial prerogatives after the war, but also came to see benefits in stable and predictable industrial relations with "responsible" unions.


The New Deal also made important investments in the nation's infrastructure. Public works projects built the roads, government buildings, and airports that revenue-starved localities could not. Long before federal aid to education, New Deal programs built school and university facilities, paid teachers' salaries and, through the National Youth Administration (NYA), put thousands through school. The New Deal may not have built many units of public housing, but its credit to homeowners not only saved homes for owners who would otherwise have lost them but paved the way for long-term mortgages that revived the private construction industry in the late 1930s and, in due course, gave the United States the highest percentage of home ownership in the world. Multipurpose dams like those in the Tennessee Valley brought water resource development and cheap power that not only transformed agriculture in the West and the South but also stimulated industrialization. The Reconstruction Finance Corporation made credit available to regional entrepreneurs in the Sunbelt who would spearhead economic development in the late 1930s and 1940s.


The New Deal had major achievements: immediate relief for the unemployed, a welfare state, long-term safeguards for commercial farmers, financial stability, the macroeconomic tools for long-term growth, the creation of a countervailing power to business in the form of organized labor, and investment in the infrastructure. But these achievements have to be set against confusions in policy, the restoration of the power of big business in World War II, the failure to tackle rural poverty with as much vigor as farm recovery, the failure to challenge segregation and disfranchisement of African Americans in the South, and the inadequacies of the welfare revolution.

The limitations of the New Deal were perfectly clear to younger New Dealers. Roosevelt inspired a remarkably talented and largely incorruptible cohort of young academics, economists, lawyers, and social workers into government service, including the first generation of influential women at the federal government level. They were self-critical and willing to learn. It was their own investigations that first uncovered the extent of rural relief needs. Critics of the impact of New Deal policy on southern tenancy were brought into the government. Advocates of social security were conscious of taking first steps: They would extend coverage and bring in health insurance later. Rural planners intended to tackle the problem of urban under-consumption and to shift farmers out of high-cost production. Advocates of the Tennessee Valley Authority (TVA) wanted to see it replicated in all the major river valleys of the country. Radical southerners saw that prosperity in the South needed political and economic democracy in the region, which meant, at the least, the end of black disfranchisement. Their faith in federal solutions made sense, given the narrow-minded, venal, and amateurish politics of so many state governments. But a remarkably lean federal bureaucracy and a recurrent faith in participatory democracy in the form of, for example, farmer committees, crop control elections, National Labor Relations Board elections, and Native-American self-government accompanied their faith in federal solutions.

That the New Dealers failed to overcome the limitations they themselves identified was sometimes the result of missed opportunities, of excessive deference to southern congressional leaders, of a lack of interest in domestic politics during World War II, of too great a willingness to compromise, and of a lack of valor against vested interests like the American Medical Association or white southerners. But the limitations were also the result of the economic emergency of 1933 and the lack of preexisting "state capacity." The need to act quickly meant working with, not against, bankers, businessmen, and farm leaders; it meant cultivating and strengthening southern conservative leaders. The lack of central government expertise and resources precluded top-down central planning or purely federal solutions.

The political realignment that the New Deal created was inevitably a partial realignment. The Democratic Party might be a class-based party of lower-income voters linked with middle-class consumers behind policies that accepted the necessity of increasing mass purchasing power. But the power of southern county-seat elites and their control of congressional leaders were still intact. Some scholars now argue that a Third New Deal from 1937 onwards attempted to achieve the full-scale political realignment, the strengthening of state capacity and executive power, and the policy prescriptions that would have enabled the New Deal reform aspirations to be more completely met through executive reorganization, the court-packing plan of 1937, and the attempt to purge the Democratic Party of conservatives in the primaries of 1938. The president would have had more control over the executive through the budget bureau, a planning board, and control of the regulatory agencies. A reformed Supreme Court would have ensured that rulemaking authority could be delegated to this new streamlined executive. The purge attempted to nationalize party politics and overcome localism and inertia. In the North, issue-oriented politics espoused by young New Dealers had replaced the patronage-oriented politics of the older generation of Democrats. Roosevelt hoped to facilitate the same change in the politics of the South. The policy complement to this administrative thrust was the National Resource Planning Board's report of 1943, Security, Work, and Relief, which called for guaranteed minimums for all American citizens, health care, and low-cost housing. Full employment, the elimination of the weaknesses of Social Security, and a structural assault on rural and urban poverty would ensure that the first steps of the New Deal were not last steps.


But a full-scale political realignment, the creation of a liberal nation-wide Democratic Party, and the triumph of a social democratic agenda was ultimately checked by a powerful anti-statist coalition that had developed right from the start of the New Deal. Conservative businessmen had backed the Association Against the Prohibition Amendment (AAPA) because of prohibition's unacceptable degree of federal control and interference in individual rights. A billion-dollar industry had been destroyed and assets confiscated without compensation. AAPA Democrats, such as John Raskob and Jouett Shouse, supported Al Smith in his attempt to block Roosevelt's nomination in 1932. They hoped to link up with southern states-rights advocates of rigid governmental economy, such as Harry Byrd of Virginia. They viewed the New Deal's exercise of power in the same light as prohibition—a massive infringement of property rights and freedom of contract. They soon sought like-minded businessmen to join them in the Liberty League in outright rejection of the New Deal.

But, on the whole, businessmen were on the defensive in the 1930s: Those who worked with the New Deal largely did so to try and restrain New Deal reforms. They regrouped in the late 1930s to redress the political balance that had produced the Wagner Act of 1935. They tapped into long-term middle-class hostility to strikes and trade unions and managed to drive a wedge between working-class and middle-class Americans. In the 1930s working-class and middle-class Americans were seen as united consumers and producers, protecting their incomes against privileged corporations. In the 1940s businessmen mounted a carefully orchestrated campaign to link inflation to union demands and the labor/middle-class coalition was never restored, except for a brief period in the mid-1960s.

Republicans could capitalize on these developments. The logic of their defeat in 1932 and 1936 should have been to moderate their conservatism, to move the party to the center to compete with the Democrats. But hard-line conservatives dominated the party machinery and the New Deal's constitutional changes, especially court reform, reawakened old guard Republican concerns in defense of the Constitution and the courts. Rural and small-town conservatives continued to dominate Republican representation in Congress, especially in the House. Western progressive Republicans, who had deserted Hoover in 1932 and rejoiced in Roosevelt's bold leadership in 1933, were nevertheless opposed to the direction of the non-emergency New Deal. Powerful anti-statist sentiments shaped their hostility to the expansion of federal power in the late 1930s.

Just as businessmen whose financial institutions had been rescued by the government disliked state intervention, so American farmers were capable of significant dissonance between their dependence on government support and their distaste for statism. For example, in the Dakotas not a single person survived the droughts of the 1930s without the government's intervention, and the federal government spent more money per capita there than in all but six other states. But sociologists noted that few Dakotans were prepared to admit that they had received government assistance. This rural celebration of self-help was as powerful in the West as it was among conservative elites in the South. Just as a wedge was driven between workers and middle-class consumers, so a wedge was driven between farmers and labor. The hostility of farmers to statism led them to be a prominent part of the anti-New Deal, anti-labor coalition.

The power of that anti-statist coalition was cemented by the presence of the southern Democrats. Some, notably Harry Byrd, Carter Glass, and Josiah Bailey had opposed the New Deal as unconstitutional from the start of the first "Hundred Days" of the Roosevelt administration. Most southern congressmen, especially committee chairmen, had welcomed New Deal measures in the economic emergency. But they cooled over the nonemergency direction of the New Deal that seemed to benefit northern cities and labor at their expense, and to threaten traditional patterns of dependency and control in the South. But the original conservatives, Glass and Bailey, saw an even greater danger of federal intrusion in Roosevelt's plans to reform the Supreme Court. They predicted that not merely would newly appointed judges expand the federal power to intervene in interstate commerce but that they would also interfere in the South's traditional pattern of race relations. This fear seemed farfetched in 1937, given the New Deal's caution on racial issues, yet Roosevelt's appointees on the Court proved those fears prescient in the long run

This anti-statist coalition represented in Congress by Republicans and southern Democrats would for a quarter of a century check any significant expansion of the New Deal. It ensured that New Deal first steps would generally be last steps. But it also shaped the liberal legacy of the New Deal. Faced with these challenges and the success of government policy in creating seventeen million new jobs in World War II, New Dealers increasingly came to champion "commercial" rather than "social" Keynesianism. They felt that they had the fiscal tools to create continued economic growth which in itself would solve many of the social, including racial, ills of America. There was no need in this formulation of Keynesianism to redistribute income or reshape capitalist institutions. Unlike ambitious New Deal goals of planning encapsulated in the National Resource Planning Board's 1943 report, liberal post-1945 policy did not require constant involvement in the affairs of public institutions or the drastic expansion of federal regulations. They acquiesced in a limited statist vision.

The New Deal was a dramatic response to economic crisis, the most dramatic democratic response in the industrialized world in the 1930s. Its recovery and relief programs may have been flawed, but they enabled millions of Americans to survive the Depression. The response of Franklin Roosevelt and his government and the radical, participatory nature of politics in the 1930s checked temporarily what was the steady erosion of popular participation and faith in politics throughout the twentieth century. The New Deal revolutionized the agenda of American politics. There were permanent new roles for the federal government. Social Security through contributory taxes by the workers themselves would prove impossible, just as Roosevelt intended, for future congresses to cut. Farm programs would prove almost as difficult to dislodge, given the strategic position in both the legislature and the executive that organized farmers occupied. Members of the U.S. House of Representatives, up for reelection every two years, soon learned that the provision of government services and infrastructure projects to their constituents would bring even more political rewards for incumbents than the patronage politics of the pre-New Deal period, which involved the appointment of postmasters and the delivery of civil war pensions. But a powerful anti-statist coalition checked the more systematic and social democratic expansion of the New Deal envisaged by reformers between 1937 and 1945.



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Brinkley, Alan. The End of Reform: New Deal Liberalism in Recession and War. 1995.

Burns, James McGregor. Roosevelt: The Lion and the Fox. 1956.

Conkin, Paul K. The New Deal. 1968.

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Schlesinger, Arthur M., Jr. The Age of Roosevelt, Vol. 1: The Crisis of the Old Order, 1919–1933; Vol. 2: The Coming of the New Deal; Vol. 3: The Politics of Upheaval. 1956–1960.

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Tony Badger

New Deal

views updated May 29 2018


NEW DEAL. The New Deal was a defining moment in American history comparable in impact to the Civil War. Never before had so much change in legislation and policy emanated from the federal government, which, in the process, became the center of American political authority. The progressive surge was also unique because it came at a time of economic collapse. Previously, in such crises government curtailed reform and reduced spending to balance the budget and so provide the stability thought necessary to help economic progress resume. The activist New Deal reversed that pattern in its effort to lift the country out of hard times and so altered American social and economic policy forever.

Origin and Design

Three factors stand out as the impetus for revolutionary change. First, the nation in the 1930s had sunk into the deepest economic depression in its history, an unprecedented catastrophe that called for measures that would necessarily break down old constraints on the use of federal powers. Second, an arsenal of progressive reform ideas that had been frustrated during the conservative years following World War I was available to resolve depression issues. Third, large numbers of racial and ethnic minorities had gained a strong enough position in American life to be ready to redress their long-standing grievances and disadvantages. By adding disaffected Republican victims of the Great Depression, reformers, and minorities, mostly in northern cities, to the traditional working-class and southern Democratic constituency, the New Deal forged an irresistible voting bloc.

The unwieldy coalition of sometimes rival interests and beliefs found the leadership it needed in Franklin Roosevelt, the most adept and inspiring president since Abraham Lincoln. Roosevelt rooted his approach in a simple set of moral precepts that he summed up in answering a question about his beliefs: "I am a Christian and a democrat, that's all." By Christian Roosevelt meant the social gospel message of shared service to those in need that he had absorbed in his youth, and by democrat, fealty to a similar progressive reform ethic. That outlook spanned both political parties. Raised a privileged only child on a large Hudson River estate at Hyde Park, New York, Franklin followed his father's lead in everything, including membership in the Democratic Party. But he was also the admiring cousin of Theodore Roosevelt, Republican president and leader of the Progressive movement in the early twentieth century. In 1910 Franklin made his successful entry into politics as a state senator devoted to reform of urban political corruption. Two years later, in support of Woodrow Wilson's campaign for the presidency, he began devising the formula that would envelop both Democratic and Republican progressive traditions.

Roosevelt's youth in the countryside and his admiration for Thomas Jefferson tied him to the decentralized ideal proclaimed in Wilson's New Freedom platform of a nation rooted in small towns and family farms. But he also accepted Theodore Roosevelt's New Nationalism argument that large concentrations of economic power were a feature of modern life that the government through expert guidance should harness to serve the general welfare. From these competing visions Franklin Roosevelt sought cooperative means to realize the ideal balance between individual liberty and democratic institutions that had eluded the nation from its beginning. In the popular term of the day, Roosevelt was an advocate of a cooperative commonwealth, and in approaching economic and political life he thought far more in terms of interdependence than of competition.

Roosevelt's political education was rounded out by his wife, Eleanor. It was she, serious, bookish, compassionate, who showed Franklin the terrible conditions she had discovered as a settlement house worker in lower Manhattan and introduced him to the remarkable women volunteers who were leading the fight to improve the lives of the poor and outcast. In drawing Franklin deeper into the lower-class world, Eleanor was able to convince him that he should learn to work with big-city machines, like Tammany Hall, as the only effective fighters for the interests of ethnic and immigrant groups. Throughout Roosevelt's presidency Eleanor would continue to stretch the inclusiveness of the New Deal by forcefully pressing for action that would serve the rights and needs of minorities, women, children, and others who usually had little influence on practical politics.

During his victorious campaign for the presidency in 1932, Roosevelt gathered a group of advisers around him who became known as the Brains Trust because they were mostly drawn from universities. Rexford Tugwell and Adolf Berle led the way in pressing for a planned approach to economic recovery and reform. Their ideas reflected a broad progressive band of thought, some of it drawn from European cooperative ventures and national systems of social insurance. Behind Tugwell's plans for a "concert of interests" lay the tutelage of Simon Patten at the University of Pennsylvania, whose advocacy of an economy of abundance early in the century opened the way for challenging orthodox conceptions of chronic scarcity and a competitive free marketplace. Berle used the devotion to facts and practical experience pressed upon him by institutional economists like John Commons and Charles Van Hise to carry out the monumental study The Modern Corporation and Private Property (1932) with his Harvard colleague Gardiner Means, which showed that control of America's large corporations had fallen into the hands of a small group of managers. Either that concentration should be broken up, concluded those who read the highly acclaimed book, or, as Berle thought, the bigness driving modern economic life should be made to benefit the public through careful control by the democratic government that alone was responsible for the general welfare. At the center of interest in planning was the memory of how the nation's productive capacity had been mobilized in World War I. The popular economist Stuart Chase captured the mood by calling for a Peace Industries Board to defeat the depression as the War Industries Board had defeated the Germans.

In his inaugural address Roosevelt promised "a New Deal for the American people" and rightly concluded that "this nation asks for action, and action now." With 13 million people, or one-quarter of the workforce, unemployed, and the local and private means relied upon to help the victims nearing collapse, the general public was ready for the torrent of legislation that flowed immediately from the White House and its congressional allies.

The New Deal in Action

Guiding the torrent during what came to be known as the Hundred Days was a remarkable group of bright, mostly young, people who wanted to be part of the promised action. It was they, as well as Roosevelt, who gave the New Deal its air of optimistic excitement. As one observer noted, "they have transformed [Washington] from a placid leisurely Southern town … into a breezy, sophisticated and metropolitan center." Within the new buzz of activity, the New Deal had first to revive and change the banking system that had almost completely stopped functioning. On 6 March a "bank holiday" was declared, and three days later Congress passed the Emergency Banking Act, empowering the secretary of the Treasury to decide which banks were stable enough to reopen and authorizing federal funds to restart banking operations. To make the revived system safe, the Federal Deposit Insurance Corporation (FDIC) was created to insure bank deposits. The stage was then set to help the millions of unemployed. On 31 March Congress enacted Roosevelt's favorite program, the Civilian Conservation Corps (CCC), to enroll idle youth in conserving natural resources, and followed up on May 12 with the Federal Emergency Relief Administration (FERA), which distributed cash payments to those unable to work.

Having addressed the immediate emergency, the New Deal could proceed with its comprehensive designs for planned reform. The Agricultural Administration Act (AAA), passed on 12 May, permanently altered American agriculture through its provision to pay farmers to keep land out of production and so raise prices by making commodities scarcer. Roosevelt's intent to stress conservation as a national priority received its greatest boost on 18 May from the passage of the Tennessee Valley Authority Act (TVA), which authorized dams on the Tennessee River that would provide the hydroelectric power needed to transform vast portions of Tennessee and adjoining states from abject poverty into the prosperity of model towns and reclaimed farmland. Most central to the integrative design, though, because industry and commerce had long been the focal point for planners, including those in the Brains Trust, was the National Industrial Recovery Act (NIRA), enacted on 16 June, which sought to create a system of fair practice for the nation's business firms. With parades and other promotional fanfare to drum up support, the National Recovery Administration (NRA) spread the New Deal activist spirit nationwide and persuaded most of the nation's businesses to devise codes to govern working conditions and prices.

Resistance and Realignment

Despite enthusiasm for New Deal initiatives, registered in sweeping Democratic victories in Congress in 1934, the New Deal suffered setbacks. Many businesses slanted their NRA codes to provide higher profits rather than the better wages for labor and lower prices for consumers that the cooperative design called for. In agriculture large farms garnered most of the benefits of payments for reducing crops. And within the Supreme Court a majority of justices regarded some New Deal measures as unconstitutional invasions of state authority and free enterprise. Taking the opposite view, radicals of left and right criticized the New Deal for not changing the capitalistic system more drastically.

New Dealers were willing to concede that the rise in gross national product from $56 billion in 1933 to $72 billion in 1935 was a slow pace, and they were particularly

disturbed that over 10 million people were still without jobs. To spur the economy toward full employment and a decent standard of living for the "common man," the administration in 1935 made three successful proposals to Congress. First, a $4.8 billion fund to create the Works Progress Administration (WPA) was rushed through Congress. Then to care for those unable to work, the Social Security Administration was formed on the model of an insurance company, using payroll deductions from workers for a trust fund that would provide unemployment insurance, aid for dependent mothers, children, and the blind, and a monthly income to those over sixty-five who had contributed to the system. Finally, after reluctantly giving up hope for agreement between labor and management within the NRA, Roosevelt supported the passage on 5 July 1935 of the National Labor Relations Act (NLRA), or Wagner Act after its sponsor, Senator Robert F. Wagner of New York, guaranteeing the right of labor to bargain collectively and have disputes with management decided by the National Labor Relations Board (NLRB).

The Wagner Act, labor's "Magna Carta," indicated how pressures were forcing the administration to change its approach to what some historians have described as the Second New Deal. Even as the Wagner Act conferred on labor means to contend against management rather than futilely attempting to cooperate with it, the New Deal faced a need to cope with forces determined to thwart its planning designs. In 1936 the Supreme Court invalidated the AAA and the NRA as unconstitutional delegations of power to the federal government. Business leaders echoed conservative judges with attacks on the New Deal as a threat to individual liberty, while critics on the radical left and right contradicted those charges by rejecting the New Deal as too closely tied to the prevailing capitalist system to enact necessary reforms. In response Roosevelt set aside his preference for cooperative inclusiveness. During his reelection campaign in 1936, he ignored the left as a minor threat and excoriated the "economic royalists" on the right, bent on blocking plans to share America's wealth and opportunity with those who had been left out. The shift of the New Deal focus from a fully cooperative system of all elements in society to advancement of the fortunes of members of the New Deal coalition against those in opposition caused some historians to conclude that the New Deal had become a "broker state," trading favors with special interests rather than acting in the full national interest. However, Roosevelt never lost his intent to find some way to achieve his cooperative commonwealth ideal.

Enthused by his overwhelming reelection, Roosevelt moved quickly to drag the Supreme Court out of the "horse and buggy" era by sending Congress a plan to enlarge the Court with a new justice for every old justice over seventy. The rebuff that followed indicated that Roosevelt had failed to realize the public's reverence for the Court. Congress shelved the "court packing" plan, and only the chance to replace retiring justices with more liberal judges saved the New Deal from further court disasters. The administration then compounded its problems. An ill-advised attempt by Roosevelt, urged on him by his fiscally conservative secretary of the Treasury Henry Morgenthau, to cut spending and balance the budget threw the country into a recession in 1937 that almost wiped out the economic gains made since 1933.

Roosevelt sought to reverse the downslide by establishing the Temporary National Economic Committee (TNEC) in 1938 to investigate industry practices that might be retarding recovery. In support of that move he appointed Thurman Arnold, an influential critic of what he called the symbols of government and folklore of capitalism, to carry out the most extensive campaign to break up monopolies ever undertaken. Roosevelt also attempted to strengthen his political coalition by supporting candidates running against Democratic congressmen who had opposed New Deal initiatives. But the New Deal had lost much of its focus and leverage. The TNEC could not agree on what ailed the economy, Arnold's campaign alienated business, and the attempt to purge anti–New Deal congressmen bagged only Representative John Taber of New York. Congressional conservatism also showed its rising force in the defeat of an antilynching bill and the reduction of progressive taxes on high income and capital gains, which the New Deal Revenue Act of 1938 proposed to fund recovery and distribute income more equitably.

Congress did agree to several important measures. In 1937 the Resettlement Administration (established in 1935) was transformed into the Farm Security Administration (FSA) with broadened powers to move poor farmers to better land; a new AAA was drafted that passed muster with a liberalized Supreme Court; a weak National Housing Act was passed in 1937 to provide low-income housing; and the Fair Labor Standards Act of 1938 established a minimum wage and a forty-hour week for many workers and at last prohibited child labor.

The Final Phase

Especially significant for the way it signaled an important shift in New Deal economic thinking was the $3 billion Emergency Relief Appropriation Act of 1938, designed to combat the recession with increased relief work for the unemployed. Preceding the passage of the act was a contentious discussion of how to regain momentum toward full recovery. Against Morgenthau's orthodox argument that a balanced budget and increased credit for business investment would place the economy on a firm footing, a growing number of advisers pressed for spending on public projects, even if it meant deficits, and using antitrust action to break up big businesses that refused to contribute to the general recovery. There was some awareness within their midst of the publication in 1936 of the most important economic work of the century, John Maynard Keynes's A General Theory of Employment, Interest, and Money, but the strongest impetus came from Keynes's American counterparts, who decried the resistance of business leaders to planning. In their manifesto, An Economic Program for American Democracy (1938), a team of Harvard and Tufts economists proclaimed that "Here in America we can save our free democratic institutions only by using them to expand our national income." Government action was essential, for "private enterprise, left to its own devices, is no longer capable of achieving anything." Especially to be checked were businessmen who seemed "obsessed with a devil theory of government" that might tempt them to try replacing democracy with a plutocratic dictatorship. Roosevelt had long looked at businessmen that way but was only finally persuaded to the Keynesian case when the chairman of the New York Federal Reserve, Beardsley Ruml, reminded him that governmental stimulation of business was an old story, stretching back to nineteenth-century grants to railroads, the distribution of public lands, and the setting of tariffs.

In another important departure from past practice in the direction of greater executive authority, Congress acceded to Roosevelt's urging in 1939 to pass the Administration Reorganization Act, which, in the name of streamlined efficiency, placed many government agencies under the president's control. By also transferring the Bureau of the Budget to the executive office and creating a National Resources Planning Board, Roosevelt further expanded the scope of the executive branch to a degree that has prompted some historians to call that development the Third New Deal, bent on using expanded executive power to revive the original New Deal ardor for cooperative planning.

Significant reform initiatives did not follow, however, partly because of conservative resistance, partly because the approach of World War II diverted attention to foreign dangers. Industrial recovery continued to lag and unemployment remained high. Only the entry of America into the war ended the impasse. Mobilization of resources and manpower eliminated the most central and persistent curse of the Great Depression by absorbing the jobless so thoroughly that the WPA could be phased out in 1943. Wartime pressures did not, however, lay the groundwork for completion of New Deal plans to end hardship and injustice by assuring full employment at good wages, extend the Social Security system to include those originally denied coverage, enact a national health system, and revise the law to grant civil rights and fair opportunity to women and minorities.

Despite these shortfalls, the New Deal changed America from a nation whose political focus was in regional localities and offered little in the way of welfare or national planning. In the wake of New Deal activism, Americans came to assume that the government would take significant responsibility for their material and spiritual needs. That expectation has remained intact even though the New Deal coalition has weakened as the prosperity it promoted moved many of its members from inner-city New Deal strongholds to the conservative suburbs, where reformist zeal and ethnic and labor union solidarity ebbed. Civil rights reform had a similarly ironic outcome. As the desegregation movement advanced in the 1960s, bearing the New Deal social justice spirit with it, many southerners rejected their traditional loyalty to the Democratic Party and joined in the Republican Party's continuing efforts to check New Deal reform in the name of states' rights and free enterprise.

An overall assessment of the New Deal's effectiveness indicates that most of its problems stemmed from not carrying its policies far enough to achieve a planned economy of abundance for all Americans, partly because of traditional individualism and to a lesser extent because the New Dealers themselves wished to revitalize the system, not displace it. Thus New Deal initiatives tended to stall. The NRA did not get enough money in the hands of consumers for them to support a fully productive economy. Commitment to deficit spending toward the end of the 1930s was not sufficient to end unemployment. New taxes on the wealthy did not go far enough to redistribute income to the desperate have-nots. Relief spending never reached more than 40 percent of those in need. And Social Security excluded several categories of needy people. In some cases, New Deal policies had unwanted results. The agricultural price support system did not eliminate the surplus and funneled payments mainly to large-scale farms. Nor were hopes for urban revitalization realized. Housing policies did not achieve the New Deal goal of eliminating city slums but instead encouraged flight to the suburbs, away from the meager low-cost housing that underfunded New Deal programs were able to build.

Yet the New Deal had lasting success in establishing the principle Lincoln enunciated that the federal government should do for people what they cannot do for themselves. Thus the NRA enacted a minimum wage standard and the right of workers to join unions of their own choosing. Regulation stabilized banking and finance. Civil rights became a significant part of the Democratic and then national agenda. And to extend recovery to mind and spirit, the WPA devised an arts program that inspired the later creation of the National Endowments for the Arts and Humanities. From the socially conscious art, regional guides, and documentary film and photography sponsored by the program has come a significant share of what Americans have learned about their history and culture.

Roosevelt stated at the outset that his New Deal would be a war on depression miseries comparable to previous military wars. But in the end it was the actuality of World War II, which the nation avoided as long as it could, that ended the depression by generating the economic stimulus the New Deal had not gone far enough to provide. In the years since the depression ended, admiration for the New Deal has remained high; but debate has also persisted as to whether the New Deal devotion to planned cooperation is a necessary part of maintaining a stable and prosperous American democracy.


Allswang, John M. The New Deal and American Politics: A Study in Political Change. New York: Wiley, 1978. A convincing explanation of the formation of the New Deal coalition, buttressed by detailed case studies.

Badger, Anthony J. The New Deal. The Depression Years, 1933–40. New York: Hill and Wang, 1989. Provides a thorough account of the history and historiography of the New Deal.

Bernstein, Irving. A Caring Society: The New Deal, the Worker, and the Great Depression. Boston: Houghton Mifflin, 1985.

Brinkley, Alan. The End of Reform: New Deal Liberalism in Recession and War. New York: Knopf, 1995.

Brock, William R. Welfare, Democracy, and the New Deal. Cambridge, U.K.: Cambridge University Press, 1988.

Fite, Gilbert C. American Farmers: The New Majority. Bloomington: Indiana University Press, 1981. The most incisive overview of New Deal agricultural policy and its effects.

Harris, Jonathan. Federal Art and National Culture: The Politics of Identity in New Deal America. Cambridge, U.K.: Cambridge University Press, 1995. The most tightly drawn account of the links between the social populism of the New Deal and the Federal Arts Projects.

Hawley, Ellis W. The New Deal and the Problem of Monopoly. Princeton, N.J.: Princeton University Press, 1966. The cornerstone for understanding the New Deal's relations with business.

Leuchtenburg, William E. Franklin D. Roosevelt and the New Deal, 1932–1940. New York: Harper and Row, 1963. Still the best one-volume account. Detailed but highly readable.

Patterson, James T. The Welfare State in America, 1930–1980. Durham, U.K.: British Association for American Studies, 1981.The best, brief discussion of the creation and evolution of Social Security.

Reagan, Patrick D. Designing a New America: The Origins of New Deal Planning, 1890–1943. Amherst: University of Massachusetts Press, 1999. Engaging portraits of the architects of national planning in modern America.

Rodgers, Daniel T. "New Deal." In Atlantic Crossings: Social Politics in a Progressive Age. Cambridge, Mass.: Harvard University Press, 1998. An erudite and sweeping discussion of the European influences on American progressive reform thought.

Rosenof, Theodore. Economics in the Long Run: New Deal Theorists and Their Legacies, 1933–1993. Chapel Hill: University of North Carolina Press, 1997. A uniquely valuable account of how New Deal economic policy drew upon the changing economic thought of the time.

Schlesinger, Arthur S., Jr. The Age of Roosevelt. 3 vols. Boston: Houghton Mifflin, 1956–1960. An epic account of the New Deal era by a master of panoramic synthesis.

Sitkoff, Harvard. A New Deal for Blacks: The Emergence of Civil Rights as a National Issue. New York: Oxford University Press, 1978.

Tugwell, R. G. The Brains Trust. New York: Viking, 1968. A shrewd appraisal that has special value because it is by an insider.

Ware, Susan. Beyond Suffrage: Women in the New Deal. Cambridge, Mass.: Harvard University Press, 1981.


See alsoGreat Depression .

New Deal

views updated May 29 2018


During the New Deal years, from 1933 to the end of world war ii, the nation experienced an era of protracted economic crisis and social dislocation, a dramatic change in national political alignments, and then mobilization for total war. A society contending with changes and emergencies of this order, especially with an enormously popular reformist President in office, cannot easily avoid profound challenges to its constitutional order; and so it was for America in this era. Every major aspect of political controversy in this period found expression of varying kinds in constitutional discourse and conflict, and these constitutional battles both reflected and actively intensified the bitter ideological polarization that bedeviled the nation's politics.

When the New Deal era came to a close just after the war, the constitutional as well as political landscape of the country had been transformed. With respect both to governmental institutions and policies and to formal constitutional doctrine, things as they had stood in 1933 had been largely swept away. The transformations of governance and politics in the New Deal era brought far-reaching reform of constitutional law, accomplished without benefit of formal constitutional amendment on any question except the repeal of prohibition. The new constitutional order that emerged, moreover, would stand firmly for half a century as the basic framework of the modern welfare, regulatory, and national-security state. In most particulars, the new order proved durable enough to survive determined efforts by neoconservatives in the 1980s to overturn some of the most important New Deal doctrines and reforms.

president franklin d. roosevelt at the outset of his presidency characteristically struck a pose that seemed to dismiss offhandedly the need for worries about constitutional difficulties. "Our Constitution is so simple and practical," he declared in his first inaugural address in 1933, "that it is possible always to meet extraordinary needs by changes in emphasis and arrangement without loss of essential form." But what changes in "emphasis" and "arrangement" he had in mind! Even the legislative programs and executive actions of the "First Hundred Days" posed a broad challenge to prevailing doctrines in constitutional law, especially regarding the protection of vested economic rights against government's hand and the proper limits of the national government's authority in the federal system. Nor did the challenge recede or soften significantly in the years immediately following, as Roosevelt and his party generated a prolix legislative and administrative record that would repeatedly inspire bitter constitutional controversies.

Virtually every element of the New Deal administration's policies, especially their idealistic nuances and implications, bore the imprint of Roosevelt's own thinking. The direction and extraordinary scope of the New Deal's challenge to the traditional role and perogatives of the states, for example, were signaled early by Rooselvelt when he was governor of New York: "In our business life and in our social contracts," he declared in 1929, "we are little controlled by the methods and practices employed by our forefathers." Why, then, he asked, be "content … to accept and continue to use the local machinery of government which was first devised generations or even centuries ago?" This kind of iconoclasm and willingness to experiment with governmental structures structures was soon to be directed against the states. Impatience with antiquated institutional legacies was linked with Roosevelt's robust "Old Progressive" faith in bringing enterprise to bear on social and economic problems. Hence, the President readily endorsed the regional approach (exemplified by the tennesee valley authority act of 1933) to problems that trascended state lines. Similarly, he was sypathetic to a national planning approach (as was espoused by his National Resource Planning Board and the agricultural price-support and production-controll efforts); and he also fostered the system of direct federal grant-in-aid support to city governments for public housing, airports, and other projects in ways that dramaically enhanced municipal autonomy within the states.

Perhaps of greatest long-run importance to governmental practice was Roosevelt's own proclivity to devolve on appointive agencies and their expert staffs the responsibility for defining the "public interest" in the course of setting regulatory policies—a preference shared by the New Deal majorities in Congress as they crafted the design of new regulatory agencies. Roosevelt regularly pressed on Congress and the public the urgency of the social and economic programs he was proposing—both the programs of the "Hundred Days," designed to break the terrible spiral of despair, and those of the ensuing years, designed to effect enduring reforms, including a systematic (and, to many, a radical) redistribution of income and wealth. The argument for urgent action, for room to experiment, and for administration with maximal flexibility and discretion was cast from the start in terms of the necessities associated with a "national emergency." As New Deal programs expanded, however, this view was translated into the more general argument for wide-ranging agency discretion and a reliance on experts for policy making. In the context of the war emergency after 1938, this tendency became even more pervasive.

The question remained: what constitutional principles, if any, restrained such claims by the chief executive? The New Deal answer in light of the Depression crisis tended increasingly to be couched as a majoritarian rationale: "Does anybody believe," asked Senator Lewis Schwellenbach of Washington, one of Roosevelt's closest allies in Congress, "that the founding fathers intended to set up a form of government which would prevent that government from solving the current problems of the people?" Roosevelt phrased the issue similarly in his first radio speech of his second term, the address in which he fired the first shot in the court-packing battle. It was the entire "modern movement for social and economic progress through legislation" that was at stake, the President declared, referring dramatically to "one-third of a nation ill-nourished, ill-clad, ill-housed." He rejected as outrageous the notion that the judiciary might deny Congress the authority "to protect us against catastrophe by meeting squarely our modern social and economic conditions."

In private correspondence with Schwellenbach, the President referred to their common view of the constitutional issues as the cause of "liberal democracy." New Deal victories by "overwhelming" popular majorities in 1932 and 1936, the President repeatedly contended in his public messages on the constitutional question, had provided an "overwhelming mandate" for immediate action to put the programs of "liberal democracy" in place.

Roosevelt and the constitutional imperatives embodied in his programs for this "liberal democracy" successfully prevailed beginning in 1937, as a new majority in support of the New Deal emerged virtually overnight on the hughes court and later became a dependable reliance for Roosevelt as he made new appointments. Similarly, the President would prevail in virtually all particulars when he assumed vastly expanded executive emergency authority in the military and foreign-policy realms during the prewar neutrality period and the years of combat in a global arena that followed the Pearl Harbor disaster.

The President thus placed his personal stamp on the most dramatic political initiatives of the era; however, there were also more enduring legacies of the New Deal in the nation's constitutional development. An inventory of this heritage from the 1930s and World War II must embrace not only the dramatic changes that were ardently debated in their own day, but also the various effects of conflict and innovation only dimly discerned by either friends or critics of Roosevelt's social and economic programs and the wartime initiatives.

Prominent in the inventory of change was the movement of national authority and active intervention into many vital areas of social and economic life that before 1933 had been left by Congress largely to the states and had been only marginally affected by national law. A vast array of legislation from 1933 to 1937 bespoke this dramatic occupation by Congress of policy areas that traditionally had been extremely decentralized in practice; some of them, moreover, had been specifically designated by the Supreme Court's conservative majority as being within the exclusive purview of the states as a matter of tenth amendment guarantees, or as a matter of judicially defined categories that differentiated "national" from "local" activities under terms of the commerce clause or in light of the doctrine of a limited number of enumerated powers.

Thus, by 1941 the working constitutional system had become a system in which formal constitutional issues of federalism had been recast completely in light of new realities generated by New Deal innovations. A definitive redistribution of both policy responsibilities and power had occurred. There was comprehensive restructuring of agriculture as a managed sector, a formal preemption of labor law through the Wagner Act and its guarantees of the right to organize, adoption of minimal federal standards for wages and hours, and the establishment of a vast regional energy and economic development program through the Tennessee Valley Authority. Federal regulatory authority was extended over the securities markets, and there was a dramatic expansion of national regulation in the transportation, antitrust, and banking fields. The New Deal also instituted the first massive entitlement programs with the passage of the social security act in 1935; this measure became the foundation stone of the modern national welfare state.

One concomitant of this powerful move toward centralization of governmental responsibilities was a transformation in the distribution of funds and expenditures. In 1929, with expenditures of $2.6 billion, the budget of the national government was only one-third the amount of state and local expenditures; but a decade later, federal expenditures were $9 billion, exceeding the combined amounts spent by state and local government. Linked with this aspect of new "giant government"—emergence of the national government as a modern Leviathan—was the New Deal's explicit adoption in 1938 of Keynesian principles for fiscal policy. Although growth of the national government establishment was not in itself a development that implicated constitutional questions directly, as a reality of governance and power, "big government" transformed the entire context of the debate over constitutional principles.

More explicitly cast in constitutional terms was the matter of federal grants in aid to state and local government, which rose from $193 million in 1933 to a floodtide level of $2.9 billion in 1939. Although welfare and relief comprised some eighty percent of these sums in each year, the vast aggregate amount in 1939 embraced a range of new programs for natural-resources management, public housing, and health services as well as the more traditional highway aid and agricultural research funds. In this arena of initiative, the Supreme Court posed no serious obstacles; in the 1923 case of frothingham v. mellon, it already had upheld the practice of attaching conditions to federal grants. Decisions in the late 1930s reaffirmed this view. Taken as a whole, the grant-in-aid programs became an important element of what has been termed the modern system of cooperative federalism, displacing the older principles and practices of dual federalism.

In its devastating response to the early New Deal measures for industrial reorganization and agricultural market controls, the Supreme Court in schechter poultry corporation v. united states (1935) did strike down key legislation in part because of what it found to be a promiscuous violation of the principles of separation of powers. After the new liberal majority had established the credo of Roosevelt's "liberal democracy" in a dominant position in the Court's decisions after 1936, however, the delegation of rule-making authority to the new administrative and regulatory agencies won virtually routine approval with the Justices. Indeed, judicial deference to agency discretion became one of the most durable—and also most problematic—features of the longer-term New Deal legacy in American law.

For the most part, it was regulation of economic interests that was at stake when challenges were raised against administrative prerogatives; and as the Court abandoned its commitment to defend economic or entrepreneurial liberty on the same basis as it would the political elements of liberty (see preferred freedoms), such challenges lost their doctrinal authoritativeness. Not until the 1960s did political leaders and legal scholars entirely sympathetic with the goals of New Deal-style benefit programs and regulatory regimes begin to worry much about excessive paternalism and discretion. They became concerned particularly with the degree to which the New Deal legacy had produced a system of social benefits, franchises, subsidies, and services that were dispensed by elaborate bureaucracies. In this system, some groups and individuals were favored, while others might be held virtually in thrall because of Byzantine or Kafkaesque procedural standards or simply because of high-handedness and capriciousness. Only then, thirty years after the system had begun to emerge from New Deal legislation and twenty years after the Administrative Procedure Act became law, were the Constitution's procedural guarantees reappraised with a view toward real equality of treatment and fairness in the agencies' administration of social programs and regulations.

When war broke out in Asia and Europe, the Roosevelt administration's policies carried the "emergency" doctrine and delegation of powers to an entirely new level. In September 1939, the President declared a "limited emergency" by executive order, thereby assuming the authority to expand the military forces and to take other measures under war statutes. After the Pearl Harbor attack, the two war powers acts (December 1941 and March 1942) gave the President unprecedented delegated powers under which he erected a massive bureaucracy with coercive powers to direct mobilization. The March 1941 Lend-Lease Act also delegated the spending power, providing the legal basis for over $50 billion in grants of supplies and credits to the Allies.

In one of the most extraordinary documents in the entire history of American constitutional law, Roosevelt in September 1942 threatened that if Congress failed to meet his wishes with respect to repealing a section of the price-control laws in light of the war emergency, he would assume the power to nullify the law on his own authority. Congressional deference averted a constitutional confrontation on the issue.

The war period was of special importance with respect to civil liberties. In one of the most grievous violations of any groups' rights in the modern era, the Roosevelt administration authorized by executive order 9066 (later validated by Congress) the removal in 1942 of the entire Japanese-ancestry population from the West Coast and their prolonged internment in concentration camps until nearly the end of the war. Meanwhile, the army took advantage of a declaration of martial law in Hawaii by the territorial governor in the hours after Pearl Harbor, maintaining a comprehensive military regime with suspension of civilian justice in criminal matters until late 1944, long after any credible threat of invasion of the Hawaiian Islands had passed. In the notorious japanese american cases (1943–1944), the Supreme Court upheld the removal and internment decisions; but when the Hawaiian policy was finally challenged (duncan v. kahanamoku), the Court ruled that the army had acted illegally in suspending civilian government and justice beyond the time justified by military necessity.

Although the wartime record on civil liberties was thus marred by excesses of the military authorities—and although the army in each instance had full support of the White House—the more enduring heritage of the New Deal in race relations and constitutional equal protection has a different face. Although failing to support federal antilynching bills or any positive civil rights legislation that would have attacked segregation, Roosevelt and the agency administrators generally pressed hard to see that blacks received an equitable share of the benefits of federal welfare and relief programs. The President supported the Justice Department's creation in 1939 of what became the Civil Rights Division; and within a few years, this unit's lawyers had undertaken a variety of prosecutions—the most significant being the case of united states v. classic (1941)—challenging racial discrimination in the electoral process in the southern states. The Justice Department's new concern for equal rights and civil liberties also served to enhance the significance of Supreme Court decisions (including especially hague v. cio in 1939) (that were then strengthening first amendment guarantees and laying the essential doctrinal groundwork for the much farther-reaching civil liberties and civil rights jurisprudence of the warren court era. In sum, racial equality and civil liberties had been brought within the ambit of the New Deal agenda—the essential counterweight to unrestrained majoritarianism that many feared was embodied in Roosevelt's attack on the Court in 1936 and even, albeit in a more reflective mode, in the constitutional theories calling for "judicial self-restraint" championed in the wake of the Court fight (see judicial review and democracy).

The American constitutional order in 1945, at President Roosevelt's death, had thus witnessed far-reaching changes in the allocation of state versus federal powers, in the extent and style of intervention by government in social and economic affairs, and in the role of the national authorities in regard to individual rights and liberties. In the realm of doctrine, the Supreme Court had reinterpreted the commerce clause so completely that the Justices would soon declare it to be simply "as broad as the economic needs of the nation" (American Power & Light v. SEC). After the decision of wickard v. filburn (1942), the economic regulatory powers of the Congress seemed to be plenary, with no economic activity protected from congressional determination of what was of national significance. As early as 1934, in nebbia v. new york, the Court had discarded traditional economic due process and affected with a public interest doctrine—two of the main props of traditional vested rights analysis that had been used to restrain severely the state's regulatory powers. In united states v. darby lumber company (1941) the Court cast into the dustbin of history, it seemed, the old view of the Tenth Amendment, declaring now that the amendment "states but a truism" and was merely "declaratory." Meanwhile, the New Deal administration posed a new challenge to state sovereignty over valuable natural resources by asserting a federal property claim based on "paramount rights" over the offshore oil and any other resources of the continental shelf, long considered to be under state ownership out to a distance of three miles. With the emergence of the new civil rights and civil liberties jurisprudence exemplified by Classic, the university-segregation decision of missouri ex rel. gaines v. canada (1938), and other decisions, the potentialities of the emerging changes in law became clear. Whether one interprets these changes, as friends of the Roosevelt Administration sought to do, as a "return to the Constitution" (a reversal of conservative doctrines that had become dominant in violation of correct principles), or instead, as a positive advancement of law to meet the urgent requirements of a modern industrial society in crisis, the New Deal era did indeed bequeath to postwar America a constitutional order dramatically transformed.

Harry N. Scheiber


Bixby, David M. 1981 The Roosevelt Court, Democratic Ideology, and Minority Rights: Another Look at United States v. Classic. Yale Law Journal 90:741–814.

Hurst, James Willard 1977 Law and the Social Order in the United States. Ithaca, N.Y.: Cornell University Press.

Murphy, Paul L. 1972 The Constitution in Crisis Times, 1918–1969. New York: Harper & Row.

Parrish, Michael E. The Great Depression, the New Deal, and the American Legal Order. Washington Law Review 59:723–750.

Scheiber, Harry N. 1989 Economic Liberty and the Constitution. In Essays in the History of Liberty. San Marino, Calif.: The Huntington Library.

——and Scheiber, Jane L. 1990 Constitutional Liberty in World War II: Army Rule and Martial Law in Hawaii. Western Legal History 3:341–378.

New Deal

views updated May 29 2018


The New Deal (19331939) was a series of programs intended to alleviate the suffering caused by the Great Depression (19291939), an abrupt economic collapse that began in 1929 and resulted in massive unemployment throughout the 1930s. The New Deal began with the inauguration of Franklin Roosevelt (19331945) as President of the United States in 1933.

To restore confidence in the American financial system Roosevelt declared a "bank holiday," closing all banks for four days until Congress met to pass bank reform legislation. The immediate banking crisis ended soon after when Congress passed the Emergency

franklin d. roosevelt's "new deal" programs attempted to alleviate the financial hardships brought on by the depression in the 1930s.
year institutedprogramdescription
1933agricultural adjustment administration (aaa)farmers were paid to stop growing specific crops. consequently, the demand for and the value of the crops rose.
1933civilian conservation corps (ccc)provided jobs for urban youth in work such as planting trees, maintaining fire lines, and improving hiking trails.
1933federal deposit insurance corporation (fdic)insured individual savings held in banks and other institutions across the comuntry. monitored and defined standards for the banking industry.
1933federal emergency relief administration (fera)provided foodl and shelter to those most affected by the great depression. distributed cash grants to the states for disbursements to individuals and families on the "dole."
1933national recovery administration (nra)set standards for wages, prices and production to encourage business recovery and investment.
1933public works administration (pwa)to stimulate demand in the construction industry, the pwa initiated large building projects such as dams, aircraft carriers, schools, and government buildings.
1933tennessee valley authority (tva)constructed a series of dams on the tennessee river to provide electricity and flood control for seven southern states. the program also established health centers and schools.
1935rural electrification administration (rea)encouraged the growth of rural electrification cooperatives, spreading electricity throughout the country's rural areas.
1935social security act (ssa)a government-run pension program, designed to provide financial assistance to the elderly, the disabled, and the unemployed.
1935works progress administration (wpa)created urban work projects, such as repairing streetcar tracks and cleaning streets.
1937farm security administration (fsa)loaned money to struggling sharecroppers. helped relocate farmers to more productive land and provided shelter for migrant workers.
1938fair labor standards act (flsa)established a minimum wage and set a maximum of work hours for unskilled laborers employed by business associated with interstate commerce.

Banking Act, which required the Treasury Department to inspect all banks before they could reopen. Three-fourths of the Federal Reserve system banks reopened within three days.

Even though these measures stemmed the immediate crisis, more comprehensive measures were needed. Congress passed the first program, the Agricultural Adjustment Act, in May 1933. The most important aspect of the act was its establishment of the Agricultural Adjustment Administration, which provided subsidies to farmers who were told to reduce crop production by leaving part of their land idle. In 1936 the Supreme Court ruled that it was unconstitutional for the government to require farmers to limit production and the act became inoperable. However, within weeks Congress passed the Soil Conservation and Domestic Allotment Act, which allowed the government to pay farmers to reduce production. In addition, the Roosevelt administration helped poor farmers by setting up the Resettlement Administration in 1935, succeeded by the Farm Security Administration in 1937, which helped farmers on marginal lands relocate to better land by providing loans.

Saving the industrial economy was the most significant challenge facing the Roosevelt administration. On the one hand, businesspeople wanted to stop rapid deflation by relaxing antitrust laws to allow the cooperation of trade associations and stabilize prices. On the other hand, New Dealers wanted business to recognize the rights of workers to organize and bargain collectively in unions, which would allow workers' wages to rise with prices. The resulting compromise was the National Industrial Recovery Act (NIRA), passed in June 1933, which established a new federal agency, the National Recovery Administration (NRA). The NRA called for every business to abide by a temporary "blanket code," with a minimum wage of between 30 and 40 cents an hour, a maximum work-week of 35 to 40 hours a week, and the abolition of child labor. Those employers who followed the code displayed the NRA symbol of the Blue Eagle in their windows.

The NRA also set up codes for most of the country's major industries to establish price and wage floors, below which the specific industry could not go. However, the hastily devised codes would fail. Most importantly, federal officials, inexperienced in running such a large program, did not have the capacity to administer it. In addition, Section 7(a) of the NIRA gave workers the right to form unions, but had no mechanism for enforcement. Thus, the program failed to raise workers' wages and increase consumer purchasing power. In 1935 the Supreme Court nullified NRA legislation when it ruled in the Schechter case that in giving the president the power to shape the NRA codes, the Congress had acted unconstitutionally. Consequently, the failing program was abolished.

One of the most successful New Deal programs was legislation enacted in 1933 to create the Tennessee Valley Authority (TVA), a project for building a dam at Muscle Shoals and for the comprehensive redevelopment of the region. By building dams and waterways in the region, the TVA nearly eliminated flooding in the area and provided electricity to thousands of people. But the Roosevelt administration also initiated major financial reforms. On April 18, 1933, Roosevelt made an inflationary move by signing an executive order, which took U.S. currency off the gold standard. Enabling the government to manipulate the value of the dollar, government management of currency set a significant precedent in federal policy and changed the relationship between the government and business. The New Deal also gave the government authority in areas of the economy that previously were weakly regulated. The Glass-Steagall Act of June 1933 allowed the government to regulate irresponsible speculation by banks. The act also established the Federal Deposit Insurance Corporation (FDIC), which guaranteed all bank deposits up to $2,500. In 1935 Congress passed a banking act which transferred the authority of the regional Federal Reserve to the Federal Reserve Board in Washington, D.C. Congress sought to protect stock market investors by passing the Truth in Securities Act of 1933, which required corporations to provide accurate and complete information to the public. In addition, in June 1934, the Securities and Exchange Commission (SEC) was established as a stock market watchdog.

The expansion of federal relief provided to millions of unemployed Americans was an enormous undertaking. One of President Roosevelt's first programs was the Federal Emergency Relief Administration (FERA), which gave grants to states in which relief agencies had run out of money. However, the FERA relief would not be enough. The second program, the Civil Works Administration (CWA), provided work relief to more than four million people between November and April during the president's first year in office. But both FERA and CWA were intended as only relief measures, not as long-term programs meant to save the country's economy. By 1934, Roosevelt began to dismantle the CWA. His administration also established the Civilian Conservation Corps (CCC), which employed millions of young men, mostly urban, to work in camps at national parks and forests on conservation and reforestation projects. Though the programs devised for the early years of the New Deal were intended to be temporary, they provided a basis for later social measures that became part of a permanent welfare state.

In 1935 Roosevelt began a new set of programs called the "Second New Deal." Noted for its shift to a decidedly anti-corporate stance, the president proposed one of the most progressive tax systems in American history. Called a "soak the rich" plan by conservatives, the system had taxes reach as high as 75 percent on income for the richest of Americans.

Another significant development during the New Deal was the growth of labor militancy. When the Supreme Court nullified the NIRA in 1935, Senator Robert F. Wagner of New York introduced the National Labor Relations Act (also called the Wagner Act) in Congress. The new law gave workers more federal protection than Section 7(a) provided by including an enforcement mechanism in the National Labor Relations Board (NLRB), which was given the power to require employers to recognize unions. While showing few signs of challenging employers in the 1920s, union leaders and workers, encouraged by the Wagner Act in 1935, stepped up organizing efforts. John L. Lewis of the United Mine Workers helped start the Committee on Industrial Organization to begin organizing unskilled factory workers, a group that the more conservative American Federation of Labor ignored because of their commitment to organizing only skilled workers. The number of workers in recognized unions jumped from three million in 1932 to eight million in 1937, and to 10 million in 1941.

In 1935 Congress passed the Social Security Act (SSA), one of the most important pieces of social welfare legislation in American history. The act established several programs. First, it provided for federal assistance to the elderly in poverty, who could receive $15 a month. The act started a pension system, in which workers and their employers would pay a payroll tax, beginning in 1940, to provide an old age pension of $10 to $85 a month for many workers, though it excluded domestic servants and agricultural workers. The SSA also set up an unemployment insurance system, and provided aid to handicapped people and dependent children.

In addition, the Roosevelt administration set up the Works Progress Administration (WPA) in 1935, a much larger work relief program than the CWA. Between 1935 and 1941, the WPA employed about 2.1 million workers. WPA workers built 110,000 public buildings, 600 airports, and over 500,000 miles of roads, and over 100,000 bridges.

Though President Roosevelt won a landslide victory in 1936, he faced a conservative backlash during the following years. Although the economy had improved by the summer of 1937, a recession struck the economy that year. In 1938, the president asked for emergency funds for public works and relief programs, and as the government's spending saturated the economy, a recovery seemed possible. The American economy, however, would not recover from the Great Depression until World War II. Only the massive federal spending needed to produce the men and material to fight the war brought the depression to an end and laid the ground work for the postwar economic boom. Even though New Dealers failed to meet their goal of rejuvenating the American economy, they had remade the federal government and its relationship to the corporate world.

See also: Glass-Steagall Act, Hoovervilles, National Industrial Recovery Act, Securities and Exchange Commission, Tennessee Valley Authority, Works Progress Administration


Badger, Anthony J. The New Deal: The Depression Years, 19331940. New York: The Noonday Press, 1989.

Brinkley, Alan. The End of Reform: New Deal Liberalism in Recession and War. New York: Vintage Books, 1995.

Burns, James MacGregor. Roosevelt: The Lion and the Fox. New York: Harcourt, Brace and World, Inc., 1956.

Fraser, Steven, and Gary Gerstle. The Rise and Fall of the New Deal Order, 19301980. Princeton: Princeton University Press, 1989.

Leuchtenburg, William E. Franklin D. Roosevelt and the New Deal. New York: Harper and Row, 1963.

though the programs devised for the early years of the new deal were intended to be temporary, they provided a basis for later social measures that became part of a permanent welfare state.

New Deal

views updated May 29 2018


"I pledge you, I pledge myself, to a new deal for the American people." In July 1932, franklin delano roosevelt said these words to the delegates at the Democratic National Convention, who had just elected him the party's candidate for president of the United States.

Roosevelt's New Deal was a response to the tumultuous events of the years leading to his nomination. After world war i, the people of the United States experienced unprecedented prosperity. Consumers of all income levels were buying goods "on time" by putting a few dollars down and paying a few dollars a month. Record numbers of people were also using the installment-buying concept to purchase stocks. The number of stockbrokers grew from fewer than 30,000 in 1920 to more than 70,000 in 1929. Stockbrokers allowed their clients to "buy on margin," meaning that a customer only had to pay 10–15 percent down on a stock, with the broker lending the client the rest and being repaid when the stock went up in value. By 1929, the skyrocketing prices in the stock market indicated continued prosperity to some economists, but to others it signaled impending doom. So much investment had been done on margin that stockbrokers had borrowed money from banks that by then were also heavily in debt. Stock prices began rapidly dropping in September 1929, and on "Black Thursday," October 24, 1929, they plummeted beyond all belief, devastating thousands of brokerage houses. By the following Tuesday, October 29, virtually all stocks were worthless. Millionaires became paupers overnight. People who had invested their savings woke up to find themselves penniless. This was the start of the Great Depression.

herbert hoover was the president at the time of the great stock market crash. He initially refused to believe that there was a problem, and even in April 1930, when more than three million people had lost their jobs, he continued in vain to reassure people that everything was fine. Because people were afraid of losing their jobs and running out of money, they refused to engage in the free-spending ways of the past and chose to save rather than to spend their money. This behavior, in turn, created a new cycle of problems. Because many banks had failed during the crash, people no longer trusted them, and kept their money at home, which depleted the supply of capital that banks needed. People also refused to buy new products and instead repaired old ones. Because few people were buying new products, companies were forced to close and to lay off employees. Many people were evicted from their homes for failing to make payments, and often several members of extended families lived together. The number of homeless persons soared, as did cases of malnutrition. President Hoover still remained firm in his stance that government aid was not an option. He believed that private charity could take care of those individuals who could not take care of themselves and that the ingenuity of private business would cure the ills of the country, not government intrusion. The American people resented President Hoover's attitude. The camps of makeshift shacks in which many people lived after being evicted were called Hoovervilles, and slogans such as Hard Times Are Hoovering over Us were heard everywhere. By December 1931, the unemployment rate was more than 13.6 million, a third of the labor force. When President Hoover sent military troops with bayonets and tear gas to disband the Bonus Army—a group of World War I veterans who had come to Washington, D.C., to seek early payment of a promised bonus for fighting in the war—his approval among U.S. voters plunged irrevocably.

Although the Republicans knew that the Democratic presidential candidate would more than likely win, they nominated Hoover again in 1932. The Democratic nominee, Franklin D. Roosevelt, won all but six states and received 22 million votes, as compared to Hoover's 15 million Roosevelt came from a wealthy family, had served as assistant secretary of the navy and as governor of New York, and had battled polio courageously. His promised "new deal" was anxiously awaited.

The day after he was inaugurated, Roosevelt requested a special session of Congress to convene and declared a week-long bank holiday. He guaranteed that at the end of one week's time, banks that the government found to be sound and secure would reopen. Roosevelt also announced a moratorium on the export of gold. Because foreign investors required trading to be done in gold (paper money was believed to be too risky) the combination of the moratorium and the bank holiday effectively put the economy of the United States on hold. After the week had passed, Roosevelt held the first of his famous "fireside chats" via the radio to reassure the American people. As promised, the majority of the banks reopened. Many people followed Roosevelt's advice and again placed their money in the banks. During those same first weeks, Roosevelt and Congress worked together to repeal prohibition, allowing the sale and consumption of alcohol to resume.

These moves were only the beginning of what is referred to as the Hundred Days. More legislation was passed during the first hundred days of Roosevelt's presidency than had been passed in any similar period of any previous presidency. Roosevelt worked with young lawyers, professors, and social workers to create legislation that was meant to get people working and spending once again. To relieve the immediate need for food and shelter, Roosevelt ushered through Congress the Federal Emergency Relief Administration, which granted $500 million in aid to the states for distribution to people in need.

Next came congressional approval of Roosevelt's Civilian Conservation Corps Act (ch. 383, 50 Stat. 319). The government paid young men between the ages of 18 and 25 for six months to one year to do construction or conservation work. The men built bridges, dams, and roads and planted more than 17 million acres of new forests. They were paid $30 per month and were required to send most of their money home to their families.

The Agricultural Adjustment Act of 1933 (AAA), 7 U.S.C.A. §§ 601 et seq., also was passed during these first hundred days. Farmers were growing large surpluses of crops such as wheat and corn, and these surpluses drove prices down

even though the farmers' expenses were rising. The AAA sought to reduce the surplus of crops by paying farmers not to grow them. Although some Americans questioned this practice because so many people were starving, the theory of the plan bore out, and by 1936 farmers were receiving $1.02 per bushel of wheat, as compared to the 38 cents per bushel that they had received in 1932.

Toward the end of the hundred days, Congress enacted the national industrial recovery act of 1933 (NIRA), (ch. 90, 48 Stat. 195) and created the National Industrial Recovery Administration to implement the act's goals. The legislation's main goal was to stimulate dormant factories and industries and to get people back to work. The National Industrial Recovery Administration believed that the best way to do this was to create a series of codes (746 in all) that companies had to follow in the marketplace. These codes regulated everything from a minimum hourly wage to the maximum number of hours per week that an employee could work. They controlled advertising and business production and output. Fearing a return of the high unemployment rate, one code forbade industry from developing technological advances that would lead to employee layoffs.

NIRA represents the first direct government involvement in business operations. It allowed industries and business to engage in previously prohibited monopolistic price-fixing so that one manufacturer could not under price its goods to drive a competitor out of business. The legislation allowed workers to unionize and to bargain

collectively for better pay and working conditions. This was all done with the goal of increasing business profits, which, in turn, would create more jobs and more spending. However, NIRA posed difficulties for many business owners, who were forced to restructure their business operations.

One of the most popular programs of the New Deal was the Works Progress Administration (WPA), which created more than 250,000 projects, putting millions of people to work. Most of the money and effort went to public construction of bridges, roads, and government buildings such as post offices. Writers were employed to interview town residents and to compile local histories. Actors and musicians were hired to bring theater and live music to residents of rural towns, who otherwise had little opportunity to see live performances.

After the first 18 months of the New Deal, five million previously unemployed people had found work. However, Roosevelt and his New Deal were not without their critics. When wealthy people realized that Roosevelt was intending not to return the country to the pre-crash status quo but rather to reform the entire national economic structure, they soon turned on him, calling him a traitor to his class. They disliked Roosevelt for the new taxes imposed on them, and some believed rumors that Roosevelt wanted to make the United States a socialist state under his dictatorship. The leaders of big business, once beholden to Roosevelt for getting their businesses back on track, were now among his most forceful critics.

Wealthy people were not Roosevelt's only critics. People to the political left of Roosevelt thought that he had let the common man down. Socialists such as upton sinclair and some Democrats such as Huey Long, the senator from Louisiana, complained that Roosevelt and his New Deal did not do enough for the lower and middle classes of society. Despite criticism from many angles, the majority of U.S. citizens loved Roosevelt, re-electing him by a landslide in 1936 over the Republican nominee, Alfred M. Landon.

One significant reason for Roosevelt's considerable popularity was the passage of the social security act of 1935 (42 U.S.C.A. § 301 et seq.)—the first piece of legislation in the history of the United States to address social welfare. The legislation provided people over the age of 65 with a monthly pension from the federal government. It also contained provisions for unemployment insurance and for aid to children. Although this form of government charity also had its critics, Roosevelt was pleased with it because it was proof that he had not forgotten the common man.

The early successes of the New Deal created a boldness that eventually led to its demise. By the mid 1930s, the U.S. Supreme Court began to strike down New Deal legislation as unconstitutional exercises of congressional power. In Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570 (1935), for example, the Court struck down the heart of Roosevelt's New Deal legislation, the NIRA. The Schechter brothers were wholesale kosher poultry distributors who did business within the state of New York. They were convicted of violating the Live Poultry Code, including wage-and-hour violations. The Court unanimously held that the federal government could only control trade between states, not trade within one state. Even liberal justices on the Court who had supported previous New Deal legislation found the challenged provisions unconstitutional. The following year, the Court struck down the Bituminous Coal Conservation Act of 1935, ch. 824, 49 Stat. 991, because its enactment was not based upon a power that Congress possessed under the Constitution. Carter v. Carter Coal Co., 298 U.S. 238, 56 S. Ct. 855, 80 L. Ed. 1160 (1936).

Many legal actions against other New Deal legislation were piling up, and in a fast and furious move in 1937, Roosevelt proposed a restructuring of the high court through the addition of a new justice to the Court for each justice over the age of 70. At the time of this proposal, six of the nine justices were over the age of 70, including Chief Justice charles evans hughes and associate justices willis van devanter, james mcreynolds, louis brandeis, george sutherland, and pierce butler. Roosevelt tried to place a nonpolitical spin on his proposal, citing instances where changes to the composition of the Court had been made before, as well as the heavy workload for nine justices, but he could not disguise his blatant attempt to pack the Court with liberal justices who saw things his way. Roosevelt refused to concede, which resulted in months of Senate debates that cost him many supporters.

Rather than exploding, the controversy retreated as the Court began supporting many pieces of New Deal legislation. In nlrb v. jones & laughlin steel corp., 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893 (1937), the Court upheld the constitutionality of the National Labor Relations Act, which was purportedly based upon the commerce clause of the Constitution. Prior to Jones & Laughlin Steel Corp., Van Devanter resigned from the Court and was replaced by hugo black. The Court's structure changed dramatically over the eight years following the decision, as the majority of justices retired or resigned from the court, including the following: Sutherland (1938); benjamin cardozo (1938); Brandeis (1939); Butler (1939); Hughes (1941); McReynolds (1941); harlan stone (1941); and Roberts (1945).

Although, in the end, the makeup of the Court was just as Roosevelt wanted, he suffered losses in support and confidence that he never regained. Many people felt that the New Deal legislation had granted labor too much power, and they were resentful of the unionization efforts, which led to strikes that were often violent. Finally, the unemployment rate in late 1937 to mid 1938 soared from five million to eleven million. Roosevelt and his vision for a New Deal lost congressional support. No further reform legislation was passed during Roosevelt's time in the White House. Although the country was much better off than it had been when he took office in 1932, the Great Depression continued. It ended not by legislation, but by the coming of world war ii.

The political machine of the New Deal and its dominant social policy continued for decades after the last piece of its legislation was passed. Although its demise can not be traced to one single event, by the time ronald reagan was elected president in 1980, the era of the New Deal was effectively over.

further readings

Fraser, Steve, and Gary Gerstle. 1989. The Rise and Fall of the New Deal Order. Princeton, N.J.: Princeton Univ. Press.

Freedman, Russell. 1990. Franklin Delano Roosevelt. New York: Clarion Books.

Schraff, Anne E. 1990. The Great Depression and the New Deal. New York: Watts.

Stewart, Gail B. 1993. The New Deal. New York: New Discovery Books.


Banks and Banking; Labor Law; Labor Union; National Recovery Administration; Schechter Poultry Corp. v. United States; Social Security; Welfare.

New Deal

views updated May 21 2018

New Deal

Initiated in 1933, just days after the inauguration of President Franklin Delano Roosevelt (FDR), the New Deal encompassed a vast array of legislation designed to relieve the homelessness, unemployment, and failed economy of the Great Depression, to bring about recovery on America's farms and industry, and to reform the economic and social problems which precipitated the depression. More than just an attempt to get the economy back on track, the New Deal also sought to reinvigorate American ideals, traditions, and expression through a series of cultural programs designed to elevate folk art and bring the elite arts to the masses. In doing so, the New Deal left a legacy of public art, literature, music, theater, and photography, while also influencing the popular media of radio and film.

Seeking to further aid in recovery in 1935, FDR established the Works Progress Administration (WPA, later called the Works Projects Administration). This vast and organizationally complex body sponsored the construction of roads, bridges, parks, sidewalks, airports, sewage systems, water systems, levies, and public buildings, such as post offices, schools, and hospitals. Like earlier relief efforts it was created to employ the unemployed, but in a departure from earlier relief employment programs, the WPA developed several projects designed to employ artists, writers, musicians, and actors. When asked why the government would concern itself with unemployed actors and artists, WPA administrator Harry Hopkins retorted: "Hell, they've got to eat just like other people." The WPA arts projects grew out of a set of conditions unique to America of the 1930s. First and foremost, FDR believed that support of the arts by the government would not only employ starving artists but would help uplift the American spirit by creating beautiful art, plays, and music. Secondly, many artists (befitting their liberal, or even communistic tendencies) felt it was a public right to have access to good art, a "cultural right" as they put it. Thirdly, many in Roosevelt's administration hoped their work would bring about "cultural democracy," the logical sequel to political and economic democracy. And finally, the depression had made Americans aware of their own uniqueness, even in the arts. Several of these projects were small and their accomplishments remain obscure, such as the WPA Dance Theater, with its accompanying Young Choreographers Laboratory, and the Composers Forum-Laboratory of the Federal Music Project. And while these various projects differed in direction and purpose, they all shared an overriding concern to discover America and define what is American.

To direct the Federal Art Project, Hopkins selected a museum curator, Holger Cahill. Cahill set out the project's objectives in an operating manual in which he argued that "through employment of creative artists, it is hoped to secure for the public outstanding examples of contemporary American art; through art teaching and recreational art activities to create a broader national art consciousness and work out constructive ways of using leisure time; through services in applied art to aid various campaigns of social value; and through research projects to clarify the native background in the arts." Cahill concluded that "the aim of the project will be toward an integration of the arts with the daily life of the community, and an integration of the fine arts and practical arts." To this end, approximately 9,000 artists and art teachers were employed by the art project, creating 2,566 murals and 17,744 sculptures for public schools, hospitals, libraries, and post offices. These murals, suggesting the works of great Mexican muralists such as Diego Rivera, followed the theme of hard working American men and women. They showed Americans at work and play utilizing native American art styles, some art deco, some copying regional artists such as Grant Wood and Thomas Hart Benton.

The result was 108,099 paintings and over 100 community art centers, many of which became permanent community fixtures. Another project, the Index of American Design, sought to catalogue and reproduce items illustrating a uniquely American style, such as weathervanes, decoys, ships' figureheads, cigar store Indians, and other regional and ethnic arts. By the mid-1960s it was estimated that the works created under this project were worth more than the project itself cost. Several artists who developed their talent in the arts project became famous later in their careers, such as Jackson Pollack and Willem de Kooning. For the most part, however, the products of the arts projects were not masterpieces, but rather locally unique arts and crafts projects, art classes for kids, and art appreciation lectures.

The director of the Federal Theater Project was Hallie Flanagan, from the Vassar College Experimental Theatre. She envisioned the creation of a vast new audience for the theater by sponsoring community theater groups. One way of creating this new audience was to write plays that were specifically of interest to its audience. The Living Newspaper became one attempt to mold theater to the documentary drama of everyday concerns by having actors recreate local events in a theater setting. The theater project also sponsored programs of everything from Shakespeare to modern farce, Gilbert and Sullivan, children's plays, and folk plays. The Federal Theater Project was perhaps the most controversial of the arts projects since many of the people involved were known to have radical and even communist sympathies. Secondly, the theater industry was centered in New York City and left many states outside of the project altogether—in total, 31 states saw the effects of the theater project. Roosevelt's adversaries in Congress used the radical tendency of the Theater Project as a way to attack the New Deal, and eventually they were able to shut down the project altogether in 1939, with arguments reminiscent of more recent battles over funding for the National Endowment for the Arts in the 1990s.

More utilitarian in its creations, the Federal Writers' Project employed over 10,000 people in various projects. Favoring non-fiction over poetry, novels, and short stories, the writers' project produced guides and pamphlets describing America. Under the direction of Henry Alsberg, a former editorial writer, the project produced the American Guide Series which generated guides for each state modeled after the European Baedeker guidebooks. The guides were composed of three parts: essays on a variety of subjects such as history, people, arts, economy, politics, and religions of each state; information on the state's cities; and motor tours of the state with descriptive information. The rationale for these guides was the desire to stimulate travel and tourism, encourage resources conservation by arousing local pride, and to broaden scholarly interests by making available more historical facts. In addition to the state guides there were regional and specific guides such as The Berkshire Hills and U.S. Highway One: from Maine to Florida. The Writers' Project also created the Life in America series with such volumes as The Armenians in Massachusetts, The Hopi, and Who's Who in the Zoo. Another project was a volume entitled American Stuff, which featured American short stories such as "Uncle Tom's Children" by Richard Wright. The Federal Writers' Project also concerned itself with the collection of folklore. Under the direction of America's two premier folklorists, John A. Lomax and Benjamin A. Botkin, the project recorded the stories of over 2,000 ex-slaves and collected stories of local customs and folklore.

While not a part of the WPA or any of the art projects, folk music collecting was also a concern of the government. Based out of the Library of Congress, the Archive of Folk Song (later renamed the Archive of Folk Culture), collected the songs of slaves, Appalachian mountain folk, cowboys, lumberjacks, sailors, and Dust Bowl migrant workers. Under the direction of John Lomax and his son Alan, the Archive of Folk Song "discovered" the music of Huddie Ledbetter, better known as Leadbelly, and Woody Guthrie, and recorded conversations with them and their songs. Two young folklorists, Charles Todd and Robert Sonkin, traveled to California to record the songs of the migrants in the Farm Security Administration camps.

Perhaps the most influential of the cultural projects of the New Deal was one which grew out of the Farm Security Administration (FSA). Headed by Roy Stryker, the photographic division of the FSA sought to document the living and working conditions of Americans during the Depression. Stryker was able to assemble the best photographers of the day into the photographic unit, including Walker Evans, Dorothea Lange, Ben Shahn, Russell Lee, Arthur Rothstein, and Margaret Bourke-White. Many of the photographers produced works of their own such as Margaret Bourke-White's You Have Seen Their Faces (with Erskine Caldwell), Dorothea Lange's An American Exodus (with Paul Taylor), and Walker Evans' Let Us Now Praise Famous Men (with James Agee). These photographers and their photographs publicized the plight of mainly rural people, from the Dust Bowl migrants to Southern tenant farmers and Cajuns in Acadiana.

The photo collection of the FSA also illustrates the main impulse behind the federally sponsored cultural activities of the New Deal: documentation. In all aspects of these various projects, New Deal reformers sought to document the lives of Americans in order to understand, and eventually change, their behavior. Utilizing the methods of social science, these reformers tried to both preserve and destroy regional, ethnic, occupational, and religious differences in the name of modernization and reform. Predominant in the works produced by these projects is the theme of rural life or work in the out of doors. Much of this is due to the idea that it was on the frontier of the nineteenth century where Americans were most clearly American; or more precisely, the frontier created the American character. Writers as far back as Ralph Waldo Emerson and Walt Whitman felt that a uniquely American literature would have to come from areas where nature imposed itself on the everyday life of Americans. John and Alan Lomax felt they found an American art form in the songs of cowboys, lumberjacks, miners, and farmers, and photographers went to the rural areas of California, the South and the northern plains in search of the real America.

Yet for all of the cultural production that came out of the New Deal, most people's cultural activities were confined to listening to big bands play swing music on the radio or watching the newly developed sound films from Hollywood. Americans had discovered mass popular culture and in turn the mass culture industries of radio and motion pictures also discovered that they could benefit from mimicking the same themes of "searching for America" as the New Deal programs. Radio programs such as America's Town Meeting of the Air, and films such as The Grapes of Wrath, clearly exhibit the influences of government-sponsored art programs.

—Charles J. Shindo

Further Reading:

Hobson, Archie, editor. Remembering America: A Sampler of the WPA American Guide Series. New York, Columbia University Press, 1985.

Hurley, F. Jack. Portrait of a Decade: Roy Stryker and the Development of Documentary Photography in the Thirties. Baton Rouge, Louisiana State University Press, 1972.

Matthews, Jane D. The Federal Theatre. Princeton, Princeton University Press, 1967.

McDonald, William F. Federal Relief Administration and the Arts. Columbus, Ohio State University Press, 1969.

Park, Marlene, and Gerald E. Markowitz. Democratic Vistas: Post Offices and Public Art in the New Deal. Philadelphia, Temple University Press, 1984.

Shindo, Charles J. Dust Bowl Migrants in the American Imagination. Lawrence, University of Kansas Press, 1997.

New Deal

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New Deal

When President Franklin D. Roosevelt (1882–1945; served 1933–45) took office in March 1933, the nation was in the depths of the Great Depression (1929–41). Beginning with the stock market crash of October 1929, it was the worst economic distress the country had ever experienced. Millions of people struggled to survive every day, and as the nation's economy weakened, many lost their jobs, their savings, and their homes. Efforts by the previous president, Herbert Hoover (1874–1964; served 1929–33), had failed to improve economic conditions.

In the election of 1932, the nation elected Roosevelt with hopes that he would bring great changes. Within the first hundred days of being in office, Roosevelt sent Congress a flurry of legislation aimed at solving the nation's problems. The legislative plan was known as the New Deal.

Roosevelt's New Deal was initially effective. In 1937, however, the economy experienced another recession, and Roosevelt was moved to introduce more legislation. This is sometimes called his Second New Deal. The most influential pieces of legislation from both waves of the New Deal were aimed at providing relief, recovery, and reform to the United States.

Relief measures

Relief measures included programs designed by the president to assist farmers and unemployed workers who faced impossible financial challenges. They included the following legislation:

Federal Emergency Relief Administration (FERA, 1933): Provided grants to states in which relief agencies had run out of money. The Civil Works Administration (CWA) was later added to the program to provide temporary work relief.

Agricultural Adjustment Act (May 1933): Established programs, including the Agricultural Adjustment Administration, to stabilize and raise prices for farm products. It provided subsidies to farmers who were told to reduce crop production by leaving part of their land idle. Money to pay the farmers was raised by a tax on companies that purchased farm products to further process into food and clothing. The Supreme Court ruled that this aspect was unconstitutional in 1936. The majority of judges ruled that it was illegal to levy a tax on one group in order to pay another. Congress therefore passed further legislation that restored some of the act's provisions to encourage soil conservation, balanced prices, and food reserves. Among them was the Soil Conservation and Domestic Allotment Act (1936). It allowed the government to pay benefits to farmers who planted soil-building crops rather than staple crops.

Civilian Conservation Corps (CCC, 1934): Employed millions of young men to work in camps at federal lands. “Roosevelt's Tree Army” restored historic sites, built park facilities, cleaned reservoirs, and planted trees.

Works Progress Administration (WPA, 1935): Established a work relief program that employed millions of people. Men built and renovated bridges, public buildings, and roads. Women were generally employed in child-care or handicrafts, such as sewing. Art, theater, and writers projects employed artists for preserving the cultural uniqueness of the United States. The WPA was dismantled in 1941 at the start of World War II (1939–45).

Recovery measures

Roosevelt designed recovery measures to normalize economic activity and to restore faith in the banking system. They included the following legislation:

Emergency Banking Act (1933): Required banks to pass a Treasury Department inspection before reopening. In response to the nation's banking crisis, Roosevelt had declared a mandatory bank holiday until this first piece of New Deal legislation could be passed. It was successful in restoring confidence in the banking system.

National Industrial Recovery Act (1933): Established the Public Works Administration (PWA), which paid private firms to construct major public works, including airports, dams, bridges, warships, schools, and hospitals.

Tennessee Valley Authority (TVA, 1933): An ambitious project that built a series of dams at the Tennessee River. The dams served to revitalize a broad region of the Southeast by generating electricity and controlling flooding in the valley. Success of the TVA led to a similar project in the Pacific Northwest, the Rural Electrification Administration (1935).

Resettlement Administration (1935) and Farm Security Administration (1937): Provided loans to help farmers relocate to better land.

Reform measures

Reform measures were designed by the president to protect consumers by regulating businesses and providing assistance to the elderly and unemployed. They included the following legislation:

Truth in Securities Act (1933): Required corporations to provide the public with accurate and complete information concerning corporate securities, or shares of stock in corporations.

Glass-Steagall Act (1933): Enabled the government to regulate irresponsible speculation by banks. It established the Federal Deposit Insurance Corporation (FDIC), which guarantees all bank deposits up to a certain amount of money.

National Industrial Recovery Act (1933): Established the National Recovery Administration (NRA). It called for every business to abide by a temporary code that provided a minimum wage, a maximum workweek, and no child labor . Those who chose to follow the code displayed the symbol of the Blue Eagle in their windows. It also gave workers the right to form unions, but had no mechanism for enforcement of the right. The U.S. Supreme Court eventually nullified NRA legislation, and the program, which was failing anyway, was abolished.

Securities and Exchange Commission (SEC, 1934): Established the SEC as a stock market watchdog.

National Labor Relations Act (Wagner Act, 1935): Established the National Labor Relations Board . It gave workers federal protection for organizing unions and required employers to recognize unions.

Social Security Act (SSA, 1935): Established several social welfare programs to assist the elderly, unemployed, and handicapped citizens. It established a pension for those over sixty-five, funded through an employment tax. It also provided unemployment compensation and governmental support for the handicapped and for single mothers with dependent children.

Fair Labor Standards Act (1938): Established the minimum wage and maximum work week and abolished child labor.

Legacy of the New Deal

President Roosevelt's New Deal allowed the federal government to assume new responsibility for the welfare of the people. In some cases, the Supreme Court decided New Deal programs were unlawful. Other programs were meant to provide just temporary relief in the midst of the Great Depression.

The New Deal helped alleviate problems caused by the Great Depression. The depression did not end, however, until the American economy recovered by providing equipment and supplies for World War II. Though many parts of New Deal legislation did not last beyond the war, several New Deal programs, including the Social Security Act and the National Labor Relations Board, survived into the twenty-first century.

New Deal

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The New Deal refers to the domestic reform program that President Franklin Delano Roosevelt pursued from 1933–1941. Given that the New Deal coincided with the rise of the Axis powers and the coming of the Second World War, military issues had a key bearing on the President's reforms.

rearmament: the navy

President Roosevelt took office in March 1933, less than two years after the Japanese conquest of the Chinese province of Manchuria. During the Manchurian crisis, the Hoover administration considered a naval demonstration, but soon learned that the United States Navy would not prove a credible deterrent to the Japanese. Accordingly, and with economic recovery definitely in mind, President Roosevelt allocated nearly $240 million in Public Works Administration (PWA) relief money for naval construction in 1933. The following year, the President's support proved critical in securing congressional approval for the 1934 Vinson-Trammel Act that appropriated money for a sustained naval expansion program through 1942.

Over the next two years, the Navy's General Board and the State Department worked to block the Japanese bid for naval parity at the 1936 London Conference. With its bid rejected, Japan refused to renew treaty limitations, thus freeing the Roosevelt Administration to pursue further fleet funding. In May 1938, with the economy still staggering from a sharp drop the previous year (the so-called Roosevelt Recession), Congress approved a second Vinson Act, which authorized the construction of some seventy additional warships. With the fall of France in June 1940, naval construction became a top priority and Congress approved the construction of additional combat ships totaling 1,325,000 tons.

rearmament: the army

While the navy enjoyed sustained growth after 1933, the army did not. In part, isolationist sentiment, which reached its height in the mid-1930s, prevented increased funding for the army, as did the nation's long-standing anti-peacetime-army ideology. By 1939, however, with the Sino-Japanese war in its second year and Europe poised on the precipice of war, the President secured over $500 million in appropriations for the Army. Congress, meanwhile, approved money for the new Civilian Pilot Training Program in order to increase the number of skilled aviators. Following the invasion of Poland in September 1939, Roosevelt approved a modest increase in manpower for both the regular army and the National Guard. Between May and October 1940, as Germany struck west, brought France to its knees, and prepared for an invasion of England, the President secured some $17 billion for the armed forces. The army gained $8 billion, enough money to equip over 1.2 million men by October 1941. In May 1940 alone, Congress appropriated enough money to build a staggering 50,000 warplanes a year. In September 1940, Congress also passed the first peacetime draft in American history, thus paving the way for a vast expansion in military manpower. As the world crisis deepened during 1941, Congress appropriated an additional $26 billion for the army.

Working behind the scenes, New Deal internationalists also strove to bolster the nation for war. Prodded by internationalists such as the State Department's Herbert Feis, the Director of the Reconstruction Finance

Corporation (RFC) Jesse Jones established a string of RFC funded agencies to coordinate the stockpiling of strategic raw materials. These companies, which included the Metals, Petroleum, and Rubber Reserve Company, stockpiled vast amounts of critical raw materials for the nation's war effort while, in effect, preclusively purchasing critical commodities in advance of the Axis. Another RFC subsidiary, the Defense Plant Corporation, oversaw the refurbishment or construction of some 2,300 defense plants.

While the RFC played a major role in preparing the nation for war, other New Deal agencies played parts as well. The PWA, for example, in addition to its role in naval expansion, played a critical role in aiding the Army Air Corps. The PWA funded the purchase of over 100 warplanes and the construction of some 50 military airfields. The Tennessee Valley Authority, meanwhile, supported the war effort through the creation of additional hydroelectric facilities to serve the needs of the aluminum industry and the nuclear facility at Oak Ridge, Tennessee.

By 1942 full-scale mobilization and war succeeded in doing what the New Deal could not, and the Great Depression at long last came to an end. With the economy flourishing, New Deal recovery programs gradually expired. In 1942 Congress terminated funding for the Civilian Conservation Corps and in 1943 Congress terminated the Works Progress Administration.


The New Deal is mainly known for its efforts to end the Depression and for its programs, such as Social Security. Besides economic recovery and social reform, Roosevelt also used the New Deal to lay the foundation of re-armament at a time when most Americans opposed spending money on weapons and becoming involved in foreign conflicts. Under the banner of putting people back to work, Roosevelt had strengthened the navy and expanded the army. The outbreak of World War II and the attack by Japan on Pearl Harbor found America ready to move from a peacetime to a wartime economy. Thus, the New Deal created legacies that, along with the lessons of World War II and the Cold War, have helped to shape American society—the necessity of military preparedness and the creation of what President Dwight Eisenhower would later call "The Military-Industrial Complex."


Dallek, Robert. Franklin D. Roosevelt and American Foreign Policy, 1932–1945. New York: Oxford University Press, 1979.

Leuchtenburg, William E. Franklin D. Roosevelt and the New Deal, 1932–1940. New York: Harper and Row, 1963.

Paterson, Thomas G., Clifford, Gary J., and Hagan, Kenneth G. American Foreign Relations, Vol. 2: A History Since 1895. Boston: Houghton Mifflin, 2000.

Internet Resources

Center for Military History. "Mobilization: The US Army in World War II, Fiftieth Anniversary." Available from <>.

Public Broadcasting Service. "Brother Can You Spare a Billion?" Available from <>.

"TVA Goes to War." Available from <>.

Sidney L. Pash

See also:Civilian Conservation Corps (CCC); Roosevelt, Eleanor; Roosevelt, Franklin Delano.

New Deal

views updated May 11 2018

New Deal

As the Great Depression deepened in the months following the 1929 stock market crash, foreign and domestic consumption of all types of American tobacco declined, causing prices to plummet. The average price of flue-cured tobacco (the most important variety because of its use by American cigarette manufacturers), which had not dropped below 20 cents per pound from 1920 to 1927, plunged to 8.4 cents by 1931. Revenues for tobacco growers in 1932 were down to only 40 percent of the average received during the 1920s. After 1932, any further slump in prices would have spelled economic ruin for most producers in the tobacco-growing states.

During the 1932 presidential campaign, Franklin Roosevelt endorsed a remedy called the domestic allotment plan. Heavily promoted by the agricultural economist Milburn L. Wilson, the proposal called for the government to pay growers of certain crops to reduce production voluntarily. Farmers would not only benefit from checks financed by a tax on processors, but also from price gains on the crops they did produce. Wilson also desired active grower participation in the programs. Farmers would vote in referenda for acceptance of the programs and help oversee implementation by choosing producer committees to ensure compliance and resolve disputes.

After winning the election, Roosevelt worked with Congress to establish the Agricultural Adjustment Administration (AAA)—the New Deal agency established by the Agricultural Adjustment Act of 1933 to administer the production control programs largely based on Wilson's allotment plan. New Dealers modified the programs over the years in reaction to farmer discontent, judicial decisions, and political influences. The result was four distinct tobacco programs for the 1933, 1934–1935, 1936–1937, and 1938–1939 periods, respectively.

In 1933 the AAA negotiated a marketing agreement with buyers to boost prices. After a requisite number of farmers agreed to reduce their 1934 planted acreage up to 30 percent in exchange for government payments, buyers consented to pay at least 17 cents per pound for flue-cured tobacco. The first tobacco program was a success, as evidenced by the fact that growers in North Carolina (the largest flue-cured tobacco state) received over $85 million for their crop compared to only $35 million in 1932.

The programs changed over the next two years as a majority of farmers rallied behind an effort to compel participation. The fact that a minority of growers did not participate but still benefited greatly from the increased prices on fully planted acreage angered many cooperating producers. Their pressure on the president and Congress resulted in the Kerr-Smith Tobacco Act of 1934. Under this law, producers were assigned a quota based on past production. Tobacco sold over a farmer's limit would have a prohibitive tax placed on it, thus creating a disincentive to overproduce. Meanwhile, the AAA continued payments to growers in exchange for reduced planting.

After the shock wore off from the Supreme Court's January 1936 ruling in the Hoosac Mills case (declaring the unconstitutionality of the AAA's production control contracts and processing taxes), Roosevelt supported an important expedient—the Soil Conservation and Domestic Allotment Act (SCDAA). Growers would now be paid from the Treasury for planting less "soil-depleting" crops, including tobacco, and planting more "soil-building" crops such as grasses and legumes. The goal was to achieve production control indirectly under the auspices of soil conservation. Because Congress repealed the Kerr-Smith Act after the high court's decision, the SCDAA was a completely voluntary program. It was only marginally effective in reducing surpluses; payments were less than under the first AAA Act, and many growers increased their planted acreage.

With a friendlier pro-New Deal Court in place, Congress passed the Agricultural Adjustment Act of 1938. Building on the existing soil conservation legislation, marketing quotas were added during high-surplus periods, subject to a two-thirds approval vote by the growers. This law governed the tobacco programs until World War II.

By the end of the 1930s, the AAA successfully helped American tobacco farmers weather the storm of the Depression. It enabled growers to better adjust supply to demand while maintaining prices at the 1920s average level. In North Carolina, growers' incomes tripled while land values doubled for farms holding a tobacco allotment. Tenants and sharecroppers in tobacco-growing areas were not as adversely affected by AAA policies as those in the cotton regions, due mainly to the relatively larger labor requirements for raising tobacco. While many cotton regions suffered a tremendous drop in nontenured laborers, North Carolina, for example, experienced only a 10-percent decline in tenants.

In creating the first farm subsidies programs in American history, the AAA helped most tobacco farmers avert economic calamity. The New Deal for tobacco was generally a successful holding operation until the prosperous World War II years. It also had a lasting impact on the nation's tobacco growers. The government's relationship with tobacco producers has never been the same, as farm subsidy programs have become part of America's political economy.

See Also Politics; Sharecroppers; United States Agriculture.



Badger, Anthony J. Prosperity Road: The New Deal, Tobacco, and North Carolina. Chapel Hill: University of North Carolina Press, 1980.

Rowe, Harold B. Tobacco under the AAA. Washington, D.C.: The Brookings Institution, 1935.

Rowley, William D. M. L. Wilson and the Campaign for the Domestic Allotment. Lincoln: University of Nebraska Press, 1970.

flue-cured tobacco also called Bright Leaf, a variety of leaf tobacco dried (or cured) in air-tight barns using artificial heat. Heat is distributed through a network of pipes, or flues, near the barn floor.

referendum an election where voters choose between policies or actions rather than between candidates; for the electorate to vote directly on a law or tax rather than indirectly through representatives.

soil conservation the husbandry of the land; making careful use of soils to prevent erosion and maintain fertility and value.

marketing quota the amount of cured leaf tobacco (usually expressed in pounds) that a tobacco grower may produce and sell in a given year. The United States Department of Agriculture began setting marketing quotas for tobacco in 1933.

New Deal

views updated May 11 2018

New Deal (1933–39) Programme for social and economic reconstruction in the USA following the Great Depression, launched by President Franklin D. Roosevelt. It was based on massive and unprecedented federal intervention in the economy. Early measures, including extensive public works, mainly dealt with relief. The New Deal encountered bitter resistance from conservatives and did not avert further recession in 1937–38. Industrial expansion, full employment, and agricultural prosperity were achieved less by the New Deal than by the advent of World War II.

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