The New Deal

The United States, July 1932. Soon, Americans will elect a new president. Many of them want to get rid of current president, Herbert Hoover, who they blame for the country’s economic crisis — the Great Depression. Running against Hoover is Franklin D. Roosevelt.

He promises to do something to end the crisis: “I pledge you, I pledge myself, to a new deal for the American people.” Four months later, Roosevelt wins. To deliver the “New Deal”, which will run from 1933 to 1939, President Roosevelt, along with the support of Congress, aims to do three things: provide relief for the poor and unemployed; help the economy recover to its normal levels; and change — reform — the country’s financial systems so that an economic depression won’t happen again. Relief, recovery and reform become the three pillars of the New Deal. To help America’s crowds of unemployed workers, Roosevelt sets up programs to give out emergency funds and to provide people with temporary work. Some are paid to build roads, organise community theatre, or run local museums, under the Works Progress Administration.

Others plant trees and fight forest fires with the Civilian Conservation Corps. Much of the New Deal’s relief work happens in the first three months of Roosevelt’s presidency, which becomes known as the Hundred Days. Over the next three years, Roosevelt turns to helping the country’s factories and farms. To strengthen manufacturing, Roosevelt sets up the National Recovery Administration, or NRA. It sets rules for businesses that reduce unfair trading practices to increase healthy competition between companies.

The NRA also sets minimum wages and maximum working hours for workers, and it guarantees workers’ right to get together and ask for better working arrangements. This is called collective bargaining. To help farming recover, Roosevelt needs to reduce the availability of corn, cotton, and rice. Over the last few years, farms have been producing more than the country needs, and this has made crops too cheap — farmers can’t make a profit. So Roosevelt sets up the Agricultural Adjustment Association.

It offers farmers money to produce less. By reducing the crops available, they become more valuable, and farmers can charge higher prices. Relief has reached the neediest, and recovery is underway for manufacturing and agriculture… but Roosevelt still needs to find a way to prevent future economic disasters. To do this, he needs to reform the banking system. During the Great Depression, much of the money people had in banks disappeared — banks had invested customers’ money on the stock market, and lost it when the stock market crashed.

So Roosevelt sets up the Federal Insurance Corporation which provides a back-up for money in bank accounts. Should banks collapse again, the government will pay people any money they lose. The scheme is a success. People feel confident once again depositing their money, and the banking sector grows stronger. The New Deal also brings an important change that spans relief, recovery and reform.

It provides monthly government payments to the old, widowed, unemployed and those with disabilities. For the first time in history, the government offers social security. As the New Deal unfolds, the Supreme Court rules that some of its programs go against America’s founding document, the Constitution. The Court orders some programs to be stopped. But despite this, the New Deal’s impact on American life and business, and the country’s economy, is considerable.

Does the New Deal end the Great Depression? It’s hard to say for certain… America’s economy won’t fully recover until the country joins World War Two.