FRANKLIN ROOSEVELT AND THE NEW DEAL

Franklin Delano Roosevelt became the new President of America. He pledged a new
deal to America to fight and recover from the Great Depression. His optimism was
what America needed. Roosevelt won a landslide victory in November 1932. He
promised the people a New Deal.

Upon accepting the 1932 Democratic nomination for president, Franklin Roosevelt
promised "a new deal for the American people"

The New Deal was a series of economic programs enacted in the United
States between 1933 and 1936. The programs were in response to the Great
Depression, and focused on what historians call the "3 Rs": Relief, Recovery, and
Reform. That is, Relief for the unemployed and poor; Recovery of the economy to
normal levels; and Reform of the financial system to prevent a repeat depression.
The Brains Trust helped come up with the programme.

Roosevelt's first act as president was to deal with the country's banking crisis.
Since the beginning of the depression, a fifth of all banks had been forced to close.
As a consequence, around 15% of people's life-savings had been lost. By the
beginning of 1933 the American people were starting to lose faith in their banking
system and a significant proportion were withdrawing their money and keeping it at
home. The day after taking office as president, Roosevelt ordered all banks to close
(Emergency Banking Act). He then asked Congress to pass legislation which
would guarantee that savers would not lose their money if there was another
financial crisis. Billions of dollars in hoarded currency and gold flowed back into them
within a month, thus stabilizing the banking system

By the end of 1933, 4,004 small local banks were permanently closed and merged
into larger banks. Their deposits totalled $3.6 billion; depositors lost a total of $540
million, and eventually received on average 85 cents on the dollar of their deposits; it
is a common myth that they received nothing back). It also established the Federal
Deposit Insurance Corporation (FDIC), which insured deposits for up to $2,500,
ending the risk of runs on banks. This banking reform offered unprecedented
stability: While throughout the 1920s more than five hundred banks failed per year; it
was less than ten banks per year after 1933.

1
On 9th March 1933, Franklin D. Roosevelt called a special session of Congress. He
told the members that unemployment could only be solved "by direct recruiting by
the Government itself." For the next three months, Roosevelt proposed, and
Congress passed, a series of important bills that attempted to deal with the problem
of unemployment. The special session of Congress became known as the Hundred
Days and provided the basis for Roosevelt's New Deal.

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

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

Agencies called the Alphabet Agencies were created.

The government employed people to carry out a range of different tasks. These
projects included the Works Projects Administration (WPA) - The WPA coordinated
all public works schemes. It spent over $10.5 billion of Federal money and employed
3.8 million men from 1935 to 1941. It had built 77,000 bridges, 24,000 miles of
sewers, 664,000 miles of road, 285 airports, 122,000 public buildings and 11,000
schools.

The Civilian Conservation Corps (CCC) - This employed jobless single men between
the ages of 18 and 25. They worked for 6 months in mountains and forests where
they were taught forestry, flood control and fire prevention. Nearly 3 million men took
part in the scheme which ran from 1933 to 1941.

The National Recovery Administration -(NRA). The NRA brought together leaders in
each industry to design specific sets of codes for that industry

2
The Public Works Administration- (PWA) was a major program of public works,
which organised and provided funds for the building of useful works such as
government buildings, airports, hospitals, schools, roads, bridges, and dams.

Tennessee Valley Authority (TVA) - a project involving dam construction planning on

Under the Farmers’ Relief Act of 1933, the government paid compensation to
farmers who reduced output, thereby rising prices. As a result of this legislation, the
average income of farmers almost doubled by 1937.

was to raise prices for commodities through artificial scarcity. It used a system of
"domestic allotments", setting total output of corn, cotton, dairy products, hogs, rice,
tobacco, and wheat. The farmers themselves had a voice in the process of using
government to benefit their incomes.

As well as trying to reduce unemployment, Roosevelt also attempted to reduce the

The New Deal had an important impact in the housing field.

The New Deal implemented two new housing agencies; Home Owners' Loan
Corporation (HOLC) and the Federal Housing Administration (FHA). HOLC set
uniform national appraisal methods and simplified

After the first hundred days, continued economic distress and mounting opposition to
FDR’s programs cast doubt upon the New Deal.

The first sign that the New Deal was in danger was trouble with the NRA. Opposition
to the NRA came to a head in 1935, when the conservative Supreme Court
declared the agency unconstitutional, claiming the NRA gave the executive branch
regulatory powers that belonged exclusively to Congress. This decision began a
series of court decisions that overturned key elements of the New Deal.

3
Another source of criticism was the conservative American Liberty League,
composed of elites who claimed that the New Deal restricted democratically
guaranteed freedoms to earn and save money and acquire property.

Other challenges to the New Deal arose from those appealing to the discontented
lower and middle classes, including Father Charles Coughlin and Huey Long, who
argued that the New Deal was not going far enough in alleviating poverty.

To regulate the economy, FDR empowered the Federal Reserve Board to exert
tighter control over the money supply, and called for strict enforcement of the
Securities Exchange Act of 1934, which required that a detailed and truthful
prospectus be publicized for each company issuing stock on the U.S. market.

In August 1935 the Social Security Act was passed. This act set up a national
system of old age pensions and co-ordinated federal and state action for the relief of
the unemployed. This was the best known achievement of the Second New Deal
which created the modern Social Security program.

Conclusively, the new deal was successful in helping American economy recover
and provided a sense of relief to the ordinary Americans who were hit hard by the
Great Depression. Although the New Deal was criticised the second victory of
Roosevelt suggests that the majority of Americans were happy with the optimism of
FDR and his efforts to remedy the situation.