How successful was President Roosevelt's 'New Deal'?

Franklin D.  Roosevelt launched his 'New Deal' in 1933 in response to the enormous scale of poverty created by the Great Depression of 1929.  Following the great crash of the New York stock exchange.  banks were collapsing.  industrial and farm incomes were down by approximately two thirds, and unemployment, which stood at 1.6 million in 1929, shot up to 12.8 million (25 per cent of the labour force) by 1933. 

The first action Roosevelt took was to close all the banks while a recovery programme was put together.  Just before the solvent banks were re-opened.  Roosevelt reassured the American public by broadcasting his first 'Fireside Chat' on the radio.  On the following day bank deposits exceeded the amount withdrawn, showing that confidence in the banking system had been restored. 

By the end of his First Hundred Days, Congress had passed fifteen significant laws concerning labour, agriculture, business.  industry, and unemployment.  Much of this emergency legislation was drawn up hastily, and by 1935 some were questioning the federal government's involvement in the reforms.  First came the Supreme Court rulings which invalidated several New Deal agencies.  Secondly, big business, which had begun by co-operating with the New Deal, started to become uneasy about federal government interference in their industrial and employment practices.  Roosevelt responded by initiating a new wave of laws.  The Second New Deal focused on public works programmes for the jobless, labour relations and social security measures. 

Industry made some gains under the New Deal.  From 1933 to 1937 the economy grew by 10 per cent a year.  However, there was a downturn in 1937 and unemployment increased to 19 per cent.  In 1941.  unemployment was still as high as 10 per cent and high unemployment looked likely to be permanent.  Meanwhile unions benefited from the New Deal with a tripling of membership in the )930s.  Almost a quarter of non-agricultural workers were unionised by 1940.  Unions also began to draw members from unskilled work and mass production.  Under the Wagner Act, employers could no longer ban unions or rely on troops to break up strikes.  Workers were guaranteed the right of collective bargaining, but the unions remained weakest in the sectors which grew in subsequent years: the senice industries. 

With farmers making up 30 per cent of the national workforce in 1930, agricultural problems had to be tackled under the New Deal.  The immediate problem of surplus products and low prices was dealt with by the destruction of 10.4 million acres of cotton crops and the slaughter of 6 million hogs.  The Agricultural Adjustment Act (AAA) paid producers to reduce their crops and taxed farm produce processors (e.g.  canning factories).  The aim was to push prices up by making products scarce.  The first problem was the apparent wastefulness this involved.  Secondly.  farmers only took part voluntarily and so success was likely to be limited.  Nevertheless, farm income doubled between 1932 and 1939, reaching $4.6 billion.  The availability of better credit facilities and loans also enabled many farmers to remain on the land.  In addition.  the Rural Electrification Administration (REA) increased the number of farms with electricity from 10 per cent in 1930.  to 45 per cent by 1945. 

Other New Deal projects met with mixed success.  In 1933 the Civilian Conservation Corps (CCC) was set up to employ young people.  Half a million were employed in reforestation, rural road building.  irrigation and flood control schemes, and soil conservation projects.  Jobless people from the city benefited as did the rural areas affected by the improvement works. 

New Deal welfare legislation represented a first for federal government involvement in direct help for the jobless.  In 1933 the Federal Emergency Relief Administration (FERA) was set up.  providing 5500 million to the states.  Each state had to match every federal dollar with three more dollars from its own coffers.  There were disadvantages in this system: poorer states were penalised by the dollar-matching arrangement.  FERA had to rely on local agencies to administer the relief, leading to wide variations between states as some provided hand-outs in the form of food parcels rather than cash, and some southern states chose to pay only half as much to blacks as to whites (e.g.  Atlanta paid 532.66 to whites and 51929 to blacks).  However.  FERA represented a huge increase in public spending.  from 5208 million in 1932 to S3 billion in 1935, and undoubtedly removed the threat of starvation for many.  Public works programmes were established by the federal government.  First the Civil Works Administration (CVA) employed 4.2 million people in public building, construction, teaching and public art projects.  The CWA was superseded by the Works Progress Administration (WPA).  at its peak employing 3.3 million people per month.  The WPA assisted many Americans not covered by other New Deal measures: women, blacks, white-collar workers and youths.  Unfortunately the work was often of a menial nature and the WPA was not destined to become a lasting employment project.  Secondly, there was the Tennessee Valley Authority (TVA).  It was established to control flooding, boost agriculture and provide cheap electricity in the Tennessee Valley.  affecting seven states in the South.  Private power companies in the area resented the competition.  The TVA also promoted massive industrialisation and by the 1970s had become a huge environmental polluter. 

In the long term the New Deal aimed to prevent destitution.  The Social Security Act of 1935 provided for employees to pay contributions into insurance policies to cover for old age and unemployment.  While the federal government did not make any contributions for old age and unemployment.  it did introduce a safety net for people who were unable to work, for dependant children and for the blind.  For these people, federal funds were to be matched by state funds.  However the social security provisions were limited: mobile, agricultural and domestic workers were not covered, fund-matching again favoured the wealthier states and health insurance was left entirely in private hands. 

When assessing the success or failure of the New Deal it is important to be aware of its aims and of the constraints within which Roosevelt's government was working.  Many New Deal arrangements were introduced as a first step to deal with the emergency of the depression years.  When it came to consolidation.  other factors came into play, such as the loss of immediacy, Supreme Court condemnation and the conservatism of Congress.  Congress's conservatism reflected that of the American people and New Dealers had to work against the backdrop of traditional anxieties surrounding the extension of federal powers. 

Other limitations surfaced in implementing the New Deal.  There were local variations because of relative state wealth and racial discrimination.  In some instances the New Deal relied on co-operation to get emergency measures in place.  Businessmen were used to draft codes governing hours and conditions for industry; and farmers were used to cut production or destroy crops so that prices could recover.  Later, these groups blocked moves which threatened to reduce their competitiveness. 

How we judge the success of the New Deal depends on what we consider its aims to have been.  If it was simply a set of emergency relief measures to deal with the worst effects of the Depression, then the New Deal was successful in the short term.  Banking was stabilised and public confidence restored.  Farmers were able to remain on the land.  Work projects helped 40 per cent of the jobless.  If we take a broader view of the New Deal, as an attempt to establish a comprehensive welfare state in the long term, then its success was mixed.  While unionisation and minimum wages gave a large number of workers benefits, by 1939 around 10 million Americans were still without jobs.  Large industrial corporations clung onto a great deal of power.  Agricultural surpluses were still being produced and rural poverty was still widespread.  The new social security system did enable workers to set aside insurance for old age and unemployment and gave assistance to people unable to work.  But social security did not cover the kinds of work where there was a high percentage of women and racial minorities.  The absence of health insurance was another very obvious failing.  However, it was the conservative nature of social security that ensured the welfare state's acceptability to the majority of Americans in the long term.  Given the political constraints and despite the limitations, Roosevelt's New Deal did represent a new departure.  It initiated an unprecedented level of federal involvement in American welfare, backed by unprecedented sums of money.