The New Deal


During the 1930's, America witnessed a breakdown of the
Democratic and free enterprise system as the US fell into
the worst depression in history. The economic depression
that beset the United States and other countries was unique
in its severity and its consequences. At the depth of the
depression, in 1933, one American worker in every four was
out of a job. The great industrial slump continued
throughout the 1930's, shaking the foundations of Western
capitalism. The New Deal describes the program of US
president Franklin D. Roosevelt from 1933 to 1939 of
relief, recovery, and reform. These new policies aimed to
solve the economic problems created by the depression of
the 1930's. When Roosevelt was nominated, he said, "I
pledge you, I pledge myself, to a new deal for the American
people." The New Deal included federal action of
unprecedented scope to stimulate industrial recovery,
assist victims of the Depression, guarantee minimum living
standards, and prevent future economic crises. Many
economic, political, and social factors lead up to the New
Deal. Staggering statistics, like a 25% unemployment rate,
and the fact that 20% of NYC school children were under
weight and malnourished, made it clear immediate action was
necessary. In the first two years, the New Deal was
concerned mainly with relief, setting up shelters and soup
kitchens to feed the millions of unemployed. However as
time progressed, the focus shifted towards recovery. In
order to accomplish this monumental task, several agencies
were created. The National Recovery Administration (NRA)
was the keystone of the early new deal program launched by
Roosevelt. It was created in June 1933 under the terms of
the National Industrial Recovery Act. The NRA permitted
businesses to draft "codes of fair competition," with
presidential approval, that regulated prices, wages,
working conditions, and credit terms. Businesses that
complied with the codes were exempted from antitrust laws,
and workers were given the right to organize unions and
bargain collectively. After that, the government set up
long-range goals which included permanent recovery, and a
reform of current abuses. Particularly those that produced
the boom-or-bust catastrophe. The NRA gave the President
power to regulate interstate commerce. This power was
originally given to Congress. While the NRA was effective,
it was bringing America closer to socialism by giving the
President unconstitutional powers. In May 1935 the US
Supreme Court, in Schechter Poultry Corporation V. United
States, unanimously declared the NRA unconstitutional on
the grounds that the code-drafting process was
unconstitutional. Another New Deal measure under Title II
of the National Industrial Recovery Act of June 1933, the
Public Works Administration (PWA), was designed to
stimulate US industrial recovery by pumping federal funds
into large-scale construction projects. The head of the PWA
exercised extreme caution in allocating funds, and this did
not stimulate the rapid revival of US industry that New
Dealers had hoped for. The PWA spent $6 billion enabling
building contractors to employ approximately 650,000
workers who might otherwise have been jobless. The PWA
built everything from schools and libraries to roads and
highways. The agency also financed the construction of
cruisers, aircraft carriers, and destroyers for the navy.
 In addition, the New Deal program founded the Works
Projects Administration in 1939. It was the most important
New Deal work-relief agency. The WPA developed relief
programs to preserve peoples skills and self-respect by
providing useful work during a period of massive
unemployment. From 1935 to 1943 the WPA provided
approximately 8 million jobs at a cost of more than $11
billion. This funded the construction of thousands of
public buildings and facilities. In addition, the WPA
sponsored the Federal Theater Project, Federal Art Project,
and Federal Writers' Project providing work for people in
the arts. In 1943, after the onset of wartime prosperity,
Roosevelt terminated the WPA. One of the most well known,
The Social Security Act, created a system of old-age
pensions and unemployment insurance, which is still around
today. Social security consists of public programs to
protect workers and their families from income losses
associated with old age, illness, unemployment, or death.
 The Fair Labor Standards Act (1938) established a federal
Minimum Wage and maximum-hours policy. The minimum wage, 25
cents per hour, applied to many workers engaged in
interstate commerce. The law was intended to prevent
competitive wage cutting by employers during the
Depression. After the law was passed, wages began to rise
as the economy turned to war production. Wages and prices
continued to rise, and the original minimum wage ceased to
be relevant. However, this new law still excluded millions
of working people, as did social security. However, a
severe recession led many people to turn against New Deal
policies. In addition, World War II erupted in September
1939. Causing an enormous growth in the economy as war
goods were once again in great demand. No major New Deal
legislation was enacted after 1938. The Depression was a
devastating event in America, and by regulating banks and
the stock market the New Deal eliminated the dubious
financial practices that had helped precipitate the Great
Depression. However, Roosevelt's chief fiscal tool, deficit
spending, proved to be ineffective in averting downturns in
the economy. 


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