New Herbert Hoover had not, that unemployment

New Deal. A phrase used by US President Franklin D. Roosevelt, which refers to the policies of his first two administrations. When he took office in 1933 the economy was collapsing, so Roosevelt began by putting the banks under federal control in order to restore confidence in them. He then, between March and June 1933 pushed through Congress fifteen major bills in a flurry of legislative activity. He did not follow any particular theory. ‘It is common sense’, he said in 1933, ‘to take a method and try it. If it fails, admit it frankly and try another.’ He accepted, as his predecessor Herbert Hoover had not, that unemployment relief was a federal responsibility that could not be left to the inadequate resources of private charity. Various government agencies were set up to provide work for the unemployed: the Civilian Conservation Corps used them on conservation projects, whilst the Public Works Administration under Harold Ickes built schools, hospitals, roads and bridges. The best known of these projects was the Tennessee Valley Authority, which sought to bring prosperity to a very backward and depressed area. Apart from helping the unemployed, there was a need to aid those still working and the industrialists who employed them. The National Industrial Recovery Act (NIRA) suspended the anti-trust laws, in return for promises from employers to reduce working hours, pay a living wage, end child labour and allow workers to organize and bargain collectively. Each industry was to draw up a code of conduct. Agriculture as well as industry was to be helped. The Agricultural Adjustment Act (AAA) tried to raise farm prices by cutting production. Farmers would be compensated if they cut back on the crops they grew and had fewer animals; a quarter of the cotton crop was therefore destroyed and six million pigs slaughtered. This wanton destruction of food when so many were hungry was widely condemned. By 1935 farm incomes had doubled, but this was partly because dust storms and devaluation of the dollar pushed up prices. Most of the benefits of the AAA went to the large farmers: the tenants and share-croppers often became worse off and many left the land. A further reform aimed to prevent another Wall Street Crash: a commission was set up to regulate stock exchanges, and buying stocks ‘on margin’ (on credit) was forbidden.All these reforms were welcome, except to capitalists (who did not like government interference in the economy and were appalled at the large budget deficits and the cost of relief), but they did not go far enough. There were still eleven million unemployed at the end of 1934, and so more radical legislation was passed in 1935. The Works Progress Administration, under Harry Hopkins, replaced earlier relief agencies and in eight years employed eight and half million people on public works and spent $11 billion. There was also an attempt to bring the USA up to Western European standards of social welfare. The Social Security Act created a compulsory system of old-age pensions and unemployment insurance, paid for by contributions from workers and employers. The system was seriously flawed: the federal government made no contribution; unemployment pay was low and was to run for only twenty weeks; many groups, like farm labourers, were excluded; and there were no sickness benefits. However, it provided a base which could be built upon. A wealth tax increased income tax and surtax and levied an excess-profits tax. The rich were now overwhelmingly hostile to the New Deal and regarded Roosevelt as a traitor to his class, a feeling which became more intense with the Wagner Act, which gave support to trade unions.Roosevelt’s landslide victory in the presidential election of 1936 gave him a mandate for more reform: in his inaugural address he referred to ‘one third of a nation ill-housed, ill-clad, ill-fed’. Yet there was little legislation at first, because the President was involved in 1937 in a bruising battle with the Supreme Court. Dominated by conservatives, the Court was hostile to government intervention in economic and social affairs, and had declared illegal several of the most important Acts of the New Deal, particularly the NIRA and AAA. Roosevelt responded in 1937 by proposing to Congress that the President should be able to appoint more (liberal) judges to the Supreme Court. There was a storm of protest: judges were seen as guardians of the Constitution and he was accused of trying to undermine judicial independence. When the President saw that there was no chance of Congress passing the bill he abandoned it. This was Roosevelt’s first major defeat, but the Court had learned a lesson too. Under threat it changed course and upheld New Deal measures such as the Social Security Act and the Wagner Act. New Acts in 1937 and 1938 allowed the federal government to lend money to sharecroppers and tenants to buy their farms; provided federal aid for slum clearance; replaced the illegal AAA by a new one; established a minimum wage and a maximum working week of forty-four hours (to be reduced to forty); and forbade child labour. All these were welcome improvements, but in 1939, when manufacturing had returned to its 1929 level, there were still nine and a half million unemployed (17 per cent of the work force). There was no return to full employment and prosperity until 1941, when, with a change-over to war production, the USA became the ‘arsenal of democracy’.


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