Study Notes on the New Deal

The New Deal Overview

  • Introduced by Franklin Delano Roosevelt (FDR) in response to the Great Depression.
  • Aimed to address economic hardships through government action and reform.

Historical Context of the New Deal

  • Comparison to Teddy Roosevelt’s Square Deal:
    • Teddy Roosevelt's policies aimed to address corruption, consumer protection, conservation, and corporate regulation.
    • The comparison highlights similarities in government intervention to improve economic conditions.

Key Components of the New Deal

  • The New Deal consists of two major phases:
    • First New Deal: Focuses on immediate relief, recovery, and reform.
    • Second New Deal: Aimed at long-term reform and addressing criticism of the first phase.

First New Deal

  • The First New Deal encompasses 3 Rs: Relief, Recovery, Reform.
    • Purpose: Immediate solutions to the economic pressure faced by the populace during the Great Depression.
Examples of the First New Deal

  • Relief Programs:

    • FERA (Federal Emergency Relief Administration): Provides funds to state governments for immediate relief needs, such as shelter, food, and cash assistance to those in need.
    • Example: Funding states with dire needs such as Illinois during the Great Depression.
    • CCC (Civilian Conservation Corps):
    • Employs young men (ages 18-25) in environmental conservation projects, such as planting trees and preventing soil erosion.
    • Promotes job creation and youth employment.
    • Based on environmental projects like improving public spaces and teaching better farming practices.

  • Recovery Programs:

    • AAA (Agricultural Adjustment Act):
    • Subsidizes farmers to limit crop production to raise prices (e.g., paying corn farmers not to grow corn).
    • Results in the slaughter of excess livestock (e.g., 6,000,000 pigs in 1933) to reduce market supply and inflate prices.
    • Critics note the negative impact on sharecroppers and people’s access to food.
    • NIRA (National Industrial Recovery Act):
    • Aims to stabilize industry by regulating wages and hours of work, but ultimately deemed unconstitutional by the Supreme Court (1935) due to overreach into legislative powers.

  • Reform Programs:

    • Emergency Banking Relief Act:
    • Aimed to stabilize banks and restore public confidence.
    • Allowed for government loans to assist struggling banks to ensure their reopening and operation.
    • FDIC (Federal Deposit Insurance Corporation):
    • Insures bank deposits (up to $2,500), restoring public trust in banking systems and separating investment banks and commercial banks.

Second New Deal

  • Direct response to critiques of the First New Deal, indicating a shift towards long-term reform.
  • **Key Policies:
    • Social Security**: Designed as a long-term safety net for citizens.

The Role of Government

  • The New Deal represents an expansion in government involvement in the economy, forcing government to become more active in economic affairs.
  • FDR’s liberal reforms were not aligned with socialist or communist ideologies but emphasized government responsibility for economic management.

Impact of the New Deal

  • Lead to a significant restoration of trust in American banks through various acts such as the FDIC.
  • Created jobs through various agencies, significantly impacting unemployment.
  • Established many foundational economic regulations still in place today, reshaping the financial landscape of America.

The First Hundred Days

  • FDR's first hundred days (March to June 1933) were characterized by rapid legislation to address the Great Depression's immediate effects.
  • Introduction of key programs and agencies under relief, recovery, and reform frameworks:
    • Relief: Examples include FERA, CCC.
    • Recovery: Examples include AAA, NIRA.
    • Reform: Examples include the FDIC, Emergency Banking Act.

Post-Hundred Days Developments

  • Later programs like the CWA (Civil Works Administration) focused on local job creation through infrastructure projects, contrasting with larger-scale efforts of the PWA (Public Works Administration).