The New Deal EQs

1. In what ways were FDR’s New Deal policies similar to Hoover’s policies?

  1. Public Works Programs: Both Hoover and FDR implemented public works programs to combat unemployment. Hoover created the Reconstruction Finance Corporation (RFC) in 1932, which provided $2 billion in loans to banks and businesses, while FDR expanded public works under the Public Works Administration (PWA) and Works Progress Administration (WPA).

  2. Government Intervention in Banking: Hoover signed the Emergency Relief and Construction Act (1932), the first federal relief program, which provided $300 million to states for unemployment relief—similar to FDR’s Federal Emergency Relief Administration (FERA).

  3. Agricultural Aid: Hoover signed the Agricultural Marketing Act (1929), which attempted to stabilize farm prices, similar to FDR’s Agricultural Adjustment Act (AAA), which paid farmers to reduce production.

  4. Business-Government Cooperation: Hoover encouraged voluntary cooperation between businesses and government, seen in his associations movement. FDR institutionalized this approach under the National Industrial Recovery Act (NIRA), which set wages and prices.

  5. Deficit Spending Concerns: Both were hesitant about deficit spending. Hoover opposed direct relief but increased government spending by 42% from 1929 to 1933, while FDR initially balanced the budget before embracing more government spending.

2. Why were FDR’s responses more effective than Hoover’s responses?

  1. Direct Relief vs. Indirect Relief: Hoover relied on voluntary measures and loans to businesses, while FDR’s FERA provided $3 billion in direct relief to unemployed Americans, reaching 20 million people by 1935.

  2. Banking Stability: Hoover’s efforts to stabilize banks were limited, while FDR’s Emergency Banking Act (1933) closed all banks for four days and restored confidence, leading to deposits exceeding withdrawals when banks reopened.

  3. Unemployment Reduction: Hoover’s policies had unemployment at 25% by 1933, while FDR’s New Deal programs (like the WPA and CCC) helped lower it to 14% by 1937 (though it rose again in 1938).

  4. Public Morale & Communication: FDR’s Fireside Chats reassured Americans, while Hoover’s public image suffered—he was seen as indifferent, famously calling economic problems "temporary."

  5. Government Spending Impact: Under FDR, federal spending increased by 83% from 1933 to 1939, leading to economic growth, whereas Hoover’s spending increases were minimal and ineffective.

3. How successful was the New Deal in solving the problems of the Great Depression?

  1. GDP Growth: The U.S. GDP grew from $57 billion in 1933 to $91 billion in 1937, indicating economic recovery.

  2. Employment Impact: Programs like the WPA created 8.5 million jobs from 1935 to 1943, though unemployment remained high at 17% in 1939 (down from 25% in 1933).

  3. Stock Market Recovery: The Securities Exchange Act (1934) created the SEC, which restored investor confidence, leading to a 400% increase in stock market value by 1937 compared to 1933.

  4. Social Security Introduction: The Social Security Act (1935) provided pensions to retirees and unemployment insurance, benefiting over 26 million Americans by 1940.

  5. Limited Success in Ending Depression: The New Deal alleviated suffering but didn’t fully end the Depression—industrial production didn’t fully recover until WWII.

4. How did critics and supporters influence FDR’s New Deal policies?

  1. Huey Long & "Share Our Wealth": Senator Huey Long proposed a tax on the wealthy to redistribute wealth, pressuring FDR to adopt more progressive policies like the Wealth Tax Act (1935).

  2. Supreme Court Opposition: The Supreme Court struck down the NIRA (1935) and AAA (1936), forcing FDR to modify his programs and propose the unsuccessful court-packing plan in 1937.

  3. Business Leaders’ Criticism: The American Liberty League (1934), backed by business leaders like Al Smith and the DuPont family, opposed FDR’s regulations, prompting him to moderate some policies.

  4. Labor Union Support: Labor unions pushed FDR to expand workers' rights, leading to the Wagner Act (1935), which legalized collective bargaining and increased union membership from 3 million to 9 million by 1940.

  5. Second New Deal Reforms: Leftist pressure led to a more aggressive Second New Deal, including Social Security, the WPA, and higher corporate taxes in 1935.

5. How did FDR’s New Deal change the role of the US Government?

  1. Expansion of Federal Power: The federal budget tripled from $4.6 billion in 1933 to $13 billion in 1940, reflecting increased government intervention in the economy.

  2. Social Welfare System: The Social Security Act (1935) created the first national pension and unemployment insurance program, permanently expanding federal responsibility for citizens’ well-being.

  3. Regulation of Business & Banking: The Glass-Steagall Act (1933) established the FDIC, ensuring bank deposits up to $2,500 ($250,000 today) and preventing reckless speculation.

  4. Shift from Laissez-Faire to Keynesianism: The government adopted Keynesian economics, spending over $41 billion on relief programs, shifting the role of the federal government to an active economic manager.

  5. Increased Presidential Power: FDR’s executive orders and agencies (like the TVA and WPA) created 100+ new federal agencies, expanding presidential influence and setting a precedent for future government intervention.1. In what ways were FDR’s New Deal policies similar to Hoover’s policies? (Negative Aspects)

  1. Both Failed to End the Great Depression: Despite increased government intervention, neither Hoover’s nor FDR’s policies fully ended the Depression—unemployment remained at 17% in 1939 and only dropped significantly due to WWII.

  2. Bank Failures Persisted Under Both: Hoover’s Reconstruction Finance Corporation (RFC) and FDR’s Emergency Banking Act (1933) helped, but over 4,000 banks still failed in 1933 alone, causing continued financial instability.

  3. Limited Immediate Relief for the Poor: Like Hoover, FDR initially hesitated to provide direct relief, fearing dependency. FERA (1933) reached only about 25% of unemployed workers, leaving many without aid.

2. Why were FDR’s responses more effective than Hoover’s responses? (Negative Aspects)

  1. New Deal Recovery Was Slow: While FDR’s programs reduced unemployment, the economy remained fragile. The 1937-1938 Recession saw unemployment rise from 14% to 19% after FDR cut government spending.

  2. Increased National Debt: Government spending skyrocketed, leading to a public debt increase from $22 billion in 1933 to $40 billion by 1939. Critics argued this level of spending was unsustainable.

  3. Failed to Restore Business Confidence: Many business leaders felt the New Deal’s regulations, like the National Recovery Administration (NRA), created uncertainty, discouraging investment and slowing recovery.

3. How successful was the New Deal in solving the problems of the Great Depression? (Negative Aspects)

  1. Unemployment Remained High: Despite New Deal programs, 9.5 million Americans were still unemployed in 1939, and full employment was only achieved during WWII.

  2. Uneven Economic Recovery: Industrial production improved, but agriculture and small businesses struggled—the Agricultural Adjustment Act (AAA) led to crop destruction while millions remained hungry.

  3. Discriminatory Policies: Many New Deal programs excluded Black workers and women. The CCC had segregated camps, and Social Security initially excluded domestic and agricultural workers, affecting 65% of Black workers.

4. How did critics and supporters influence FDR’s New Deal policies? (Negative Aspects)

  1. Supreme Court Rejected Key Programs: The NIRA (1935) and AAA (1936) were ruled unconstitutional, showing that some policies overstepped federal power and lacked legal grounding.

  2. Court-Packing Plan Backlash: FDR’s 1937 plan to add six Supreme Court justices backfired, causing political damage and reducing congressional support for further New Deal programs.

  3. Socialist and Communist Opposition: Left-wing critics argued that the New Deal didn’t go far enough in redistributing wealth, leading to tensions within FDR’s own Democratic Party.

5. How did FDR’s New Deal change the role of the US Government? (Negative Aspects)

  1. Increased Government Bureaucracy: The expansion of federal agencies created inefficiencies and overlapping programs—by 1939, there were over 100 federal agencies, many of which lacked coordination.

  2. Government Spending Created Deficit Concerns: The national debt doubled, and critics feared that Keynesian deficit spending would lead to long-term economic instability.

  3. Set a Precedent for Federal Overreach: Some argued the New Deal gave too much power to the executive branch, setting a precedent for government intervention that some saw as socialist.