Posts Tagged ‘national recovery act’

Roosevelt’s New Deal – A Question of Success

April 2, 2010

New Deal programs put 1/3 of America’s destitute to work.

In the decades since the end of the Great Depression, debate has raged in the hearts of tax payers and politicians about the success or failure of the New Deal; President Franklin Delano Roosevelt’s collections of legislative actions aimed at providing relief from and a way out of the economic chaos that was the Depression. When addressing the question of success or failure, one cannot simply look at the program as a whole, because it was not simply one program. Many acts were proposed and passed – some to great benefit and some to disappointment. This paper will show five programs in particular that hail the New Deal as a success for one specific reason: that these acts did exactly what they were intended to do – to stop the collapse of the banks and to bring relief to millions of suffering poor. These five acts are: the Emergency Banking Act, the National Recovery Act, the Federal Emergency Relief Administration, the Civil Works Administration, and the Works Progress Administration.

The need for relief from the dire situation of the Great Depression is of no debate. The years from 1928 to 1933 saw unprecedented collapse of markets and economies across the nation. Businesses failed by the hundreds of thousands, large ticket sales plummeted to fractions of their earlier levels, millions of workers were unemployed, homes and farms were in foreclosure and people were hungry with nowhere to turn (Henretta 727-728). The inaction of the Hoover administration overtaxed charities to the breaking point. Newly elected President Roosevelt and the democratic majority Congress set to work immediately to shore up a failing economy with a whirlwind of legislative action. (Henretta 739) The sheer speed at which they addressed current economic concerns turned the mood of the nation around. Finally, the people of the U.S. had hope that relief would be forthcoming.

The first act passed was the Emergency Banking Act (EBA) of 1933. To stem the flow of bank closures (nearly 2300 in 1931 alone), Roosevelt “declared a national ‘bank holiday’” (Henretta 739), bringing an immediate, if temporary halt to any more closures. For one day, all banks closed their doors.  In a special session of Congress, the EBA demanded a Treasury Department inspection of any bank wanting to reopen to ensure they had enough cash reserves. Using the radio to reach the American public, Roosevelt convinced the people that their money was better off in the banks than out of them. With confidence returning, the follow-up to the EBA was the Glass-Steagall Act which gave birth to the Federal Deposit Insurance Corporation, protecting deposits of up to $2500 from losses. These two actions brought enough confidence back to banking that bank closures topping 4000 in 1933 virtually ceased in 1934 when only 61 went under.

The National Recovery Act changed the way businesses governed themselves and how they set prices and production quotas. Of those changes, the most beneficial to the American people were the codes that outlawed child labor, set minimum wages and limited working hours for adults (Henretta 742). This group of actions prevented employees from being forced to work 16 hour days, thereby opening                      up man-hours for more employees. It moved children out of the work place, opening up more jobs while improving quality of life for children. And finally, wages were raised to a legal minimum across the nation, paying workers more for the hours they put in.

Bringing relief to the unemployed required a different action – one that would encourage people to continue looking for

There was a gnawing fear of “what would happen” if the Depression continued.

work while allowing them to feed their families and pay for their homes. The Federal Emergency Relief Administration was created to do just that. Its first director, Harry Hopkins, sent federal monies to state relief programs. The money was desperately needed and quickly distributed – $5million in just two hours after Hopkins started. In the first two years, over $1billion was spent (Henretta 742). It wasn’t a long term answer, but it was fast. The masses who continued to go without work were at least able to put food on their families’ tables.

Congress set up a construction program called the Public Works Administration (PWA). To fund it, Hopkins was then named head of a new Civil Works Administration through which he gave $400 million to PWA.  In 30 days, 2.6 million people had jobs. The following year, CWA would hit its high point, paying for the jobs of 4 million Americans. These jobs involved “repairing bridges, building highways, constructing public buildings and setting up community projects.” (Henretta 743/744) Valuable work was being done, and millions of formerly unemployed finally had respectable occupations.

The first New Deal didn’t continue long enough to see any stability in the recovering economy. When a new wave of recession began to rear its ugly head, FDR brought out phase two – the Second New Deal. One of the many programs in Act Two was the Works Progress Administration, another back-to-work program that “became the main federal relief agency.”  (Henretta 747) Unlike the FERA, the WPA put people straight onto the federal payrolls instead of paying the states to employ them.

The WPA was massive. Running from 1935 to 1943, the WPA employed over 8 million people and spent $10.5 billion. Assignments included construction or repair of over 650,000 miles of roads, 124,000 bridges, 125,000 public buildings, 8200 parks and 850 airports. No one was getting rich working on these projects. Pay averaged $55 per month. But for those working, it was a far step above a hand-out. There were jobs for only one-third of the unemployed in the US. (Henretta 747), but for that third, this was heaven-sent.

What was, perhaps, one of the best “products” to come from the New Deal was not as tangible as a paycheck or a pot of soup. Perhaps the greatest benefit was hope. With the inaction of the Herbert Hoover, hope was in short supply. As an Arizona man was quoted in the text saying, “You can’t sleep, you know. You wake up at 2 a.m. and you lie and think.” (Henretta 737) In 1931, Mary Hamilton, a writer from Great Britain, observed, “…long queues of dreary-looking men and women standing in ‘breadlines’ outside the relief offices and the various church and other charitable institutions. Times Square…is packed with shabby, utterly dumb and apathetic-looking men, who stand there, waiting…there is an obscure alarm as to what they may do ‘if this goes on’…” (Henretta 732) Through these programs that hope and optimism returned. Americans could finally believe there would be an end to the hunger and destitution.

Three of the aforementioned programs were effective here in Montana. The Civil Works Administration “put 20,000 Montanans to work within three months.”  Due to mismanagement, it was replaced by the Federal Emergency Relief Administration, first giving direct relief and then employment. But the most present was again the Works Progress Administration which employed up to 21,000 people in the state.  “The [dormitory] project allowed rural children to stay in school, eased the financial burden of their families and gave (cook) MacLean pride in her own labor.” (Murphy 52) Other projects included “schools, roads, bridges, dams, stadiums, parks, swimming pools, tennis courts, fairgrounds, golf courses, water and sewage systems, airports, fish hatcheries, fences, sidewalks and curbs.” (Murphy 53) The work was valuable, honest and a worthy trade for the pay. Finally, people who were unable to grow crops on drought stricken land had a chance to feed their families from the fruit of their own labor.

These programs that made up the “New Deal” weren’t panaceas. Some programs didn’t provide much good at all. But these five brought desperately needed relief to millions, kept banks open, and even encouraged investment. It would take the Second World War to finally bring comprehensive relief to the nation, but in the mean time, the New Deal gave millions of people the ability to hold on.