Differences Between the First and Second Stages of Franklin D Roosevelt’s New Deal

The question being investigated is: What were the major differences between the first and second stages of Franklin D Roosevelt’s New Deal? To answer this and reason which was the more effective, both of the plans must be considered and compared, with attention paid to their effects and the feelings toward them from people of different perspectives.

The first source being evaluated is Franklin D. Roosevelt’s Inaugural Address,1 in which he addresses his plans for the United States’ financial crisis. He delivered the speech on November 4th, 1933.2 This pertains specifically to the research question as it describes the course of action for the New Deal. FDR wrote it as a motivational speech as well as a way to outline his plans for economic recovery. The value of the origin is that it was written by FDR,3 who had created the New Deal. This means that the information in the speech is accurate. It is written to inform about the current state of the nation and the plan for reform. The origin of the source is limited by the fact that not all the speech is focused on the New Deal, as it was his Inaugural Address and not just a statement on the New Deal. There is also the possibility of bias because FDR was in favor of the New Deal. The purpose of the source was to inform the American people of FDR’s plans for the New Deal, which would help the country recover from its financial crisis. It was also written to reassure the American people since there had been much uneasiness given the rise of unemployment and the state of the economy. The value of the purpose of the source is that it directly states FDR’s plans for the New Deal as he begins his presidency and explains his reasoning in a way that the average American could understand. It detailed the plans for the New Deal and the way that they would benefit the average American that had been affected by the Great Depression. The limit of the purpose is the fact that it was written as a speech for the average American, and as such it could be omitting specific details of the plan. In addition, it could be exaggerated to make it sound more reassuring. In addition to detailing the New Deal and his plans for economic reform in the US, FDR also gives a rallying speech to the American public to help them feel strong in the face of financial crisis. The source’s content is valuable because it is focused on the average American, which is the group most affected by the Depression.

The second source that is being evaluated is a paper written by John Hardman from Stanford University.4 It is a secondary source drawing from reports written by financial experts, as well as FDR’s two inaugural addresses.5 It is relevant because it provides information on the first and second New Deal stages. It was written by John Hardman and featured on the Stanford University website.6 The value of the origin is that it is credible, being from Stanford. The limitation is that it is from a broader group of reports, and the New Deal is not focused on exclusively. The purpose of the source is to inform the reader on the New Deal and the Great Depression. This is valuable because it is directly related to the research question. The limitation of the purpose is that the Great Depression is the primary focus, and the information on the New Deal is sometimes interspersed among other information. The source provides information on the New Deal, and draws from several credible sources. This is valuable because it is relevant to the research question.

Though Franklin D Roosevelt’s First New Deal was immeasurably important in America’s financial recovery, its short term solutions were not as effective as the Second New Deal’s long term solutions that then combined with the economic boom brought on by the massive supplies production necessary for World War II. Although one could argue that the First New Deal helped America more in a shorter period of time than the Second New Deal did, the Second New Deal came just before America entered World War II, and as such America grew financially more in the period of the Second New Deal than that of the first. The First New Deal provided jobs to millions of Americans,7 but the Second New Deal provided the ability for workers to form unions to better their working conditions,8 established a minimum wage,9 and kept young people from working in potentially hazardous environments.10 The Second New Deal also established Social Security,11 which was very important to provide income to those with no employment or few funds.

Franklin D Roosevelt’s First New Deal was part of his presidential campaign,12 and was popular among the public. Due to its popularity it was a major contributor to FDR’s election. The First New Deal was comprised of many parts, but the most notable of these were the federal reform of bank insurance,13 the repeal of the prohibition,14 and the construction of many government funded projects.15 Many construction projects began with FDR’s election, such as the construction of new roads, federal buildings, airports, hospitals, schools, bridges, dams, warplanes, and warships, including two new aircraft carriers.16 This created jobs for many Americans, all of which were subsidized by the government.17 This employed millions of formerly jobless Americans.18 Another tactic FDR used to reintroduce money into the economy was to repeal the prohibition, or the 21st amendment.19 At first he introduced an interim bill that made it legal to purchase, sell, and consume alcohol as a temporary solution, but then went on to fully repeal the 21st amendment.20 This increased the amount spent in grocery stores, at restaurants, and at bars, which was a helpful additional measure in bringing more money in to the average citizens.21 With the New Deal, the Federal Deposit Insurance Corporation was established, providing security in investments for consumers and banks.22 It allowed people to deposit money and invest without the risk of their bank failing and losing their money. This allowed banks to reclaim some of the money they had lost when the stock market crashed. While it is a common misconception that investors and consumers did not receive a sizable portion of their money back, if any, investors actually received an average of approximately 85 cents to the dollar on investments or deposits they had made before the Great Depression.23 All in all, depositors lost approximately 540 million dollars.24 Much of the First New Deal was focused on rural America. FDR believed that the recovery of the US agricultural system was integral in recovering from the Great Depression.25 Some of the construction projects that had been subsidized by the government involved bringing electricity into America’s rural farm areas.26 He tried to monitor and regulate the amount of corn, cotton, tobacco, dairy, hogs, rice, and wheat produced by farms, but this was unpopular with the public and it was later ruled unconstitutional.27 The government could not regulate the production of goods on private property.28 Another measure taken to improve the agriculture industry was to allow farmers to profit while reclaiming the fields that had been run dry of nutrients.29 Cotton and other fields were plowed up and replanted with government-subsidized alfalfa, which is rich in nutrients and helps to rejuvenate soil.30 This measure allowed farmers to earn money while letting their fields regain nutrients.31 In addition, to drive up the price of pork products, six million piglets were slaughtered and discarded.32 As a result, the price of pork was driven up by the lack of supply, and hog farmers were able to turn a greater profit.33

The Second New Deal focused on more long term solutions than those of the First New Deal. In 1935, the Social Security Act was established,34 allowing those who were unemployed or in poverty to claim a bit of steady income. For those that were still employed, the National Labor Relations Act of 1935 allowed employees to form unions,35 allowing them to take initiative in changing unsatisfactory or unfair workplace conditions and pay rates. The Fair Labor Standards Act, established in 1938, provided a federal minimum wage.36 The Fair Labor Standards Act also established a maximum of 44 hours a week,37 set a minimum age of 16 for workers,38 preventing child labor, and made it so that persons under the age of 18 could not work in hazardous environments.39

World War II started in 1939,40 and with it came a boom in supplies production. Munitions, weapons, food, clothing, and other supplies were necessary for the war effort. This sudden demand for production had a similar effect to the first stage of the New Deal. There was suddenly a massive demand for factory work. This change in the economy makes it difficult to evaluate the full effect of the Second New Deal, because there is a major change being introduced that would probably not have happened had the war not began. To further the difficulty of evaluating the effect of the Second New Deal, in 1941, when America joined the war,41 many of the men that had previously been working in factories and other such places left to go to war instead of working at home.42 This combined with the Second New Deal created a financial environment in those years (≈1935-1945), that, when viewed collectively, was not dissimilar to the First New Deal and its effect on the employment on Americans. The biggest difference in the two time periods is that during the First New Deal, banks were federally insured, which, although completely necessary, did not directly affect the average person as much as a minimum wage and new working conditions and laws did.

The First New Deal was extremely important in the short term, helping those affected most by the Great Depression to get back on their feet, but the Second New Deal combined with the massive scale of supplies production necessary for World War II brought a similar effect to that of the public works projects of the First New Deal, as well as providing more security for the average working class American. If the war had not started, the First New Deal may have had the greater effect in the short term, but overall, the long term effects of the Second New Deal were more important in helping America recover from the Great Depression and giving security to the working class.

Bibliography

1. Amadeo, Kimberly. The Balance. “New Deal Summary, Programs, Policies, and Its Success.” Modified November 16, 2018. https://www.thebalance.com/fdr-and-the-new-deal-programs-timeline-did-it-work-3305598
2. Editors of Encyclopaedia Britannica. Encyclopedia Britannica. “New Deal.” Accessed December 13, 2018. https://www.britannica.com/event/New-Deal.
3. Editors of History.com. History.com. “New Deal.” Accessed December 4, 2018. https://www.history.com/topics/great-depression/new-deal.
4. Editors of History.com. History.com. “World War II.” Accessed December 7, 2018. https://www.history.com/topics/world-war-ii
5. Friedman, Milton and Schwartz, Anna. A Monetary History of The United States, 1867-1960. Princeton University Press, 1963.
6. Hardman, John. Stanford.edu. “Great Depression and The New Deal.” Accessed November 30, 2018. https://web.stanford.edu/class/e297c/poverty_prejudice/soc_sec/hgreat.htm.
7. Heinemann, Ronald. Depression and New Deal in Virginia. University of Virginia Press, 1983.
8. Library of Congress. “President Franklin Delano Roosevelt And The New Deal, 1933-1945.” Accessed December 5, 2018. http://www.loc.gov/teachers/classroommaterials/presentationsandactivities/presentations/timeline/depwwii/newdeal/.
9. National Labor Relations Board. “National Labor Relations Act.” Accessed December 11, 2018. https://www.nlrb.gov/how-we-work/national-labor-relations-act.
10. Office of Financial Management. “Fair Labor Standards Act.” Accessed December 11, 2018. https://ofm.wa.gov/state-human-resources/compensation-job-classes/compensation-administration/fair-labor-standards-act-flsa
11. Roosevelt, Franklin. “First Inaugural Address.” Accessed November 29, 2018. http://historymatters.gmu.edu/d/5057/
12. Roosevelt, Franklin. “We Have Only Just Begun To Fight.” Accessed December 6, 2018. https://www.ourdocuments.gov/doc.php?flash=false&doc=69&page=transcript
13. U.S. History. ushistory.org. “The Farming Problem.” Accessed December 20, 2018. http://www.ushistory.org/us/49c.asp