Diametrically opposite views have been expressed about the significance and contributions of New Deal[1] and other policies of President Franklin D. Roosevelt. On the one hand, there are scholars who hold that save for Washington’s first administration and the Civil War years, no other comparable period had witnessed such changes in American life. For example M.J. Heale says;
Franklin D. Roosevelt’s administration was a major watershed in American history. When he first took the oath of office on 1933 the United States was to a large extent a land of small-town values, minimal government, and isolation from the affairs of the world. This was the traditional America presided over by Anglo-Saxon and protestant elites…By 1945 a new America has taken shape , one characterized by metropolitan values, pervasive governmental bureaucracy, and world power pretensions. This was United States that would dominate the world for the second half of the twentieth century…Franklin D. Roosevelt, more than any other single person gave direction to this fundamental transformation of American political society. (XI)
On the other, its opponents contend that New Deal failed to attain its main objective viz. overcoming the depression. Relief, Recovery and Reforms were the three great aims of New Deal. Let’s examine whether administration of Franklin D. Roosevelt was successful in achieving its objective.
Though the actions of FDR’s administration did not form a part of carefully planned scheme and were taken to deal with the immediate problems, yet of all actions were guided by three principles-relief, recovery and reform. Relied implied that millions f American citizens who were in desperate needs of food and money had to be helped. Recovery meant that the country had to be taken out of depression. Reform implied that the glaring defects in the American society had to be set right to take the country forward. It may be noted hat chief objective of the New deal was not to destroy capitalism, but to preserve it by keeping a balance between different interests. Roosevelt explained the objective of the New Deal thus; “What we seek is balance in our economic system—balance between agriculture and industry and the balance between the wage earner, the employer and the consumer”.[2] A close analysis of measures taken by FDR’s administration pertaining to each of these objectives will capacitate us o understand the New Deal in a better way.
Relief measures included establishment of Federal Emergency Relief Administration (EFRA) in 1933 to provide aid to fifteen million unemployed who were at the verge of starvation. EFRA made loans and outright gifts to the states and local authorities to provide work relief or outright dole to the unemployed. As it was not an easy job to provide work, most of these agencies provided ‘dole’[3].
Work Progress Administration was another such measure. As the time rolled on, the administration realized that the problem of unemployment should be dealt with on a more or less permanent basis. Accordingly in April 1935, Congress passed a Relief Act which the government to provide “work relief, and to increase employments by providing useful projects”(Betters, 1978. p. 90). In July1935, FDR’s administration WPA was set up under Hopkins to provide work to all employables. The Work Progress Administration’s projects were selected on the basis that projects should be of public use and major parts of the funds should be spent on labor rather than materials. These plans should not interfere with private employment; these plans should be accomplished within one year. The wages to be paid on all such projects were known as “security wages” and were lower than the wages paid by private employees but higher than the amount paid as direct relief. The projects pf WPA included construction of roads, dams, airports, schools, hospitals, community centers, playgrounds etc. Between 1935 and 1941 the WPA spent over 11 billion Dollars and provided work to over two million people. Civilian Conservation Corps (CCC) was another step to tackle the growing problem of unemployment and to provide relief to the Americans.
The New Deal also made an effort to affect recovery in business to provide normal employment to all those who were capable of earning their livelihood. The formulation of Reconstruction Finance Commission (RFC) was a step in this direction. Actually this commission was established under Hoover’s administration but was permitted to continue under FDR’s administration and certain new functions were assigned to it i.e. to grant loans to industries as well as to railroads and banks. Furthermore, The National Recovery Act was passed in 1933. It is considered as the most important and far reaching measures adopted by FDR’s administration to affect recovery. The act made an effort to ensure co-operation between business, labor and government to overcome hard times and to put people back to work. It also aimed at reforming the conditions of the work and workplace by raising wages and lowering working hours, by restricting child labor. The act has three outstanding features. Firstly, setting up of Public Works Administration (PWA) which was designed to stimulate industry by a program of direct spending. Secondly, introduction of National Recovery Administration that tried to abolish child labor, fixing minimum wages and took other steps to eliminate unfair competition in the industry. Thirdly, it warded legal status to trade unions.
FDR administration further took various steps to boost the agricultural sector. Since the World War I American agriculture has been plagued to such an extent that when Roosevelt assumed office, it was completely in a devastating state and farmers were in rebellious mood. The efforts of Hoover administration to buy the surplus off the market through the Federal Farm Board had miserably failed. Roosevelt made an effort to stimulate the agriculture and restored the purchasing power of the farmers. In 1933, the Farm Credit Administration was created to refinance agricultural mortgages at a rate of 4% and loan money to farmers who had already lost their lands by fore-closure. With a view to ensure that farmers get a good price for his produce, the Farmers Relief Acts was passed and promulgated in 1933 which created Agricultural Adjustments Administrations (AAA). “Benefits payments” were arranged for farmers who agreed to reduce production of basic crops[4]. As a result of this policy, in 1934 and 1935, the farmers withdrew from over 30 million acres of cultivation. FDR’s administration further enacted Soil Conservation Act (1936), New Agricultural Adjustments Act (1938) and introduced Resettlement Administration (RA) and Farm Security Administration (FSA) to improve the financial loss of the farmers. (Barber, 1996. pp.69-74)
Roosevelt further introduced measures in the Banking and Finance sector to improve their health and public-confidence. With a view to give people confidence in their bank, within a week of assuming presidential office, FDR got Congress to pass Emergency Banking Act which gave President the power to re-open those banks which were considered solvent. As a result soon the people were convinced that all was well with their country’s finances. Securities Act was enacted in 1933 to prevent the formation of fraudulent companies. With a view to keep the prices stable, Roosevelt administration abandoned the god standard.
FDR administration also undertook reforms through long range social reforming. Social Security Act was passed that established a scheme for old age pension run by the federal government. It also envisaged a plan for unemployment insurance. The Roosevelt administration also made effort to solve the problems of the slums. It reserved huge fund the uplift the socio-economic life of the slums. Furthermore, Home Owner Loan Corporation was formed to provide the home builders with the credit at low rates of interest. In 1937 United States Housing Authority (USHA) was formed. All these measures helped to solve the housing problem of Americans. In addition to these measures, other measures for social, economic, and cultural uplift of American were undertaken by FDR administration.
Critics are of the view that the administration of FDR suffered various drawbacks. It spent huge amounts on various projects and national debt greatly increased. Smiley (1983) opposes this misconceived notion and says that it remained moderately stable and unwavering as compared with Hoover’s administration. The lavish spending of the Federal Government undermined the virtues of thrift and initiative. The expansion of governmental control inevitably led to the expansion of bureaucracy.
In spite of its slight drawbacks, it is an undeniable fact that FDR administration has remarkable achievements to its credit. It helped a large number of people, caught in worst depression in American history, by providing them jobs, finances farms and home mortgages. Through vigorous banking policy, the administration saved many people grave difficulty. It also organized the financial sector. It further liberated the minds of the American people from the idea that government deficit was something to be avoided at all cost. Professor Hicks and Mowrey are of the view that;
“Probably the greatest achievement of New Deal was to recreate a feeling of confidence in the American people that Government at Washington was really their government and that it could be used just as energetically to fight the enemies of the good life within the country as it could those from without.” (Hicks and Mowry, 1956. p. 762)
The New Deal administration demonstrated the value of powerful Presidential leadership and demonstrated that democratic system was also capable of dealing with crisis effectively. As Prof. Bailey has said; “He [Roosevelt] helped preserve democracy in America at a time when democracies abroad were disappearing down the dictatorial drain. And in playing this role, he unwittingly girded the nation for its part in the titanic war that hung on the horizon a war in which democracy the world over be at stake.” (Bailey, 1966. p. 856)
In the light of above discussion, it can be said that FDR administration succeeded in preventing the destruction of American economic and political system. In fat as a result of his administration, [policies and effective measures, American socio-economic system was further strengthened.
References
Bailey, Thomas A. The American pageant; a history of the Republic. Boston, Heath.
1966.
Barber, Willams. J. Designs within disorder : Franklin D. Roosevelt, the economists, and
the shaping of American economic policy, 1933-1945. Cambridge ; New York :
Cambridge University Press. 1996.
Betters, Paul Vernon. Cities and the 1936 Congress. New York : Arno Press, 1978.
Heale. M.J. Franklin D. Roosevelt the New Deal and war. London ; New York :
Routledge. 1999.
Hicks, John D and Mowry, George E. A short history of American democracy. Boston :
Houghton Mifflin Company. 1956.
Smiley, Gene, “Recent Unemployment Rate Estimates for the 1920s and 1930s,” Journal
of Economic History, June 1983, 43, 487-93.
Zevin, B. D. ed.; Nothing to Fear: The Selected Addresses of Franklin Delano Roosevelt,
1932-1945 (1946) Cambridge: Houghton Mifflin, 1946.
[1] The ‘New Deal is the name given to a series of actions taken by Franklin D. Roosevelt administration to take American people out of the depression prevailing in the country at that time, and o lead them to a new future.
[2] Address to the Representatives of Industry on N.R.A. Codes on March 5th, 1934.
[3] An outright payment in money or grants of clothing and food.
[4] Because farmers produced much more than could be consumed by the American people. The necessary money was obtained by imposing a tax on processors (flour miller, meat packers etc.)
