The New Deal


        During the 1930's, America witnessed a breakdown of the 
Democratic and free enterprise system as the US fell into 
the worst depression in history. The economic depression 
that beset the United States and other countries was unique 
in its severity and its consequences. At the depth of the 
depression, in 1933, one American worker in every four was 
out of a job. The great industrial slump continued 
throughout the 1930's, shaking the foundations of Western 
capitalism. 

        The New Deal describes the program of US president 
Franklin D. Roosevelt from 1933 to 1939 of relief, recovery, 
and reform. These new policies aimed to solve the economic 
problems created by the depression of the 1930's. When 
Roosevelt was nominated, he said, "I pledge you, I pledge 
myself, to a new deal for the American people." The New Deal 
included federal action of unprecedented scope to 
stimulate industrial recovery, assist victims of the 
Depression, guarantee minimum living standards, and prevent 
future economic crises. Many economic, political, and 
social factors lead up to the New Deal. Staggering  
statistics, like a 25% unemployment rate, and the fact that 
20% of NYC school children were under weight and 
malnourished, made it clear immediate action was necessary. 
In the first two years, the New Deal was concerned mainly 
with relief, setting up shelters and soup kitchens to feed 
the millions of unemployed.  

        However as time progressed, the focus shifted towards 
recovery. In order to accomplish this monumental task, 
several agencies were created. The National  Recovery 
Administration (NRA) was the keystone of the early new deal 
program launched by Roosevelt. It was created in June 1933 
under the terms of the National Industrial Recovery Act. 
The NRA permitted businesses to draft "codes of fair 
competition," with presidential approval, that regulated 
prices, wages, working conditions, and credit terms. 
Businesses that complied with the codes were exempted from 
antitrust laws, and workers were given the right to organize 
unions and bargain collectively. After that, the government 
set up long-range goals which included permanent recovery, 
and a reform of current abuses. Particularly those that 
produced the boom-or-bust catastrophe. The NRA gave the 
President power to regulate interstate commerce. This power 
was originally given to Congress. While the NRA was 
effective, it was bringing America closer to socialism by 
giving the President unconstitutional powers. 

        In May 1935 the US Supreme Court,  in Schechter Poultry 
Corporation V. United States, unanimously declared the NRA 
unconstitutional on the grounds that the code-drafting 
process was unconstitutional. Another New Deal measure under 
Title II of the National Industrial Recovery Act of June 
1933, the Public Works Administration (PWA), was designed to 
stimulate US industrial recovery by pumping federal funds 
into large-scale construction projects. The head of the PWA 
exercised extreme caution in allocating funds, and this did 
not stimulate the rapid revival of US industry that New 
Dealers had hoped  for. The PWA spent $6 billion enabling 
building contractors to employ approximately 650,000 workers 
who might otherwise have been jobless. The PWA built 
everything from schools and libraries to roads and highways. 
The agency also financed the construction of cruisers, 
aircraft carriers, and destroyers for the navy. 
        
        In addition, the New Deal program founded the Works 
Projects Administration in 1939. It was the most important 
New Deal work-relief agency. The WPA developed relief 
programs to preserve peoples skills and self-respect by  
providing useful work during a period of massive 
unemployment. From 1935 to 1943 the WPA provided  
approximately 8 million jobs at a cost of more than $11 
billion. This funded the construction of thousands of 
public buildings and facilities. In addition, the WPA 
sponsored the Federal Theater Project, Federal Art 
Project, and Federal Writers' Project providing work for 
people in the arts. In 1943, after the onset of wartime 
prosperity, Roosevelt terminated the WPA. One of the most 
well known, The Social Security Act, created a system of 
old-age pensions and unemployment insurance, which is still 
around today. Social security consists of public programs to 
protect workers and their families from income losses 
associated with old age, illness, unemployment, or death. 
The Fair Labor Standards Act (1938) established a federal 
Minimum Wage and maximum-hours policy. The minimum wage, 25 
cents per hour, applied to many workers engaged in 
interstate commerce. The law was intended to prevent 
competitive wage cutting by employers during the Depression. 
After the law was passed, wages began to rise as the economy 
turned to war production. Wages and prices continued to 
rise, and the original minimum wage ceased to be relevant. 
However, this new law still excluded millions of working 
people, as did social security. However, a severe recession 
led many people to turn against New Deal policies. In 
addition, World War II erupted in September 1939. Causing an 
enormous growth in the economy as war goods were once again 
in great demand. No major New Deal legislation was enacted 
after 1938. 

        The Depression was a devastating event in America, and 
by regulating banks and the stock market the New Deal 
eliminated the dubious financial practices that had helped 
precipitate the Great Depression. However, Roosevelt's chief 
fiscal tool, deficit spending, proved to be ineffective 
in averting downturns in the economy.