** the Great Depression -- the New Deal -- government role








The New Deal: Goverment Role


Figure 1.-- While President Roosevelt's motives were questioned at the time, I think it is clear that his goal and that of New Deal figures were humanitarian. But the question of whether they helped end or prolonged the Depression is a very important question. Here a mother with her two children or living in an Elm Grove, Oaklahoma Hooverville (August 1936). While the term Hooverville is commonly used, many New Deal historians do not mention that AAA policies played a major frole in forcing thousands of tennant farmers and share cropers off the land and to this kind of abject poverty. The FSA was in part created to assist the people the AAA policies had unitebnionally forced off the land. Source: Library of Congress LC-USF34- 009694-E. Click on the image for a fuller discussion.

The New Deal measures involved government directly in economic areas that had never before been contemplated. The National Recovery Act involved steps toward a planned economy. The Works Progress Act involved the Government into virtuly every area of the economy. Jobs were found for virtually every area of employment. There was also major steps made in Government social programs. The Tenessee Valley Authority sought to remake the physical and social envirmoent of an entire area. These and other New Deal programs resulted in greatly increased spending and unbalanced budgets. This led to increasingly criticisms of Roosevelt's programs. He became, as a result, one ofthe most contriversial president's in American history. Before the New Deal, the American people had very very limited expectations. After the New Deal, Americans began expecting much more from the Federal Government. Each of the New Deal programs need to be evaluated on their own merits. Some such as the REA and CCC were clearly beneficial. Other agencies are more controversial. Many social reforms such as Social Security were clearly needed. Few will deny that greatly required relief programs were needed for those in need. And Government refulation of banks and the security indistry was clearly involved. But one question is to often ignored by liberal historians for which the New Deal is a virtual icon. Did the New Deal help end the Depression or did it actually prolong it. Often ignored is the fact that the Depression in other countries such as England and France, although the continuing Depression in Aneruca was a drag on other economies. New Deal defenders might argue that conservative and business interests were oposed to basic changes and unsettled by the more invasive government role. Support for labor in particular required adjustment on the part of industry. Some may argue that the oponets of the New Deal attempted to sabatoge it. This is rather a streach because it would mean financial costs to themselves. But it surely would have affected the invesrment climate. New Deal critics argue that Government spending and defecit spending absorbed available credit and thus crowded out or made it more difficult for the private sector to recover. This is a very difficult issue which is still a matter of economic discussion. While President Roosevelt's motives were questioned at the time, I think it is clear that his goal and that of New Deal figures were humanitarian. But the question of whether they helped end or prolonged the Depression is a very important question.

New Deal Agencies

Many new agencies were created by the New Deal to pursue the expanding government role. As they became known by acroinyms created from their names, they became known as the alphasbet agencies. Many were creatures of the New Deal and were closed during the New Deal, in some cases because of Supreme Court decesions. Others lasted until the Depression abted. Other are still active toiday. Each of the New Deal programs need to be evaluated on their own merits. Some such as the REA and CCC were clearly beneficial. Other agencies are more controversial. Many social reforms such as Social Security were clearly needed. Few will deny that greatly required relief programs were needed for those in need. And Government regulation of banks and the security indistry was clearly involved.

Agricultural Adjustment Administration (AAA)

President Roosevely within days of his inauguration (March 1933) called the new Congress into special session and introduced a stunning 15 major pieces of legislation. Just ine of these would have been considered a major program by precious administrations. This was called the First Hundred Days. The measures in mny cases were major departures in government policy. They were passed with little amendment or debate by Congress. Agriculture had been in Depression a decade before the Great Depression. The Depression only exacerbated the farm problem which was further impaited by the Dust Bowl storms. The new Administration was thus anxious to address the farm problem. Farming was still a substantial sector in the United States. One of the first New Deal measure to be introduced and enacted by Congress was the Agricultural Adjustment Act (AAA). It was one of the greatest departures from American free market policies. Congress declared that is was now 'the policy of Congress' to balance supply and demand for farm commodities so that prices would support a decent purchasing power for farmers. This established the policy of 'parity'. The AAA attempted to control the supply of seven 'basic crops' (corn, cotton, milk, peanuts, rice, and wheat. The AAA offered payments to farmers (meaning land owners) if they would take some of their land out of production. Some farmers refused to particioate in the AAA program, but most appeared to have particvipated. Even many who participated did not like the Government controling their operatrions, but given the condituions they had little choice. There were unintended consequences of the AAA farm support payments. Many farmers, especially in the South, turned some oor most of their land over to tennant farmers and share croppers. Thus these farmers when they cut back production forced tennants and share croppers off their land. The AAA at a time of high unemployment added to the unemployment roles. Farmers also modernized their operations (mechnization, insceticides, herbicides, fertilizer, ect.). Here the farmers were assisted by the Rural Electrification Administration (REA) which brought electricity from the cities into rural areas. The AAA program did not succeed in increasing farm prices significantly because the improving yield because of increasing effivcency meant larger crops, albeit land was taken out of pfoduction. Tthe Supreme Court ruled that the AAA was unconstitutional (1937). This was one of the rulings which set the President on his court packing effot. The idea of farm supports and parity were subsequently reenacyed by CVongress and remained the foundation of Federal farm policy for decades. The AAA did suceed in ending farm tenency and sharecropping in America. This may not be considered a bad thing, but it created a good deal of pain for the individual displaced because there were no jobs available for them in other sectors. As a result, another New Deal agency was created, the Farm Security Administration (FSA), in part to deal with the thousands of individuals duispossed by the AAA.

Civilian Conservation Corps (CCC)

Youth benefitted from the Civilian Conservation Corps (CCC). President Franklin Roosevelt established the CCC, only a month after taking the oath of office in 1933. It was one of the first alpahbet soup agencies the President established under his New Deal. The CCC was created for boys who had finished school and couldn't find jobs. They worked in national parks and forests throughout the country, earning the nick name of the Tree Army. It is estimated that the CCC youths planted 200 million trees among their many projects. It was the largest program of reforestation and conservation in American history. This environmental program provided employment for 2.5 million youth and young unmarried men from age 17 to 25. The maintained and restored forests, beaches, and parks. The CCC built numerous forest roads, campgrounds, ranger stations and trails, many still used by park visitors and campers today. The stipend was only $1 a day for regular enrolless, but included received free board and job training. Assistant Leaders got $36 and leaders $45. Each month, $25 of their $30 salary was sent home to their families, many of whom were on relief. The money not only fed the families, but put money into local economies. This was pump-priming in New Deal terms. The CCC also provided their clothes, items similar to what the army wore. Youths who joined up were issued clothes for work and dress uniforms of spruce green in the winter and khaki for summer wear. They wore stripes on their uniforms. Two stripes were Assistant Leader, three strips for the Leader. I believe they were also provided work clothes. The CCC youths were lodged in camps and provided good food and medical care. The camp facilities varied. Many were made up of barracks-like building, often of wood and tar paper. Other worked from tent camps (figure 1). There were about 1,300 camps. During World War II, some of the camps were turned into prisoner of war (POW) camps. The program operated 1934-43. There was also a similar, but much small program for young women. About 8,500 women participated. Many New Deal agencies were sharply criticised, usually by business groups with the recurring charge of socialism. The CCC was one of the most popular and least criticised of all the New Deal programs.

Farm Security Administration (FSA)

The Farm Security Administration (FSA) was one of several New Deal agencies designed to assist rural America. A small effort conducted by the FSA was to document Americans living in poverty in rural areas by creating a photographic record. The result is a remarkable set of photigraphs of great historical significance. One of the small group of photographers was Dorothea Lange who took the moving photograph here. These images appeared in magazines and newspapers as Americans debated the Depression and how to address it. The program drew the ire of Congrsssional Republicans who attempted to restrict the finding and eventually kill the program. This became a real problem after the Comgressional byelection in 1938 returned many Republicans and conservative Democrats to Congress. The collection might well have been lost, but the program afministers managed to transfer the archive to the Library of Congress. Dorothea Lange went on to become one of the most significant American photographers. She later worked for the War Relocation Authority (WRA). She is particularly know for her photographs of the Japanese Americans intened during World War II.

National Recovery Act (NRA)

The New Deal measures involved government directly in economic areas that had never before been contemplated. The National Recovery Act involved steps toward a planned economy.

Rural Electrification Administration (REA)

One program which undeniably improved farm life and productivity was the Rural Elecrification Administration (REA). This made farm life not only easier and safer, but American farmers vastly more productive. Utilities becuse of the small number of customers per mile of line were unwilling to run lines into rural areas. REA helped finance cooperatives organized by the farmers. The result was the ekectrifiction of rural areas. Which revolutionized rural life. It was probably more significant than all the other New Deal efforts to aid farmers, except perhps croop supports. And in this case it was not grant, but loans that got paid back. There was criticsm promoted by the utilities that cooperatives were not as American as corporations. They had a Soviet sound to them. Of course volutary cooperatives were far different thn the collectives forced upon Soviet farmers. The issues became less clear cut after World war II when the suburbs began expanding into rural areas and from use of electricity increased to the point that utilities became more inteesested in serving rural areas.

Social Security Administration


Tennessee Valley Administratioin (TVA)

The Tenessee Valley Authority sought to remake the physical and social envirmoent of an entire area.

Works Progress Administration (WPA)

The Works Progress Act involved the Government into virtuly every area of the economy. Jobs were found for virtually every area of employment. There was also major steps made in Government social programs. An important part of the First Hundred Days was expanding relief (money and food) programs to the unemployed and oter afflicted groups. Relief was, however, a stop gap measure to allow Americans to survive the Depression until jobs once more became available. The Depression persisted. Here economists differ on why this was, but the private sector did not recreate the jobs that had been lost. As a result, another flurry of New Deal legislation followed in 1935. This was in part possible because of the Democratic Congressional victories in the 1934 by-election. The new programs included the Works Projects Administration (WPA) which provided jobs not only for laborers but also artists, writers, musicians, and authors. The WPA was in large measure the public face of the New Deal. The WPA along with Social Security became the center pieces of the New Deal. WPA also became perhaps the most controversial New Deal Agency.

Federal Departments (Ministries)

President Roosevelt's New Deal not only created a lot of new agencies to deal ith the Depression ctisis, but expaned funding for existing programs. Of all Federal agencies more attention was given to the Department of Agriculture than andother depatrment. One of the most popular New Deal figures was Agriculture Secretary Henery A. Wallce, although not with the Democratic Party estsblishmet. He work tirelessly to improve American farming through imprived methods, research, and a ange of innivaive programs. His major gioal was to rise farm prices. He was the most outspolen liberal in the cabinet. It is not accident that President Roosevelt chose him as his 1940 running mate. It is stateling that a Secretary of Agriculrur becameso favoravlt disposed toward the Soviet Unio which presided over the greatest agricultural failure in human history. Many of the new Federal agenies were established or became part of the Department of Agriculture. County extension offices offered services to farmer around the country. Here both Federal and state efforts were combined. This included research on crops and farming methods cinducted at Land Grand cilleges and insitutions. This provided farmers a great deal of valuable informtion on crops, methods, soil coservstion, and topics of interest. Preventing another Dust Bowl was a high priority for the New Deal. Soil conservatiion was so important in preventing another Dust Bowl that a new Soil Conservatiion Service was established within the USDA (1938). The New Deal did not solve the American farm problem. This was primarily a matter of over production. Americn farmers were too good for theor own good. The New Deal did, however, solve the Dust Bowl. It has been almost a century now and there has been no repeat of the Dust Bowl, lage becuse of the soil conservtion masures dopted by Americn frmrs bginning with he New Deal. Also important to the New Deal was the Department of Labor. We do not see as many new programs and agencs in Labor, mpre Americans were affected by Labor reform than the agricultural programs.

Defecits

These and other New Deal programs resulted in greatly increased spending and unbalanced budgets. This led to increasingly criticisms of Roosevelt's programs. He became, as a result, one ofthe most contriversial president's in American history.

Rhetoric

President Roosevelt's rhetoric was very effective in restoring the morale of the general public. This gelped restore confidence in Governmnt. Hirhetoric about business was very different. His genal attitude was tht business had caused the Depession. He coined the term 'economic royalists'. Such rhetoric while it had political appeal was nort the sort of talk that would restore confidence witghin the business community. The President seem to feel that business caused the problem anf government was going to fix it. He does not seem to have recognized the need to create the kind of business enviroment in which invest and business expansion could resume.

Tax Policy

Perhaps the grerest mistake made by the Government, both the Hoover Administration nd New Deal New Deal was tax policy. President Hoover was committed to balalacing. This of course necver occurred. And President Roosevelt was also committed to balancing the budget. He criticized President Hoover for defecit spebding in the 1932 presidential election. Democratic and Republican Congressmen also advicated closing the budger defecit. President Roosevelt upon assuming office launched proigrams that caused eben larger buget defecits. His critics complained about defecit spnding and the President never quite lost interest in balacing the budget. Because there was interet in balcing the budget by both Republicans and Demorats. The Hovr Administration and Congress began atazation policy that would esentially be followed by the Roosevely Administration. The Hoover Adninistration sked for tax increases and received support from brh Semicratic and Reoublican Congressmen. Congress passed the Revenue Act of 1932 just as the 1932 Presudential campaign was beginning (June 1932). Key elements of the Hoover tax law, including regressive consumption taxes, became a key element of Federal finance throughout the NEwcDeal. It was the largest peacetime tax increase in American history. Congress estimated tht the tax increases would generate some $1.1 billion in additional revenue. The law was designed to obtain much of the additional recenue grom rich people. Congress raised income tax rates for everyone. The top marginal rate were increased from 25 to 63 percent. Effective rates on the richest 1 percent of Americans doubled. [Brownlee] Congress also increased estate tax rates and cut the exemption by half. There were also - also included an array of regressive excise taxes. The law created entirely new levies (including taxes on gasoline and electricity), as well as raising rates for existing levies. These increases did not affect the rich, but did hit the very goup the New Deal clomed to be trying to help--the Forgotten Man. Presidebt Roosevelt once in office, however, did nothing to backaway from these regresive excise taxes. In fact, excise taxes provided a third to half of all Federal revenue throughout the the New Deal. President Roosevelt decided to continue the policy of high tax rates to help close the griwing budget gap. The President and many New Dealers believd that incresing taxes on the well off would mean more money for the needy. This for many New Dealers was both a financial and moral isue. The actual economic impact of raising taxes was not consudered, meaning raising taxes on the well off might impact investment and business activity which would negatively impact the needy as well. Despite all the work on economics, this is still a strongly held belief among Amerucan liberals--mot recently expressed in the occupy Wall Stret Movemnt.

Public Expectations

Before the New Deal, the American people had very very limited expectations. After the New Deal, Americans began expecting much more from the Federal Government.

Impact on the Depression

One question is to often ignored by liberal historians for which the New Deal is a virtual icon. Did the New Deal help end the Depression or did it actually prolong it. Often ignored is the fact that the Depression in other countries such as England and France, although the continuing Depression in Aneruca was a drag on other economies. New Deal defenders might argue that conservative and business interests were oposed to basic changes and unsettled by the more invasive government role. Support for labor in particular required adjustment on the part of industry. Some may argue that the oponets of the New Deal attempted to sabatoge it. This is rather a streach because it would mean financial costs to themselves. But it surely would have affected the invesrment climate. New Deal critics argue that Government spending and defecit spending absorbed available credit and thus crowded out or made it more difficult for the private sector to recover. This is a very difficult issue which is still a matter of economic discussion. While President Roosevelt's motives were questioned at the time, I think it is clear that his goal and that of New Deal figures were humanitarian. But humanitarian goals do not neceasily mean that the Nea Deal shortened the Drepression. The the question of whether they helped end or prolonged the Depression is a very important question and one because of the basically liberal orientation of academia, one which hads not been well addressed..

Sources

Brownlee, Elliot.

Thorndike, Joseph J. "New Deal Taxes: Four Things Everyone Should Know" (November 20, 2008)..






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Created: 3:36 AM 10/13/2009
Last updated: 7:10 AM 5/21/2018