The National Industrial Recovery Act (NIRA) of 1933 was set up due to the conflict between people involved in the industrial works. Some voices called for protection from excessive competition and others called for massive increase in government spending. The formation of the National Recovery Administration in June 1933 was one of the many outcomes of the NIRA. The NRA was a voluntary administration which appealed to almost everybody in some shape or form. It provided codes regulating working conditions, production, pricing and a minimum wage. It also eliminated unfair competition in particular industries (including child labour) and section 7a of the law guaranteed workers collective bargaining (allowing workers to organise communally and negotiate with employers regarding work related issues). Approximately 23million people worked under the NRA fair code however, violations of codes became common. The overview of the NRA was that it stopped the rapid descent of prices for a short time, but eventually high wages came into practice which resulted in the rise of pricing and the decrease of consumer consumption. It was also looked upon as relieving the employers rather than the employees. Social groups that were left wing saw the NRA as an implement of the corporate state significant to Italian and German fascism. In 1935, the Supreme Court declared the NRA unconstitutional due to the illegal allocation of legislative authority to the federal government thus overriding the power of individual states. This suggests that the NRA was more of a failure than a success.
When Roosevelt came into office, one of his top priorities was farming and agriculture. In 1932, farm income had decreased by 67% of what it had been in 1929. Roosevelt was concerned about the farmers’ lack of purchasing power which resulted in the sufferings of majority of the workforce in America. On May 12th 1933, Roosevelt established the Agricultural Adjustment Administration (AAA) which was set to curtail surplus agricultural goods. The government paid farmers to leave their land ideal by cutting down on production, arguing that the fewer crops meant higher prices. The cash which went to the farmers was provided by ‘processing taxes’. This was the start of a price-support system through loans from the Commodity Credit Corporation which provided stability for farmers in the next 50 years. The program achieved its objective (farm income doubled during 1932-1936) but small rural farmers (e.g. the Okies and Arkies) did not benefit as much as large industries. The Supreme Court in 1936 ruled that the AAA was unconstitutional as it took particular exception to the processing taxes. Due to the removal of the AAA, the Soil Convention and Domestic Allotment Act came into practice under the Second New Deal. It was looked upon as a radical departure from traditions of laissez-faire government. This Act allowed the government to pay farmers to reduce production in order to prevent erosion and “conserve soil”. The purpose of the Soil Convention and Domestic Allotment Act was to correct the political problems of the AAA.
The Tennessee Valley Authority of 1933 was considered the most successful program to Roosevelt within the New Deal schemes. The multipurpose aims of the TVA were based on agriculture regeneration, flood control, and cheaper power and electricity. This allowed the federal government to build dams and power plants in Tennessee Valley. The high dams the TVA built ended the annual threat of flooding and provided the major source of energy. TVA power lines reached through Tennessee and even into other states surrounding Tennessee such as Alabama and Mississippi. In Tennessee Valley itself the number of farms electrified by 1945 increased by 73 percent from 1933. The TVA played a crucial role in self-sustaining economic growth in southern eastern states. It did not only improve farming conditions and agriculture, but also improved the rate of employment.
There were many other Acts that concerned farming but did not play a big part in the New Deal schemes. They were mainly made for improvements on farm security. Examples of these acts are the Taylor Grazing Act of 1934 and the Farm Tenancy Act of 1937.
In any significant economic recovery, the most important measure would have to be the generosity with which the New Deal, in this case, aided the unemployed. Roosevelt tried to solve the problem of many young unemployed men by creating the Civilian Conservative Corps in 1933. Under this scheme, unemployed, unmarried men between the ages of 18-25 were put on the government payroll to work on reforestation and conservation projects. The CCC concurrently provided job training skills which prepared the men to step into private sector jobs as soon as the economy recovered. After a while, the number of those rejoining the CCC decreased; employers were anxious to employ CCC men due to their developed technical skills. This led to the CCCs failure. The federal government for the first time in May 1933 granted money directly to the states for unemployment relief under the inauguration of the Federal Emergency Relief Administration. It granted $500million to the states for relief and $250million was available as a basic grant on the basis of requirement. It had three primary objectives: adequacy of relief measures, to provide work for the unemployable and the diversification of relief programs. These relief programs included constructions, park and school maintenance projects, fuel wood gathering, etc. In a report to Congress in 1936, the FERA indicated that while actual physical suffering was prevented, it was never fully possible to achieve living standards of minimum decency for the entire population in need of relief. It became clear that this act alone was not enough to provide work relief for the unemployed and was not working as hoped. The Civil Works Administration of November 1933 was set up in response for a work relief program. It was successful in that it provided approximately 4.2 million jobs. There were a lot of useful construction and the wages the CWA workers received eventually helped the wider economy. However in time, the CWA wages started to run up against Roosevelt’s budgetary concerns. Due to the generosity of the CWA wages, there was a shortage of labourers in private industry and agriculture. The CWA was concluded unnecessary and was just another emergency act to solve the unemployment crisis at the time. The NIRA created the Public Works Administration in May which encouraged the building of useful constructions such as dams, warships, aerodromes and various government offices. Under this Act, the federal government was provided $3.3 billion to hire Americans to work on public works projects. During this six-year period, the PWA helped construct seventy percent of new school buildings, one-third of new hospitals, and two aircraft carriers. The PWA also constructed more than twenty-five thousand housing units to provide shelter for homeless Americans which determines its success in terms of construction and unemployment relief.
Historians generally conclude that the Public Works Administration failed to meet its wider goal of providing jobs to all American workers seeking employment as it was limited to skilled and able-bodied workers only. In argument to that, the PWA also provided a sense of self-worth to American workers who attained jobs through the program. Rather than just receiving a government handout, these workers felt that they were contributing to the state and earning an honest and valuable living.
Hopkins wanted to give the able-bodied unemployed work relief, ‘Give a man a dole and you save his body and destroy his spirit; give him a job and pay him an assured wage, and you save both the body and the spirit.’ This was how Hopkins looked at unemployment in hope to restore a worker's self esteem. Roosevelt started the Works Progress Administration in order to aid the able-bodied unemployed in 1933. The WPA was an elaboration of the CWA but with less ‘boondoggling’ and in 1935-9, the WPA was the biggest employer.
However, such emergency measures did not tackle the long-term problem of economic insecurity. The New Deal partially improved a wage economy but did not improve the unemployment crisis.
Roosevelt promised to introduce a social security system which would aid the old and needy for the welfare of the economy. In 1934, Roosevelt announced the establishment of a Committee on Economic Security which made recommendations for unemployment and old age which were eventually accepted by Congress in 1935. This led to the formation of the Social Security Act of 1935 which was a scheme of unemployment or health insurance, old-age pensions for workers and federal matching grants to state assistance programs to the impoverished. The Social Security Act helped millions of Americans feel more secure although it did not cover farm and domestic workers. The NIRA was replaced by the Wagner Act (1935) which set up a National Labor Relations Board. The NLRA compelled employers to recognise the union to which the majority of their workmen belonged to and allowed unions to negotiate with any disputes over hours and wages with industries. In 1938, the Supreme Court held that the first amendment made to the constitution barred the National Labor Relations Board from making it illegal for employers to show opposition to trade unions. This led to immediate controversy. Some employers and Congress men strongly criticized the NLRA for being pro-union and anti-employer.
It can be argued that Second New Deal (1935 onwards) welfare policy under the federal government was starting to contain the threat of radical change, hence being progressively less liberal (shifting to the left). There was a recession in 1937-1938 in government expenditure. Roosevelt turned away from the Keynesian economic theories in order to balance the federal budget. This resulted in the rise of unemployment by 1.5million in July 1937. The economy did not recover fully from Roosevelt’s recession until America entered the Second World War.
It is also acknowledged that the New Deal had permanently changed the relationship between the government and its people; e.g. the government intervened more on many economic and social aspects of society. Although the New Deal had success, it also attracted notable opponents such as Dr. Francis Townsend - an elderly physician who began to rail against reform and benefits for everyone except the elderly, Father Charles Coughlin – this Catholic priest was an original supporter of the New Deal who drastically changed his view after disagreeing with the spending involved in many of the New Deal programs, Huey Long- a senator from Louisiana who originally support the New Deal but turned against it when he disagreed on the manner in which money was being spent (Huey Long was classified as the most powerful New Deal critic), Leftists - these activists supported other programs promoting social welfare and equality (or socialism and radicalism) and Conservatives – this group of people are usually the wealthy and are not willing to share their wealth in the form of higher taxes, centralization of powers in the Federal government, etc. New Deal programs were financed by increased taxes (excise taxes, personal income taxes, inheritance taxes, corporate taxes, “excess profits” taxes, from $1.6 billion in 1933 to $5.3 billion in 1940. It was because of this opposition that Roosevelt moved towards the left during the Second New Deal, most schemes were more favourable for the opposition.
In conclusion, with the benefit of present knowledge and hindsight, it is in my considered view that the New Deal was successful in keeping America afloat then and prevented the country from adopting extreme regime such as some countries in Europe where communism or fascism or a totalitarian system was adopted. The New Deal did not eliminate poverty, unfair treatment of minorities and continuing high unemployment persists. It did not end the Depression nor effectively addressed the underlying causes of economic and social problems; but it did improved life for millions and restored confidence. Notwithstanding being marginalized to a certain extent by New Deal programs, the minorities especially the African American were made aware of their civil rights.
The New Deal measures did not end the Depression and it was not until the government spent huge amounts of money financing war production for allies in World War II that ended the Depression. This revived economy, created unprecedented prosperity for millions of Americans with increase productions and real income improvements.
