Do you think the New Deal was a success?

There are many good and bad points about the New Deal. There is a lot of evidence to show that the New Deal was very successful, and I am going to discuss these successes first.

In Roosevelt’s first 100 days he introduced many measures that helped restore American’s confidence. The first thing that he did was to close all the banks for a day so that he could inspect their books. This was called the ‘Emergency Banking Act’, and Roosevelt was allowed to do this because of the extraordinary powers granted to him. After he had inspected the bank’s books, only the banks whose books were financially sound were allowed to re-open and it also stopped the banks using customers money for investing in stocks an shares on Wall Street. This meant that people knew their money was safe and their confidence in banks was restored. People started to put their money back into the banks after this. This was definitely a success of the New deal.

Another financial success of the New Deal was the Home Owners’ Loan Corporation (HOLC). This was set up to help those in danger of defaulting on their home mortgage to lend money at low rates of interest. It bought people’s mortgages from banks and allowed them to pay money back over a longer period of time. 1 fifth of all urban homes were soon bought through the HOLC.

Help was also provided for the desperately poor, states were given $500 million and money was spent on nursery schools, soup kitchens, blankets and small-scale employment schemes. Prohibition was ended and so the government received tax from alcohol, however government salaries were cut to provide money for this particular employment scheme. The Social Security Act was something that Roosevelt was the most proud of. It stated that from 1940 the government would provide a state pension to workers over 65. The government also had to provide unemployment benefit, sickness pay and help for the disabled. This was looked upon as not a good idea by many people as they thought it was un-American and Communist.

Another part of the New Deal that was seen as Communist was the National Recovery Administration (NRA). This was to improve working conditions and job security. Minimum wages and maximum hours of work were set. Trade unions were set up. By 1939 trade union membership had risen from 3.3 million to 9 million. This was a great success of the New Deal.

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The New Deal also helped farmers a lot. In 1933 18 million acres of land were taken out of production to stop over production. Quotas were set for production and this helped raise farmer’s income by 50% in 1932-3. This was due to the Agricultural Adjustment Act (AAA), the act also provided finance to modernise farms and improve farming techniques. The Tennessee Valley Authority (TVA) was set up to regenerate 41,000 sq. miles across 7 American states, in one of the poorest areas of the US. It suffered from soil erosion and flooding, and the New Deal tried to help them. Model farms were also set up. The income increase for farmers was a significant success for the New Deal.

Before the New Deal, in 1933, 13 million Americans were unemployed. The whole purpose of the New Deal was to ‘prime the pump’. This meant the government would set up work schemes for the unemployed. Workers would earn wages and they would spend these wages on goods. Factory’s production would have to increase and therefore would have to employ more workers. These workers would receive wages and the Government would no longer have to provide jobs. The Civilian Conservation Corps (CCC) was set up and provided work for 6 months work for the unemployed, 2.5 million men served in the 1930s. Pay was low and most of it had to be sent back home so the women could support their families. Also creating employment was the Public Works Administration (PWA), it was responsible for slum clearance and house building in the cities. Among other things, new hospitals and schools were built. This scheme was given $3,300 million to spend on major public works. The Civil Works Administration (CWA) was set up to provide immediate employment, in its first four months it spent $933 million setting up over 180,000 work schemes. It only lasted a year but it provided employment for 4 million people. All of these work schemes were a very successful part of the New Deal.

I think that the greatest success of the New Deal was the fact that all of the measures combined helped save the USA from falling under Communist or Nazi rule. This happened in Germany, Italy and Japan. Because of this, after World War Two, America emerged as the strongest nation in the world.

Despite all of these successes, the New Deal attracted many criticisms and hit many failures. Certain groups of people did not benefit from the New Deal, for example the Black community in the US. The Blacks remained as second class citizens and there was still wide spread racial discrimination. In the New Deal blacks were put in different camps and they also found it hard to get work. By 1935 around 30% were living on relief. Roosevelt failed to put through civil rights laws because he needed the support of the Democratic Congressmen in the South to carry through the New Deal. These Congressmen were opposed to civil rights for Blacks and any measures to help them. Women did not benefit from the New Deal either. Much of the jobs created were aimed at men, and women earned a lot less than men did.

Although farmers had received help from the government their income was still low and the problems of the Dust Bowl had not been solved fully. There also seemed to be a loss of freedom amongst the farmers, although their income improved the government controlled much of what they were doing.

This control by the government was seen as a bad effect of the New Deal. There was thought to be too much centralised power, and this was seen as being un-American and unconstitutional. It was seen to be going against the American way of life, and was anti ‘rugged individualism’ and anti ‘laissez-faire’. These were two of the key ideas that brought about the boom in the 1920s.

A major factor that affected the success of the New Deal was the fact that government spending was very costly. By 1937 this was very clear. 20% of people were working for the WPA with their wages being paid by the government. Social security measures had to be paid for by higher taxes, American with well paid jobs were paying higher taxes than ever before. Also by 1937 unemployment was still high at 8 million, which was five times higher than in 1929.

Also 1937 the Roosevelt cut back his spending. He had realised that he couldn’t go on spending as much as he had been and cut back his public spending. As a result of this unemployment rose and as it reached 10 million Roosevelt changed his mind as asked Congress for more huge sums of money. He was granted $2.4 billion to create more jobs and the economy began to pick up again.

A major criticism of the New Deal is that it created a false economy. The economy was only picking up because of the huge sums of money that were being poured into it by the government. The government could not continue to spend these enormous sums, as it was not gaining the same as it spent in tax from the economy. Some critics say that the economy would have suffered a huge crash again had it not been saved by the outbreak of World War Two. At the outbreak of World War Two, American industry increased production and sold billions of dollars-worth of war goods to the Allies. The government also started re-arming and recruiting in case America was forced to enter the war. The economy soared and when America entered the war in 1941 unemployment fell below the level of 1929.

I think that the New Deal was successful in the way that it created immediate employment at the height of the depression and it helped to start to restore consumer confidence in America. Communism and Nazism were avoided, and inter-state co-operation in the Tennessee Valley had shown what could be achieved. Unemployment fell and farmer’s income had improved. Trade unions and state help had improved living and social conditions. However, Blacks were not helped and still lived in poverty, and unemployment, although lower than before, still numbered 6 million. Government spending was far too costly and it was inevitable that the New Deal would have eventually ground to a halt. When Roosevelt did cut back on spending unemployment rose dramatically. I think that in the short term the New Deal was a success but in the long term, had World War Two not broken out, the American economy would not have recovered.

Laura Spandler