On his first inaugural address Roosevelt placed the blame for the Great Depression on bankers, and proceeded to close all banks in America until he could pass new legislation. Five days later, on March 9 1933, Roosevelt sent to Congress the Emergency Banking Act, which was signed and passed on the same day. In order to stabilise the banking system, which had, during the past few years, lost much of people’s money and gone into debt itself, Roosevelt had experts assigned to examine every bank in the country and only reopen them if they were found to be financially secure. This way people would not invest their money in banks which would probably go bankrupt and lose their money. To further strengthen the banking system Roosevelt created the Federal Deposit Insurance Corporation, which still exists today. It insured all deposits for up to $5000, meaning if a bank did go bankrupt it’s clients would not lose all of their money.
The best known feature of the New Deal were without doubt the Alphabet Agencies. Alphabet Agencies were essentially government departments set up to implement Roosevelt’s policies. The Federal Deposit Insurance Corporation was one of these.
Roosevelt believed that true prosperity would not return until farming was prosperous. One of the alphabet agencies created by the New Deal was the Agricultural Adjustment Administration. During the First World War many farms in Europe faced difficulties. The Americans used this to their advantage and produced more food that they then exported and sold to Europeans. By the 20s European agriculture had recovered making it harder for Americans to sell their produce in Europe. Despite this the American farmers continued to produce more food than could be consumed, making their profits fall. Because of this they found it hard to pay their mortgages and fell into debt. The AAA paid farmers for cutting crop, milk, butter production and also for not raising pigs and cows by 30%. To raise the money to pay the farmers the AAA taxed the companies that bought the farm products and processed them into food and clothing.
Another Alphabet Agency was the National Recovery Agency. The NRA allowed industries to impose minimum wages and floor prices. Floor prices are minimum prices that can be charged for a product. The aim of the NRA was to reduce what it called “destructive competition”.
To create jobs for unemployed Americans the Public Works Administration was created. The PWA spent $3.3 billion on various work projects, including the construction of schools, hospitals, post offices, roads and dams. It created tens of thousands of jobs over a period of six years.
The last agency I will be looking at is the Tennessee Valley Authority, which still exists today. The TVA was designed to modernize the Tennessee Valley, which was one of the most poverty-stricken areas in America, although mainly in Tennessee it covered seven states in total. Thirty percent of the population was affected by malaria, the average income was only $639 per year, and much of the land had been farmed for too long, eroding and depleting the soil. The TVA introduced the farmers to fertilisers, taught them ways to improve crop yields, control forest fires and improve habitats for fish and wildlife. The main change the TVA made came from the electricity it generated. It built many dams and power-plants, which both produced electricity and jobs. This production of dams displaced more than 15,000 families however which caused TVA resentment in some rural communities.
In 1935 the Wagner Act, or National Labour Relations Act was introduced. It was a law that introduced maximum work hours, better training and the development of standard procedures. It also gave workers the choice whether they wanted to be represented by a trade union, which could negotiate wages with employers and defend employees if they were treated unfairly.
FDR and other ‘New Dealers’ such as Eleanor Roosevelt and Harold Ickes worked to ensure that blacks received at least 10% of welfare assistance payments. However there was absolutely no attempt to end segregation or improve black rights in the South. Roosevelt also appointed many black people to positions in his administration. Because of this Roosevelt gained the support of many black Americans.
Overall, the New Deal introduced many agencies and laws to help improve the economy. Many of these received strong criticism, some even being revoked years later with the Supreme Court declaring them ‘unconstitutional’. The New Deal did succeed in stabilising the banks in America and provided many jobs. It was however not the reason the Great Depression ended, as the real cause was World War 2. Roosevelt is remembered very favourably for his changes though and many laws and agencies still exist today. His First Hundred Days in office are also considered the greatest ever, and every president’s are now compared to his, making him one of the most beloved presidents of all time.