These relief agencies marked an unprecedented federal involvement in welfare. The millions of Americans who benefited from them--especially blacks and other "forgotten men"--showed their gratitude by lionizing Roosevelt and by voting Democratic in subsequent elections. The relief policies of the New Deal also did much to restore confidence in the nation's political institutions, and to undercut the agitation growing since 1929 for radical solutions to hard times.
Critics of the New Deal were correct, however, in observing that the relief measures did not go far enough. Even at its peak the WPA failed to reach 7 million unemployed and their families, and it paid extremely low wages. Unemployables--the sick, the crippled, the aged, dependent children--were left heavily dependent upon the states, which were often unable or unwilling to help. New Deal relief policy must be judged a partial success at best.
Recovery Programs
The key recovery programs of the New Deal were the Agricultural Adjustment Administration (AAA), the National Recovery Administration (NRA), and the Public Works Administration (PWA), all established in the productive "100 Days" of the 1933 special session of . Unlike the relief agencies, these concerned themselves primarily with the longer-term goal of stabilizing and improving agriculture, business, and employment.
The AAA's primary solution to depressed farm prices was domestic allotment--a program that encouraged commercial farmers to cut production of basic crops and livestock. Reductions in supply, it was hoped, would increase market prices. Farmers who cooperated received federal subsidies financed through taxes on processors of agricultural produce. Partly because disastrous droughts cut production in the Great Plains, the AAA was able to limit supply and raise farm prices by 50% in Roosevelt's first term. To this extent it aided large commercial farmers in regions unaffected by drought.
But the AAA created hardships for tenants, many of whom were forced off the land by acreage quotas, and for consumers, who had to pay higher prices for food and clothing. Many critics were appalled that the New Deal promoted agricultural scarcity when millions of people lacked adequate food and clothing.
The NRA was a venture in government-business cooperation. Hugh Johnson, its administrator, encouraged business and labor leaders to sign codes of fair competition within their industries. These set guidelines for pricing and production and guaranteed labor the rights of collective bargaining, minimum wages, and maximum hours. After a quick start, the NRA lost its effectiveness. Union spokesmen complained that the courts negated the labor guarantees. Progressives protested that monopolies were exempted from antitrust prosecution. Small businessmen asserted that the codes favored large corporations. By 1934 evasion of the codes was widespread, and industrial recovery was sluggish. In 1935 the U.S. Supreme Court declared the NRA unconstitutional, holding that the code-making provisions constituted an unwarranted transfer of legislative authority to the president.
The PWA, which had an initial appropriation of $3.3 billion, helped build scores of courthouses, sewage plants, bridges, hospitals, and city halls in the 1930s. In a limited fashion it constructed public housing for the poor. Secretary of the Interior Harold Ickes, its director, disbursed huge sums of money without causing a breath of scandal. Yet Ickes' caution in spending funds made the PWA a poor engine for recovery. Instead of pumping money quickly into the economy, he held it back until he was certain that it would be wisely used. Increased purchasing power, essential for prosperity, was therefore slow to develop.
Limited Gains for the New Deal
Despite the limitations of the New Deal relief and recovery programs, the economy recovered slightly between 1933 and 1936. Expecting further progress, the voters returned Roosevelt to office in 1936. The president then made the mistake of asking for legislation permitting him to "pack" the conservative Supreme Court, which had found the AAA and some other New Deal legislation unconstitutional, with up to six new justices. At the same time militant workers staged sit-down strikes in factories. These events alarmed conservatives and moderates and put New Dealers on the defensive. Congress approved modest appropriations to aid tenant farmers and promote public housing but resisted most New Deal initiatives in Roosevelt's second term.
The greatest blow to the New Deal was the sharp economic recession that descended in late 1937 and wiped out most of the gains of 1933-1936. It was caused primarily by cuts in federal spending that Roosevelt, a fiscal conservative, had made early in the year to reduce budgetary deficits. Shaken by the slump, Roosevelt delayed until April 1938 before recommending increased spending. His procrastination exposed the uncertainty and inconsistency of New Deal fiscal policy throughout the 1930s. It was not until the government greatly increased spending in 1939 and 1940--for national defense--that the Great Depression began to disappear.
This fiscal conservatism was symptomatic of a broader political caution characteristic of the New Deal. Fearful of antagonizing Southern congressmen, Roosevelt gave no support to civil rights legislation. He made only half-hearted and short-lived efforts to assist tenant farmers, provide for public housing, or to redistribute wealth through increased taxes on the rich. Though he gave lip service to trust-busting in his second term, he did not try to stem the tide of corporate concentration. Throughout the 1930s the New Deal was opportunistic and practical. It worked with, rather than against, large commercial farmers and big business. It respected voluntarism, decentralization, and states' rights. Republicans who complained of "New Deal radicalism" grossly exaggerated their case.
Reform Legislation
Radicals were equally wrong in charging that the New Deal did nothing of consequence. On the contrary, several domestic reforms of the 1930s were significant. Among them were the Federal Deposit Insurance Corporation (FDIC), which helped prevent banking panics; the Securities and Exchange Commission (SEC), which made a start toward federal regulation of the stock exchanges; and the Banking Act of 1935, which increased Washington's control over monetary policy. These enactments lessened the chances of future depressions as sharp as the one of 1929-1939.
The Tennessee Valley Authority, created in 1933, was an especially significant New Deal accomplishment. A public corporation with broad powers, it engaged in the manufacture of fertilizer, in soil conservation, and in social experiments with state and local agencies. Its most striking achievement was the building of multipurpose dams to control floods and generate cheap electric power throughout the region drained by the Tennessee River and its various tributaries.
The New Deal also helped change the nature of labor-management relations. Labor leaders, encouraged temporarily by passage of the NRA in 1933, recognized that Roosevelt would not use government to crush unions. Accordingly, they staged successful organizing drives throughout the 1930s. They also agitated for the Wagner Act, passed in 1935. This important law established the National Labor Relations Board, which guaranteed to labor the right to bargain collectively on equal terms with management.
In 1938 New Dealers secured passage of the Fair Labor Standards Act, which set minimum wages and maximum hours for certain types of work and abolished child labor involved in interstate commerce. Though the act excluded many workers from coverage, it was a cautious step toward federal supervision of labor conditions. In part because of the benevolently neutral attitude of the New Deal, in part because of the leadership of militant labor leaders, union membership in the United States jumped from 3.2 million in 1932 to 9 million in 1940. This was the most important social change of the decade.
Another lasting accomplishment of the New Deal was the Social Security Act of 1935. This law, long sought by reformers, involved the federal government in programs of old-age pensions, unemployment insurance, and assistance to needy blind and disabled persons, and to dependent children. The law was conservative in many ways: regressive payroll taxes paid for old-age pensions; many workers were not covered; and states were expected to provide most of the money for the blind, disabled, and dependent. Nonetheless, the Social Security Act became a basis for later expansion of federally assisted social services.
Legacies of the New Deal
The New Deal also helped to change politics and political institutions. Democrats, previously an awkward coalition of disparate elements, became the proponents of urban liberalism and swept to power in much of the North and Midwest. Afterward, the Democratic Party enjoyed majority status in the United States. Under the New Deal the executive branch, and the presidency in particular, also became much more activist and innovative than before. The states and localities themselves grew in the course of administering federal programs and appropriating funds for matching-grant programs. Interest groups, which were already strong before 1933, broadened their lines of contact with these expanding governmental entities. In these ways the New Deal, though of dubious value economically, set in motion long-range trends toward governmental expansion and modernization.
