The New Deal

The following is an article from Uncle John's Endlessly Engrossing Bathroom Reader.

A massive government effort to get people back to work and restart the economy, the New Deal had its detractors, then and now. But it remains one of the most popular and effective government programs in American history.

CRASH AND BURN

In October 1929, during the first year of Herbert Hoover's presidency, the U.S. stock market crashed. By 1933, unemployment had climbed from 4% to 25%, plunging the nation into the Great Depression. Hoover, a Republican, took a lot of the blame for it and was beaten by a landslide in his 1932 reelection bid by the Democratic candidate, former New York governor Franklin D. Roosevelt. FDR promised American a "New Deal" -sweeping government intervention to revive the economy, and new laws to make sure the collapse was never repeated. His legislation was quickly passed through the Democrat-controlled Congress.

Although heavily criticized at the time as socialism or even communism, the New Deal put millions of Americans back to work, provided security for senior citizens, and in the process helped to stabilize the American economy. Most importantly, it gave Americans hope. Here's a look as some of the many agencies created in the New Deal to institute Roosevelt's reforms.

Federal Emergency Relief Administration. The first relief agency of the New Deal, it provided emergency welfare and aid. More than $3 billion was allocated to states and cities for homeless shelters, soup kitchens, and vaccinations, as well as literacy training and free childcare for job-seeking parents. FERA also provided temporary work for as many as 20 million people- construction and maintenance jobs, such as repairing public buildings, laying sewer pipe, and raking leaves for $15 per week. The agency was terminated in 1935, and its projects were absorbed into other programs.

National Recovery Administration. The aim of the NRA was to stimulate economic recovery by asking businesses to set a 40-cents-per-hour minimum wage and standardizing the work week at 40 hours for white-collar jobs and 36 for blue-collar. More than 23 million people worked under NRA-abiding companies, but violations of the code were common. Also, participation by firms was voluntary, so the agency didn't really have a lot of authority. In 1935 the Supreme Court declared the NRA unconstitutional because the federal government had overstepped state labor laws. Nevertheless, minimum wage and work hour laws were later passed by Congress.

Civilian Conservation Corps. Not only did the CCC raise awareness of the importance of preserving natural resources, but in doing so it created 250,000 conservation, forestry, and land improvement jobs in 2,600 locations. Nicknamed by workers "Roosevelt's Tree Army, " CCC workers planted more than three billion trees from 1933 to 1942, accounting for half of all organized planting in American history. But "conservation" meant a lot of things for the CCC- workers constructed fire towers, built 100,000 miles of fire roads, fought and prevented wildfires, preserved wildlife habitats, controlled floods, and prevented soil erosion. One clever element of the CCC was how it reallocated labor resources to areas where there were labor shortages. American cities had far too many needy workers, so the CCC moved them to sparsely populated rural areas, where there was work to be done and few to do it.



Public Works Administration. In one of the first New Deal programs enacted in 1933, the government allocated $4 billion for the construction of what was ultimately 34,000 projects, including airports, highways, aircraft carriers, bridges (including San Francisco's Golden Gate Bridge), hospitals, and schools. By June 1934, the PWA had planned all of its projects and allocated all of its money. So in 1935, Congress created a new agency called the Works Progress Administration to develop more civic construction and job creation programs in the same vein.

Works Progress Administration. Picking up where the PWA left off, the WPA employed 8.5 million people between 1935 and '43 at an average wage of $2 per day for civic construction projects such as roads (650,000 miles), bridges (78,000), buildings (125,000), and 700 miles of airport runways. The WPA was the nation's largest "employer" at the time, and the largest New Deal agency -it spent $11 billion over its life span. Some WPA projects still in existence: Dealey Plaza in Dallas (where John F. Kennedy was shot in 1963), LaGuardia Airport in New York, Timberline Lodge in Oregon, and the presidential retreat Camp David (which was initially a resort for all federal employees). One notable branch of the agency was the Arts Program, which hired thousands of artists, musicians, actors, photographers, and writers to use their talents for public works. For example, future major authors Saul Bellow and Ralph Ellison wrote state guidebooks, and painter Jackson Pollock produced murals.



Federal Deposit Insurance Corporation. During the Depression, customers lost faith in banks. Many had failed and closed suddenly, and their customer's money was irretrievably lost. But banks are an important part of the financial system -no modern economy can function without them. Created by the Glass-Steagall Banking Reform Act of 1933, the FDIC restored faith in banks with a government-backed insurance policy on deposits. If a bank failed, a consumer's account was insured up to $5,000. (Today, the guarantee is $250,000.)

Agricultural Adjustment Administration. In order to increase the market price of crops and livestock, and thereby make farms financially stable again, there had to be either a greater demand or less supply. The AAA paid farmers a subsidy to grow less. The AAA opened in May of 1933, by which point the year's crops were already planted. Since it was too late to pay farmers not to plant, the agency destroyed existing stockpiles and reduced the size of livestock herds. Twenty-five percent of the nation's cotton fields were razed, and six million piglets and 220,000 pregnant cows were slaughtered. Destroying crops while so many Americans struggled to put food on the table made the AAA very controversial. Besides, it didn't work- large farms benefitted most; they simply evicted tenant farmers and sharecroppers, let the land go fallow, then collected a fee from the government. And by 1937, wholesale food prices hadn't changed much from before the AAA went into effect.



Federal Housing Administration. During the Depression, home mortgages were mostly short-term- about 3 to 5 years, as opposed to the 30-year standard of today. The FHA, born out of the National Housing Act of 1934, regulated interest rates and mortgage terms so home ownership was more within reach for middle- and low-income families. The agency also helped ensure that enough affordable housing existed for purchase by offering loans for home-building companies, which had suffered greatly in the economic downturn.

Securities and Exchange Commission. Fraud, deception, and insider trading contributed to the stock market crash, so in an attempt to make sure it never happened again, Congress passed the Securities Exchange Act in 1934. In addition to requiring disclosure of a company's financial information and dealings to investors, it made securities (stock) fraud a crime and established the Securities and Exchange Commission. Its five commissioners are appointed by the president to police the financial world.

National Labor Relations Board. Created by the National Labor Relations Act of 1935, the board's purpose was to protect and enhance the rights of workers to organize into unions and collectively bargain for better wages and better working conditions.



Farm Security Administration. Formed by the Resettlement Administration Act of 1935, this agency delivered aid to the nearly one million farm families who'd fled the Dust Bowl agricultural disaster in Arkansas and Oklahoma for California, as well as those evicted by farm bosses after AAA subsidies. The FSA purchased ruined farms from victims of the Dust Bowl and relocated the farmers to 34 government-owned group farms, where they grew food for themselves while learning modern techniques from agricultural scientists. The FSA also set up refugee camps for farmers and provided educational grants to farm families. But the most famous project of the FSA was its photography branch- it sent out photographers, most notably Gordon Parks and Dorothea Lange, to document the plight of Depression-era farmers.

Social Security Administration. The SSA provided financial assistance for single mothers, a free food program for children of low-income families, and unemployment insurance. But most famously, the SSA created and managed a federal pension system for retired people. Not only did it allow aging citizens to retire from the workforce (without starving), it also opened up their jobs to new workers. Social Security payments were financed by a payroll tax, and they still are: It remains in effect today, covering 40 million people and accounting for a quarter of the federal budget.

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The article above is reprinted with permission from Uncle John's Endlessly Engrossing Bathroom Reader.

Since 1988, the Bathroom Reader Institute had published a series of popular books containing irresistible bits of trivia and obscure yet fascinating facts. If you like Neatorama, you'll love the Bathroom Reader Institute's books - go ahead and check 'em out!


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Only the wealthy really care about the stock market. But the "haves" got a lot of the "have nots" to focus on Taxes! Budget deficit! Socialism! as buzzwords. A lot more people will have to hurt before there is any real political change. Of course, a 25% unemployment rate would certainly do it.
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I can't imagine a program of this magnitude being approved today. Not only would the Party of No actively work to defeat it, programs like this help average Americans instead of those poor, needy corporations. At what point did the stock market begin to be the only picture of the financial health of a nation?
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