New Deal Brings Social Reforms
The new President brought an air of cheerful confidence that quickly rallied the people to his banner. Before long, the complex of reforms known as the New Deal was well on its way. In a certain sense, it can be said that the New Deal merely introduced into the United States types of reform familiar to Englishmen, Germans, and Scandinavians for more than a generation. Moreover, the New Deal represented the culmination of a long-range trend toward abandonment of laissez faire, going back to the regulation of the railroads in the 1880s and the flood of state and national reform legislation of the Theodore Roosevelt-Wilson era.
What was truly novel about the New Deal was the speed with which it accomplished what elsewhere had taken whole generations. Many of the reforms were hastily drawn and weakly administered; some actually contradicted others.
During the entire New Deal period, despite its speed in decision and execution, public criticism and discussion were never interrupted or suspended; in fact, the New Deal brought to the individual citizen a sharp revival of interest in government.
When Roosevelt took the presidential oath, the banking and credit system of the nation was in a state of paralysis. With astonishing rapidity the banks were reopened, and a policy of moderate currency inflation was adopted in order to start an upward movement in commodity prices and to afford some relief to debtors. New governmental agencies brought generous credit facilities to industry and agriculture. Savings-bank deposits up to $5,000 were insured, and severe regulations were imposed upon the sale of securities on the stock exchange.
In agriculture, far-reaching reforms were instituted. Following the Supreme Court nullification of the Agricultural Adjustment Act three years after its passage, Congress passed a more effective farm-relief act, providing that the government make money payments to farmers who would devote part of their land to soilconserving crops or otherwise cooperate in long-range agricultural goals. By 1940, nearly six million farmers were receiving federal subsidies under this program. The new act likewise provided loans on surplus crops, insurance for wheat, and a system of planned storage to ensure an "ever-normal granary." Soon, prices of agricultural commodities rose, and economic stability for the farmer began to seem possible.
Another goal of the New Deal was to bring independence to farm tenants. The federal government set up the Farm Security Administration to subsidize the purchase of farms for tenants on easy terms, and it refinanced farm loans, bringing relief to the holders of farm mortgages. Simultaneously, Secretary of State Cordell Hull was attemptmg to restore some foreign markets by reciprocity agreements designed to break down the economic autarky created by high tariffs. Under the Trade Agreements Act of June 1934, Secretary Hull negotiated unconditional most- favored-nation reciprocity treaties with Canada, Cuba, France, Russia, and some 20 other countries. Within a year, American trade had improved materially, and by 1939 farm income was more than double what it had been seven years before.
The New Deal program for industry went through an experimental phase in the opening years of the Roosevelt Administration. In 1933 a National Recovery Administration (NRA) was set up, based essentially upon the idea that the crisis could be resolved by limiting production and fixing higher prices; but even before the NRA was declared unconstitutional in May 1935, it was widely considered unsuccessful. By this time other policies were fostering recovery, and the administration soon took the position that administered prices in certain lines of business were a severe drain on the national economy and a barrier to recovery.
As progress toward recovery continued, the federal government spent thousands of millions of dollars for relief of the unemployed, for public works, and for the conservation of national resources. These "pump-priming" expenditures created new demands at home for the products of American industry.
It was during the New Deal that organized labor made greater gains than at any previous time in American history. Section 7 (a) of the National Recovery Administration Act had guaranteed to labor the right of collective bargaining, and in July 1935, to replace the labor provisions of the defunct NRA, Congress passed the National Labor Relations Acts which set up a labor board to supervise collective bargaining, administer elections, and assure workers the right to choose the organization that should represent them in dealing with employers.
Great progress was made in labor organization. The American Federation of Labor, with its principle of craft unionism, was slow to organize the unorganized, and some of the dissatisfied mass unions broke away and formed the Congress of Industrial Organizations (CIO). A successful organizing drive by the CIO, particularly in basic industries like automobiles and steel, spurred the AFL to competitive action. Whereas there had been 4 million organized workers in 1929, there were 11 million in 1939 and 16 million in 1948.
Organization brought a growing sense of common political interests, and labor's power increased not only in industry but also in politics. This power was exercised largely within the framework of the two major parties, and although the Democratic Party generally received more union support than the Republican Party, no labor party as such emerged.