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The New Deal 721
Terms & Names
Terms & Names
MAIN IDEA
MAIN IDEA
One American's Story
The Impact of
the New Deal
The New Deal affected
American society not only in
the 1930s but also in the
decades that followed.
Americans still debate over how
large a role government should
play in American life.
WHY IT MATTERS NOW
WHY IT MATTERS NOW
George Dobbin, a 67-year-old cotton-mill worker, staunchly
supported Franklin Delano Roosevelt and his New Deal
policies. In an interview for a book entitled These Are
Our Lives, compiled by the Federal Writers’ Project, Dobbin
explained his feelings about the president.
A PERSONAL VOICE GEORGE DOBBIN
“ I do think that Roosevelt is the biggest-hearted man we
ever had in the White House. . . . It’s the first time in my
recollection that a President ever got up and said, ‘I’m
interested in and aim to do somethin’ for the workin’ man.’
Just knowin’ that for once . . . [there] was a man to stand
up and speak for him, a man that could make what he felt
so plain nobody could doubt he meant it, has made a lot of us feel a
sight [lot] better even when [there] wasn’t much to eat in our homes.
”
—quoted in These Are Our Lives
FDR was extremely popular among working-class Americans. Far more impor-
tant than his personal popularity, however, was the impact of the policies he
initiated. Even today, reforms begun under the New Deal continue to influence
American politics and society.
New Deal Reforms Endure
During his second term in office, President Roosevelt hinted at plans to launch a
Third New Deal. In his inaugural address, the president exclaimed, “I see millions of
families trying to live on incomes so meager that the pall of family disaster hangs
over them day by day. . . . I see one third of a nation ill-housed, ill-clad, ill-nourished.”
However, FDR did not favor deficit spending. More importantly, by 1937 the
economy had improved enough to convince many Americans that the Depression
was finally ending. Although economic troubles still plagued the nation, President
•Federal Deposit
Insurance
Corporation (FDIC)
•Securities and
Exchange
Commission (SEC)
•National Labor
Relations Board
(NLRB)
•parity
•Tennessee Valley
Authority (TVA)
A coal miner, Zeno Santinello,
shakes hands with Franklin D.
Roosevelt as he campaigns in
Elm Grove, West Virginia, in 1932.
▼
p0721-725aspe-0623s5 10/17/02 9:07 AM Page 721
Page 1 of 5
A
Roosevelt faced rising pressure from Congress to scale back New Deal programs,
which he did. As a result, industrial production dropped again, and the number of
unemployed increased from 7.7 million in 1937 to 10.4 million in 1938. By 1939,
the New Deal was effectively over, and Roosevelt was increasingly concerned with
events in Europe, particularly Hitler’s rise to power in Germany.
SUPPORTERS AND CRITICS OF THE NEW DEAL
Over time, opinions about
the New Deal have ranged from harsh criticism to high praise. Most conservatives
think President Roosevelt’s policies made the federal government too large and too
powerful. They believe that the government stifled free enterprise and individual
initiative. Liberal critics, in contrast, argue that President Roosevelt didn’t do
enough to socialize the economy and to eliminate social and economic inequali-
ties. Supporters of the New Deal contend, however, that the president struck a rea-
sonable balance between two extremes—unregulated capitalism and overregulated
socialism—and helped the country recover from its economic difficulties. One of
Roosevelt’s top advisers made this assessment of the president’s goals.
A PERSONAL VOICE REXFORD TUGWELL
“ He had in mind a comprehensive welfare concept, infused with a stiff tincture of
morality. . . . He wanted all Americans to grow up healthy and vigorous and to be
practically educated. He wanted business men to work within a set of understood
rules. Beyond this he wanted people free to vote, to worship, to behave as they
wished so long as a moral code was respected; and he wanted officials to behave
as though office were a public trust.
”
—quoted in Redeeming the Time
722 C
HAPTER 23
MAIN IDEA
MAIN IDEA
A
Analyzing
Issues
Why did
industrial pro-
duction drop and
unemployment go
up again in 1938?
A. Answer
Because, in
response to
pressure from
Congress, FDR
cut back on
New Deal pro-
grams.
“Many more problems have been created than
solved by the New Deal.”
Critics of the New Deal believe that it failed to reach its
goals. The historian Barton J. Bernstein accepted the
goals of the New Deal but declared that they were
never met. To him, the New Deal “failed to raise the
impoverished, it failed to redistribute income, [and] it
failed to extend equality.”
In Senator Robert A. Taft’s opinion, “many more
problems have been created than solved” by the New
Deal. He maintained, “Whatever else has resulted from
the great increase in government activity . . . it has cer-
tainly had the effect of checking private enterprise com-
pletely. This countr y was built up by the constant estab-
lishment of new business and the expansion of old busi-
nesses. . . . In the last six years this process has come
to an end because of gov-
ernment regulation and
the development of a tax
system which penalizes
hard work and success.”
Senator Taft claimed that
“The government should
gradually withdraw from
the business of lending
money and leave that func-
tion to private capital
under proper regulation.”
“The New Deal transformed the way American
government works.”
Supporters of the New Deal believe that it was suc-
cessful. Many historians and journalists make this judg-
ment by using the economic criterion of creating jobs.
The New Republic, for example, argued that the short-
comings of the WPA “are insignificant beside the gigan-
tic fact that it has given jobs and sustenance to a mini-
mum of 1,400,000 and a maximum of 3,300,000 per-
sons for five years.”
Some historians stress that the New Deal was more
than a temporary solution to a crisis. Professor A. A. Berle
stated that, “human beings cannot indefinitely be sacri-
ficed by millions to the operation of economic forces.”
According to the historian William E. Luechtenburg,
“It is hard to think of another period in the whole histo-
ry of the republic that was
so fruitful or of a crisis
that was met with as
much imagination.”
To Pulitzer Prize-win-
ning historian Allan
Nevins, the New Deal was
a turning point in which
the U.S. government
assumed a greater respon-
sibility for the economic
welfare of its citizens.
COUNTERPOINT
COUNTERPOINT
POINT
POINT
THINKING CRITICALLY
THINKING CRITICALLY
CONNECT TO HISTORY
1. Comparing and Contrasting How did the New Deal
succeed? How did it fail? Write a paragraph that
summarizes the main points.
SEE SKILLBUILDER HANDBOOK, PAGE R8.
CONNECT TO TODAY
2. Draft a Proposal Research the programs of the WPA
and draft a proposal for a WPA-type program that would
benefit your community.
p0721-725aspe-0623s5 10/17/02 9:07 AM Page 722
Page 2 of 5
EXPANDING GOVERNMENT’S ROLE IN
THE ECONOMY
The Roosevelt administra-
tion expanded the power of the federal govern-
ment, giving it—and particularly the presi-
dent—a more active role in shaping the econo-
my. It did this by infusing the nation’s econo-
my with millions of dollars, by creating federal
jobs, by attempting to regulate supply and
demand, and by increasing the government’s
active participation in settling labor and man-
agement disputes. The federal government also
established agencies, such as the Federal
Deposit Insurance Corporation (FDIC)
and the Securities and Exchange
Commission (SEC), to regulate banking and
investment activities. Although the New Deal
did not end the Great Depression, it did help
reduce the suffering of thousands of men,
women, and children by providing them with
jobs, food, and money. It also gave people hope
and helped them to regain a sense of dignity.
The federal government had to go deeply into debt to provide jobs and aid to
the American people. The federal deficit increased to $2.9 billion in fiscal year
1934. As a result of the cutbacks in federal spending made in 1937–1938, the
deficit dropped to $100 million. But the next year it rose again, to $2.9 billion.
What really ended the Depression, however, was the massive amount of spending
by the federal government for guns, tanks, ships, airplanes, and all the other
equipment and supplies the country needed for the World War II effort. During
the war, the deficit reached a high of about $54.5 billion in 1944.
▼
Unemployed
workers sit on a
street in a 1936
photograph by
Dorothea Lange.
Federal Deficit and Unemployment, 1933–1945
Federal Deficit (in billions of dollars)
(Fiscal year ending June 30)
Unemployment (in millions of people)
60
55
50
45
40
35
30
25
20
15
10
5
0
13
12
11
10
9
8
7
6
5
4
3
2
1
0
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
SKILLBUILDER
Interpreting Graphs
1.
What was the peak year of the deficit?
2.
What relationship does there seem to be between deficit spending and unemployment?
Why do you think this is so?
The New Deal 723
Skillbuilder
Answer
1. 1943
2. Unemployment
increases when
there is less
deficit spending
and decreases
when there is
more deficit
spending, per-
haps because
the deficit
spending stimu-
lates the cre-
ation of jobs.
p0721-725aspe-0623s5 10/17/02 9:07 AM Page 723
Page 3 of 5
724 C
HAPTER 23
PROTECTING WORKERS’ RIGHTS
One of the areas in which New Deal poli-
cies have had a lasting effect is the protection of workers’ rights. New Deal legis-
lation, such as the Wagner Act and the Fair Labor Standards Act, set standards for
wages and hours, banned child labor, and ensured the right of workers to orga-
nize and to bargain collectively with employers. Today, the National Labor
Relations Board (NLRB), created under the Wagner Act, continues to act as a
mediator in labor disputes between unions and employers.
BANKING AND FINANCE
New Deal programs established new policies in the
area of banking and finance. The Securities and Exchange Commission (SEC), cre-
ated in 1934, continues to monitor the stock market and
enforce laws regarding the sale of stocks and bonds. The
Federal Deposit Insurance Corporation (FDIC), created by the
Glass-Steagall Act of 1933, has shored up the banking system
by reassuring individual depositors that their savings are pro-
tected against loss in the event of a bank failure. Today, indi-
vidual accounts in United States federal banks are insured by
the Federal Deposit Insurance Corporation for up to $100,000.
Social and Environmental Effects
New Deal economic and financial reforms, including the cre-
ation of the FDIC, the SEC, and Social Security, have helped
to stabilize the nation’s finances and economy. Although the
nation still experiences economic downturns, known as reces-
sions, people’s savings are insured, and they can receive
unemployment compensation if they lose their jobs.
SOCIAL SECURITY
One of the most important legacies of
the New Deal has been that the federal government has
assumed some responsibility for the social welfare of its citi-
zens. Under President Roosevelt, the government undertook
the creation of a Social Security system that would help a large
number of needy Americans receive some assistance.
The Social Security Act provides an old-age insurance
program, an unemployment compensation system, and aid
to the disabled and families with dependent children.
It has had a major impact on the lives of millions of
Americans since its founding in 1935.
THE RURAL SCENE
New Deal policies also had a signifi-
cant impact on the nation’s agriculture. New Deal farm
legislation set quotas on the production of crops such as
wheat to control surpluses. Under the second Agricultural
Adjustment Act, passed in 1938, loans were made to farm-
ers by the Commodity Credit Corporation. The value of a
loan was determined by the amount of a farmer’s surplus
crops and the parity price, a price intended to keep farm-
ers’ income steady. Establishing agricultural price sup-
ports set a precedent of federal aid to farmers that con-
tinued into the 2000s. Other government programs, such
as rural electrification, helped to improve conditions in
rural America.
B
MAIN IDEA
MAIN IDEA
B
Developing
Historical
Perspective
Why was the
establishment of
the Social Security
system such an
important part of
the New Deal?
B. Answer The
government
began accept-
ing responsibili-
ty for providing
assistance to
needy members
of society.
N
O
W
N
O
W
T
H
E
N
T
H
E
N
SOCIAL SECURITY
Today the Social Security system
continues to rely on mandatory
contributions paid by workers—
through payroll deductions—and
by employers. The money is invest-
ed in a trust fund, from which
retirement benefits are later paid.
However, several problems have
surfaced. For example, benefits
have expanded, and Americans
live longer than they did in 1935.
Also, the ratio of workers to
retirees is shrinking: fewer peo-
ple are contributing to the system
relative to the number who are
eligible to receive benefits.
The long-range payment of bene-
fits may be in jeopardy because
of the large number of recipients.
Continuing disagreement about
how to address the costs has pre-
vented legislative action.
A Social Security poster proclaims the benefits
of the system for those who are 65 or older.
▼
p0721-725aspe-0623s5 10/17/02 9:07 AM Page 724
Page 4 of 5
THE ENVIRONMENT
Americans also
continue to benefit from New Deal
efforts to protect the environment.
President Roosevelt was highly commit-
ted to conservation and promoted poli-
cies designed to protect the nation’s nat-
ural resources. The Civilian Conservation
Corps planted trees, created hiking trails,
and built fire lookout towers. The Soil
Conservation Service taught farmers how
to conserve the soil through contour
plowing, terracing, and crop rotation.
Congress also passed the Taylor Grazing
Act in 1934 to help reduce grazing on
public lands. Such grazing had con-
tributed to the erosion that brought
about the dust storms of the 1930s.
The Tennessee Valley Authority
(TVA) harnessed water power to generate
electricity and to help prevent disastrous floods in the Tennessee Valley. The gov-
ernment also added to the national park system in the 1930s, established new
wildlife refuges and set aside large wilderness areas. On the other hand, government-
sponsored stripmining and coal burning caused air, land, and water pollution.
The New Deal legacy has many dimensions. It brought hope and gratitude
from some people for the benefits and protections they received. It also brought
anger and criticism from those who believed that it took more of their money in
taxes and curtailed their freedom through increased government regulations. The
deficit spending necessary to fund New Deal programs grew immensely as the
nation entered World War II.
The New Deal 725
▼
This 1933
cartoon depicts
Roosevelt
exhausting
Congress with
his many reform
policies.
C
MAIN IDEA
2. TAKING NOTES
In a cluster diagram like the one
below, show long-term effects of the
New Deal.
Which long-term benefit do you think
has had the most impact? Why?
CRITICAL THINKING
3. MAKING GENERALIZATIONS
Some critics have charged that the
New Deal was antibusiness and
anti–free enterprise. Explain why you
agree or disagree with this charge.
Think About:
• the expanded power of the feder-
al government
• the New Deal’s effect on the
economy
• the New Deal’s effect on the
American people
4. EVALUATING LEADERSHIP
How successful do you think
Franklin Roosevelt was as a
president? Support your answer
with details from the text.
5. INTERPRETING VISUAL SOURCES
Look at the political cartoon above.
What does it suggest about
Roosevelt’s leadership and the
role of Congress? Explain.
New Deal’s
Long-Term Effects
MAIN IDEA
MAIN IDEA
C
Analyzing
Effects
How did New
Deal programs
benefit and harm
the environment?
•Federal Deposit Insurance
Corporation (FDIC)
•Securities and Exchange
Commission (SEC)
•National Labor Relations
Board (NLRB)
•parity
•Tennessee Valley Authority
(TVA)
1. TERMS & NAMES For each term or name, write a sentence explaining its significance.
C Answer They
benefited the
environment
with new trees,
hiking trails, fire
lookouts, soil
conservation,
flood control,
national parks,
wildlife
refugees, and
wilderness
areas. They
harmed it with
air, water, and
land pollution.
p0721-725aspe-0623s5 10/17/02 9:07 AM Page 725
Page 5 of 5
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