The New Deal 515

Terms & NamesTerms & NamesMAIN IDEAMAIN IDEA

One American's Story

The Impact ofthe New Deal

The New Deal affectedAmerican society not only inthe 1930s but also in thedecades that followed.

Americans still debate over howlarge a role government shouldplay in American life.

WHY IT MATTERS NOWWHY IT MATTERS NOW

George Dobbin, a 67-year-old cotton-mill worker, staunchlysupported Franklin Delano Roosevelt and his New Dealpolicies. In an interview for a book entitled These AreOur Lives, compiled by the Federal Writers’ Project, Dobbinexplained his feelings about the president.

A PERSONAL VOICE GEORGE DOBBIN

“ I do think that Roosevelt is the biggest-hearted man we everhad in the White House. . . . It’s the first time in myrecollection that a President ever got up and said, ‘I’minterested in and aim to do somethin’ for the workin’ man.’ Justknowin’ that for once . . . [there] was a man to standup and speak for him, a man that could make what he feltso plain nobody could doubt he meant it, has made a lot of us feel asight [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 heinitiated. Even today, reforms begun under the New Deal continue to influenceAmerican politics and society.

New Deal Reforms EndureDuring his second term in office, President Roosevelt hinted at plans to launch a ThirdNew Deal. In his inaugural address, the president exclaimed, “I see millions of fami-lies trying to live on incomes so meager that the pall of family disaster hangs overthem 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 theeconomy had improved enough to convince many Americans that the Depressionwas finally ending. Although economic troubles still plagued the nation, President

•Federal DepositInsuranceCorporation (FDIC)

•Securities andExchangeCommission (SEC)

•National LaborRelations Board(NLRB)

•parity•Tennessee ValleyAuthority (TVA)

A coal miner, Zeno Santinello,shakes hands with Franklin D.Roosevelt as he campaigns inElm Grove, West Virginia, in 1932.

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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 ofunemployed 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 withevents in Europe, particularly Hitler’s rise to power in Germany.

SUPPORTERS AND CRITICS OF THE NEW DEAL Over time, opinions aboutthe New Deal have ranged from harsh criticism to high praise. Most conservativesthink President Roosevelt’s policies made the federal government too large and toopowerful. They believe that the government stifled free enterprise and individualinitiative. Liberal critics, in contrast, argue that President Roosevelt didn’t doenough 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 overregulatedsocialism—and helped the country recover from its economic difficulties. One ofRoosevelt’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 ofmorality. . . . He wanted all Americans to grow up healthy and vigorous and to bepractically educated. He wanted business men to work within a set of understoodrules. Beyond this he wanted people free to vote, to worship, to behave as theywished so long as a moral code was respected; and he wanted officials to behaveas though office were a public trust.”

—quoted in Redeeming the Time

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MAIN IDEAMAIN IDEA

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AnalyzingIssues

Why didindustrial pro-duction drop andunemployment goup again in 1938?

“Many more problems have been created thansolved by the New Deal.”

Critics of the New Deal believe that it failed to reach itsgoals. The historian Barton J. Bernstein accepted thegoals of the New Deal but declared that they werenever met. To him, the New Deal “failed to raise theimpoverished, it failed to redistribute income, [and] itfailed to extend equality.”

In Senator Robert A. Taft’s opinion, “many moreproblems have been created than solved” by the NewDeal. He maintained, “Whatever else has resulted fromthe great increase in government activity . . . it has cer-tainly had the effect of checking private enterprise com-pletely. This country 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 andthe development of a taxsystem which penalizeshard work and success.”Senator Taft claimed that“The government shouldgradually withdraw fromthe business of lendingmoney and leave that func-tion to private capitalunder proper regulation.”

“The New Deal transformed the way Americangovernment 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 morethan a temporary solution to a crisis. Professor A. A. Berlestated 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 wasso fruitful or of a crisisthat was met with asmuch imagination.”

To Pulitzer Prize-win-ning historian AllanNevins, the New Deal wasa turning point in whichthe U.S. governmentassumed a greater respon-sibility for the economicwelfare of its citizens.

C O U N T E R P O I N TC O U N T E R P O I N TP O I N TP O I N T

THINKING CRITICALLYTHINKING 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 WPAand draft a proposal for a WPA-type program that wouldbenefit your community.

EXPANDING GOVERNMENT’S ROLE INTHE 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 federaljobs, by attempting to regulate supply anddemand, and by increasing the government’sactive participation in settling labor and man-agement disputes. The federal government alsoestablished agencies, such as the FederalDeposit Insurance Corporation (FDIC)and the Securities and ExchangeCommission (SEC), to regulate banking andinvestment activities. Although the New Dealdid not end the Great Depression, it did helpreduce the suffering of thousands of men,women, and children by providing them withjobs, food, and money. It also gave people hopeand helped them to regain a sense of dignity.

The federal government had to go deeply into debt to provide jobs and aid tothe American people. The federal deficit increased to $2.9 billion in fiscal year1934. As a result of the cutbacks in federal spending made in 1937–1938, thedeficit 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 spendingby the federal government for guns, tanks, ships, airplanes, and all the otherequipment and supplies the country needed for the World War II effort. Duringthe war, the deficit reached a high of about $54.5 billion in 1943.

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Unemployedworkers sit on astreet in a 1936photograph byDorothea Lange.

Federal Deficit and Unemployment, 1933–1945

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SKILLBUILDER Interpreting Graphs1. 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 517

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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 forwages and hours, banned child labor, and ensured the right of workers to orga-nize and to bargain collectively with employers. Today, the National LaborRelations Board (NLRB), created under the Wagner Act, continues to act as amediator in labor disputes between unions and employers.

BANKING AND FINANCE New Deal programs established new policies in thearea of banking and finance. The Securities and Exchange Commission (SEC), cre-

ated in 1934, continues to monitor the stock market andenforce laws regarding the sale of stocks and bonds. TheFederal Deposit Insurance Corporation (FDIC), created by theGlass-Steagall Act of 1933, has shored up the banking systemby 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 bythe Federal Deposit Insurance Corporation for up to $100,000.

Social and Environmental EffectsNew Deal economic and financial reforms, including the cre-ation of the FDIC, the SEC, and Social Security, have helpedto stabilize the nation’s finances and economy. Although thenation still experiences economic downturns, known as reces-sions, people’s savings are insured, and they can receiveunemployment compensation if they lose their jobs.

SOCIAL SECURITY One of the most important legacies ofthe New Deal has been that the federal government hasassumed some responsibility for the social welfare of its citi-zens. Under President Roosevelt, the government undertookthe creation of a Social Security system that would help a largenumber of needy Americans receive some assistance.

The Social Security Act provides an old-age insuranceprogram, an unemployment compensation system, and aidto the disabled and families with dependent children. It has had a major impact on the lives of millions ofAmericans since its founding in 1935.

THE RURAL SCENE New Deal policies also had a signifi-cant impact on the nation’s agriculture. New Deal farmlegislation set quotas on the production of crops such aswheat to control surpluses. Under the second AgriculturalAdjustment Act, passed in 1938, loans were made to farm-ers by the Commodity Credit Corporation. The value of aloan was determined by the amount of a farmer’s surpluscrops 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, suchas rural electrification, helped to improve conditions inrural America.

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MAIN IDEAMAIN IDEA

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DevelopingHistoricalPerspective

Why was theestablishment ofthe Social Securitysystem such animportant part ofthe New Deal?

NOWNOW THENTHEN

SOCIAL SECURITYToday the Social Security systemcontinues to rely on mandatorycontributions paid by workers—through payroll deductions—andby employers. The money is invest-ed in a trust fund, from whichretirement benefits are later paid.However, several problems havesurfaced. For example, benefitshave expanded, and Americanslive longer than they did in 1935.Also, the ratio of workers toretirees is shrinking: fewer peo-ple are contributing to the systemrelative to the number who areeligible to receive benefits.

The long-range payment of bene-fits may be in jeopardy becauseof the large number of recipients.Continuing disagreement abouthow to address the costs has pre-vented legislative action.

A Social Security poster proclaims the benefitsof the system for those who are 65 or older.

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THE ENVIRONMENT Americans alsocontinue to benefit from New Dealefforts 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 ConservationCorps planted trees, created hiking trails,and built fire lookout towers. The SoilConservation Service taught farmers howto conserve the soil through contourplowing, terracing, and crop rotation.Congress also passed the Taylor GrazingAct in 1934 to help reduce grazing onpublic lands. Such grazing had con-tributed to the erosion that broughtabout the dust storms of the 1930s.

The Tennessee Valley Authority(TVA) harnessed water power to generate electricity and to help prevent disastrousfloods in the Tennessee Valley. The government also added to the national park sys-tem in the 1930s, established new wildlife refuges and set aside large wildernessareas. On the other hand, government-sponsored stripmining and coal burningcaused air, land, and water pollution.

The New Deal legacy has many dimensions. It brought hope and gratitudefrom some people for the benefits and protections they received. It also broughtanger and criticism from those who believed that it took more of their money intaxes and curtailed their freedom through increased government regulations. Thedeficit spending necessary to fund New Deal programs grew immensely as thenation entered World War II.

The New Deal 519

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This 1933cartoon depictsRooseveltspurring on aslow-movingCongress withhis many reformpolicies.

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MAIN IDEA2. TAKING NOTES

In a cluster diagram like the onebelow, show long-term effects of theNew Deal.

Which long-term benefit do you thinkhas had the most impact? Why?

CRITICAL THINKING3. MAKING GENERALIZATIONS

Some critics have charged that theNew Deal was antibusiness andanti–free enterprise. Explain why youagree or disagree with this charge.Think About:

• the expanded power of the feder-al government

• the New Deal’s effect on theeconomy

• the New Deal’s effect on theAmerican people

4. EVALUATING LEADERSHIPHow successful do you thinkFranklin Roosevelt was as apresident? Support your answerwith details from the text.

5. INTERPRETING VISUAL SOURCESLook at the political cartoon above.What does it suggest aboutRoosevelt’s leadership and therole of Congress? Explain.

New Deal’sLong-Term Effects

MAIN IDEAMAIN IDEA

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AnalyzingEffects

How did NewDeal programsbenefit and harmthe environment?

•Federal Deposit InsuranceCorporation (FDIC)

•Securities and ExchangeCommission (SEC)

•National Labor RelationsBoard (NLRB)

•parity•Tennessee Valley Authority(TVA)

1. TERMS & NAMES For each term or name, write a sentence explaining its significance.

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MISSOURI

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SPOTLIGHT

The TennesseeValley Authority

The Tennessee Valley Authority (TVA) is a federal agency that was established in1933 to construct dams and power plants along the Tennessee River and its tribu-taries. The Tennessee River basin is one of the largest river basins in the UnitedStates, and people who live in this area have a number of common concerns. TheTVA has helped the region in various ways: through flood and navigation control,the conservation of natural resources, and the generation of electric power, as wellas through agricultural and industrial development.

The Tennessee Valley covers parts of seven states. Thus,the TVA became an enormous undertaking, eventually com-prising dozens of major dams, each with associated powerplants, recreational facilities, and navigation aids.

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HYDROELECTRIC DAM

A hydroelectric dam uses water power tocreate electricity. The deeper the reservoir,the greater is the force pushing waterthrough the dam.

The water force spinsthe blades of the turbine.

The turbinedrives the generator.

The water is forcedthrough the intake andinto the penstock.

The generator produceselectricity and transmits itthrough the power lines.

Once it passesthrough the turbine, thewater reenters the river.

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Region served by TVA power

TVA Dam

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The New Deal 521

KENTUCKY DAMOver a mile and a half long and206 feet high, the Kentucky Damcreated the 184-mile-long KentuckyLake, a paradise for fishing.

NORRIS DAM Located on theClinch River, atributary of theTennessee River,the Norris Dam isnamed afterSenator GeorgeW. Norris ofNebraska. Norriswas a progres-sive leader whocalled for govern-ment involvementin the develop-ment of thepower potentialof the TennesseeRiver.

Before 1930, most homes in the area had no electricity.Women wash clothes outside this homestead nearAndersonville, Tennessee, in 1933. Their estate wassubmerged when the Norris Dam filled.

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THE CUMBERLAND RIVER A similar series of dams, operatedby the Corps of Engineers, is foundon the Cumberland River. This system cooperates with the TVA.

THINKING CRITICALLYTHINKING CRITICALLY

1. Analyzing Distributions Locate the dams on thismap. Why do you think they might have been placed inthese particular areas?

2. Creating a Model Create a 3-D model of a dam.Before you begin, pose a historical question yourmodel will answer. Think about environmental changescaused by the construction of a dam.

SEE SKILLBUILDER HANDBOOK, PAGE R31.

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IRESEARCH LINKS CLASSZONE.COM

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