Large-Scale State

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By 1933 many farmers had become desperate. Their average income was now less than one third of what it had been in 1929 – and farmers had been badly off even then. By 1933 many were leaving their crops to rot in the fields because selling prices were too low to cover even the harvesting costs. Roosevelt made helping the farmers one of his Government’s most urgent tasks.
There was bitter criticism of the plan. To many it seemed wicked that, at a time when so many people were hungry, the Government should actually be paying farmers not to grow food.
n 12 May the Agricultural Adjustment Administration (AAA) was created, as some federal officials were deeply sympathetic towards the plight of tenant farmers. The Act aimed to make farming more efficient by eradicating over-production. In many cases the AAA paid farmers to produce less. If smaller quantities were produced, prices would be higher and farmers would be better off. As a result, ¼ of growing cotton crops were ploughed under, 6 million pigs were slaughtered and part of the tobacco harvest destroyed. Farmers who agreed to reduce this were compensated. This bought benefits to large-scale farmers as their profits soon began to rise but not necessarily to anyone else. Year by year prices crept upward.

By 1936 farmers’ incomes had risen by 50% from their 1933 level.
heat prices (cents per bushel)








Over 100

  • The Government gave farmers who agreed to grow soil-strengthening crops such as clover or beans money grants.

  • Grants were made to help farmers to buy machinery and fertilisers.

  • A government-backed insurance agency was set up, so that the farmers could insure his crops against destruction and other natural hazards.

Many American farmers were much better off by the end of the 1930s. Generally speaking, those who benefited most were those who owned their land.

For tenants and farm labourers, life continued to be very hard right through the 1930s. Many lost both their jobs and their homes as they were replaced with tractors and other laborsaving equipment.

Westward Movement

In 1933 the glaring sun turned the soil into light and lifeless dust. In November, strong winds, picking up the dust, swirled it away in great choking clouds. As a result, from 1933 onwards thousands of these refugees went westwards, hoping that beyond the Rocky Mountains in California they would find some way of making a decent living.
The people of California looked with suspicion and fear as ragged strangers poured down from the mountains into their towns and villages. Often the only work to be found was fruit and vegetable picking. Both jobs were badly paid and short lasting, and the plights of most of these dust bowl refugees continued to be hard. It was only when the outbreak of the Second World War made Californian factories begin to take on more workers that life began to improve for them.
But despite the hard times experienced by the farmers driven off the land, those who managed to hold on gradually saw things improving. By 1939, incomes from farming were more than double what they had been in 1932. Most of this increase was the result of a steady rise in the prices of farm products.
There was a belief that, on the whole, the AAA had helped make a better life for farmers.

  • Better prices they were getting for their crops

  • Homes and lives had been made more comfortable and farming was made easier by Government schemes to bring electricity into rural areas

  • More secure position due to Government-supported crop insurance schemes.

It is not surprising that throughout the 1930s the farmers were amongst Roosevelt’s strongest supporters.

More problems for the New Deal agencies lay ahead in the Supreme Court. In 1936 the Court declared that the AAA, the Agricultural Adjustment Administration, went against the constitution and was therefore illegal. The nine judges said that giving help to farmers was a matter for each state government, not the federal government. Thus all the help that the AAA gave to farmers suddenly stopped.
The AAA had only helped farm owners. Sharecroppers who farmed the owner’s land for a share of the crop, tenants who rented their land, and farm workers who neither owned nor rented land received no help from it. In fact, by encouraging farmers to plant less the AAA forced many sharecroppers, especially cotton sharecroppers in southern states, and tenants to leave the land. Landlords had no reason to keep on sharecroppers when there were no crops to be harvested so they evicted them.
In 1935 Roosevelt set up the Resettlement Administration with the Farm Society Administration (FSA). This was more successful in helping poor farmers than the earlier schemes. By 1944 the FSA had helped to settle 11,000 families and provide 41,000 long-term low interest loans to help tenants and sharecroppers to buy their own farms. The FSA also established labour camps, which helped migrants from the Dust Bowl looking for work in California to improve their living conditions. Typically, however, the improvement was only slight. The FSA might have done more, but it was opposed by members of Congress from the southern states. One reason for their opposition was that the FSA provided integrated camps and medical schemes both for Black and White migrant workers at a time when the races were still strictly segregated in the south.
An Evaluation of the New Deal

Ed Johnson, Democrat Governor of Colorado said the New Deal was “the worst fraud ever perpetuated on the American people”. It may be an extreme view but it can be argues that on the surface, at the least, the actual achievements of the New Deal do seem rather slender.

  • In 1933, 18 million Americans were unemployed. By 1939, 9 million were still out of work. The Government seemed reconciled that there would be 5 million permanently unemployed.

  • Personal national income stood at $86 billion in 1929 but only $73 billion in 1939, despite a rise in population of 9 million at this time.

  • One in five (20%) Americans required some sort of relief in 1939.

  • Wages averaged $25.03 per week in 1929 and $23.86 in 1939.

  • Agricultural policies did nothing to help the worst-off farmers.

  • Roosevelt was reluctant to spend excessively on Federal projects. He failed to see that massive Government expenditure was necessary to offset the reduction in spending in the private sector as a result of the Depression.

  • Social welfare programmes were seriously deficient.

  • Failure to embark on a large-scale housing programme. Federal Government built only 180,000 homes.

  • A series of mass movements were demanding radical action to end the Depression and a redistribution of the nation’s wealth.

  • Supporters could only claim partial recovery had been achieved.

  • By 1939 there had been great improvements in some sectors of the economy. Would these have occurred in spite of New Deal policies and not because of them?

  • Opponents grumbled that Roosevelt was acting like a dictator.

  • Some feared that Roosevelt’s administration was moving towards fascism.

  • Many believed that crucial agencies such as the NRA handed too much power to the very businessmen whose practices had led to the Depression.

  • Labour leaders were disappointed by Governments half-hearted support of trade unions.

  • Most conservative businessmen opposed federal deficit spending fearing higher taxes and undermining of the economy (spending more than was raised in taxes). They feared too much Government intervention in the economy. There was a belief that government power and budgets had to be reduced drastically, while business should be given greater voice in setting national policy.

  • New Deal had created huge bureaucracies that interfered in local affairs and failed to curb that power of the rich.

  • By 1939, the USA was the slowest of the major countries to recover from the Depression.

Many Americans remained suspicious of the New Deal and it never received unqualified praise. However, according to Raymond Moley, one of Roosevelt’s trusted lieutenants; the New Deal did restore ‘confidence in the American people, confidence in their banks, in their industrial system and in their Government. Confidence was the buoyant spirit that brought back prosperity.’ But Moley denied that the New Deal solved America’s problems. One of Harry Hopkin’s helpers, Joe Marcus, claimed that big business went along with the New Deal in order to defend the existing American society against a possible socialist or even communist alternative. “It was a very unusual Depression in the history of societies. It lasted so long and went so deep.” And of course, the New Deal did not end the Depression. Unemployment, successfully checked during 1934-36, crept up again after 1937. World War 2, not the New Deal would solve that particular problem.

The Success of the New Deal

When summing up the New Deal, we must not forget the enormity of the problems facing Roosevelt in 1933. No incoming President faced greater economic difficulties and these were compounded by a desperate loss of confidence among producers and consumers. New Deal legislation came about largely in response to crises.

Helping the less fortunate

One of the greatest achievements of the New Deal was in changing the expectations of the role of Federal Government. This is particularly true of the help for the less fortunate members of society.

  • Relief agencies offered hope to millions.

  • 4/5 of Americans did not require relief by 1939.

  • Direct relief enhanced the role of Federal Government. This led to a greater role for state and local governments to work as partners in many of the programmes.

  • Laid the foundations of the welfare state.

  • In many respects, the New Deal broke new ground. Roosevelt frankly accepted that unemployment relief was a national responsibility.

There were new departures in Government responsibilities. Social Security Act (1935) set up a national system of old age pensions and unemployment benefit for the first time. It is true that the amounts spent were inadequate for the needs of a population suffering from a prolonged Depression but important precedents were set by the introduction of this legislation. It could be built upon in the future.

Economic reform

The New Deal was mainly intended to rescue the capitalist system from its worst excesses and provide a more rational framework in which it could operate.

  • Roosevelt hoped his measures would facilitate a resurgence of capitalist confidence and expansion.

  • Many New Deal measures favoured big business. Roosevelt courted their support and was often disappointed when he received a lukewarm response.

  • Banking system was reformed and made more efficient.

  • Recognised that Federal Government had a role as an arbiter in relations between employers and employees.

  • Unemployment decreased by 50%.

  • Incomes of farmers rose by 50%.

  • Prices fell more than wages; people in work could afford to buy more as a result.

  • Introduced much needed controls on banks and the stock exchange.

  • Established the idea that Government was responsible for regulating the economy.

Political reform

  • The expansion of Government was to be permanent.

  • Raised the Presidential office to a new peak of prestige and power. Revitalised and dramatised the Presidency and expanded the President’s law making functions.

  • Federal bureaucracy expanded to cope with the demands being made upon it both then and in the future.

  • Americans began to look to Federal Government rather than the states for action to meet problems.

  • Federal and State Governments were involved in joint programmes that increased their activities and made them more dependent on the Federal Government for funding and action.

  • Attempted to reform the Supreme Court but failed but the threat was enough to ensure that the Supreme Court became more sympathetic to New Deal.

  • Supreme Court began to adopt a more flexible view of the constitution.

  • Democrat party was identified as the party of social reform with an agenda to help the have-nots in society. Republican Party became the party of wealth and big business.

  • The New Deal brought about major political realignment. It created coalitions of blacks, urban blue-collar workers, unions, southern conservatives and eastern liberals that survive largely in tact in the Democrat Party today.

  • More people took part in presidential elections in the 1930s.

  • Introduced and skilfully stage managed the press conference and mastered the use of the radio.

However, the New Deal was not a cohesive programme – indeed, it often seemed contradictory. It may even be a misnomer to call it a programme at all. Possibly, it might best be seen as a series of measures to deal with specific crises, with little overall plan. But there is little doubt that at the end of the New Deal legislation, the USA changed forever and the role of Government was greatly enhanced.

Social reform

  • Restored national morale.

  • More and more people felt they had a stake in their country. It made people feel like they belonged.

  • Expectation was set that the Government would take responsibility for people’s problems.

  • Relief and benefits provision showed many people that the President was someone who was interested in them and who cared.

  • Social Security Act and relief/job creation agencies expanded the role of Government in the lives of people considerably.

  • Conferred new status on minorities. Roosevelt appointed an unprecedented number of Catholics, Jews, Blacks and women to Federal jobs.

The legacy of the New Deal

The most important legacy is that the New Deal restored hope and confidence in capitalist and democratic systems in the USA. Vast majority of Americans wanted existing system to provide solutions for the Depression and so averted revolution in the USA. The power of the state was enhanced in an unprecedented way.
Industrial relations had moved into the modern era with more of a partnership between Government, employer and the unions. The Government recognised the importance of big business. American capitalism grew in reality through the power of big business. Although it may not always have been realised at the time, it was largely big business that the economic measures of the New Deal aided.
People and states increasingly looked to Government for help with their problems. Tentacles of Government, it seemed, were everywhere. The USA had moved from individualism with very little Government interference to a country where the Government increasingly took responsibility for people’s lives and welfare. Depression showed the economy wasn’t self-righting and that American Dream was largely impossible to realise unaided, however much initiative and ability to work hard one might possess.
Roosevelt was clearly providing Americans with the New Deal he had promised in 1932. But whether or not the New Deal would work remained to be seen.

  • New Deal legislation resulted from pressure from business leaders, politicians, reformers and the growing mobilisation of popular discontent. Roosevelt was usually receptive to theories. He was an experimenter and an improviser but he would ignore ideas he did not like. He chopped and changed between people who suggested a way forward but there was no overall plan or outlook to follow.

  • New Deal had a single overriding aim: to save American capitalism. Certainly, the New Deal involved an unprecedented amount of national economic planning. It also entailed public spending on a scale so massive that Roosevelt’s campaign promises to balance the budget couldn’t be kept.

  • Not everything that Roosevelt did was new. He lent money to the Reconstruction Finance Committee (RFC) to extend policy of refinancing home and farm mortgages – he simply continued what Hoover began.

  • Roosevelt’s style gave the impression that he had embarked on a bold new course, but his early legislation was actually the programme of the more conservative members of the Democrat party.

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