Daily Class OutlineDaily Class QuestionsDaily Class Web LinksDaily Class Notes

Question for Discussion: Did the New Deal help
end the Depression or make it worse?

Reading: Hymowitz, pp. 303-311; Hoffman, pp. 228-244;
Gerster, pp. 160-164; Roosevelt "First Inaugural
Address" (web)

Reaction Paper topic: How would General Wesley Clark
respond to Kenneth Adelman's argument that we need
to go to war with Iraq right now? (Due Oct. 28)

Daily Class Web Links

The United States in the Great Depression

Roosevelt and the New Deal

Government vs. the Market

Corporate Welfare:

Daily Class Outline

1. The Causes of the Great Depression

2. President Roosevelt's New Deal

3. Debating the New Deal: The
Federal Government vs. the Free Market

Daily Class Questions

1. Could women doing office and sales work  in the
1920s and 1930s earn a living wage? If not who
were they working for?

2. How were women in office and sales work affected
by the Great Depression?

3. How were married women seeking work affected
by the Great Depression?

4. Were women workers protected by Unions in the 1930s?

5. Why were women in the Great Depression often
blamed for stealing jobs from unemployed men?

6.  In his first Inaugural address, what does President
Roosevelt declare is the first and primary task of the
Federal government in dealing with the Great

7. According to Roosevelt, what are the two views
of government that Americans hold?

8. What does Roosevelt mean when he calls for
a "new deal for the American people"? What will
he do as President that past Presidents have 
not done?

9. What does President Hoover mean by "the
American system"?

10. What are President Hoover's major arguments against Roosevelt's New Deal?

11. According to President Roosevelt in his 1938
"The Power of a Few" speech, what is the major
threat posed by larger, national corporations?

12.  Does Roosevelt believe that the Federal
government can and should limit the growing
power of these large, national corporations?

Daily Class Notes

"Because Americans are very slow to learn that it is economic relationships that govern political actions, and not political actions that govern economic relationships. This is another way of saying that those who own rule, and they rule because they own. In a political democracy they may appear to be beaten for a while, but in the end the victory is theirs because the economic power is theirs. They furnish the big campaign contributions; they can even use the people's money to corrupt the people's mind to their purposes, and they are welded into a united front against mercurial popular movements by "the cohesive power of public plunder."
.............................Suzanne La Follett (1933)

New Deal Programs:

  1. Minimum Wage Laws
  2. 40 Hour Work week
  3. Right to form Unions
  4. Outlaw Child Labor
  5. Created Unemployment insurance for workers
  6. Created Worker and Plant Safety laws
  7. Created Welfare and Aid to Families with Dependent Children
  8. Created FHA to insure Home Mortgage Loans
  9. Created Public Housing for the homeless
  10. Increased Progressive taxation of the Wealthy and Corporations
  11. Created FDIC to protect Bank Deposits
  12. Created new Laws to Regulate Banking to prevent Bank failures
  13. Created the Securities and Exchange Commission to regulate the Stock Market
  14. Created New Laws to Regulate the Economy and large, National Corporations.
  15. Created Social Security system to support the elderly
  16. Created system of Parity and Government support for Farmers
  17. Created Rural Electrification Programs
  18. Created Government support for Culture and the Arts
  19. Created Government jobs for the unemployed through the WPA

The larger debate over the New Deal is not really whether it helped end the Depression. On that score, most agree that the Depression lingered throughout the 1930s despite Roosevelt's effort to end it and create a growing, expanding American economy. In his essay, "The achievement of the New Deal," William Leuchtenberg argues that the New Deal, though not effectively ending the Depression, helped millions of American survive the brutal poverty, economic hardship, and loss of hope that the Depression created. But Gary Best in his essay, "Pride, Prejudice, and Politics: Roosevelt versus Recovery, 1933-1938," argues that the very New Deal programs Roosevelt created to help Americans overcome the Depression actually made it worse and increased suffering. The real debate between Leuchtenberg and Best isn't over whether the New Deal helped end the Depression but what is and should be the role of the Federal government in regulating the economy and promoting the general welfare of Americans. Like critics of the New Deal from the 1930s to the present day, Best argues that it created a social welfare state that was anti-business and undermined the general welfare more than it helped it. Leuchtenberg and supporters of the New Deal from the 1930s to today argue that the economy and American business success cannot be totally relied on to provide jobs, opportunities, and a minimal standard of living to all Americans.In order to better understand this debate about the role of government and the success and failure of the New Deal, we need to look at some of the major economic statistics of the 1920s and 1930s to see how Americans were affected by the Depression. (See "Timelines of the Great Depression" web site.) In the 1920s, despite the general economic boom, American farmers were suffering a farm depression; their incomes, the price they got for their crops, and the value of their farmland were all falling. As a result of this farm depression, thousands of farmers were losing their farms to bankruptcy and foreclosure in the 1920s. But, in addition to farmers, American workers found that their right to form Unions, their salaries, and their standard of living were declining in the 1920s. By 1929, before the Depression, 50 percent of Americans earned less than a minimal sustsistence level standard of living. Because of the farm crisis and other economic problems, 600 banks were failing a year in the 1920s. Thus, despite the booming economy of the 1920s and the profits and financial success of America's wealthy and larger corporations, American workers and farmers and poor families were suffering.Largely because the decline in the standard of living and salaries of workers because of inflation and increased living costs, the American economy was beginning to overheat by the late 1920s. American industries found that they were producing more goods than people could buy. Faced with overproduction and underconsumption, American corporations began to lay off workers and close factories in 1929. As a result of the loss of jobs, many Americans found they were even more unable to buy the goods produced by our economy. As a result, more industries were forced to lay off workers and close factories. This process created a runaway cycle of layoffs and factory closing that soon led to the deepest global depression in the twentieth century. At the height of the Depression in 1934, one of out every four Americans were unemployed. The 1930s economic depression was so devastating to many Americans because they did not have unemployment, food stamps, welfare, workers compensation, federal protection of their bank deposits, and other government relief programs. It was under Roosevelt between 1933 and 1938, that the federal government became committed to providing a "social safety net" to protect those hardest hit by economic downturns and the inability of our economy to provide opportunities for all Americans.Leuchtenberg believes that the real accomplishment of Roosevelt's New Deal was to guarantee to Americans a minimal standard of living and social welfare in the face of economic downturns and depressions. Roosevelt believed that America was too wealthy and to just to allow millions of Americans to suffer from the ups and downs of our economy. America could not allow millions to suffer as a result of economic downturns which were no fault of their own. Let's look for a moment at some of the New Deal programs to relieve American's suffering during the Great Depression.Under the New Deal, the federal government protect workers right to organize and form unions. The government created minimum wage laws, the eight hour day, unemployment compensation, and worker safety laws which protected workers' rights to work in a safe work environment. In addition to helping workers, the New Deal created the Social Security program which guaranteed the elderly a minimal standard of living when they retired. Before social security, many of the elderly were bitterly poor and suffered from malnutrition. The New Deal also helped American farmers by providing them emergency loans to prevent them from losing their farms. Farmers were guaranteed government subsidies to protect their income from the falling crop prices which had devastated so many farmers in the 1920s and early 1930s. The government would guarantee "parity" to farmers, that is, the government would guarantee a high enough price for their crops so that farmers could make a profit farming and remain on the farm. The New Deal also helped millions of Americans who lost billions of dollars when thousands of banks closed during the height of the Depression. The government created the FDIC, the Federal Deposit Insurance Corporation, which insured American's bank deposits in the event that the bank failed. The New Deal also helped the poor by creating food stamps, welfare and Aid to Families with Dependent children, and public housing for the poor. Finally, the New Deal provided millions of public jobs for the millions of American workers and families who had faced chronic unemployment caused by the Great Depression. As a result of these New Deal programs, millions of Americans who had never been able to rely on the government before to protect and assist them in times of economic downturns began to depend on government support to protect and support the general social welfare.Critics of the New Deal like Gary Best argued that the New Deal created the "social welfare state" which only undermined the general welfare and hurt the economy and American business. Best argues that Roosevelt's support for "social welfare" was the centerpiece of his "war against business." Instead of working with large corporations to help end the Depression, Best argues, Roosevelt blamed business for the Depression and tried to punish Business through his New Deal programs. Roosevelt's support for workers and labor, Best believes was anti-business. The New Deal programs for workers cost business new taxes and forced them to confront a whole new series of government regulations about how they should run their businesses. Social Security also was anti-business, Best believes, because it created a whole new series of taxes businesses had to pay for each worker. Best argues that the New Deal's support for the poor and government jobs hurt business because these programs were paid for by higher taxes on corporations and the wealthy. In addition, because workers could now get government support and government jobs they would now be less likely to take any job they could get and work under any conditions. This caused businesses to have to pay a lot more to hire and keep their workers. All of these programs, Best concludes, were anti-business and only impeded a "business recovery."Instead of providing jobs and helping Americans who were hurt by the Depression by creating all sorts of new social welfare programs, Best argues that Roosevelt should have tried to help American business with loans, tax relief, and regulatory relief. By working with and supporting businesses, American corporations would have recovered much more quickly from the Depression; they would have invested in American industry, opened factories, and created new jobs. And, Best concludes, only American business's faith that government will support their investments and protect their profits will lead them to create a "business recovery," a expanding, growing economy. If American corporations and the wealthy who own and support them are profitable, then their wealth and success will soon "trickle down" to all Americans. Best concludes that the New Deal and government social welfare programs have hurt business confidence and willingness to invest in America. If the federal government cuts or eliminates these anti-business social welfare programs and reduces taxes on corporations and the wealthy, then they will create a booming economy that will support all Americans and guarantee them jobs, wealth, and opportunity.But can the economy really create enough jobs, wealth, and opportunities to provide all Americans a decent standard of living? Do Americans really trust the economy to guarantee their future prosperity and social welfare? Despite Best's argument, most Americans demand that the government provide benefits to the poor, to the unemployed, to farmers, to workers, and to the elderly because they do not trust the economy to continuously support all Americans. We can see from the 1920s that despite the booming, expanding economy, millions of Americans were still suffering poverty, declining living standards, and bankruptcy. If a booming economy could really help all Americans, why were these American suffering in the 1920s? Best and other conservatives would argue that if Americans are poor, unemployed, unable to feed their families, or unable to afford decent housing that it is their individual fault. If individual worked hard enough and honestly tried to improve their lives and wealth, then every American could be guaranteed an honest living and a high quality of life.But Best doesn't answer the difficult question of what government should do for those, through no fault of their own, suffer economic loss and personal and family hardship. Should American society allow them to suffer in their poverty and despair? Or should America try to offer them a leg-up, offer them economic assistance, welfare, and hope that they can survive and recover from their economic and financial problems? In the end these are the still unanswered questions raised by the New Deal and government social welfare programs. If you have faith in business and an expanding economy to lift all Americans, as Best does, then you won't support government social welfare programs. If, however, you believe as Leuchtenberg does that American government and society has a responsibility to help the unfortunate and those threatened by economic downturns, then you will support government social welfare programs. The larger debate today in the 1990s is how much government support and social welfare can the American economy and taxpayer afford to provide. What should be the balance between relying on an expanding economy and American corporations to provide jobs, wealth, and opportunities and relying on government programs to step in and provide assistance when it appears that the American economy can't? This is the larger question that American government, society, and businesses are forced to address as a result of the reforms created by the New Deal.


© 2002 by Chris H.  Lewis, Ph.D.
Sewall Academic Program; University of Colorado at Boulder
Created 7 August 2002:  Last Modified: 15 Oct. 2002
E-mail: cclewis@spot.colorado.edu
URL:    http://www.colorado.edu/AmStudies/lewis/2010/newdeal.htm
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