The New Deal

The New Deal: A Chronology

Classification of government policies in New Deal

money and banking programs

socialization of financial risks

regulation of business

promoting labor

relief and public works programs

social security

promoting agricultural interests

industrial planning

reciprocal trade policy

deficit financing

First New Deal: 1933-early 1935

•accepted concentration of economic power and compliment it with concentration of political power

100 Days of the New Deal: foundation for new role of government in the economy

•Emergency Banking Act: March 9, 1933
- opened banks under government supervision, not nationalized
•Economy Act: March 20, 1933
- Roosevelt had promised to reduce size of Government 25%,
- to balance budget, to inflate the economy
•Civilian Conservation Corps: March 31, 1933
- set up Corps in 1935, >500K young, unemployed men employed in planting,...
•abandonment of gold standard: April 19, 1993
- gold price of dollar was lowered to raise prices, not work
- in January of 1934 set $35 as price of ounce of gold
•Federal Emergency Relief Act: May 12, 1993
- set up national relief system, grants in aid to states to aid unemployed
•Agricultural Adjustment Act: May 12, 1933
- "An act to relieve the existing national economic emergency by increasing agricultural purchasing power... "
- help farmers act as cartel and restrict output
- after WW II 1940-late 1960s productivity gains in agriculture: acreage down 15% but yield per acre up 70%
•Emergency Farm Mortgage Act: May 12, 1933
- provide refinancing of farm mortgages
•TVA: May 18, 1933
- provide unified development of Tennessee Valley
•Truth-in-Securities Act: May 27, 1933
- require full disclosure for new issues
- 1934 follow up law: placed stock exchanges under govt. control
•Home Owners' Loan Act: June 12, 1933
- provide refinancing for home mortgages
•National Industrial Recovery Act: June 1933:
- response to senate passage of Black bill-30 hour week to spread Employment
Title 1: business recovery system
- "Congress provide for the machinery necessary for a great cooperative movement throughout all industry in order to obtain wide reemployment"
- adopt codes of fair competition, allow firms to act oligopolistically
- unconstitutional in 1935
Title 2: $3.3B public works program
- "The President is authorized to create a Federal Emergency Administration of Public Works"
•Glass-Steagall Banking Act: June 16, 1933
- separating commercial and investment banking
- insuring deposits: FDIC
•Farm Credit Act: June 16, 1933
- reorganization of agricultural credit services
•Railroad Coordination Act: June 16, 1933
- set up federal coordinator of transportation

Second New Deal: early 1935 -

•attempt to restore competitive environment, encouraged counter- organization of weaker economic groups, moved to economic planning

•Schlesinger: "The second New Deal was a coalition between lawyers in the school of Brandeis and economists in the school of Keynes"

"The First New Deal told business what it must do. The Second New Deal characteristically told business what it must not do"

Labor Legislation

•Wagner Act: July 1935
- introduced in 1934, no presidential support
- establish National Labor Relations Board:
- power to conduct elections to determine appropriate bargaining unit
- enumerated unfair labor practices (promoting unions)
•Walsh-Healey Act: 1936
- restrictions on employment conditions of govt. contractors, child labor
•Fair Labor Standards Act: 1938
- abolished child labor, min wage of $.25, max hours at 44
•Banking Act of 1938
- modified structure of FED, concentrated OMO in FOMC
•Wheeler-Rayburn Bill 1935
- severe limits to utility holding companies
•Social Security Act 1935
- •1932 Wisconsin established 1st state unemployment insurance law
- old age pensions had been pledged by Progressive Platform in 1912
- •1932 Democratic Platform: unemployment&old age security under state law
- •described as socialistic, threat to life by destroying thrift
- •components of law
- •national system of old age insurance
- •Fed & State shared cost of poor elderly pensions
- •national aid to states for dependent mothers, blind &handicapped
- •problems with law
- •failure to develop national U program
- •regressive tax
•Tax Bill: 1935
- attempt to raise graduated rates, raised inheritance tax, new gift taxes,
- graduated corporate income tax
- passed in watered down form

Regulation of Industry: National Planning

•Federal Communications Commission 1934
•Federal Power Commission 1935
•Motor Carriers Act: 1935
- put interstate motor carriers under ICC
•Federal Maritime Commission: 1936
- put industry under Maritime Commission, subsidies, rate setting
•Civil Aeronautics Act: 1938
- establish CAB to provide subsidies, cartel like regulation, price controls
•Robinson-Patman Act: 1936
- large wholesalers&manufactures not able to provide discounts to large buyers