The New Deal, 1933 (Cambridge (CIE) IGCSE History): Revision Note

What Was the New Deal as Introduced in 1933?

Summary

When Franklin D. Roosevelt (FDR) was inaugurated in January 1933, he faced an enormous task. His solution completely reshaped the relationship between the federal government and the American people. Roosevelt brought direct relief to those who needed it most and created millions of jobs for unemployed Americans.

This radical solution to the problems caused by the Great Depression was known as the “New Deal” for the American people.

The Hundred Days

• The problems facing the US at the start of 1933 were so vast that FDR started introducing his New Deal immediately

• Roosevelt had three key aims for the New Deal:

  • Relief

    • Provide food for people in need

    • Implement policies that stop people from losing their homes

  • Recovery

    • Boost the economy so that there are jobs for people who are unemployed

    • Rebuild trade and industry

  • Reform

    • Create a welfare state in the US 

    • Ensure that people have access to government help for unemployment, sickness, disability and old age

• The changes achieved in the early weeks of FDR’s presidency led to the period being known as “The Hundred Days”

Roosevelt’s achievements in The Hundred Days

The Emergency Banking Act (1933)

• Roosevelt closed all banks for four days and ordered their accounts to be inspected, which:

  • Gave people more confidence in the banking system and led them to reopen accounts

  • Increased the money that banks had available to lend to businesses, especially as the government backed their loans

• This was successful because confidence in the banks was re-established 

The Beer and Wine Revenue Act (1933)

• This ended the Prohibition and legalised the sale of beverages of no more than 3.2% alcohol

  • Many people had openly broken the Prohibition

  • It had become acceptable for people to ignore the government

  • The Act stopped millions of dollars from going to criminals and earned the government revenue from taxing alcohol

• This was successful because it reduced law-breaking and increased taxes

The Economy Act (1933)

• Roosevelt cut the wages of all government employees by 15%, including his own

  • Many government workers struggled with lower wages, but this action freed up $1 billion to help people who were unemployed

• This was both a success and a failure because it impacted some people’s wages but increased the money available 

Fireside chats

• Roosevelt broadcast his policies on the radio

  • He spoke to the US every Sunday

  • More than 60 million US citizens listened to his fireside chats

• This was a revolutionary idea and was regarded as a success

The Alphabet Agencies

• FDR created agencies to tackle specific problems of the Depression

  • Each agency became known by its abbreviation

  • As a result, they collectively became known as the Alphabet Agencies

Agricultural Adjustment Administration (AAA)

• The AAA aimed to:

  • Stop overproduction by paying farmers to produce less

  • Increase food prices and farmers’ profits

• The impacts of the AAA were that:

  • Farmers’ revenue doubled between 1933 to 1939

  • Some farmers destroyed their produce

    • People criticised this, as the food could have been given to the poor

Federal Emergency Relief Administration (FERA)

• FERA invested $500 million to create jobs for the poor, for example, by setting up soup kitchens

• From 1933 to 1935, FERA distributed more than $3.1 billion

• It provided work to more than 20 million people

Civil Works Administration (CWA)

• Aimed to create four million short-term jobs for unskilled workers before the winter of 1933

• This was achieved by:

  • Creating pointless jobs known as boondoggles

    • These included hiring 100 people in Washington to scare pigeons away with balloons

• This only lasted one winter

  • These 4 million people then became unemployed again

Public Works Administration (PWA) 

• The PWA aimed to:

  • Attract skilled workers to build schools, hospitals, dams, aircraft carriers and airports

  • Create four million long-term jobs

• The PWA helped the US to recover by improving its infrastructure 

  • This Act was not useful for the millions of unskilled workers

National Recovery Administration (NRA)

• The NRA aimed to:

  • Establish fair prices, working conditions and a minimum wage

  • Ban child labour and sweatshops

• Businesses that met these promises could use the “Blue Eagle” on their products

• The US government encouraged people to purchase Blue Eagle products

  • By 1933, over two million employers worked with the NRA

  • More than 22 million workers benefitted

Civilian Conservation Corps (CCC)

• The CCC aimed to:

  • Provide temporary work to single, unemployed men aged 18 to 25

  • Give the men jobs such as clearing land, planting trees and making reservoirs

• By 1938, more than two million men had served in the CCC

  • Each member received free food, shelter and clothing

  • Men learnt skills that could be transferred to other jobs 

• Each project only lasted six months

• The men were only paid $1 a week

Home Owners’ Loan Corporation (HOLC)

• The HOLC aimed to:

  • Help people meet their mortgage repayments

  • Lend homeowners money at lower interest rates

• More than 800,000 people repaid their HOLC loans

• Loans from the HOLC were not available to farmers or houses worth more than $20,000

Tennessee Valley Authority (TVA)

• The TVA:

  • Built dams to prevent the Tennessee River from flooding, which caused soil erosion

  • Provided cheap hydro electricity — at the time, only 3% of farms had electricity

  • Created new jobs — half of the Tennessee Valley’s population relied on charity

• The TVA built 16 hydroelectric dams by 1944

  • By 1940, these were the USA’s biggest source of electricity

  • By 1950, 93% of farmers had an electricity supply 

• The TVA prevented soil erosion and flooding

  • This improved farming in the Tennessee Valley

• Increased access to electricity meant that car makers, paper mills and steel makers built factories in the Tennessee Valley

• Black Americans could not own a TVA model farm