Economics/Class Relations

Analyzing FDR’s New Deal

by Jay Lino

The New Deal was a series of programs, public works projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1936, with the goal of combating the effects of the Great Depression. The New Deal represented a departure from laissez-faire economic policy and sought to restore the economy through government intervention. The New Deal was highly controversial, with some people praising it for improving the lives of millions of Americans, while others criticized it for increasing the size and scope of the federal government.

The Great Depression was a worldwide economic depression from 1929 to 39. It was the most severe depression of the 20th century, and was caused by a combination of factors, including:

First, the Stock Market Crash of 1929 in which the stock market crashed, leading to a significant loss of wealth for many Americans and a decrease in consumer spending. Second, Bank Failures, as many banks had invested heavily in the stock market, and when it crashed, they were unable to pay depositors. This led to a wave of bank failures that eroded the public’s confidence in the financial system. Thirdly, Overproduction and Underconsumption, as the 20’s saw significant technological advancements that led to increased productivity and efficiency. However, productivity wasn’t met with an increase in demand by consumers, causing a surplus of goods and contributing to the depression. Fourth, Agricultural Distress as farmers had been suffering from a persistent agricultural depression throughout the 1920s, and falling prices of agricultural products and loss of credit made it difficult for farmers to live. Fifth, Reduction in International Trade as the depression was not limited to the US, and many other countries around the world were also struggling economically, which led to a cut in international trade. Finally, Unequal Distribution of Wealth as the gap between the rich and the poor had been growing, and the rich were not spending enough money to support the economy, and the poor lacked the buying power to keep the economy growing.

During the Depression in the United States, unemployment reached its peak in 1933, with 25% of the labor force out of work. The GDP of the United States declined by 26% from 1929 to 1933. Industrial production in the United States declined by 47% from 1929 to 1933. The stock market lost about 90% of its value from its peak in 1929 to its low in 1932. Roughly 9,000 banks failed between 1929 and 1933, wiping out savings for millions of Americans. Agricultural prices declined approximately 60% from 1929 to 1933. The number of homeless people increased dramatically during the Great Depression, and many people were forced to live in makeshift shelters or on the streets. And so the United States rallied around a presidential candidate, Franklin Delano Roosevelt. Roosevelt won 57% of the American vote, as the nation rallied around a new leader, who would go on to be president for four terms.

Socialists and syndicalists had some influence on the policies and programs of the New Deal, believing in the principle of collective ownership of the means of production and distribution, and argued that the government had a responsibility to address the economic crisis and to provide for the needs of the people. They supported government intervention in the economy and advocated for programs that would provide for the basic needs of the working class, such as unemployment insurance, public works projects, and the establishment of a national health insurance program. Huey Long, Louisiana Senator, also had an influential role in the inspiration for the New Deal, however he believed that it did not go far enough in addressing the needs of Americans. He argued that the New Deal should do more to redistribute wealth and provide for the basic needs of the working class, such as jobs, education, and medical care. He advocated for a program to cap individual wealth and provide a guaranteed minimum income for all citizens.


Leave a Reply