In October of 1929, the American stock market plummeted. $10 billion in stock investments disappeared within hours.¹ Although this did not cause the great economic crash, it caused a snowball effect that would lead to millions in poverty. In the midst of the Great Depression, the election of 1932 changed American ideals regarding government intervention in the economy and society. The two presidential candidates, Republican Herbert Hoover and Democrat Franklin D. Roosevelt, had much different proposals for igniting the economy. Hoover planned to rely on natural processes to stabilize the country, whereas FDR proposed the use of the federal government to assist American citizens and businesses. Roosevelt’s idea of a “New Deal” won over the American people, and put him in control to fix the nation. Franklin Delano Roosevelt’s New Deal provided desperate relief from the American Great Depression and enacted policies and institutions to guard against future economic catastrophe. The fundamental changes that the New Deal brought to the nation became a staple to the American economy, and essential to the citizens of the United States. Although it did not directly boost the nation out of the depression, the New Deal greatly increased the role of the federal government and how the government interacts with its citizens. The idea of the proper role of federal government changed due to the effects of the New Deal. Supporters believed that the New Deal greatly assisted those in economic turmoil, whereas those who were against it believed that it encouraged laziness and dependency.
The New Deal caused the federal government to break from the traditional “laissez faire” style, where the economy and government were separate. The federal government had now accepted responsibility for spurring economic growth and stabilizing the economy. The New Deal made the government an employer for the unemployed and sponsored work projects nationwide. Programs such as the FDIC and NIRA restored Americans’ trust in the banks and the stock market. The Homeowners Refinancing Act allowed Americans to keep their homes in times of struggle. The Works Progress Association and the Civilian Conservation Corps provided jobs to the unemployed, in the form of public works projects and other government funded labor. Lastly, the Federal Emergency Relief Act provided welfare payments to those in need. The creation of a Welfare State assumed the government responsible for providing welfare for the poor, sick, disabled, and unemployed. This major change in American policy was the first implementation of direct benefits from the federal government.
Previously, those in need received assistance from private charities, local government, or other outside sources. This was evident during Herbert Hoover’s administration. America at the time dealt with unemployment largely by relying on the private sector. Hoover’s philosophy was directly opposite to that of direct relief. He believed that the Great Depression was a natural market fluctuation, and would eventually correct itself through time, charity, and self-regulation.¹ Hoover warns American citizens on the dangers of the New Deal in his 1932 speech: “I therefore contend that the problem of today is to continue … measures and policies to restore this American system to its normal functioning, to repair the wounds it has received, to correct the weaknesses and evils which would defeat that system. To enter upon a series of deep changes, to embark upon this inchoate new deal which has been propounded in this campaign, would be to undermine and destroy our American system.” Hoover’s language shows how truly worried he was for the state of America following the New Deal. FDR’s ideas on government action and direct economic influence was in complete opposition to that of Hoover, whose traditional standpoints demanded that America just kept treading the rough waters that it was in. It is apparent than Hoover, much like many other New Deal critics, believed that FDR was pushing America into a state of Socialism—a large red flag during a period of constant Communist paranoia.
Many Americans were exempted from Social Security and other programs, and thus caused many issues between those receiving federal benefits and those missing out. The Social Security Act of 1935 funded those in need through payroll taxes rather than general tax revenue. Agricultural and domestic workers were ineligible from receiving Social Security. About half of African Americans and more than half of all women workers were ineligible from these benefits.¹ FDR’s idea of “no man left out” was far from true. The frustration of the left out American worker was summarized by Minnie Hardin’s letter to Eleanor Roosevelt. She states, “You people who have plenty of this worlds goods and whose money comes easy, have no idea of the heart-breaking toil and self-denial which is the lot of the working people who are trying to make an honest living, and then to have to shoulder all these unjust burdens seems like the last straw. During the worst of the depression many of the farmers had to deny their families butter, eggs, meat, etc. and sell it to pay their taxes and then had to stand by and see the dead-beats carry it home to their families by the arm load, and they knew their tax money was helping pay for it.” Minnie, much like many other Americans, questions the free handouts given to those unwilling to earn an honest living. Although obviously biased, her letter shows how those receiving government benefits are actually better off than those working. She explains that this simply encourages those under welfare to not go back to work, and “is creating a nation of beggars and dead-beats.” This alternative viewpoint to New Deal policies was not typical to Americans but does reveal a major issue regarding the welfare and Social Security systems that FDR put into place.
On the contrary, men like Huey P. Long believed that government assistance and the redistribution of the nation’s wealth would skyrocket the economy and make the nation stronger. Long was disgusted that a nation with such wealth and luxury could also have so many men, women, and children living in poverty. Long states, “Is that, my friends, giving them a fair shake of the dice or anything like the inalienable right of life, liberty, and the pursuit of happiness, or anything resembling the fact that all people are created equal; when we have today in America thousands and hundreds of thousands and millions of children on the verge of starvation in a land that is overflowing with too much to eat and too much to wear?” Huey Long openly supports the New Deal policies, showing that those with the wealth and luxury should have more than enough capital to pay taxes to assist his or her neighbor. Long also shows the obvious wealth disparities in America at the time, saying, “It is impossible for the United States to preserve itself as a republic or as a democracy when 600 families own more of this Nation’s wealth—in fact, twice as much—as all the balance of the people put together. Ninety-six percent of our people live below the poverty line, while 4 percent own 87 percent of the wealth. America can have enough for all to live in comfort and still permit millionaires to own more than they can ever spend and to have more than they can ever use…” Long’s ideals demand an excessive amount of federal support for those in need, and may extend FDR’s New Deal policies, but show support for his ideas. It is apparent, thought, why many believed that these ideas seemed “socialist.”
FDR’s goal for the New Deal was not to create a nation of beggars and dead-beats but was to jump start the nation following the Great Depression. In his 1936 re-nomination acceptance speech, Roosevelt states, “Today we stand committed to the proposition that freedom is no half-and-half affair. If the average citizen is guaranteed equal opportunity in the polling place, he must have equal opportunity in the market place.” FDR believed that in order to have a strong nation and economy, the United States could not citizens struggling and poor. Thus, the New Deal allowed those who were struggling financial opportunity and therefore an equal opportunity in the market place.
The New Deal did not directly push America out of the Great Depression, but rather it was from the growth resulting from World War II. However, the New Deal expanded the role of the federal government and put in place policies and programs that continue to be used today. Many social assistance programs that exist currently in the United States trace back to the New Deal, which include pensions, unemployment insurance, disability support, and subsidized public housing. The New Deal was put into place during a period where government and economy could not and should not intervene and brought upon the major question of the relationship between government and its people. It could be said that government programs helped many people recover from the Depression but caused issues between those working and those benefitting from their work. In the big picture, New Deal programs set a precedent for the federal government to play a key role in the lives of its citizens, which continues to be a debate today.