New Deal

:Alternative meaning: New Deal (United Kingdom)

The First Hundred Days

Having won a decisive victory in the 1932 presidential election, and with his party having decisively swept Congressional elections across the nation, the new president entered office with considerable influence over Congress. Thus, a large share of the major initiatives of the New Deal (reforming the stock market, aid to the unemployed, and propping up the banking system) took shape during the “first hundred days” of the administration.

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The "bank holiday" and the Emergency Banking Act

Upon taking office the administration moved readily to take a series of measures to prop up the shaky banking system. With a banking crisis looming, some observers wondered if the administration would take radical measures, such as nationalizing the banking system (a response to the Great Depression throughout much of the world).

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Instead, on March 6, two days after taking office, the president issued an order closing all U.S. banks for four days until Congress could meet in a special session. By demonstrating that the federal government was stepping in to stop the alarming pattern of bank failures, the action created a general sense of relief. (Earlier, many states had already closed down the banks before March 6.)

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Three days later, Roosevelt sent to Congress the Emergency Banking Act, drafted in large part by officials appointed by the Hoover administration. The bill provided for Treasury Department inspection of all banks before they would be allowed to reopen, for federal assistance to failing large institutions. Congress passed the bill within four hours of its introduction. Three-quarters of the banks in the Federal Reserve System reopened within the next three days, and billions of dollars in "hoarded" currency and gold flowed back into them within a month, thus stabilizing the banking system.

Related Topics:
Emergency Banking Act - Hoover - Federal Reserve System

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The Economy Act

On the morning after the passage of the Emergency Banking Act, Roosevelt sent to Congress the Economy Act. Otherwise, Roosevelt warned, the nation would have faced a billion dollar deficit. The act proposed to balance the federal budget by cutting the salaries of government employees and reducing pensions to veterans by as much as 15 percent, thus reassuring the business community that the new president was as fiscally conservative as his predecessor. Like the banking bill, it passed through Congress almost instantly, despite heated protests by left-leaning members of Congress.

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During the first hundred days, the New Dealers did not recognize a value in government spending as a vehicle for economic expansion. Most economists at the time rejected deficit spending and favored balanced budgets. In fact, during his campaign against President Hoover, Roosevelt attacked the president for running a deficit, and pledged to balance the budget if elected.

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The Agricultural Adjustment Act

The first hundred days also produced a federal program to protect U.S. farmers from the uncertainties of the depression through subsidies and production controls. This program began with the Agricultural Adjustment Act, creating the Agricultural Adjustment Administration (AAA), which Congress passed in May 1933.

Related Topics:
Agricultural Adjustment Act - 1933

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The Act reflected the desires of leaders of various farm organizations and Roosevelt's secretary of agriculture, Henry A. Wallace. The AAA implemented a provision for crop reductions known as the "domestic allotment" system of the act. Under this system producers of corn, cotton, dairy products, hogs, rice, tobacco, and wheat would decide on production limits for their crops. The AAA would then pay them subsidies for leaving some of their land idle with funds provided by a new tax on food processing. Farm prices were to be subsidized up to the point of parity.

Related Topics:
Henry A. Wallace - Corn - Cotton - Dairy - Hog - Rice - Tobacco - Wheat

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The most controversial aspect of the anti-deflationary crop reductions program was the large-scale destruction of crops and livestock at a time in which many families could not even afford food. This included the slaughter of approximately six million pigs. Nevertheless, gross farm incomes increased significantly in the first three years of the New Deal. The AAA established an important and long-lasting federal role in the planning on the entire agricultural sector of the economy.

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Other initiatives

, the administration launched a new federal regulatory agency to oversee the stock market. Dubbed the U.S. Securities and Exchange Commission (SEC), this new federal agency set out to reform of the banking system by setting up a system of insurance for deposits.

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The administration also launched a series of relief measures and welfare agencies to aid unemployed workers. Among these programs were the Civilian Conservation Corps (CCC), the Civil Works Administration (CWA), and the Federal Emergency Relief Administration (FERA).

Related Topics:
Civilian Conservation Corps - Civil Works Administration - Federal Emergency Relief Administration

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In 1933 the administration also began the Tennessee Valley Authority (TVA), a project involving state planning on an unprecedented scale in order to curb flooding and generate electricity in the impoverished Tennessee Valley region of the Southern United States.

Related Topics:
Tennessee Valley Authority - Tennessee Valley - Southern United States

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In a measure that garnered substantial popular support, Roosevelt in his first days supported and signed a bill to legalize the manufacture and sale of beer, an interim measure pending the repeal of Prohibition, for which a constitutional amendment (the Twenty-first) was already in process.

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