What is a New Deal?

Published by Thomas Herold in Economics, Laws & Regulations, Retirement

'New Deal' is explained in detail and with examples in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

The New Deal represented a new domestic economic program that American President Franklin D. Roosevelt put into place in the years from 1933 to 1939.

The goals of this extensive program were to provide immediate and urgent economic relief to the unemployed along with much needed economic reforms in finance, agriculture, industry, labor, waterpower, and housing. These economic programs and reforms massively grew the scope of the federal government’s role. The term actually came from the Democratic nomination acceptance speech of Roosevelt on July 2, 1932.

American voters had reacted forcefully to the unhelpful responses of President Herbert Hoover’s administration in dealing with the devastation brought on by the Great Depression. The American electorate massively turned out to vote for the democratic candidate’s pledge of creating a new deal for the country’s forgotten man.

The New Deal stood in contrast to the general American political and economic ideas of laissez faire capitalism. Instead it brought in an economy regulated and participated in by the government. The goal was to bring harmony to economic interests that conflicted.

The Hundred Days initial several months period of Roosevelt’s first term saw a great amount of the New Deal laws passed. His first goal was to help out the enormous groups of unemployed workers and to ease their suffering. He did this with his government entities the CCC Civilian Conservation Corps and the WPA Works Progress Administration. They provided short term emergency government assistance to the unemployed and offered construction project employment, temporary work, and youth employment in the national parks and forests.

In the years leading up to 1935 the New Deal also aimed to restore the devastated agricultural and business communities. Roosevelt gave authority to the National Recovery Administration to encourage lost industrial activity. They could propose industrial codes that oversaw wages, trade practices, child labor, hours, and labor union collective bargaining. The New Deal made efforts to oversee the financial organizations so that there would not be repeats of the widespread bank failures and the catastrophic 1929 stock market crash.

It created the SEC Securities and Exchange Commission in order to safeguard investors from deceptive investment marketing and sales. Bank deposits became insured by the new government insurance agency the FDIC Federal Deposit Insurance Corporation. All banks could become members of the Federal Reserve System under this program.

The agenda also addressed farming and electrical power. The AAA Agricultural Adjustment Administration tried to raise the rates paid to farmers by giving them subsidies in order to produce the key staple crops. In 1933 the government founded the TVA Tennessee Valley Authority to deliver less expensive electricity and better navigation as well as to produce nitrates and stop floods. This covered seven states and made major improvements for Americans who lived in these areas.

By 1935 the New Deal had moved on to help out working Americans living in the cities. Labor unions were substantially strengthened by the 1935 Wagner Act. This also gave the federal government more power in determining industrial relations as it founded the NLRB National Labor Relations Board to run the program. Forgotten homeowners received aid as well. Congress passed laws that helped refinance on the edge mortgages. Bank loans were also guaranteed for mortgages and for modernizing homes.

The most substantial and lasting programs of the New Deal had to do with retirement and unemployment benefits. In 1935 and 1939 it established Social Security. This delivered benefits to the elderly and widows. It also provided disability insurance and unemployment compensation to those out of work. In 1938, minimum wages became established alongside maximum working hours in specific industries.

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The term 'New Deal' is included in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.