The Impact of the New Deal on American History
by Bob Brousek
Comparative Topics in American History
13 August 2004
Look deep within United States history to find its most significant molding element and one will find that its source stemmed from a great national crisis. At its highest extent, nearly one-fourth of its labor force was unemployed and American confidence in itself deeply shaken. It is in studying the Great Depression and President Franklin Delano Roosevelt’s New Deal, that America’s most significant influential event can be found. The New Deal and its legacy had the largest impact on American society since the founding of the United States. The New Deal altered the political and social nature of the nation as well as preserved the fundamental capitalist nature of the American economy.
At the outset, the New Deal changed the Americans’ view of their national government. Historian, William Leuchtenburg argues that the New Deal should be recognized for its transformation of how the American government works. First, he states that prior to the depression, it would have been difficult for citizens of the day to recognize a federal presence in their local communities.i Simply, before the depression the federal government rarely had a direct effect on peoples’ lives as there were no programs such as social security, welfare, federal regulation of the stock market, or farm subsidy programs.ii
The role of the federal government not only changed with the coming of the New Deal but the depression also changed the expectations American citizens had towards the national government managing the economy. Larry Madaras, professor of History at Howard College asserts that the New Deal was more than the sum total of a number of economic statistics. The true importance of the New Deal, according to Madaras, lies in the fact that Americans’ expectations towards the federal government drastically changed during the depression.iii
Historian, Carl Degler agrees. He affirms that the most striking change in American thought from the depression was the abandonment of the doctrine of laissez faire. He argues the once cherished principle was largely discarded during the depression era. Almost every New Deal program contradicted the foundations of laissez faire economics and “made inroads into the hitherto private resources of business and the individual.” iv Legislation such as the Securities Act of 1933, which created the Securities and Exchange Commission placed regulations on the stock market, the most classic of examples of the free market system. Americans supported such change with the intention of learning the lessons of the infamous stock market crash. In addition, the Tennessee Valley Authority would create a means by which the federal government would compete with private business, a most revolutionary concept.v
Furthermore, Degler maintains that proof of this fundamental change of the American psyche can be found in the permanence of some of the New Deal programs. He contends that in the 1950s the first Republican administration after the depression under Dwight Eisenhower did not turn back the reforms of the New Deal. Banking regulation, the TVA, SEC, and Social Security, among other programs are still in existence today and have become part of the American way of life. Still today, no political party aspiring to gain high office dares to repeal them.vi Leuchtenburg agrees with this point and suggests that the New Deal “altered the character of the State of America” vii
David Bennett, professor of history at Syracuse University, develops the argument further. He maintains that through the effects of the depression Americans recognized that social and economic problems required national political solutions and a national political responsibility. He claims that this is the single most important accomplishment of the New Deal. Franklin Roosevelt’s New Deal may not have achieved its goal of delivering the United States out of the Depression but it did change Americans’ view of their national government.
Roger Biles, chair of the history department at East Carolina University, claims that the significance of the New Deal is that it instituted stabilizers that have been successful in preventing another depression. Three examples solidify his point. The Securities and Exchange Commission, established to supervise the stock market, is today a foundation of the American financial system. The Glass-Steagall Banking Act gave increased powers to the Federal Reserve to alter interest rates and limit speculative loans, therefore increasing its effectiveness in implementing monetary policy. Finally, the creation of the Federal Deposit Insurance Corporation significantly lowered the number of bank failures and aided in restoring Americans’ confidence in the banking system. viiiThese three examples play crucial roles in our American economy and are taken for granted by most Americans who have come to expect the national government to manage the economy.ix
Increase in the size of government and the altered American psyche towards the national government’s role in the economy are not the only recognized changes resulting from the New Deal. It was also responsible for numerous political and social changes that have left a lasting impact. Politically, it transferred power from Wall Street to the nation’s capitol (specifically the White House), assisted organized labor in becoming a viable political and economic interest group, and revolutionized politics. Moreover, socially the New Deal rescued the American farmer and aided African-Americans more than any other government had done since the end of the Civil War.
The political changes that resulted in the New Deal era are noteworthy. Under Roosevelt’s administration, the national government was now supporting farmers, the unemployed, and managing natural resources to name a few. Americans now looked to the president rather than to Congress and overall the national government was seen as responsive to historically disparaged groups. Disadvantaged interest groups now had the same ear of the government that in the past was only in the grasp of big business. These groups lobbied for access to federal funds. Though equity did not result, the long-term result was increased access to federal funds and advancement of their private agendas.x
Biles additionally states, and Leuchtenburg concurs,xi that the decade of the 1930’s brought life into a troubled labor movement through programs within Roosevelt’s New Deal. The Wagner Act helped give unions a dynamic voice in American society, and government laws eliminated sweatshops and deterred child labor. Laws enforcing work hour standards and wages as well as working conditions were all achievements of the union movement which still today is a solid backer of the Democratic Party.xii Although a critic of the New Deal as a success, historian Barton Bernstein agrees that the New Deal assisted labor unions to gain a larger voice as an interest group. However, he claims that this voice was more formal and symbolic and not for the industrial workers for their leaders.xiii Bernstein argues that the most significant gain in labor was the New Deal’s support of labor’s right of collective bargaining.xiv Whatever the case, union labor would earn a voice and today union labor remains a powerful political force.
Also in the political realm, the electorate was changing during this time period due to immigration and urbanization. Roosevelt’s Democratic Party gained northern urban strength in the 1930’s, an area that had historically been dominated by the Republicans. According to Biles, a New Deal coalition formed based upon shared economic interests. This coalition would retain enough influence to keep the Democrats in the nation’s majority party into the 1980’s.xv
Socially, the New Deal rescued the American farmer. The farm economy had been devastated with overproduction, overexpansion and falling prices for their crops. Programs such as the Farm Credit Administration and the Rural Electrification Administration were key components of this rescue. The FCA resulted in one in every five farm mortgages being refinanced and the REA brought electricity to nine out of ten farmers by the end of Roosevelt’s administration. However, the passage of the Agricultural Adjustment Act began the large-scale farmer subsidies that would mold the agricultural sector of the American economy to what it is today.xvi
African-Americans in some respects benefited from the New Deal. Though still suffering from discrimination and segregation, under the New Deal, blacks were given more than any other government before according to Bernstein. According to Bernstein, many blacks looked beyond the visible discrimination and segregation of the New Deal and distinguished that they were given more within the programs of the New Deal than any administration before.xvii Many blacks that had voted consistently Republican shifted in large numbers and voted for FDR and the Democratic Party.xviii Secretary of the Interior, Harold Ickes emphasized that “The greatest advance [since Reconstruction] toward assuring the Negro…equality of opportunity…has been made since Franklin D. Roosevelt was sworn in as President…”xix Though much progress was yet to be made, these initial efforts would foster the first steps towards the modern day Civil Rights Movement.
In contrast, recently more conservative historians contend that the real significance of the New Deal in American history is that FDR’s programs protected and modernized American corporate capitalism. In its basic terms, they argue that FDR’s efforts saved capitalism during an era of strong anticapitalist sentiment. These historians emphasize that the New Deal was not radical but rather a conservative effort to block radical left reformers such as Huey Long and Upton Sinclair who criticized the New Deal as not going far enough to restructure the American economic system. This viewpoint, though different from others given, greatly supports the New Deal’s significant impact on American history.
Historian, Seymour Lipset states that Franklin Roosevelt played a unique role in keeping the United States politically stable during this time of unrest. According to Lipset, he used two basic tactics to diffuse the radical left protests . These tactics were to adopt many of their demands in his own speeches. Second, he used his political skills to absorb leaders of these groups into his following. For example, he adopted a tax reform bill as a reaction to Huey Long’s “Share-Our-Wealth” proposal and convinced leaders of protest groups like Wisconsin governor, Philip La Follette, that they were part of his coalition.xx
Bernstein agrees as he contends that though the New Deal failed to solve the problems of the depression, it did conserve and protect American corporate capitalism by diffusing American radicals charged with bringing increased socialist reform. For there was never a significant redistribution of power and income in American societyxxi Lipset concludes that the fact that left-wing parties did not make significant strides during the Great Depression dramatically signifies the importance of Franklin Delano Roosevelt and the New Deal in preventing this.xxii
Everything considered, the New Deal and its effects have undoubtedly had the most impact on American society since its founding. Faced with the greatest economic crisis of this nation’s history, Franklin Delano Roosevelt’s New Deal changed both the role of the federal government and Americans’ expectations towards the national government’s responsibilities to its citizens. It was significant in bringing political reforms that strengthened the executive branch and various private interest groups and parties. It sparked social changes in America’s agricultural heartland and in the status of blacks in the United States. However, maybe most importantly, it preserved the nation’s capitalist system from threats of radical left-wing reforms and preserved the nation’s two-party political system with emphasis on individual character. Today, America would not be what it is without the efforts and legacy of the New Deal.
Leuchtenburg, William. The New Deal Was a Great Achievement.
1985. Quoted in The Great Depression: Opposing Viewpoints
(San Diego: Greenhaven Press, 1994), 266.
ii Ibid., 268
iii Madaras, Larry. Taking Sides: Clashing Views on Controversial Issues in American History, Volume II
Ed (Guilford: McGraw-Hill Companies, 2001), 236.
iv Degler, Carl. The Third American Revolution
. 1959. Quoted in Conflict and Consensus in Modern American History
ed. (Lexington: D.C. Heath & Co., 1984), 364.
v Ibid., 367
vi Ibid., 375
vii Leuchtenburg, New Deal, 268
viii Biles, Roger. A New Deal for the American People. 1991. Quoted in Taking Sides: Clashing Views on Controversial Issues in American History, Volume II. 9th ed. (Guilford: McGraw-Hill Companies, 2001), 219.
ix Madaras, Taking Sides, 236
x Biles, American People, 221
xi Leuchtenburg, New Deal, 269
xii Ibid., 220
xiii Bernstein, Barton, The New Deal: The Conservative Achievements of Liberal Reform
. 1968.) Quoted in Twentieth Century America: Recent Interpretations
ed. (San Diego: Harcourt Publishers
, 1972, 262.
xiv Ibid., 262
xv Biles, American People, 221
xvi Leuchtenburg, New Deal, 275
xvii Bernstein, Conservative Achievements, 260
Leuchtenburg, New Deal, 276
xix Ickes, Harold. “The Negro as a Citizen.” Quoted in Twentieth Century America: Recent Interpretations. 2nd ed. (San Diego: Harcourt Publishers, 1972, 261
xx Lipset, Seymour. It Didn’t Happen Here: Why Socialism Failed in the United States. W.W. Norton & Co.
Bernstein, Conservative Achievements, 245
xxii Lipset, It Didn’t Happen Here
Bernstein, Barton, & Matusow, Allen, ed. Twentieth Century America: Recent
Interpretations. 2nd ed. San Diego, California: Harcourt Publishers, 1972.
Davis, Allen, & Woodman, Harold, ed. Conflict and Consensus in Modern American
History. 6th ed. Lexington, Massachusetts: D.C. Heath & Co., 1984.
Hoffman, Ellizabeth, & Gjerde, Jon, ed. Major Problems in American History, Volume
Boston, Massachusetts: Houghton Mifflin Co., 2002
Leone, Bruno, O’Neill, Teresa, ed. The Great Depression: Opposing Viewpoints.
San Diego, California: Greenhaven Press, Inc., 1994.
Madaras, Larry, & SoRelle, James, ed. Taking Sides: Clashing Views on Controversial
Issues in American History. Vol 2, 9th ed. Guilford, Connecticut: McGraw-Hill