‘The New Deal was fundamentally an economic program.’ Discuss.

New Deal programs from 1933 to 1938 responded to the economic turmoil of the 1929 Wall Street
Crash and onset of the Great Depression. However, this essay will argue the New Deal programs can
be defined as sometimes overlapping ‘recovery’ and ‘reform’ programs, where recovery remained
primarily economic, but reform was invariably tied to socio-cultural and political changes to ensure
the same scale of disaster did not occur again. Through analysing ‘first’ and ‘second’ New Deal
legislature on agriculture, the economy, employment and labour, this essay suggests that the New
Deal was economic at outset, but not ‘fundamentally’ since it invoked equally profound social,
political and cultural transformations within American society.

Agricultural legislation of the New Deal originally prioritised economic reform but progressively
incorporated social transformation. The structure of the May 1933 Agricultural Adjustment Act
demonstrated profound economic prioritisation. George Peek, director of AAA, stated his simple aim
to ‘’put up farm prices’’, leading to the fallowing of 10,000,000 acres of cotton and slaughter of
6,000,000 pigs. This prevented oversaturation in the market, reducing competition which enabled
farmers to keep prices high as sole producers, rising 1932-1936 net farm income by 50%. However,
simultaneously, Lorena Hickok reported the starving conditions of Americans nationwide, reporting
in Pineville, Kentucky, how five babies had died of starvation, ‘’in the last 10 days’’. The
government’s primacy of inflating prices rather than redistributing crops (inevitably removing
valuable consumers from the American market and reducing the rate of purchase for crops)
demonstrated the New Deal as ‘fundamentally’ economic since it placed the need to kickstart
consumer society ahead of possible social welfare routes. However, federal government
progressively saw the New Deal as a chance to reform American society; economic recovery was a
prerequisite to socio-economic reform. James Patterson notes how American ‘’old poverty’’
preceded the Depression, and Hickok’s rural surveys reinforced this. Her reports of ‘’children in
West Virginia who never tasted milk’’ demonstrated widespread deprivation before the 1930s,
influencing ‘second’ New Deal legislation to make attempts at equalising social conditions. The 1935
Social Security Act was originally ‘’opposed to exclusions of any specific industries’’, especially noting
‘’agricultural workers, domestic servants… and many self-employed’’. The desire to extend old-age,
childcare and unemployment insurance across American society demonstrated social welfare’s
significance in the New Deal, despite the economic cost of extra pensions. While the ‘Solid South’ of
Congress blocked such broad inclusions, excluding 65% of African Americans from social security for
fear of undermining Jim Crow systems, nearly 2,300,000 African Americans did receive insurance by
1940. This demonstrated the social element of the New Deal, helping a more limited than intended
but still significant proportion of rural Americans alongside economic relief.

The New Deal contained economic programs which had significant political consequences. Having
left the gold standard, in July 1933 Roosevelt confirmed American withdrawal from international
exchange-rate stabilisation at the London Conference. The October 1933 gold-purchase plan
enabled the treasury instead to purchase gold at prices confirmed daily, inflating the cost from
$20.67 to $35 per ounce by January 1934. Roosevelt manufactured inflation at the expense of
foreign policy, creating ‘’most bitter resentment’’ from British Prime Minister MacDonald since he
had assured Washington’s cooperation with international gold before the Conference. This
demonstrated the significance of inflation to Roosevelt’s New Deal; he could artificially raise US
prices, encouraging international exports due to the dollar’s 40% exchange value loss, and
discourage imports, fuelling the consumption of domestic goods to reinvigorate the insular
economy. While Keynes noted the uncertainty of US gold made it ‘’more like a gold standard on the
booze than the ideal managed currency’’, preventing the expansion of US imports, these policies
demonstrate Roosevelt’s fundamental attention to the economy. However, while he sacrificed
foreign goodwill, control of the economy held insular political significance. Roosevelt’s first policies
included a national four-day banking holiday from 5 March 1933 and the June Glass-Steagall Banking
Act, forcing commercial and investment banking interests to split. Such intervention to prevent
another commercial crisis based upon the stock market used governmental power to regulate
American capitalism. This expanded federal responsibilities into caring for the economy, necessary
for the inflation controls that Roosevelt hoped to exert. By intervening in previously laissez-faire self-
regulated capitalism, Roosevelt took unprecedented steps in stimulating the domestic market
through government rather than business, and enshrined responsibility for future economic
guidance within executive and legislative jurisdiction. Roosevelt’s economic New Deal thus relied
upon equally profound political changes to expand federal regulatory powers.

Employment legislation of the New Deal equally had immediate economic impacts, but held wider
cultural significance. The Emergency Relief Appropriations Act released nearly $5,000,000,000 for
government-financed projects, channelled into the Works Progress Administration under Harry
Hopkins. This financed the employment of 3,000,000 men, over 600,000 college students and
2,600,000 jobless youths. Federally-sponsored employment created economic stability within
society, not just through the promotion of jobs to avoid poverty, but through the re-entry of wage
circulation. Recognising the significance of workers as consumers, federal employees received $52 a
month on average to spend, revitalising businesses like agriculture which would kickstart production.
The government impetus to restart the circulatory nature of the production-consumption economy
demonstrated employment legislation as a means to empower capitalism. However, the style of
employment held socio-cultural significance alongside its direct economic benefits. Michael Denning
notes how a ‘cultural front’ emerged in the New Deal, where works programs sponsored cultural
developments that invoked many of the fundamental American ideals of the decade. This was
apparent through the Public Works of Art Project, sponsoring 3,749 artists’ creations of 15,633
artworks, including Diego Rivera’s 7-panel murals of Detroit Industries which depicted the
persistence of American spirit throughout the age of mechanisation. Woody Guthrie, in recording
the Dust Bowl Ballads for the Library of Congress in 1940, noted the significance of culture as a
means of expression in the Great Depression, intending ‘to sing songs that will prove… this is your
land’’. Thus, federal sponsorship of culture embraced the grand ideals of American history on
individualism, liberty of land, ownership and spirit, and implicitly projected these values to the public
as part of 1930s policy. Thus, culture was endorsed within the New Deal to self-project a
fundamentally American identity onto its politics, alongside its immediate economic impetus.

The regulation of labour within the New Deal was fundamentally economic, but regulating the social
implications of business-labour relations became necessary to long-term economic success. In the
National Industrial Recovery Act (May 1933), Roosevelt oversaw the National Recovery
Administration which allowed industries to draw up codes, cartelising production which would
create the conditions necessary for economic recovery with operational business and labour. By
1935, over 4,500 staff-members oversaw 700 codes, primarily drawn up by business capitalists
rather than in conjunction with labourers. Such codes sought to end cutthroat competition leading
to price discounting, stabilising the industry and setting production quotas. This demonstrates the
economic priority of the act, managing production to ensure the continuity of internal industry.
While the act had a social clause through section 7a, allowing workers ‘’to organise and bargain
collectively’’ which resulted in union surges, such as the United Mine Workers gaining 400,000
members, such legislation received no federal enforcement unlike the supervision of codes. This
meant federal priorities appeared definitively alongside economics. However, Roosevelt realised
sustainable long-term business-labour relations rested on both sides. While businesses had been
empowered across the Progressive era, receiving favourable self-regulatory conditions over the
Republican governments of the 1920s, labour was still fundamentally defined by Reconstructionist
‘free labour’ ideology, which prevented any attempt to control labour as ‘’arbitrary interference’’
with the fourteenth amendment according to Lochner v. New York (1905). Roosevelt suggested such
an idea was outdated for the ‘’individual in the mass industrial era’’ in a 1932 speech, causing him to
directly endorse collective bargaining with federal protection through the National Labour Board in
the 1935 Wagner Act. This break from precedent redefined individualism to empower workers with
collective rights which could take on the increased power of corporations in industrial society. Such
redefinition of a core value of Americanism demonstrated the profound transformations the New
Deal reckoned with in social identity, to enact its long-term economic goals. The ideological
transformation of labourers’ social identities suggested the New Deal necessitated social change to
enforce economic harmony going forwards.

Therefore, the New Deal was economic in many respects, but this had profound social, cultural and
political implications. Agricultural legislation of the New Deal originally sought to restore the farming
economy, but progressed to social relief, intended to reach all areas of America. Furthermore, the
economic programs of the New Deal rested upon political changes, transforming the right of the
federal government to intervene. Employment legislation directly invoked American culture to
integrate core values symbolically into the New Deal, marking it as distinctly American. Furthermore,
the regulation of labour necessitated a social re-evaluation of American individualism, transforming
the identity of workers to enable their greater rights in an industrial age. Thus, the New Deal was not
‘fundamentally’ economic since economic changes became invariably social, cultural and political.