United States

Hoover’s Federal Farm Board had tried to end the long-standing agricultural depression by raising prices without limiting production. Roosevelt’s Agricultural Adjustment Act (AAA) of 1933 was designed to correct the imbalance. Farmers who agreed to limit production would receive “parity” payments to balance prices between farm and nonfarm products, based on prewar income levels. Farmers benefited also from numerous other measures, such as the Farm Credit Act of 1933, which refinanced a fifth of all farm mortgages in a period of 18 months, and the creation in 1935 of the Rural Electrification Administration (REA), which did more to bring farmers into the 20th century than any other single act. Thanks to the REA, nine out of 10 farms were electrified by 1950, compared to one out of 10 in 1935.

Civilian Conservation CorpsNew members of the Civilian Conservation Corps waiting to be fitted for shoes at Camp Dix, New Jersey, 1935.Encyclopædia Britannica, Inc.

These additional measures were made all the more important by the limited success of the AAA. Production did fall as intended, aided by the severe drought of 1933–36, and prices rose in consequence; but many, perhaps a majority, of farmers did not prosper as a result. The AAA was of more value to big operators than to small family farmers, who often could not meet their expenses if they restricted their output and therefore could not qualify for parity payments. The farm corporation, however, was able to slash its labour costs by cutting acreage and could cut costs further by using government subsidies to purchase machinery. Thus, even before the Supreme Court invalidated the AAA in 1936, support for it had diminished.

Business recovery

As the economic crisis was above all an industrial depression, business recovery headed the New Deal’s list of priorities. Working toward that goal, the administration drafted the National Industrial Recovery Act of 1933, which, among other things, created a National Recovery Administration to help business leaders draw up and enforce codes governing prices, wages, and other matters (coded industries would be exempt from the antitrust laws). Labour was offered protection from unfair practices and given the right to bargain collectively. A large-scale public works appropriation, administered through the PWA, was intended to pour sufficient money into the economy to increase consumer buying power while prices and wages went up.

Despite great initial enthusiasm for the NRA program, it was a failure. The codes became too numerous and complex for proper enforcement, and they were resented because they tended to favour the leading producers in each regulated industry. The protections afforded labour proved illusory, while the PWA, despite an impressive building record that included not only dams, bridges, and schools but also aircraft carriers, was too slow and too small to have much effect on the economy as a whole.

Yet, even if the NRA had overcome its technical problems, failure would probably still have resulted. What the country needed was economic growth, but the NRA assumed that the United States had a mature economic structure incapable of further expansion. Accordingly, it worked to stabilize the economy, eliminate wasteful or predatory competition, and protect the rights of labour. Encouraging growth was not on its agenda.

The second New Deal and the Supreme Court

In reaction to pressures from the left and hostility from the right, the New Deal shifted more toward reform in 1935–36. Popular leaders, promising more than Roosevelt, threatened to pull sufficient votes from him in the 1936 election to bring Republican victory. Senator Huey P. Long of Louisiana was building a national following with a “Share the Wealth” program. The poor in Northern cities were attracted to the Roman Catholic priest Charles E. Coughlin, who later switched from a program of nationalization and currency inflation to an antidemocratic, anti-Semitic emphasis. Many older people supported Francis E. Townsend’s plan to provide $200 per month for everyone over age 60. At the same time, conservatives, including such groups as the American Liberty League, founded in 1934, attacked the New Deal as a threat to states’ rights, free enterprise, and the open shop.

Huey LongUPI/Bettmann Archive