How Does New Deal Ideas Continue to Influence Actions Taken by the Government

President Franklin Delano Roosevelt guided the United States through one of the toughest periods in its history. He was sworn into office as the Great Depression was tightening its grip on the country. Millions of Americans lost their jobs, their homes, and their savings.

FDR's New Deal was a series of federal programs launched to reverse the nation's decline. New Deal programs put people back to work, helped banks rebuild their capital, and restored the country's economic health. While most New Deal programs ended as the U.S. entered World War II, a few still survive.

Federal Deposit Insurance Corporation

The FDIC insures bank deposits, protecting customers from bank failures.

Getty Images / Corbis Historical / James Leynse

Between 1930 and 1933, nearly 9,000 U.S. banks collapsed. American depositors lost $1.3 billion dollars in savings. This wasn't the first time Americans had lost their savings during economic downturns, and bank failures occurred repeatedly in the 19th century. President Roosevelt saw an opportunity to end the uncertainty in the American banking system, so depositors wouldn't suffer such catastrophic losses in the future.

The Banking Act of 1933, also known as the Glass-Steagall Act, separated commercial banking from investment banking​ and regulated them differently. The legislation also established the Federal Deposit Insurance Corporation (FDIC) as an independent agency. The FDIC improved consumer confidence in the banking system by insuring deposits in Federal Reserve member banks, a guarantee they still provide bank customers today. In 1934, only nine of the FDIC-insured banks failed, and no depositors in those failed banks lost their savings.

FDIC insurance was originally limited to deposits up to $2,500. Today, deposits up to $250,000 are protected by the FDIC coverage. Banks pay the insurance premiums to guarantee their customers' deposits.

Federal National Mortgage Association (Fannie Mae)

The Federal National Mortgage Association, or Fannie Mae, is another New Deal program.

Win McNamee / Getty Images

Much like in the recent financial crisis, the 1930's economic downturn came on the heels of a housing market bubble that burst. By the start of the Roosevelt administration in 1932, nearly half of all American mortgages were in default, and at its worst in 1933, some 1,000 home loans were foreclosed every day. Building construction came to a halt, putting workers out of their jobs and amplifying the economic fallout. As banks failed by the thousands, even worthy borrowers couldn't get loans to buy homes.

The Federal National Mortgage Association, also known as Fannie Mae, was established in 1938 when President Roosevelt signed an amendment to the National Housing Act (passed in 1934). Fannie Mae's purpose was to purchase loans from private lenders, freeing up capital so those lenders could fund new loans. Fannie Mae helped fuel the post-WWII housing boom by financing loans for millions of GIs. Today, Fannie Mae and a companion program, Freddie Mac, are publicly held companies that finance millions of home purchases.

National Labor Relations Board

The National Labor Relations Board strengthened labor unions. Here, workers vote to unionize in Tennessee.

Ed Westcott / Department of Energy

Workers at the turn of the 20th century were gaining steam in their efforts to improve working conditions. By the close of World War I, labor unions claimed 5 million members. But management started cracking the whip in the 1920s, using injunctions and restraining orders to stop workers from striking and organizing. Union membership dropped to 3 million, just 300,000 more than pre-WWI numbers.

In February 1935, Sen. Robert F. Wagner of New York introduced the National Labor Relations Act, which would create a new agency dedicated to enforcing employee rights. The National Labor Relations Board was launched when FDR signed the Wagner ​Act in July of that year. Though the law was initially challenged by business, the U.S. Supreme Court ruled the NLRB was constitutional in 1937.

Securities and Exchange Commission

The SEC came into being in the wake of the 1929 stock market crash that sent the U.S. into a decade long financial depression.

Chip Somodevilla / Getty Images

After World War I, there was an investment boom in the largely unregulated securities markets. An estimated 20 million investors bet their money on securities, looking to get rich and get their piece of what became a $50 billion pie. When the market crashed in October 1929, those investors lost not only their money but also their confidence in the market.

The main goal of the Securities Exchange Act of 1934 was to restore consumer confidence in the securities markets. The law established the Securities and Exchange Commission to regulate and oversee brokerage firms, stock exchanges, and other agents. FDR appointed Joseph P. Kennedy, father of future President John F. Kennedy, as the SEC's first chairman.

The SEC is still in place, and works to ensure that "all investors, whether large institutions or private individuals…have access to certain basic facts about an investment prior to buying it, and so long as they hold it."

Social Security

Social Security continues to be one of the most popular and important New Deal programs.

Douglas Sacha / Getty Images

In 1930, 6.6 million Americans were age 65 and older. Retirement was nearly synonymous with poverty. As the Great Depression took hold and unemployment rates soared, President Roosevelt and his allies in Congress recognized the need to establish some kind of safety net program for the elderly and disabled. On August 14, 1935, FDR signed the Social Security Act, creating what has been described as the most effective poverty mitigation program in U.S. history.

With the passage of the Social Security Act, the U.S. government established an agency to register citizens for benefits, to collect taxes on both employers and employees to fund the benefits, and to distribute those funds to beneficiaries. Social Security helped not only the elderly, but also the blind, the unemployed, and dependent children.

Social Security provides benefits to over 63 million Americans today, including over 46 million senior citizens. Although some factions in Congress have attempted to privatize or dismantle Social Security in recent years, it remains one of the most popular and effective New Deal programs.

Soil Conservation Service

South of Lamar, Colorado, a large dust cloud appears behind a truck traveling on highway 59, May 1936.

PhotoQuest / Getty Images

The U.S. was already in the grip of the Great Depression when things took a turn for the worse. A persistent drought that started in 1932 wreaked havoc on the Great Plains. A massive dust storm, dubbed the Dust Bowl, carried the region's soil away with the wind in the mid-1930s. The problem was literally carried to the steps of Congress, as soil particles coated Washington, D.C., in 1934.

On April 27, 1935, FDR signed legislation establishing the Soil Conservation Service (SCS) as a program of the U.S. Department of Agriculture (USDA). The agency's mission was to study and solve the problem of the nation's eroding soil. The SCS performed surveys and developed flood control plans to prevent soil from being washed away. They also established regional nurseries to cultivate and distribute seeds and plants for soil conservation work.

In 1937, the program was expanded when the USDA drafted the Standard State Soil Conservation Districts Law. Over time, over three thousand Soil Conservation Districts were established to help farmers develop plans and practices for conserving the soil on their land.

During the Clinton administration in 1994, Congress reorganized the USDA and renamed the Soil Conservation Service to reflect its broader scope. Today, the Natural Resources Conservation Service (NRCS) maintains field offices across the country, with staff trained to help landowners implement science-based conservation practices.

Tennessee Valley Authority

A large electric phosphate smelting furnace used to make elemental phosphorus in a TVA chemical plant in the vicinity of Muscle Shoals, AL.

Alfred T. Palmer / Library of Congress

The Tennessee Valley Authority may be the most surprising success story of the New Deal. Established on May 18, 1933, by the Tennessee Valley Authority Act, the TVA was given a tough but important mission. Residents of the impoverished, rural region desperately needed an economic boost. Private power companies had largely ignored this part of the country, as little profit could be gained by connecting poor farmers to the power grid.

The TVA was tasked with several projects focused on the river basin, which spanned seven states. In addition to producing hydroelectric power for the under-served region, the TVA built dams for flood control, developed fertilizers for agriculture, restored forests and wildlife habitat, and educated farmers about erosion control and other practices to improve food production. In its first decade, the TVA was supported by the Civilian Conservation Corps, which established almost 200 camps in the area.

While many New Deal programs faded when the U.S. entered World War II, the Tennessee Valley Authority played an important role in the country's military success. The TVA's nitrate plants produced the raw materials for munitions. Their mapping department produced the aerial maps used by aviators during campaigns in Europe. And when the U.S. government decided to develop the first atomic bombs, they built their secret city in Tennessee, where they could access millions of kilowatts produced by the TVA.

The Tennessee Valley Authority still provides power to 10 million people in seven states and oversees a combination of hydroelectric, coal-fired, and nuclear power plants. It remains a testament to the enduring legacy of FDR's New Deal.

Additional Sources

• Maues, Julia. "Banking Act of 1933 (Glass-Steagall)." Federal Reserve History. Washington DC: The Federal Reserve Agency, 22 November, 2013
• Pickert, Kate. "A Brief History of Fannie Mae and Freddie Mac." Time Magazine, 14 July 2008.
• "Our History," Washington DC: The National Labor Relations Board.
• Living New Deal website.

powellmect1980.blogspot.com

Source: https://www.thoughtco.com/new-deal-programs-still-in-effect-today-4154043

Share this post