A New Deal for the American People.

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Roger Biles. A New Deal for the American People. DeKalb: Northern University Of Illinois Press. 1991. Pp. 274. $28.50. Cloth: ISBN 087580554X. $12.00. Paper: ISBN 0875801617


By promising "a new deal for the American people," Franklin D. Roosevelt gave millions of Americans impoverished by the Great Depression hope. This period of crisis in America was characterized by the stock market crash, widespread bank closings, and massive unemployment. The relief programs implemented by the Roosevelt administration between 1933-1937 were named the New Deal. During this time the federal government’s role in public welfare emerged and this according to Biles “marked the turning point in the making of modern America.”(14)

With a "New Deal for the American People" Roger Biles gives a concise history of the New Deal. He discusses the factors which contributed to the Great Depression and looks at the New Deal's successes and failures. Before moving onto his coverage of Roosevelt’s New Deal programs Biles spends the first chapter covering President Herbert Hoover’s handling of the crisis that was the Great Depression. His coverage of this subject is a little wishy washy. It is not completely clear whether he thought Hoover did what he could or if he thought he didn’t do enough. Biles contradicts himself with regards to this question. In one section he refers to Hoover as bold and innovative and applauds him for engaging in some “ambitious ventures,” such as the 1931 creation of the Reconstruction Finance Corporation (RFC), which was empowered to give loans to banks, building and loan associations, insurance companies, and railroads.(21)

In another section he attacks Hoover for his rejection of “calls for federal relief and employment programs,” stating that he instead “monotonously preached individualism and voluntarism.”(22) Biles disagrees with Hoover’s insistence that private business “take the lead” and that “government involvement be limited to the gathering of data, the provision of expert advice, and the dissemination of educational materials.”(23) Biles asserts that it was not until the summer of 1932, after acknowledging the failure of the RFC, that Hoover “began to consider a large-scale public works effort.”(22) However, this was “too little, too late,” according to Biles. In fact this is the phrase he uses to sum up Hoover’s entire presidency.(24) He believes Hoover’s “tardy and often minimal attempts at innovation” undermined his attempts to restore prosperity and the American people had had enough.(24) Roosevelt’s victory in 1932 “reflected the American people’s desire that the government take an active role as an agent for human welfare.”(28) They were ready for someone to take action. Biles quotes Roosevelt as saying, “Take a method and try it. If it fails admit it frankly and try another. But above all, try something.”(33)

Biles asserts that Roosevelt didn’t waste any time filling his promise of immediate action. Not long after taking office he called Congress into an emergency session and by doing so the period known as the New Deal began. His first act was The Emergency Banking Act of 1933, which provided for a system of reopening sound banks under the Department of the Treasury’s supervision. Federal loans were also made available when needed. This act was of great importance to Roosevelt because it “restored confidence in the nation’s banking system.”(39) However, this was not enough for Roosevelt. He believed that for long term recovery the people’s “faith in the stock exchange would have to be restored as well.”(39) To address this Roosevelt created The Securities and Exchange Act of 1934, which established government supervision of the stock market.

Programs and policies aimed at long-term reform, rather than immediate relief often took center stage in the New Deal. The National Recovery Act (NRA) was an attempt at such reform. Its goal was to stabilize prices and wages through cooperative "code authorities" involving government, business, and labor. It regulated the pricing and production of a variety of products and services. Ultimately, the NRA failed to provide economic recovery. Biles asserts that "if the codes had any affect at all, they restricted production, permitted higher prices, and reduced purchasing power, none of which enhanced the possibility of invigorating the economy."(91) At the time of the NRA's failure the New Deal's focus began to change. If it could not provide recovery, it could at least bring some relief.(92)

Biles discusses each of the New Deal’s relief programs, such as the Works Projects Administration. He describes how they each came about and their functions. He then analyzes each giving an assessment of their strengths and weaknesses and their significant contributions, if any. After looking at each Biles reaches the conclusion that “for all it did, the New Deal could have done much more.”(115) As late as 1938 the unemployment rate was at 19.1% and in 1940 it was at 14.6%.(226) The programs "never went as far as conditions demanded or many liberals recommended."(231) While many people were helped by the programs there were still a large number that received no significant aid or no improvement in their quality of life.

Biles acknowledges the fact that the New Deal "clearly failed to restore economic prosperity."(225) In spite of the aid provided by the federal and state governments the "enormity of the economic problems throughout the country left much of the president's pledge unfulfilled." However, he does not argue that the New Deal prolonged the Great Depression as some historians do. One such historian, Professor Gary Dean Best, argues that Roosevelt's regulatory programs created an antibusiness environment, which stunted the United States' economic recovery. Biles argues that in spite of its "minimal reforms and non-revolutionary programs," the New Deal created a limited welfare state that "implanted several stabilizers that have been more successful in averting another such depression."(227) According to Biles, the New Deal’s most important contribution was the implantation of these stabilizers.

Biles identifies four stabilizers. The first is The Securities and Exchange Act of 1934. Second, is the Wheeler-Rayburn Act, which allowed the Securities and Exchange Commission to do the same with public utilities. Third, The Glass-Steagall Banking Act, which forced the separation of commercial and investment banking and broadened the powers of the Federal Reserve Board to change interest rates and limit loans for speculation. The fourth stabilizer is the Federal Deposit Insurance Corporation, which increased government supervision of state banks and greatly lowered the number of banks that failed.(227) According to Biles, these four “stabilizers” “established a firm economic foundation that performed well for decades thereafter,” thereby making the New Deal a success. (228)

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