History Optional Paper-2 Solution – 1987: Q.8
Q.8 Critically examine the New Deal of Franklin D. Roosevelt. Did he want to introduce a sort of socialism?
Background of the New Deal
The Great Depression in the United States began in 1929 when the American stock market–which had been roaring steadily upward for almost a decade–crashed, plunging the country into its most severe economic downturn yet. Speculators lost everything; banks failed; the nation’s money supply diminished; and companies went bankrupt and began to fire their workers. By 1932 at least one-quarter of the American workforce was unemployed.
When President Franklin Roosevelt took office in 1933, he acted swiftly to try and stabilize the economy and provide jobs and relief to those who were suffering. Roosevelt addressed the problems of the depression by telling the American people that, “I pledge you, I pledge myself, to a New Deal for the American people.”
Over the next eight years, the government instituted a series of experimental projects and programs, known collectively as the New Deal.
Aims of the New Deal
(1) Relief: to give help to the poverty-stricken millions who were without food and homes.
(2) Recovery: to reduce unemlloyment, stimulate the demand for goods, and get the economy moving again.
(3) Reform: to take measures to prevent economic disaster.
Measures taken under the New Deal
Initial days of Roosevelt’s administration saw the passage of banking reform laws, emergency relief programs, work relief programs, and agricultural programs.
Later reform included union protection programs, the Social Security Act, and programs to aid tenant farmers and migrant workers.
The Farmers Relief Act, National Industrial Recovery Act, Social Security Act etc were passed.
The Federal Emergency Relief Act (FERA) was the first major effort of the new Congress to cope with the millions of adult unemployed.
Criticism of the New Deal
(1) Businessmen criticised it due to the growth of trade unions, the regulation of hours and wages, and increased taxes.
(2) Some state governments resented the interference by the federal government in what they considered to be internal state affairs.
(3) The Supreme Court claimed that the President was taking too much power and ruled several measures unconstiutional including National Recovery Administration (NRA).
(4) Many socialists criticised it as they felt that the New Deal was not drastic enough and still left too much power at the hand of big businesses.
Achievements of the New Deal
(1) In early days, it provided relief for destitute and jobless and created millions of extra jobs.
(2) Confidence was restored in the government and may have prevented violent revolution
(3) Public work schemes provided assets of lasting values.
(4) Welfare benefits such as the Social Security Act was an important steps towards a welfare state.
(5) National direction of resources and collective bargaining between workers and management became as accepted normal.
(6) Democracy and free enterprise was preserved at the time when states like Germany and Italy responded the similar crisis with fascism.
Limitations in the success
(1) When it came to recovery, the New Deal’s performance lagged. It was certainly successful in both short-term relief, and in implementing long-term structural reform. However, the New Deal failed to end the Great Depression. Throughout the decade of the 1930s, unemployment remained brutally high, while economic growth remained painfully slow.
Recovery only came about, when the heavy demands of mobilization for World War II finally restored the country to full employment.
(2) Farmers’ Relief Act helped farmers but threw many farm labourers out of work.
Reasons for partial success
(1) Opposition of the Supreme Court.
(2) Roosevelt was cautious in the amount of money he was prepared to spend to stimulate the industry.
Did FDR introduced a short of socialism?
(1) The New Deal increased the government’s regulation and intervention and the economic system. Wages, working hours, production, price etc were regulated.
(2) Labor’s right to organize unions and to bargain collectively with employers through agents of their own choosing
(3) Several relief works like dole money and soup kitchen were launched.
(4) Social Security Act introduced schemes like old age pension and unemployment insurance schemes.
(1) Regulations and interventions were limiyed in nature. Free enterprise continued and there was no takeover of the industry by the government. The measures taken by the government were not radical.
(2) Several measures of socialist outlook were temporary in nature. Several measures had been terminated due to the Supreme Court declaring those measures as unconstitutional like NRA.
Roosevelt’s program drastically altered the relationship between the capitalist market, the people, and their government, creating for the first time in this country’s history an activist state committed to providing individual citizens with a measure of security against the unpredictable turns of the market. Many called it a short of socialism.
Though FDR temporarily abandoned the capitalism system and turned toward socialism, he did not want to implement socialism. But he accepted socialism to save capitalism just like Lenin had accepted capitalism to save socialism.