FDR's New Deal Programs

Faced with a depression unparalleled in the history of the United States, in the winter of 1933 newly-elected President Franklin Delano Roosevelt embarked upon an ambitious yet politically pragmatic series of programs designed to jump-start the American economy from crisis to credibility. This series of programs came to be known as "The New Deal." Central to the advisor-initiated policies of the New Deal was the belief held by Mr. Roosevelt that the key to American economic recovery lay in the agricultural sector. Specifically, the President and his inner circle of economic advisors contended that by increasing agricultural income, combined with limited inflation and modest federal spending for relief and construction, his administration could pull the country out of the deep doldrums it had slipped into during the just ended, anti-federal-activism presidency of Herbert Hoover. To that end, during his first one hundred days in office, the thoroughly activist-oriented president pushed through a pliant Congress the Agricultural Adjustment Act - and brought into being the Agricultural Adjustment Administration, or AAA.

It is important to know just how badly off the country was during this period, just four years into the twelve-year cycle of economic misery that has come to be termed "The Great Depression." Beginning with the infamous Stock Market Crash of October 1929 - "Black Monday," when so many fortunes were lost in a single day that legends of the suddenly ex-weal

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To counter-balance that, it was decided to offer the agricultural sector a new valuation of wealth: land would be evaluated for what it could yield, and farmers would be paid by the federal government for not growing certain agricultural commodities - it would be the land, not the produce, that determined the subsidies. To fund the subsidies, a sales tax would be imposed on the processing of food products. And another element was factored in: inflation. Roosevelt and his advisors came to the conclusion that, in order to pull the farming sector out of the debt it had accrued over the past decade, a modest, government-controlled inflation would be necessary. Farm prices would go up, then, from the pressure of two sources: decreased output would mean scarcity, resulting in higher prices; and the devalued dollar would further boost the price, giving the agricultural sector a much improved input cost-to-output profit ratio than the current status quo was capable of providing. Those were the ideals; the political triumph was in how Roosevelt persuaded the legislative community to accept this unheard-of government manipulation of the agricultural sector. Between his November '32 victory and assumption of office in March '33

Category: Government - F