1933: The Dawn of the New Deal
1933 was the beginning of FDR’s “New Deal,” and many of the related programs began that same year.
Things kicked off in March with the Emergency Banking Act, in which all banks underwent a four-day bank holiday to give accountants a chance to come up with a plan to stabilize the banking system. Each bank was also assessed for stability. At the end of the four days, most banks reopened, with all banks under supervision of the U.S. Treasure department and subject to federal loans where necessary. Nearly four thousand small banks found to be too unstable were merged into larger banks, with Depositors eligible to receive 85 cents on the dollar for their deposits. In order to avoid any other such bank crashes, the government also created the Federal Deposit Insurance Corporation (FDIC) that June, insuring deposits in any bank up to $5,000. People who had been hoarding money in mattresses gradually took a deep breath and deposited money into the nation’s banks again, slowly bringing stability back to the economy.
Other programs which began in 1933 included:
- The Federal Emergency Relief Administration: A $500 million grant to the states for emergency food and shelter.
- The Civil Works Administration: this was a short-term project during the winter of 1933-1934, creating 4 million construction and public works jobs.
- The Public Works Administration: a longer-term agency contracting construction workers for public improvement projects throughout the country. Nearly every county in America had at least one PWA project; such projects included swimming pools, bridges, band shells, hospitals, schools, bridges, highways, and dams. Only three counties in the nation did not participate in the PWA.
- The Federal Surplus Relief Corp: purchased surplus food crops and animals for distribution to the states.
- Civil Conservation Corps: created jobs on conservation projects such as reforestation, soil reclamation, wildlife refuges, firebreaks, and improvement to national parks. Members were nicknamed “Roosevelt’s Tree Army.”
- The Agricultural Adjustment Act: provided subsidies to farmers producing corn, cotton, dairy products, hogs, rice, tobacco, and wheat for reducing their output, thus reducing the supply of such crops and increasing the price. Farmers benefited, but at the public’s expense. Also, at the beginning of the program, surplus food and crops were destroyed rather than being distributed as part of any sort of welfare program. A public backlash lead to the AAA being declared unconstitutional in 1936.
- The Tennessee Valley Authority targeted parts of the rural south for especial assistance; the program involved dam-building projects along the Tennessee river to provide electricity to areas of Tennessee, Alabama, Mississippi, and Kentucky, and small areas in Georgia, North Carolina, and Virginia. The TVA also created educational programs to help farmers in the area modernize their farming methods, replanted forests in the area, and cleaned the river to improve fishing conditions.
Other programs, such as the Works Progress Administration, were implemented in later years.