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Swampyville's - FDR's Second New Deal (Bottom Up)!

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What was FDR's Second New Deal?

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During the depression years while the United States had a 25% unemployment rate, the government was paying the larger farmers not to grow crops to create a world wide demand for agricultural products. While many Americans were starving, the international financial community was investing in Germany's (Nazi) rearmament. In fact one of the investors, Henry Ford, was instrumental in having a factory in Germany that built tanks for the Nazi's. In the 1930's while Americans starved, the German people, under Hitler, with Investments (seed money) from the international financial community suffered little from the Depression years.

FDR's First New Deal was from the "Top Down" and his Second New Deal was from the "Bottom Up", thus squeezing the Middle!

The "second" New Deal (1935-40s) aimed at restoring the economy from the bottom up (History 1302)!

The "second" New Deal attempted to end the Depression by spending at the bottom of the economy where government funds attempted to turn non-consumers into consumers again. Many of the programs lasted only until World War II while others became permanent fixtures in American life. The Works Progress Administration was a huge federal jobs program that sought to hire unemployed breadwinners for the purpose of strengthening their family's well-being as well as boosting consumer demand. The jobs varied but consisted of mainly of construction of public roads, buildings and parks. Over the course of its life (1935-43) over eight million Americans worked on WPA projects.
This was "counter-cyclical demand management" on a huge scale.

The 1935 Social Security Act set up a modest worker-funded but federally-guaranteed pension system. Not on the princely scale that had been advocated, nevertheless, Social Security (at the time) did act as a safety net for a few older workers, promoted increased some consumer demand and earned a place as a fixture on the American political and social landscape.

Finally, another significant component of the "second" New Deal was the National Labor Relations Act of 1935. Usually called the Wagner Act after its sponsor, Senator Robert Wagner of New York, this law attempted to prevent employer's use of intimidation and coercion in breaking up unions. It set up the National Labor Relations Board to guarantee the right of collective bargaining for American workers. The results were immediately discernable:
the formation of the Congress of Industrial Organizations whose auto worker and coal miner units soon saw their wages increase significantly. Again, higher wages among the masses of the working class is an example of the "second" New Deal's attempt to restore the economy from the bottom up.

Assessing the legacy

World War II ended both the temporary New Deal programs and the Depression they were attempting to cure. Keep in mind that many facets of the New Deal--Social Security, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission to name only three--have remained in American life from the 1930s until the present.

War ended the Depression simply because of increased government spending, an intensified version of what Roosevelt was already doing with the WPA and similar programs.. Responding to the external threats posed by the Axis Powers (Germany, Japan and Italy) Roosevelt and the Congress threw fiscal caution to the wind and spent what was necessary to win the war.
In so doing, they also achieved pre-Depression levels of employment and prosperity.

What then is the legacy of the New Deal as a whole? Would it have ended the Depression? The best answer to that is that it went a long way toward alleviating the worst suffering of the Depression while still being captive to the conventional thinking (political, fiscal, racial) of the day. One cannot answer the question of whether it could have ended the Depression based on historical facts. World War II interrupted the process.

What are the other long-term consequences of the Depression and New Deal?
The rise of the "Roosevelt Coalition" of farmers, union members, working class people, Northern blacks and liberals made the Democratic Party the nation's dominant party for almost sixty years. Further, the political consensus that developed after World War II held that never again should the government allow another depression to take hold. Thus, there followed an unprecedented level of federal economic intervention. This huge expansion in the role, size and power of government in American social and economic life is aptly summed up in Republican President Richard Nixon's famous 1971 remark, "We're all Keynesians now." (History 1302)

Basically the "Keynesians Theory" was spend your way to prosperity. The same theory that is being used today! It didn't work then and it won't work now! That is, if the special interests are allowed to get their sticky fingers in what is left of the "American Pie"!

"How fortunate for governments that the people they administer to don't think"! (Adolf Hitler)

"MEMORES ACTI PRUDENTES FUTURI" (Mindful of what has been done, aware of what will be)

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