Reforming the American Economy
In order to end the Depression and ensure that such an economic disaster would never happen again, the government would have to reform the economic system. Reforming is a task that involves strength, leadership, and the upmost
dedication. This goal would take a great deal of work, and many successful programs. These are the some of the many New Deal programs intended to reform the economy.
dedication. This goal would take a great deal of work, and many successful programs. These are the some of the many New Deal programs intended to reform the economy.
The Agricultural Adjustment Act and the Federal Surplus Relief Corporation
American farmers were some of the people who were hardest hit by the effects of the Depression. Prices of the products they grew dramatically dropped, and it ended up costing more to grow the crop than what it was being sold for. Farmers were in poverty and felt that the last time they made a good living was in 1914. In May of 1933, Congress passed the Agricultural Adjustment Act, or the AAA. This program was to help bring American farmers' incomes up to the levels that existed in 1914. The AAA was formed to create some balance between the supply from farmers and the demand from the consumers. They limited how much farmers produced in each year based upon the need from customers. In farms where too much was being produced, the government paid farmers to destroy excess, meaning plowing away additional crops and slaughtering any overabundance of livestock. Many people were against the AAA, because they thought that the destruction of surplus goods was wasting resources. But, the AAA gave the deemed excess to the Federal Surplus Relief Corporation. The FSRC, as it is also known as, removed the surplus from the market and distributed it to state and local organizations, which was then given to the needy of the area.
The Federal Securities Act
Also in May of 1933, Congress passed the Federal Securities Act. This program was implemented to set up rules that people buying and selling stock have to follow and to prevent improper business activities. "Investors now had the right to know how the business operated, how much money it made, and how it planned to spend the money from the sale of the stock." (Fitzgerald 67) The Federal Securities Act also required that new stocks be registered with the government before offered to investors. The Securities Exchange Act, passed in 1934, helped supplement this program.
The Glass-Steagall Banking Act and the Federal Deposit Insurance Corporation
Congress passed the Glass-Steagall Banking Act in June of 1933. The program helped end dishonest behaviors in the banking system by not permitting banks to invest in stocks or risky practices. This Act also helped create the Federal Deposit Insurance Corporation, or the FDIC. Before the creation of the FDIC, if a bank was robbed or something else happened to their deposited money, customers were not guaranteed that they would receive their money back. More often than not, Americans lost their whole savings for good. The FDIC changed this. For the first time ever, the government insured money that was deposited into banks. Each customer was insured $5,000, which was a great amount of money in the 1930's. The program is still in use today, but customers are now insured for up to $100,000 at each bank.
The Wagner Act or the Labor Relations Act
In July of 1935, Congress passed the Wagner Act, which was also known as the Labor Relations Act. This Act dealt with labor unions that were being formed across the country. The program prohibited any labor union that was formed by employees in management positions rather than actual workers. It also banned any company from preventing workers from forming unions by threatenting unemployment or blacklisting.
The Public Utilities Holding Company Act and the Revenue Act
Roosevelt signed the Public Utilities Holding Act in 1935. This new program made a company taking over a majority of a utility illegal, which helped ensure enough competition to keep prices more reasonable for the consumer. In 1936, the Revenue Act was passed. This new program made it possible for the U.S. government to take up to 70% of larger incomes through taxes.
The Social Security Act
The Social Security Act, passed in 1935, was a huge achievement in history. The program is basically an "old-age" insurance fund that employees contribute money to each month. It gives peace of mind to Americans who can no longer work due to their age; they have the money they had been contributing to their whole working life to use. The Social Security Act also gave insurance to unemployed people, so if a person lost their job, they could use the money during the time when they were looking for a new job. This law is still in effect today, helping millions of Americans nationwide.
The Fair Labor and Standards Act
The Fair Labor and Standards act was passed in June of 1938, and it was the "last major reform law of the New Deal". (Fitzgerald 77) This program had positive results in its major focus of helping employed Americans. Through the Fair Labor and Standards Act, a minimum wage for workers was set at 40 cents. The program also created a limit of 40 hours per week for employees nationwide. The Act also prohibited companies from hiring workers that were under the age of 16, and that an American worker that was under 18 years of age was not allowed to have any type of dangerous job.