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Why Did Roosevelt Introduce The New Deal History Essay

"In Hoover we trusted, now we are busted!" This saying is summing up the presidential election campaign of 1932. Hoover had not done a good job; he failed to deal with the Economic Depression. People were poor and now lived in Hoovervilles. Hoover had already lost the election before it had even begun because of this. The presidential election took place against the backdrop of the biggest economic depression in American History. Franklin D Roosevelt’s campaign promised the Americans “A New Deal”. The New Deal was the title given to a sequence of events and promises that Franklin D Roosevelt initiated between 1933 and 1938. Franklin D Roosevelt was a Democratic candidate who came from a privileged background; however this did not affect the way in which he understood the USA due to a polio attack in 1921. He fought Polio and this gave him the ability to relate to ordinary Americans. Roosevelt was able to beat Hoover by promising to do better than him, by introducing a new deal.

In 1929 America was a booming industrial country and the richest in the world. In June 1929 this all started to change. Factory outputs started declining due to the simple fact that everyone had the thing being produced. On September the 5th Roger Babson said, “sooner or later there will be a crash in the market”. This caused a decline in the stock market by 3%. The market however recovered rather quickly. The stock market then started to change rapidly. Speculation increased to an all time high, then days after a huge fall happened, this lead to people buying and selling for whatever they could. On Tuesday the 29th October; also known as Black Tuesday the stock market collapsed and the banks went bust. The crash did not have an immediate impact, however it did affect the speculators and they were the immediate losers. Hoover was president at the time of the Wall Street crash and depression, but he failed to solve the problem. Hoover believed in ‘rugged individualism’ and ‘laissez faire’. He thought that the government should not interfere in peoples’ lives as this would encourage them to work less hard and rely on government support more. Hoover thought that countries became prosperous because individuals had to work hard as they were responsible for their own lives. When the depression came around, he thought it would go away by itself, hence his saying, “prosperity is around the corner”. The economy however did not get better it got worse and Hoover did not help himself by not paying unemployment benefit. This made the economy worse. When Hoover finally realised the economy was not going to get better itself he started to lend money out and solve financial problems. This did not work for the simple reason he did too much too late.

The election campaign of 1932 was very one sided and Roosevelt just needed to promise to be better than Hoover. He caught the mood of voters with his New Deal promise and people were prepared to risk the change in style of government-they had nothing to loose. The people of America were given a new hope from Roosevelt. Roosevelt needed to keep his promises to America. If he did not America would keep deteriorating and it would become a poor and ruined country. The promises he made would give Americans back confidence and restore America’s economy. If he did not keep them confidence in America would drop even lower and America’s economy would become so bad it would have to be completely rebuilt and that would cost billions.

Explain the main features of the new deal

Roosevelt had promised to take immediate action after the elections. Roosevelt had three main aims, these were; relief, recovery and reform as this was to be a “New Deal” for the Americans. The New Deal was to bring back confidence and stability in banking and finance. He did this by setting up federal agencies, which are also referred to as alphabet agencies. This period when he was in office was known as the “hundred days”. The “hundred days” was the period in which Roosevelt set up the agencies whilst in office. This gave back a great deal of strength to the economy, however problems still remained. This is when Roosevelt introduced the “Second New Deal”, however this concentrated on social welfare.

Roosevelt needed to restore trust and confidence in the American people and in order to achieve this he had to give American people back their jobs. The Civil Conservation Corps, otherwise known as the CCC were set up to deal with this. They provided work for thousands, although not the best of jobs. This gave Americans back an income. The leads me onto another feature of the New Deal, "money". The CCC ensured that American people got a wager, a source of income, which meant people could buy items. This meant confidence would slowly be restored and as confidence was restored people started to take risks. Roosevelt had dealt with the confidence issue that had ruined America. However people were still not confident enough to trust the banks.

Roosevelt used a simple but effective plan for this. A huge amount of banks were effected by the depression, some of those banks were good others were bad, so Roosevelt closed the bad ones and re-opened the good ones as well as pumping money to them. Roosevelt also introduced “Fireside chats” whereby he would talk on the radio to all the Americans about the new changes to the banks and why they could now trust them. This gave the economy a huge increase of trust. Banks were reopened and people trusted them. To be completely sure that there would not be another crash, Roosevelt supervised the stock market and banks and made sure there was a limited amount of speculation. People began to deposit money into the bank and trust was regained. Roosevelt had solved many of the problems produced by the depression, however still had the industry to deal with.

The Industry was very important to America’s growth and therefore needed to be restored. Roosevelt poured money into the economy an “primed the pump” this would then mean industry would be able to keep itself going. Roosevelt also set up more alphabet agencies to deal with this. They got people jobs, which gave people an income, which meant more spending, so demand for good increased and more gods were produced. The industry were giving jobs out, which meant more spending and yet again demand for goods increased so more goods were produced again and more pay means more taxes. The government got more money from the taxes and the spiral continued, as did the up rise of the industries. People were now very confident and trusted banks.

Roosevelt had restored confidence and trust back into finance, American people and industry as well as making America more advanced. His work all links back to his three aims. His first aim was “relief”; to help people right away, which he did by taking immediate action; the 100 days. “Recovery” was the second, and this was designed to get the USA out of the depression, which he also did by reversing the spiral of depression. Finally “reform” was designed to make sure another depression did not happen which again he did by having banks and the stock market supervised with limited speculation. Roosevelt had ticked off all of these aims.

The New Deal had solved the big problems for America, however other problems still existed, and Roosevelt was put under pressure about this and formed the “Second New Deal”. The second new deal dealt with pensions for the elderly, security of the future and other features. These were, union protection programs, the Social Security Act, and programs to aid tenant farmers and migrant workers.

The New Deal had many features to it and each one helped America back to where it was before the depression. Roosevelt set himself three main aims and included in each of these aims were federal agencies that provided America with everything. The New Deal’s Main features were reform, recovery and relief. These were meant to give America immediate help, recover from the depression and stop any future depressions. The aims worked in a chain happening one after the other.

 

‘The New Deal was not a complete success’- How far do you agree with this statement?

To understand whether or not the New Deal truly was a success or not we must first learn of its successes and failures compared to a pre depression booming America. If Roosevelt’s New Deal could re-establish America to the status it was at during the boom years after such an economic decline in which over 14 million people were unemployed then surely it was a success.

Firstly, Roosevelt introduced the Emergency Banking Act which closed all the banks in the country. After 8 days of investigations, a few banks were finally opened. These banks were deemed to be safe for people to re-invest their money. Soon after over 5000 banks were officially re opened giving the American public confidence once again in their banking system proven by the re investment of over $1 billion. This was definitely a success. By from 1929 up until the New Deal was introduced the number of bank failures continued to rise, as soon as Roosevelt introduced the New Deal, the figures lowered to 0, lower than ever before. This prevented the problem from escalating further and even benefited America for the future being an improvement in comparison to the ‘booming twenties.’

Roosevelt also reformed the way the stock market used to regulate by introducing the Securities Exchange Act which regulated the Stock market ensuring that the chances of another crash were minimal, which was also a success. He also raised taxes which was questioned and criticised by many Republicans and the wealthier business men and upper class. The Republican belief was that people shouldn’t have to be taxed so highly and so the government shouldn’t really get involved. Roosevelt being a Democrat went against this as he understood that the recovery and prosperity of America was dependant on a larger middle class. This was one of his aims and also one of the reasons why he is to this day, America’s longest running president. He remembered the forgotten man, the working class.  By increasing taxes he was able to distribute the nations wealth more evenly therefore reducing poverty. By doing so he gained a great amount of support thus proving his success.

Roosevelt also helped the poor, unemployed, sick, disabled, homeless, hungry, widows and the elderly etc all through his New Deal. He introduced the Agricultural Adjustment Agency (AAA), the Civilian Conservation Corps (CCC), the Civilian Works Administration (CWA), the Public Works Administration (PWA) and the Farm Credit Administration all to help the unemployed and the agricultural industries. Each was designed to provide relief and employment. For example the AAA and the FCA were designed to help farmers. They gave out loans and advice to farmers as well as reduce the farm quotas which meant that they could get more money for their crops and even moved some farms to areas of bad land to more fertile land. The AAA also helped modernise farms increasing time and efficiency however this was not a complete success as it caused many farm workers or labourers to lose their jobs and it wasn’t able to help everyone.

The programs designed to reduce unemployment were however more successful. The peak depression figures of 14 million unemployed were almost halved to 8 million by 1936 by Roosevelt. They were designed to give people jobs so that poverty could be reduced which would mean that more people had money to spend which would then in turn create larger profits for industries and businesses causing them to expand and increase wages or employ more and more people who could then go and spend more money in a ‘Cycle of prosperity’. Roosevelt understood this and knew that this would be an easy way for America to recover and redeem its status as the richest and most powerful nation which is why he made reducing unemployment and poverty one of his priorities.

The reduction of unemployment and poverty is also linked to Roosevelt’s success in reducing the number of businesses that collapsed each year. After the implementation of the New Deal, these figures reduced to lower than those during the boom years making it a great success. The GNP figures during the boom years were over $100 billion yet the depression caused this to go down $58 billion. Roosevelt’s success in reducing unemployment and decreasing the number of businesses that collapsed was proven when by 1940, America was once producing over $100 billion.

On the other hand, despite so many successes, Roosevelt still had his critics and failures. Senator Huey Long was one of Roosevelt’s critics. He claimed that Roosevelt was simply not doing enough based on the fact that America was recovering at a slower pace than Europe. Similarly, W E Leuchtenburg claimed that Roosevelt couldn’t have been doing enough as there were still 8 million people unemployed. In contrast, many wealthy business men were completely opposed to how much Roosevelt was doing. They claimed that he had raised taxes too high.

One of Roosevelt’s biggest failures was his attempt at trying to improve relations between workers and employers. He introduced the National Recovery Administration which outlawed child labour and improved working conditions and as part of his second New Deal he introduced the Wagner Act which meant that workers had more power. This annoyed employers as they were no longer able to reduce wages and/or sack an employee for being a part of a union. This created arguments between workers and employers making it a huge failure.

This barrage of criticism, which included some from Congress, caused Roosevelt to try and please everyone which would’ve been impossible. He tried to regain some support by reducing government expenditure. This meant cutting the New Deal budget. Immediately, unemployment rose again. However, Roosevelt was very fortunate. Although he personally never did solve the unemployment problems, by 1942, America had joined the Second World War taking place in Europe between the Allies and Germany. This solved the unemployment problem as millions of men went to fight in the war. He did also face a lot of criticism for his lack of support for ethnic minorities. America was a popular place to be during its boom years creating a surge of immigrants to enter the country. The ethnicity of the people became very diverse although these minorities seemed to be separated i.e. the Polish had their area where most of them lived, same for the Russians and Mexicans, Puerto Ricans etc. Roosevelt did what he could for the ‘forgotten man’ yet ethnic minorities such especially those who were black didn’t seem to be getting any help. Even women were slightly left out, in comparison to men, although, Roosevelt did help a majority of the American people. As part of his New Deal, Roosevelt introduced the Federal Emergency Relief Administration (FERA) which invested over $500 million into employment schemes, blankets, soup kitchens etc. As well as this he introduced the Home Owners Loan Corporation (HOLC) which helped people pat their mortgages although this too couldn’t help everyone. The Social Security Act was a part of the second New Deal. It was one of the first times the government was willing to pay benefits the unemployed, the disable, sick, widows etc and it even gave pensions to the elderly which was deemed a great success. Despite all his criticisms, he did receive a lot of thank you letters and words of encouragement from the millions of people he helped.

By far one of Roosevelt’s biggest successes has to be the Tennessee Valley Authority. It covered large amounts of 6 states of America where farming was the main source of income. However, this area was prone to flooding due to the Tennessee River running through it. It was due to the floods that the area had become fairly poor, even during the boom. There were very few alternative jobs available in the area until the TVA was set up. Huge public work programs and projects were started employing millions in the area. Tennessee Valley was completely transformed and revitalised. Over 33 dams were built to protect the area from flooding by being able to control the water flow, while a 650 mile long water way was created. Soon Tennessee became the biggest producer of hydro-electric power in the whole of America providing cheap electricity for the surrounding areas.

In conclusion, I agree with the statement in saying that the New Deal was not a complete success although the level of success may vary depending on different people’s interpretations of Roosevelt’s main aims for his New Deal were to help America recover and to reform capitalism in order to prevent another crash. If we were to judge his success depending on his aims then he succeeded completely. Roosevelt did successfully manage to help the American economy recover and the reformation of capitalism also worked as another crash similar to that in 1929 hasn’t occurred to this day. He did also succeed in many other things; for example, he provided aid in the form of pensions and benefits for the poor, widows, unemployed, disabled and the elderly and he completely revitalised and improved the Tennessee Valley area whilst also bridging the economic gap between the rich and the poor by distributing money more evenly. He even managed to improve many things compared to America during the boom. For example, he reduced the number of banks and businesses that failed to an all time low. However, it is not possible for us to say that he succeeded at everything. He failed to help everyone, with many parts of America receiving very little in the form of aid and he worsened the situation between workers and employers whilst also angering many wealthy business men.

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