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Governments in Action

The USA, 1919-1941

ROOSEVELT AND THE NEW DEAL

 What measures did Roosevelt introduce to deal with the Depression?

After the Wall Street Crash in 1929 America suffered a severe DEPRESSION. There was a slump in the economy, a fall in production and a lower standard of living. Factories, banks, offices and farms closed down, unemployment reached 12 million in 1932. Unemployment meant poverty – there was no dole to help those in need. Soup kitchens, breadlines and Hoovervilles were features of the Depression. Many Americans protested, the naming of shanty towns after President Hoover, the Bonus Army demonstration in 1932 and the protest song, ‘Brother can you spare a Dime”, all attacked the record of Hoover’s government.

In the 1932 election FRANKLIN DELANO ROOSEVELT , the DEMOCRATS candidate for President promised “a new deal for the American people.” As Governor of New York (1928-32) he had spent taxes on public works creating jobs for people. He appealed to the ‘Forgotten Man’, the unemployed, and promised to do something positive about the Depression. He promised to spend government money creating jobs, to give people wages, allowing them to buy goods gain. He called this ‘Priming the pump’, kickstarting the economy. This would help the economy to grow. Roosevelt appeared to be a man of energy and determination; he seemed prepared to take action, while President Hoover, who believed in LAISSEZ FAIRE, did not. Roosevelt was elected President in 1932. Roosevelt saw himself as the dealer in a card game, he was going to shuffle the cards and give the people a new hand to play; “I pledge you, I pledge myself, to a new deal for the American people.”

Roosevelt gathered around him an enthusiastic and determined team of advisers (the Brain’s Trust) to help him draw up his plans. Roosevelt committed himself to bringing about change and to break with the past, “The country needs….the country demands bold, persistent experimentation.” He spoke to the people on the radio, his famous FIRESIDE CHATS, explaining what he intended to do. In the first three months of office, the first 100 DAYS, Roosevelt introduced measures to deal with the following problems:

  • lack of confidence in the economy
  • unemployment
  • agriculture
  • industrial decline
  • poverty and despair

The aims of the New Deal were,

    • RELIEF to give help to the poor, hungry and homeless
    • RECOVERY To help industry to provide jobs
    • REFORM To help the old, the sick and the unemployed.

These measures were in the form of a variety of organizations and laws, known by their initials, the ALPHABET AGENCIES. They were intended to deal with the following problems.

THE BANKING CRISIS

PROBLEM People had lost confidence in the Banks and were withdrawing their savings, 1616 banks went bankrupt.

SOLUTION EMERGENCY BANK ACT

HOW IT WORKED

    • All banks were closed for four days.
    • Weak banks were given government advice and money
    • Very weak banks were closed.
    • Roosevelt spoke to the people on the radio telling them to leave their money in the bank.

UNEMPLOYMENT

PROBLEM To provide work not dole to the millions who had lost their jobs.

SOLUTIONS Several agencies were set up to provide work.

PUBLIC WORKS ADMINISTRATION (PWA)

  • It built schools, houses, courtrooms, hospitals, railways, bridges, tunnels and ports
  • It provided high quality public facilities

CIVIL WORKS ADMINISTRATION (CWA)

  • It provided emergency short term jobs
  • 4.5 million people built roads, schools and airports
  • It lasted for 1 year

WORKS PROGRESS ADMINISTRATION (WPA )

  • It employed 3 million people

CIVILIAN CONSERVATION CO (CCC)

  • Provided work for 3 million young unemployed men.
  • It paid $1 a day and board and lodge
  • It improved the environment

INDUSTRIAL RECOVERY

PROBLEM To help industry grow, to get workers and employers to co-operate, for the benefit of the community.

SOLUTION NATIONAL RECOVERY ACT (NRA)

HOW IT WORKED Industries drew up codes of conduct, dealing with wages, hours, conditions

of work and trade practices to rule out unfair competition between firms.

1935 WAGNER ACT workers were allowed to join Unions; this was resisted by the employers.

AGRICULTURE

PROBLEM Low prices and therefore low incomes for farmers due to OVERPRODUCTION. 1 in 20 Farmers had been evicted from their farms.

SOLUTION AGRICULTURAL ADJUSTMENT ACT (AAA)

HOW IT WORKED Surpluses were destroyed, farmers paid not to grow crops, Quotas were set limiting crop size. However

  • SHARECROPPERS lost out. They worked for landowners in return for a share of crops grown. Now crops were being destroyed they had no income.
  • Droughts and Dust Bowls destroyed crops but created more unemployed farm workers.
  • Prices for cops did not reach the 1929 level until 1941.

POVERTY

PROBLEMS Need to provide RELIEF for the unemployed and the homeless.

SOLUTIONS a) HOME OWNERS LOAN CORPORATION (HOLC)

    The government gave loans to the unemployed to help them keep up with their mortgage repayments.

    b) THE SOCIAL SECURITY ACT 1935

    To provide benefits for the unemployed and the retired. (Pensions).

THE TENNESSEE VALLEY AUTHORITY

This is seen as one of the most important successes of the New Deal.

PROBLEM The Tennessee Valley was a depressed area covering seven states. It suffered from soil erosion, flooding and poverty.

SOLUTION The TVA was created in 1933 to plan the economic recovery of the region.

  • Dams were built to control flooding and provide HEP.
  • New industries grew up using cheap power (Aluminium, paper and fertilizers)
  • These industries made use of the river for transport.
  • New farming methods were encouraged.

How far was the New Deal successful in ending the Depression in the USA?

DID THE NEW DEAL CURE THE DEPESSION? It was only when America entered the Second World War in 1941 that she genuinely began to recover from high unemployment, low farm prices and business stagnation. There was no economic miracle. However it did:

    • reduce unemployment
    • save millions from poverty
    • modernise public buildings and services
    • Roosevelt gave hope to millions where previously there had only been despair.

Roosevelt was criticized for increasing the power of the Federal Government at the expense of the states and of increasing the power of the President; some accused him of being a dictator and of destroying the American tradition of individual self-reliance. Roosevelt would justify the ‘interference’ by saying that desperate circumstances require desperate remedies. He could also argue that the New Deal was popular with the American people as he was re-elected in 1936 with a landslide victory. As he himself commented “Everyone is against the New Deal, except the voters.” He was the only President to serve FOUR terms in office, he was re-elected in 1936, 1940 and 1944.

Opposition to the New Deal

Not everyone thought that the New Deal was a good idea and there was intense opposition to it from some groups. Many people in America were committed to the ideas of laissez-faire, rugged individualism, minimal state interference and the American Dream

  • Big businessmen, the rich and Republicans were opposed to the increase in taxation and the increased power of the President.
  • Republicans argued that the New Deal was a waste of tax payers money. They argued the government would make people dependent on the government and undermine their willingness to work. They believed in the values of self-help individualism and LAISSEZ-FAIRE. Business men did not want the government to interfere in the running of their companies, they did like Roosevelt’s support for Trade Unions. They argued that the New Deal had gone too far
  • Extremist political groups did not believe that the New Deal went far enough. Groups such as the SHARE OUR WEALTH movement and the OLD PEOPLE’S MOVEMENT demanded more help for the poor.They argued the New Deal had not gone far enough to help the poor people.
  • The Supreme Court – this consists of Nine Judges, appointed for life. They can decide whether a law breaks the Constitution or not. They declared several New Deal laws to be unconstitutional (AAA and NRA). They argued that these measures interfered with the right of States to make their own laws. Roosevelt sought to pack the court with judges that would support him but by 1936 five of the nine judges came over to his way of thinking. These threats made Roosevelt unpopular.

World War Two

The USA did not enter the war until December 1941 but it did sell goods to Britain and France and this increased demand for American goods. The Lend-Lease policy provided Britain and France goods on credit, it helped to boost American industry and agriculture. When the USA entered the war and the economy was put on a war footing the economy was lifted out of the Depression.

Summing up the New Deal Think back to the aims of the New Deal – Did it provide Relief, Reform and Recovery?

Successes

  • Millions of jobs were created
  • Millions of people received relief, food, shelter and clothing.
  • The TVA and the Social Security Act had long lasting effects on America. It was accepted that the state should play some part in dealing with poverty.
  • Workers rights were improved.
  • Confidence was restored.
  • The USA did not fall to extremist movements like Communism or Fascism.
  • Public works programmes helped the development of industry and agriculture

Failures

  • Unemployment fell, it rose again in 1938, but it did not reach the levels before 1929 until WW2 was underway.
  • Black Americans made little progress.
  • Women made little progress and were still paid less than men.
  • The programme was not wholly supported by the American people
  • US trade did not recover.

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What is all knowledge except recorded experience, and a product of history? - Thomas Carlyle