How effective was the New Deal in tackling the economic problems of the 1930's?
When Franklin Delano Roosevelt was elected President of the U.S.A. he promised a 'New Deal' with the American people to rescue the country from the dire state that the great depression had put it in. Before describing how effective the New Deal was in tackling the economic problems of the U.S. it is important to describe how these problems came about. The poor economic status of America in 1933 when FDR took office, were directly due to the Wall Street Crash of 1929. This stock market crash caused the collapse of many banks, industries and business's throughout the U.S. and caused a massive rise in unemployment - from 1.6 million (3% of the work force) just before the crash to 12.8 million (25% of the work force) in 1933. Tindal and Shi state that "the crash had revealed the fundamental business of the country to be unsound."1
Therefore FDR had a mammoth task to overcome these problems and place America economy on a stable footing. As soon as Roosevelt was inaugurated he faced and economic crisis, Leuchtenburg states that on the day of his inauguration "forty states had closed their banks, and banks operated on a restricted basis in the rest."2 Roosevelt set upon this task of reopening the banks with confidence and vigour, he and his team worked hard with their predecessors and less than eight days since FDR's inauguration the Emergency Banking Bill was passed through congress and the next day the banks reopened. This one small conservative (many observers that FDR would have been more radical) action had restored the American peoples faith in the banks, and the same day that the banks reopened deposits far exceeded the withdrawals. Next FDR set about balancing the budget, he did this through several measures such as cutting $400 million from payments to war veterans and cutting the pay to federal employees by $100 million: these actions were successful as Leuchtenburg states "Under the leadership of Franklin Roosevelt, the budget balancers had won a victory for orthodox finance that had not been possible under Hoover."3 Even though many historians have commented that this (the Banking Act) was not a true New Deal reform due to it's conservative nature, Brogan argues otherwise "the first piece of New Deal legislation."4 In this early period of his administration FDR also repealed prohibition, whilst not an economic measure, it was beneficial to the economy as a new area of business had opened up which had a proven market and the government would gain more revenue through the taxes involved. With the Banking Act FDR had reaffirmed confidence in the banks and had started to slow journey to economic recovery, so in this sense this New Deal legislation had proved very effective.
When Franklin Delano Roosevelt was elected President of the U.S.A. he promised a 'New Deal' with the American people to rescue the country from the dire state that the great depression had put it in. Before describing how effective the New Deal was in tackling the economic problems of the U.S. it is important to describe how these problems came about. The poor economic status of America in 1933 when FDR took office, were directly due to the Wall Street Crash of 1929. This stock market crash caused the collapse of many banks, industries and business's throughout the U.S. and caused a massive rise in unemployment - from 1.6 million (3% of the work force) just before the crash to 12.8 million (25% of the work force) in 1933. Tindal and Shi state that "the crash had revealed the fundamental business of the country to be unsound."1
Therefore FDR had a mammoth task to overcome these problems and place America economy on a stable footing. As soon as Roosevelt was inaugurated he faced and economic crisis, Leuchtenburg states that on the day of his inauguration "forty states had closed their banks, and banks operated on a restricted basis in the rest."2 Roosevelt set upon this task of reopening the banks with confidence and vigour, he and his team worked hard with their predecessors and less than eight days since FDR's inauguration the Emergency Banking Bill was passed through congress and the next day the banks reopened. This one small conservative (many observers that FDR would have been more radical) action had restored the American peoples faith in the banks, and the same day that the banks reopened deposits far exceeded the withdrawals. Next FDR set about balancing the budget, he did this through several measures such as cutting $400 million from payments to war veterans and cutting the pay to federal employees by $100 million: these actions were successful as Leuchtenburg states "Under the leadership of Franklin Roosevelt, the budget balancers had won a victory for orthodox finance that had not been possible under Hoover."3 Even though many historians have commented that this (the Banking Act) was not a true New Deal reform due to it's conservative nature, Brogan argues otherwise "the first piece of New Deal legislation."4 In this early period of his administration FDR also repealed prohibition, whilst not an economic measure, it was beneficial to the economy as a new area of business had opened up which had a proven market and the government would gain more revenue through the taxes involved. With the Banking Act FDR had reaffirmed confidence in the banks and had started to slow journey to economic recovery, so in this sense this New Deal legislation had proved very effective.
