How effective was the New Deal in tackling the economic problems of the 1930's?
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Introduction
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. ...read more.
Middle
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. After this early work Roosevelt pushed through a mass of New Deal legislation at a very quick pace in since what has become known as the 'Hundred Days'. The banks crisis was over, but unemployment was still at the chronic level of over thirteen million, and millions of farm and home owners were in debt. The administration created two organisations to solve the problem, the Farm Credit Administration (FCA) and then passed the Home Owner's Loan Act to provide the same service to city dwellers through the Home Owner's Loan Corporation. Both these actions helped to slow down the rate of foreclosures and helped to strengthen the banking system, so both of these responses can be seen as effective work upon the economy. To tackle the chronic unemployment the administration set up the Civilian Conservation Corps. ...read more.
Conclusion
The NRA was finally killed off in 1935 by the Supreme Court who ruled that it was unconstitutional. At the time the NRA was generally considered to be a failure, but in retrospect it seem a shrewd piece of legislation. The NRA did help businesses on the road to recovery, businesses became stronger and this was a good thing for the economy. One area where the New Deal reforms were sadly lacking was in the area of trade. The New Deal never had a coherent overseas trade policy. FDR over-looked Americas obligations to look after other, smaller nations financial problems, he was only interested in the U.S. In conclusion the New Deal was partially successful in recovering America from its economic problems it suffered after the Wall Street crash of 1929. I say only partially because, America's economic growth at the end of Roosevelt's first administration was not brilliant, but it was in a far healthier position than in 1933. ...read more.
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