*Relieve suffering (e.g. help the unemployed).
*Reform (i.e. create a fairer society)
THE NEW DEAL
Roosevelt said that people ‘wanted action, and action now’. In the first 100 days of his presidency Roosevelt took more action to end the depression than Hoover had ever done. Roosevelt first passed some Emergency Measures to stabilise the situation. Roosevelt used the radio to tell the Americans what he was doing. He called these broadcasts ‘fireside chats’. By using this term he hoped that Americans would think he was talking to them directly, addressing their individual problems. Roosevelt wanted to be seen as one of the people, understanding their needs. In this way he hoped to reassure people and thus increase confidence.
1) Emergency Banking Act - All banks were closed and their accounts checked. Only those that were well managed with plenty of cash were allowed to reopen. This Act aimed to stop the panic and restore confidence in the banking system. It was successful - when the good banks reopened people did not rush to continue taking their money out.
2) Economy Act - This cut Government expenditure (e.g. on wages) so the money could be spent helping the unemployed. This Act, therefore, was designed to increase demand. (Nearly $1 billion was saved)
3) Beer Act - Making beer became legal again. This would increase demand and provide new jobs. The Government could also now collect tax money on beer sales which could be used to help the unemployed.
The creation of new jobs meant more people had more money. They would spend this money and so demand would increase. Consequently, businesses needed to employ more people and so even more people would have more money - demand would increase again etc......!
Alphabet Agencies Helping the Unemployed
Roosevelt set up FERA and the PWA. FERA had $500 million dollars to give aid to the hungry and homeless. The PWA was designed to create work for skilled unemployed industrial workers by starting public works schemes such as building roads and bridges.
FERA - FERA was meant to give the unemployed aid but the official in charge, Harry Hopkins, believed that people should not receive free benefit as it took their pride away, stopped them practicing their skills, and prevented them from doing socially useful things. Therefore, Hopkins used FERA money to set up the CWA.
CWA
Good Points: The CWA found work for 4 million people paying them up to $1 an hour for skilled jobs (40cents for unskilled workers). These jobs meant more people had more money and so demand increased. Many of the jobs were worthwhile (e.g. 40,000 schools were improved).
Problems: But the CWA had a major problem; it was actually wasting money as it cost more to set up these new jobs than it did to pay dole relief. And not all the jobs were worthwhile. Many of the CWA jobs were ‘boondoggles’ such as historians paid to research the history of the safety pin and people paid to scare pigeons away with balloons. Gradually people began to criticise Harry Hopkins for wasting money at the CWA. Finally the CWA was stopped and the 4 million people lost their jobs so reducing demand again.
WPA
Good Points: But Harry Hopkins did not give up. He set up the WPA to replace the CWA. There was all types of work and the WPA became the country’s biggest employer in 1935. It gave work to over 2 million people. WPA workers helped to build 11,000 new schools and 40,000 miles of roads.
Problems: But just like the CWA, Hopkins and the WPA were criticised for wasting money because they also created ‘boondoggle’ jobs.
PWA
Good Points: Run by Harold Ickes, the PWA was much more of a success as it did not provide ‘boondoggle’ jobs but instead built more things of lasting social benefit. The PWA built 70% of America’s schools, 35% of America’s hospitals, a sewage system for Chicago and military equipment etc....
Problems: But the PWA only provided work for those with a skill. The WPA had to help those without skills.
CCC and TVA - These two Alphabet Agencies were very popular because they created jobs and improved the environment at the same time.
CCC
Good Points: Over 300,000 young men were employed to conserve the country’s forests. Millions of trees were planted, fire look-out posts were built, and trees were treated for disease. The young men were paid $1 a day and had to send $25 of their earnings back to their families each month so they could spend it. This, in turn, would increase demand. The CCC, therefore, was both good for the environment and the economy. It was also good as it taught the young men skills.
TVA
Good Points: The TVA successfully solved America’s biggest environmental problem and created thousands of long-term jobs at the same time. The Tennessee river often flooded and so was gradually eroding the usually dry land. This made the land unfertile and farmers suffered as less food was produced. This was a major problem as such a large area was affected. The TVA built 21 dams to stop the flooding and in so doing created thousands of jobs. Many other jobs were then created as the new reservoirs behind the dams provided work (e.g. Hydro-electric plants were built to make cheap electricity - they needed workers - see your separate sheet for other details). By 1940 the Tennessee Valley was a prosperous area as so many people were in work all businesses benefited.
