Short-term acts were set up to provide relief. This included such things as soup kitchens for the homeless that couldn’t afford basic foods. Emergency relief prevented people from starving, and jobs were provided for as many people as possible.
Another feature was the Agriculture Adjustment Act that aimed to stop farmers overproducing food. Farmers were given money to stop making food because they were producing too much (therefore driving the prices down) and nobody bought it and so all went to waste. This raised the prices and meant farmers earned more money.
Government intervention was another big feature. Roosevelt spent government money ‘priming the pump’. By doing this the government changed working hours and wages. Some people didn’t like this as they felt government had too much of a role in businesses.
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). By 1940 the Tennessee Valley was a prosperous area as so many people were in work all businesses benefited.
B. Roosevelt introduced the new deal when he came into power in March 1933 because the American economy was shattered due to the Wall Street Crash which led to the depression. The economic boom had huge effects on the public as they felt that buying shares from the stock market was an easy way to make profit. Both big and small businesses took interest and invested their spare money. In 1923, 266 million shares were sold, whereas in 1928, it rose to 1,125 million sold. Share prices became more than their real value. Prices were forced up because so many people wanted to purchase them. People were so confident with the stock market that shares were being bought without a doubt. In the late 1920s however, producers began having difficulty selling their goods, so the public began selling their shares before prices fell any lower. In October 1929, everybody wanted to sell shares, but no-one wanted to buy them. Share prices therefore fell dramatically. People, who had borrowed loans to buy shares, had to sell whatever they had left. On October 24th, 13 million shares were sold, however on 29th of October, 16 ½ million had done so. Share values fell by $40,000 million from September to December. This had huge effects on the banks. Six hundred and fifty banks went bankrupt in 1929. Many businesses that did not survive through the crash, created mass unemployment. America was in a downward spiral – as more men because unemployed, less people would buy goods, which meant more men would lose their jobs, and so on. Soon people could not pay rent, so families ended up living parkways and subways. The current president at the time, Hoover, believed in the idea of “Laissez-faire” meaning to let the economy sort its self out. He believed that ‘Prosperity was just around the corner’. However, this was not the case. The economy seemed to continuously go down with no sign of hope.
In the 1932 elections, Roosevelt was elected as the new president of the USA.
The new deal was meant to help banks, farmers, home owners, industry, unemployed and depressed areas. It was first set up to give relief to those in desperate needs, then to recover it’s business and finally to reform the economy.
These problems definitely needed attention and Roosevelt needed the New Deal to do so. Another reason for the introduction of the New Deal was because Roosevelt though of it as something that he had to prove, and he wanted to show that he cared for the economy and had put a lot of thought into rebuilding the economy. The previous president, President Hoover had given the American President role a bad name and Hoover wasn’t very popular because of his lack of interest in rebuilding the economy and was considered no help to America. Hoover had the economic system as a laissez-faire system, which was, where the government had no control over the economy, to a different system where the government did. The government’s involvement was the agencies that they formed. He introduced the Securities act which forced companies to provide information to the public. Managers who did not follow this could have been prosecuted. In 1934, the Securities and Exchange Commissions gave the government power to control activities in the stock market. This gave investors confidence in rebuilding America’s businesses.
Roosevelt had to eliminate farmers over producing food, as this lead to low selling prices. Instead Roosevelt paid the farmers to not produce as much food. The AAA (Agriculture Adjustment Act) was set up to try and reduce production in the long run which therefore raised prices that they were to be sold at.
Roosevelt helped the unemployed by setting up the CCC which provided jobs for unemployed young men. The pay was low but it carried out important projects such as fish farming and fighting forest fires. Its members planted 200 million trees which helped to reduce soil erosion. The CCC provided work for around 3 million men under the age of 25 years old.
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.
