Explain why Franklin Delano Roosevelt introduced the New Deal.

Explain why Franklin Delano Roosevelt introduced the New Deal

On the 24th October and for a second time on the 29th October, share prices on Wall Street, the New York stock exchange fell significantly. This fall became known as the Wall Street Crash.

People rushed to sell shares because they realised companies were falling. By October 1929 the selling was frantic, and prices declined because people didn’t want to buy shares at high prices. Businesses collapsed and thousands of people were ruined and money had to be loaned and not repaid. This then became no better and led to the Depression which hit the USA in October 1929 and then spread to most countries in the world.

As a result of the Great Depression in 1929, USA stopped lending money abroad and called in its loans. By 1930 roughly 2000 banks collapsed as people rushed to withdraw savings. But this wasn’t all. Unemployment was rising rapidly throughout the USA and relief for the unemployed was running out. By 1932 over 12 million people were unemployed in USA. Bread lines and evictions were a common sight in most cities and hundreds of thousands roamed the country in search of food, work and shelter. This is shown in Source D of “The USA 1919 – 1941 Sources Booklet” which is a photograph, taken in 1937 of black people queuing for Government relief. This source gives the impression that the queue is extremely long and appears everlasting, as they are queuing in front of a large poster outside. Therefore showing that they are queuing from inside the Government building onto the streets.

Historians estimate that roughly 42% of Americans lived below the poverty line before the Wall Street Crash. This meaning they didn’t have the money required for essentials such as food, clothing, heating and housing. The growth in industry in the 1920s did not create many new jobs. The millions of unemployed in the USA included poor whites, although an even greater amount of Black and Hispanic people, and also other members of America’s large immigrant communities.

Statistics showed that in 1929, 1.5 million were unemployed, 5 million in 1930, 9 million in 1931, and an estimated total of 13 million unemployed in 1932. Also in crisis were the rural areas, as the farm prices collapsed. On several occasions, violence broke out as farmer’s dumped food or blocked roads to prevent the transport of food to the cities until prices increased.

However, Republican policy decided not to interfere, and subsequently did nothing to improve poverty and unemployment. The man destined to change this however was Franklin Delano Roosevelt.

In the Presidential election of 1932, Governor Franklin Delano Roosevelt of New York successfully defeated his opponent, Herbert Hoover, who was previously elected in November 1928, and readily held responsible for the Great Depression. Shantytowns built by unemployed workers on the outskirts of cities were called ‘Hooverville’s’ and the newspapers the homeless used to keep off the cold were called ‘Hoover blankets’. A famous banner carried in a demonstration of Iowa farmers read “In Hoover we trusted and now we are busted”. Hoover was thought of as a ‘do-nothing’ President, as he and most other Republicans were still unwilling to change their basic policies.

Hoover believed that the Depression was a result of problems other than the US economy, and that these problems were beyond US control. He thought that the key to recovery was confidence in the economy, and he said that businesses should be left alone to bring back prosperity.

Many people thought that the US would deteriorate into dissolution and very little faith was placed with the current policies of Hoover. The Americans needed someone to guide them through this most economically debilitating time in history, someone with a strategy.

In comparison to Hoover, his opponent, Franklin D Roosevelt could ...

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In comparison to Hoover, his opponent, Franklin D Roosevelt could not be any more different.

Hoover and the Republicans believed that the best way to get better was to let it sort itself out. The good times had arrived without Government help. They would come back the same way. People just had to be patient. “Prosperity is just around the corner” he promised. Soon there would be “a car in every garage” and a “chicken in every pot”. Another belief of Hoovers was that it wasn’t the Governments job to look after the poor and unemployed. Giving them dole money would only make them rely on the State for everything and they would never want to work again. They must depend on charity, local councils, and “rugged individualism”.

Meanwhile, Roosevelt had different ideas. During his election, Roosevelt promised the people of America a New Deal. He wasn’t entirely clear on what measures he might include. However, it was clear that he planned to use the full power of the Government to get them out of the Depression, and this is all the public really needed to know. They didn’t need details, they just wanted hope and confidence, and Roosevelt provided this.

Roosevelt won the election by a landslide. He won in all but three states. It was the worst defeat the Republicans had ever suffered. This is because the previous three American Presidents had all been Republicans and these were Harding, Coolidge and Hoover.

There are three foremost reasons why Roosevelt succeeded in getting a victory over Hoover. Firstly, he believed strongly in ‘active government’ trying to improve the lives of ordinary people instead of sharing Hoover’s beliefs of self help. Also, he had plans to spend public money on getting people back to work. However he had already begun doing this in his own state as Governor of New York. Furthermore he wasn’t afraid to ask for advice on important issues from a wide range of experts such as factory owners, union leaders or economists.

President Roosevelt organised his priorities well. These priorities were to get Americans back to work, protect their savings and property, provide relief for the sick, old and unemployed, and finally, to revive American industry and agriculture. This was called the New Deal. So Roosevelt introduced the New Deal to the people of America, “I pledge you, I pledge myself to a new deal for the American people”.

So, the New Deal was primarily introduced by Roosevelt because of the consequences of the Wall Street Crash. As a conclusion the impact of the Wall Street Crash was horrific. At least 12 million people were out of work, with a further 12,000 people being made unemployed every day, 20,000 companies had gone bankrupt, and 1616 banks had gone bankrupt. Also 1 farmer in every 20 was evicted and 23,000 people committed suicide in one year (the highest ever). Consequently after the Wall Street Crash, the rich had lost the most because they had invested the most. This was when Hoover reassured the nation that prosperity was “just around the corner”, and cut taxes to help encourage people to buy more goods. However, with hindsight, we know that the worst of the Depression was around the corner. This is because the crash had destroyed one crucial thing to the prosperity in the 1920s – confidence. In 1929, 659 banks failed, and in 1930 a further 1352 went bankrupt. Around the country a billion dollars were withdrawn from banks and put in safe deposit boxes, or stored at home. In addition, in 1931 another 2294 banks turned bankrupt. So whilst Hoover was promising that “prosperity is around the corner”, he really wasn’t aware that the worst Depression in history was actually forming around the corner.

Some Americans predicted that a crash was approaching but very few people took them seriously. Most people believed that the USA was so wealthy and so powerful that it could not possibly happen. To their surprise, they were wrong.

The crash led to a huge loss of confidence on the part of the millions of Americans who had invested on Wall Street. All over the USA people were drawing money out of banks and stored it at home.

Also though, Roosevelt was greatly influenced by a British Economist called John Maynard Keynes. Keynes’ book, “The Economic Consequences of the Peace” was published after the Treaty of Versailles in 1919. In his book Keynes argued that Governments had a duty to manage and regulate the Economy and to create stability. Furthermore, he said that failure to do this would only plunge the planet into more wars and discontent.

Roosevelt was prepared to interfere and change the most sacred ideas and to dispute with even the Supreme Court of Justice if needed to continue with his plans for the New Deal. There were so many problems in the USA that Roosevelt wanted to amend.

One of these many problems was America’s loss of confidence in the banks. The banking and credit system of the nation was in an appalling condition. With astounding promptness the nation’s banks were closed, and then reopened only if they were in credit.

In addition, as stated earlier, the situation concerning unemployment was horrendous. By 1933 roughly 13 million were unemployed. Bread lines were a common sight in most cities, with hundreds of thousands roaming the country in search of food, work and shelter. So in attempt to overcome this major problem the Civilian Conservation Corps (CCC), a program passed by Congress to bring relief to young men between the age of 18 and 25 was set up. The CCC enrolled young men in work camps across the country for approximately $30 a month. About 2 million men took part, doing several different projects. These included planting trees to prevent soil erosion and maintain national forests, abolishing stream pollution, creating fish and bird sanctuaries, and conserving coal, gas, coal, sodium and helium deposits. So this produced jobs for unemployed young men.

As an effect of the Depression very few could afford essentials and couldn’t find work. Few could afford housing and so living conditions deteriorated when numerous families crowded into small houses or apartments. The Depression had a big impact on families and caused several problems. The number of divorces decreased as couples could not afford separate houses, and others also delayed wedding plans. In fact, in order to help homeowners by providing low interest loans, a Home Owners Loan Corporation was set up in 1933. This act used federal money to pay off mortgages so homeowners didn’t lose their home.

Unemployed men felt like failures when they couldn’t support their families and lost their rank in the family when they saw their wife and children working to the point when they were too ashamed to get help or relief. Women were blamed for taking men’s jobs and in 1931, the federal of labour even authorized it. So women continued with “women’s jobs” such as nursing. But even if they were able to get a job in industry which was rarely the case, they were usually paid less than men.

Many acts and agencies attempted to help people in these situations. The Public Works Administration used federal money to build schools, roads, dams, bridges, and airports. These would be vital once the USA had recovered but in the short term, they created millions of jobs. Also the WPA was an attempt to provide work. Actors, painters, musicians, and writers were employed through the Federal Theatre Project, the Federal Art Project, and the Federal Writers Project. Furthermore the National Youth Administration gave part-time work to students and provided help for unemployed youth. The Fair Labour Standards Act of 1938 was created to cut the maximum number of hours a person could work, and also to raise the minimum wage for those who worked in inter-state trade. The act gave protection to over 13 million people. It introduced a 40 hour week and a minimum wage of 40 cents an hour. Moreover, working conditions were improved with the National NIRA by setting up codes of practices for such things as hours, wages, unfair competition and banning child labour.

Clearly, another major problem was the impact on health. Thousands went hungry, and children suffered long terms effects from a poor diet and inadequate medical care. Many unemployed people couldn’t afford basics and spent hours queuing up on streets for bread, handed out by charities or businesses. They had to resort to charity, begging and even theft to feed and care for their families.

The WPA built 77,000 bridges, 24,000 miles of sewers, 285 airports, and 664,000 miles of road, 122,000 public buildings and 11,000 schools to help neglected areas by improving the vicinity.

Many farmers in America were African American, which therefore means that blacks suffered the most as farmers were worst off during the Depressing. One reason for this is because the black American and the farmer had not benefited at all in the jazz age (the booming twenties) and therefore needed a lot of help. The Agricultural Adjustment Act (AAA) aimed to gradually increase the subsidy until farm prices reached a figure could give all farmers a guaranteed minimum income. This helped the farmers and blacks a great deal along with the Tennessee Valley Authority (TVA).

Roosevelt had to restore confidence in America and this is what he himself believed. So with hindsight and in my belief, there isn’t a simple answer to this question. However I believe the Wall Street Crash was the first disaster which resulted into the Depression, which was a rough time couple of years for everyone not only in America. Furthermore, from 1920 to 1932, the Republicans were in the Presidents seat and, as I believe, despite their successes they did the nation no help with their views of self help. Therefore Roosevelt had to overcome many problems caused throughout the previous 13 years of Harding, Coolidge, and Hoover.