Explain why Roosevelt introduced the new deal
F.D Roosevelt introduced the new deal to solve the problems arising from the Wall Street Crash and the great depression. These problems were the collapse of the stock market, mass un employment and the collapse of the banks, the social effects of unemployment, the farming depression and the dust bowl.
The great depression lasted throughout the 1930’s, disaster struck first for the stock market in October 1929. The professional dealers in shares always knew the stock market would not rise up forever. Some share holders began to sell in the October believing prices were at their peek yet soon by the 21st; the prices began to plunge, leading to the Wall Street Crash on the 24th of October.
Businesses had been making a lot of money due to America expanding, surfaced roads increased from 620,000 to 1,000,000. Numbers of electronics such as televisions, tripled. More people were buying shares because American businesses seemed so profitable. The cause of this stock collapse, i.e. the Wall Street Crash, were the companies were manufacturing more goods than people had money to buy even if it was on credit and share holders were using borrowed money to buy shares. The American stock brokers increased their borrowed money by three which the share buyers were then forced to up their share prices with the money they didn’t have. By Tuesday the 29th of October the U.S stock market had collapsed completely, 16 million shares had been traded and now hardly anyone wanted to buy shares and most of them were sold at very low prices.
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This crash soon evolved, causing serious mass unemployment. The crash had made people panicky, made them uncertain about their future. So many decided to save any money they had instead of buying everything which they once did. Because no one was buying anything, the factories were making more goods than they could sell, so factory owners cut out production and laid off workers. The stocks had dropped which left the Americans penniless therefore the demands to buy goods collapsed, and the businesses were not bringing in employment for that reason increasing unemployment.
Money seemed almost non-existent, leading the head of the money i.e. the banks to collapse as well. The Crash had destroyed the one thing that was crucial to the life of the 1920’s and that was confidence and this was most displayed in the banking crisis. Even before 1930, in 1929 six hundred and fifty nine banks had failed, and as they failed the public stopped trusting them, therefore withdrew their savings. A year on, another 1500 went bankrupt. This was one of the worst failures in American history and making things worse, by 1931 escalating problems in European banks had unfortunate knock on effects to America. Billions and billions has been withdrawn from the banks, to be placed in deposit boxes or even stored at home. The money felt only secure if it was a hard currency.
Now America kept their money rather than spend it, keeping it to them selves rather than banking it, another 2294 banks went under in 1931.
By 1932 unemployment had risen to at least 10 million as more and more businesses went bankrupt. The American economy was trapped in a downhill spiral. The government’s attitude and policy was a simple laissez-faire situation. Hoover believed it was up to the private businesses to get America out of the depression. He thought the government itself could do very little to decrease the unemployment. Around 120,000 had no work for a year after the crash and in the USA probably more than 40 million were unemployed. By 193- the American communist party organised unemployment rallies though out the USA, there were no welfare states, welfare being the government giving the people money to not stay on the streets, yet this did not seem to happen anywhere. Breadlines became a common sight all over America, a man who was an unemployed worker explains; quote “one man used to earn $8000 a year, now unable to find any work at all.” The bread lines were the unemployment queues for a simple meal of bread and soup provided by the local charities or soup kitchens from the local council. With no money for rent, unemployed men and families began to build shacks where they could find unoccupied land; these were named “Hoover-villes.” Hoover-villes were cold, unheated shacks, built on any land they could find that wasn’t already occupied. Most locations were along railroad embankments or city dumps. The shacks were built from tar paper, tin, old packaging and old car bodies and in many cases only the lucky ones could find the Hoover-villes.
The farming also was seriously effected, The federal Farm Board bought large amounts of wheat and cotton to try to help farmers, but it did not buy an adequate amount, and farm prices still continued to plummet. But worst of all Hoover refused to start unemployment benefit; he had little to do with the financial disaster and did nothing. In 1932 was a Presidential election year and Roosevelt promised to start unemployment benefits Hoover refused and to set up a large government industrial project which could create new jobs.
The farmers worst hit by the disaster lived in Texas, Colorado, Oklahoma, New Mexico and Kansas and for years, farmers in these states had been over farming the land. This soon led onto the Dustbowl.
The dustbowl was the effect which struck many of the farmers within the mid-west states such as Texas, Oklahoma and so on. For years the farmers had been over farming the soil and eventually exhausted it and by grazing too many cattle they had slowly destroyed the grazing land, leaving the soil unfastened and wrecked.
Between 1933 and 1935 muscular winds swept across the massive area which was to now be known as the Dust Bowl. Scientists believe that around 850 million tons of soil just “blew away” and some farmers in the dust bowl lost all their topsoil and others found their land covered in dust dunes. Nearly 100 million acres of land was damaged. They were soon forced off the land and hundreds of thousands of people packed everything and headed off to places such as California or Nevada. Most of the migrant farmers found very little work in California a contrasted state to their own and they too ended up in the Hoover-villes. Roosevelt’s government set up the Resettlement Administration and the Farm Security Administration to try and diminish the problem. They gave money to over 700,000 families but for most it was too little or too late.
The problems Roosevelt had to solve summed up to be a few, he had to face the drowning effect the depression had on his country, the rise and big fall in the stock market, improve unemployment and decrease the figures of the homeless, bring back the banks and encourage the public to trust in them again, he also tackle the social and physical effects if depression and finally battle the dust bowl and its effects. Roosevelt had an awful lot to take care of, and it was up to him to finish it. I feel the New Deal was a political campaign tactic for Roosevelt and nothing more. If the New Deal was put forward how Roosevelt did now then it would be seen and considered as pure politics, it was seen Roosevelt had strong personal beliefs, and he felt he had a right to fight for them I think the New Deal was one of these beliefs therefore he felt he had to do something about it. He believed in an active Government to improve the lives of the public He also had a strong belief in the cliché American Dream. That meant that anyone who worked hard enough could become rich. I think this became a strong ethos that many Americans then and still do now, believed in. Roosevelt knew and had the faith that he could bring America into recovery with the New Deal and the many agencies and acts that were to be passed to solve issues raised by the depression.