Explain why Roosevelt introduced the New Deal
There were many reasons why Roosevelt introduced the new deal, and the aims of Roosevelt in introducing this New Deal were getting Americans back to work, protecting their savings and properties, providing relief for the sick, old and unemployed, to get the American industry and agriculture back on it’s feet and to boost the self esteem and to raise the moral of the American people.
Roosevelt also wanted to change the style of the way in which Herbert Hoover was running America previously. Hoover was a Republican. The Republicans were formed in 1854 and dedicated to national rights as a result they had been a dominant power in the running of America since 1856. Coalitions of shifting interests made them modernise and become anti-state especially regarding welfare. Roosevelt however was a Democrat which were formed earlier than the Republicans and were anti-Federalist and again because of coalitions of shifting interests they gained modern support from Liberals and minorities.
In the 1920’s the US economy faced a crisis, although few people recognised that it was happening. It was a crisis of over production which basically meant that America was producing more products or goods than it could sell. The ‘boom’ had been based on selling consumer goods and this meant finding more and more people to buy goods such as fridges, telephones, vacuum cleaners etc. By the late 1920’s the market was running out of customers, and this was the beginning of the Wall Street Crash.
Even before the Wall Street Crash more than 60% of American families did not have enough money to live on. Farmers, unemployed and low-wage earners had no money to spare for consumer goods after they had fed, clothed and housed themselves and their families. The well off could not go on buying and buying as there were limits to how many of these goods they needed and US industry could not sell abroad because other countries had put tariffs on US imports.
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Even the very rich lost money on Wall Street but they could just about afford it, however the vast bulk who had gambled on Wall Street could not afford to lose this money. This had a very important and dramatic impact on the economy as these people could no longer afford to spend money and therefore were not able to buy consumer goods. Therefore as there was no buying shops went bust, and as shops went bust factories had no reason to employ people who were making products that were not being sold. Unemployment became a major issue and by 1932 this was clearly visible. 12 million people were unemployed, 12,000 people were being made unemployed every day, 20,000 companies had gone bankrupt, 1616 banks had gone bankrupt and 23,000 people committed suicide in one year, the highest ever.
AS there was no benefit for the unemployed the situation worsened and many people came to rely on charity for food and shelter. The President at the time, Herbert Hoover believed in ‘rugged individualism’ were he thought that if you were in trouble you should help yourself and not expect others to help you. Therefore he did not do a great deal of work to help the citizens of America. By 1939 the Depression was it’s worst. Hoover did not believe that the depression would last and that ‘Prosperity’ was ‘just around the corner.’ Although Hoover had these views he did do some good. Money was made available to create jobs to build things such as the Hoover dam. In 1932 he gave $300 million to the states to help the unemployed but it had little impact as the states were run by people who also believed in ‘rugged individualism.’
Many saw Hoover’s attempts as being ‘to little to late,’ and in the November 1932 election the person that had promised the American public a New Deal, Franklin Roosevelt, heavily defeated him.
Roosevelt introduced the New Deal to transform America’s economy which had been destroyed by the Wall Street Crash. The Wall Street Crash did not only have an effect on America’s economy but also on the American people’s self-esteem, however because Roosevelt was now doing something about this it gave them a great boost in confidence.
In Roosevelt’s first 100 days many new acts were introduced which were to form the foundations of the New Deal. It was designed to cover as many issues as could be imagined including social, economical and financial. The success of Roosevelt and the power of backing that he received meant that many of these acts were passed without too much scrutiny. However in the later years the Supreme Court of America deemed many of the acts unconstitutional.
On March 15th 1933 Roosevelt asked Congress to pass on ‘economy act’ which meant that everyone who worked for the government and the armed forces would take a 15% pay cut and also that government spending was cut by 25%. The money saved from this act (approximately $1 billion) could be used to finance the New Deal.
On March 20th 1933 Roosevelt asked Congress to pass the ‘beer act,’ which effectively ended Prohibition. The beer sold meant a raise in the revenue for the government from the tax of beer. It also boosted people’s moral and confidence as it allowed many Americans to have an alcoholic drink without being criminalised as they had been before simply because they wanted a drink.
The Emergency Banking Act made the inspection of every bank compulsory. If it was found to be financially stable and had plenty of money it was allowed to stay open however it if was not the bank would be closed immediately. Also the Federal Government insured people’s deposits in banks against losses caused by public panic. This helped restore the public’s confidence in the nation’s banking system.
The National Industrial Recovery Act was made up of three parts. It included the Public Works Administration (PWA) to manage public works projects, spending $7 billion and gave work to millions of people. It set up the National Recovery Administration to set up codes for employees such as hours worked, wages and outlawing child labour. 16 million workers were covered by these codes and an 8 hour week and a minimum wage of $12.50 was introduced. The third part was to allow trade unions the legal right to bargain with employers, as a result of this, members of trade unions dramatically increased.
The Agricultural Administration Act (AAA) paid farmers to limit the amount of crops they grew. The act also bought and slaughtered animals to raise the price of farm products. Between 1933 and 1937 farmer’s incomes increased by 50% but in 1936 the Supreme Court declared the AAA unconstitutional.
The Tennessee Valley Authority (TVA)s sole task was to redevelop the Tennessee Valley which included 7 states and 40,000 square miles. Hydroelectric powers stations were set up to provide electricity to many people, mainly farmers, dams were built to introduce flood control as well as soil conservation. The valley was regenerated.
Finally the Social Security Act set up the first old age pension scheme. Workers and employers had to pay into a federal pension fund. Each state was also expected to deal with unemployment insurance.
Roosevelt also set up many agencies. The Civilian Conservation Corps was set up to employ jobless single men between the ages of 18 and 25. They worked for 6 months in mountains and forests were they were taught forestry, flood control and fire prevention. Altogether nearly 3 million men took part in this scheme.
The Works Administration Act coordinated all public works schemes. It spent over $10.5 billion of federal money and employed over 3.8 million men from 1935 to 1941. By the time it came to an end it had built 77,000 bridges, 24,000 miles of sewers, 664,000 miles of road, 225 airports, 122,000 public buildings and 11,000 schools.
The Farm Credit Administration used Federal money to pay off farm creditors and save farmers from bankruptcy. Finally the Home Owners Loan Corporation again used Federal money to pay off mortgages so that people did not lose their homes.
All of the agencies and acts gave a boost of confidence to the American public as something was now being done. People were working and the economy was improving, they could now put their savings in banks without fears of losing it and plans and benefits for the sick elderly and unemployed were introduced.
To finance his new deal Roosevelt had introduced higher taxes for the richer. The rich felt like they had been betrayed but Roosevelt simply said that he would tread on the toes of the few while the majority benefited. The New Deal also faced a lot of opposition from the Supreme Court. It took a stance from a legal viewpoint and in 1935 declared the National Recovery Administration illegal. The following year it declared the Agricultural Adjustment Act illegal as well. The Supreme Court said that any attempt to help the farmers should come from state level and not Federal level. Altogether the Supreme Court declared 11 out of the 16 Alphabet Laws unconstitutional.