FDR's New Deal

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Steve Hajiyianni  pg         Sunday, 6 September 2009

New Deal Coursework

  • Why Did Roosevelt Introduce The New Deal?

The Wall Street crash of 1929 started the devastating economic downturn in the United States that was to become the Great Depression. It escalated when people began to panic and pull all their money out of the banks. Due to this, by 1933, 11,000 of the US’ 25,000 banks had failed. This widespread loss of confidence in the economy made people reluctant to spend their money, which caused businesses to either fail or cut back on their workforce. The decline in demand for labour was the initial cause of high unemployment, which reached unprecedented heights throughout the decade with 13 million people becoming unemployed. In 1933, 25% of all workers were unemployed. Homelessness also increased vastly due to unemployment, which led to the coining of the term ‘Hoovervilles’ as a name for the towns of cardboard boxes built and inhabited by homeless men, named after president Herbert Hoover.

It had been made clear that the downward economical spiral was not going to resolve itself, and would only get worse if something wasn’t done to combat it. President Hoover had previously held a ‘Laissez Faire’ attitude, meaning that he believed too much government coercion would have negative effects on the state of things and they should be therefore left alone. However, in an effort to boost the American economy, the Smoot-Hawley Tariff Act was approved in 1930. This act raised taxes on products that had been imported from other countries in order to encourage people to buy American-made products. Instead, it caused other countries to raise taxes on products exported from America in retaliation, which ended up having negative effects on the global economy. Hoover believed the solution lay in volunteerism, “I am willing to pledge myself that if the time should ever come that the voluntary agencies of the country together with the local and state governments are unable to find resources with which to prevent hunger and suffering ... I will ask the aid of every resource of the Federal Government.... I have the faith in the American people that such a day will not come.” This quote portrays Hoover’s reluctance to involve the government too heavily in aiding the situation and it was this attitude that ultimately led to the American people losing faith in him.

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By the time President Roosevelt was elected in 1933, he had seen from Hoover that inaction would get him nowhere in solving the problem or earning the respect of the American public. His hands-on attitude to politics was displayed during his period as Governor of New York State when he spent $20 million of tax money on helping the unemployed. This was the first time tax money had been used in this way and it showed people that he had the right idea about how to deal with the situation. As a reform governor, he established a number of ...

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