Section 1

a. Explain the main features of the New Deal?

There were many features of the New Deal, but the most important feature was to create jobs and put the USA back to work. Roosevelt faced a banking crisis on the day he elected as President. To deal with it he immediately got the Emergency Banking Act passed, in order to stop the banks going bankrupt. It forced all banks to stay closed for four days. Banks which were entirely desperate on the finances were ordered to close immediately. The rest were promised that the government would support them, so the public could gain confidence in them again. He publicised this to the nations through his ‘fireside chats’ as he realised he could communicate with the others effectively through the radio. The ‘fireside chats’ kept the Americans in touch with what the government was doing, and it made the whole nations untied in facing its problems together. It worked, the banking system was saved from collapse and people took money back to the banks. Also Roosevelt wanted to bring the Wall Street Crash under control, as it had been the uncontrolled activities of dishonest financiers, who were willing to make any trick to make money out of the stock market. In 1934 he set up the Securities and Exchange Commission to control the activities of the Stock Market. Therefore the investors could have more confidence on not swindling out their money.

The Agriculture Adjustment Act was set up to help farmers, as agriculture was overproducing, which made the prices remained low, and it would be hard for the farmers to make a profit. The Adjustment Act gave the government power to destroy extra produce, and compensating them for the loss. Cotton farmers needed to plough their crop into the ground for the piglets that the government bought to slaughter. The Agricultural Adjustment Administration was established to put the act into process, and to reduce production by reaching agreement with farmers on sensible amounts to be produced in future. In this way prices could rise, and farming would recover.

The industry was helped.

Two important agencies were set up by the National Industrial Recovery Act. The Public Works Administration, it used skilled industrial workers, unemployed on large-scale building projects. And, right was given to workers to go on strict together for fair wages. This gave a massive improvement to trade unions; they could now organise in industries where they had been excluded before. The act created another agency called the National Recovery Administration too. It negotiated with industry to establish agreements on working conditions, employment evils like child labor, low pay and long hours. To put this in operation, each industry would need to agree an employment code with the government. And fair prices would be charged for goods, as the code would ensure workers wages and conditions. Permission for display the National Recovery Administration’s logo of a blue eagle was given to those employers that agreed a code. These firms were rewarded by the government to favor the employers when contracts were awarded. Roosevelt also helped the unemployed by setting up the Civilian Conservation Corps; it created jobs for unemployed young men in useful environment projects, such as fish farming, strengthening river banks, fighting forest fires. However the works the employed did were criticised as forced labour, as the pay rates were extremely low and it even had a uniform. Its members provided shelter for crops and helped to reduce soil erosion by planting approximately 200 million trees. After that the Federal Emergency Relief administration was set up to help the poor. It gave government funding to local government to provide emergency help for the poor. As in 1933 the USA’s trouble was so serious, people needed to be saved from starvation first.

To help the depressed areas, the Tennessee Valley authority was set up to renew the Tennessee Valley by constructing dams which would provide electricity and encourage industry to develop. Because the agriculture in the Tennessee Valley was seriously hit by floods, which also caused soil erosion. The available of electricity would definitely benefit people who lived there. Also the Tennessee River would become passable, and would bring trade to the area.

Home owners were helped by the Home Owners’ Loan Corporation. It was set up to prevent the home owners from losing their homes and not keep up their repayments, which caused by the Depression. If this did happen, it would be bad for the bank which would not recover its money and for the family to leave their home. The Home Owners’ Loan Corporation gave low interest home owner to cope with temporary unemployment. The Farm Credit Administration was also given similar help to farmers. The ‘ alphabet agencies’ was set up by the government to run the New Deal , as there were too many new government organizations set up to carry out the work of the New Deal such as AAA, FERA and TVA. The Beer Act of March 1933 was started, its purpose was to make legal against the sale and manufacture of beer and wines this process was finished and the prohibition was ended d when the 21st Amendment to the Constitution was approved at the end of 1933.

During 1935 The Supreme Court started to challenge the New Deal, and radical opponents were criticizing that Roosevelt did not take enough action to co-operate the poor. So Roosevelt introduced the Second New Deal, which focused more on improvements of welfare and labour right. It mainly introduced 3 new orgaisations. The works Progress Administration was introduced to find emergency short term job for unskilled workers, mostly in building projects. It managed to find work for around eight million people in its eight years of existence. Second one was the Social Security Act, which gave old age pensions, unemployment benefits, and financial support for the handicapped in order to set up a national insurance scheme in the USA. The third one was The Resettlement Administration in response to help poor farmers by giving them free equipment and settled some of the poorest on land again. Funding was held to give money to farmers for soil conservation scheme.

Overall the main feature of the New Deal was to create works for the unemployed and bring the American’s economy back by passing and setting laws and organisations.

b. Explain why Roosevelt introduced the New Deal?

In 1933 the New Deal was introduced by President Roosevelt in response to the Great Depression of the 1930s which started when the stock market crashed in 1929. The New Deal was intended to help people get back on their feet and make the economy again. He had also promised to the Americans a ‘New Deal’ too.

The Wall Street Stock market in New York crashed in October 1929. It disturbed the American economy seriously and it totally destroyed the confidence in American business. In the Great Depression thousands of people lost everything, and banks went bankrupt. Production fell, as more people had less to spend on goods, and it also meant that more unemployment. Unemployment rose rapidly, it reached up to 13 million in 1933 from 1.6 million in 1929.

On 24 October 1929 which was known as the ‘Black Thursday’ was the day that the shares and prices dropped sharply. Even prices were in free fall, the market was still surrounded by panic selling, however no one bought any. The biggest banks in the USA started to buy shares, in order to stop panic selling. Prices had recovered at the end of the day nevertheless that was not significant enough to save all people who had been ruined. Once more the prices fell rapidly, but the banks did not do anything to support the market. And Over 16 million shares were traded away. $10000 million were lost in a single day’s trading. By 1932 the average value of shares was only one-fifth of what they had been before in 1929. This made businesses hard to run, as they had no money to buy equipments, materials and pay wages. In 1929 only one million cars were sold, whereas four million cars were sold in 1929. This is because people had lost so much money in the Depression; so they now had less money to spend on goods. Therefore fewer goods were made and less factories and workers are needed, which meant unemployment had rose. And selling goods was one of the ways that businesses raise money from. Another way was by borrowing money, but borrowing money from the banks became very difficult, as the banks knew once they lend the money to the businesses, they would never able to pay it back. In any circumstances, it was usually the banks themselves that broke, eventually five thousands banks were closed in the three years, and industry shut down too. By 1932 a quarter of the working population was unemployed; further more the economy in 1933 was producing only 20 per cent of what it had been in 1929.

Although numerous of serious problems had been caused in the Depression, the previous President Hoover did not take any actions in dealing with the effects of the Crash. As he believed that the economy would soon cure by itself, like all republicans, he thought the government should not interfere the business matters. Shortly Hoover appealed to understand that the USA was facing a far more serious problem than what he thought. He asked the employers not to sack any workers or cut their pay. He set up the Reconstruction Finance Commission to give loans to businesses in trouble. It bought the extra crops in an attempt to hold the price up and it created jobs for the unemployed by encouraging the states to open public works programmes. However Hoover did not believe in them, and they were not significant enough to make any difference, even the ideas were good. In 1930 he made matters worse by agreeing with the Hawley Smooth tariff, which placed even higher taxes on imports. It led the other nationals to do the same, which made it extremely difficult for the USA to export its surplus production. This immediately pushed the rest of the world into depression too.

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It was obvious the USA was not a good state when the first day that the Wall Street Stock market crashed, families lost their homes, or were split up when parents left to search for work and unemployed were relied on charity. Unemployed were queuing for handouts of food every single day. Destitute people were wandered around looking for food and work. The city of Philadelphia had cut relief funds to 50000 families, as money to help the poor were running out in 1932.

Roosevelt introduced the New Deal because of the huge numbers of unemployment and ...

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