Was the New Deal a Failure?
Was The New Deal a Failure?
After the Wall Street Crash in 1933 the American economy collapsed and fell into a state of depression. There were a number of problems in 1933 - all of which stemmed from the slump, which followed the Wall Street Crash. Firstly, there was no confidence in the money system, or in the banks. In total 1500 banks had been closed and 9'000'000 men and women lost their savings because the banks had collapsed. The people in America needed immediate relief. A once strong and prosperous country had been reduced to a country living in poverty and grief. The Americans were not used to this type of life style and they were not prepared for it either. The Americans needed to be rescued from the depression and they needed it immediately. Also because of the depression, millions had lost their jobs and could not find work anywhere else. In1933 there were over 12'000'000 unemployed and more than 30'000 firms had gone bankrupt. At this time, not only were the workers not doing too well; farmers were also being destroyed because the prices for products such as wheat and corn were far too low. It didn't even pay off for the farmers to shift the harvest from the fields because of the low prices. A solution was needed which would help both workingmen and farmers. Because of the disastrous consequences that the depression had, welfare schemes were needed as a backup, which would prevent and 'cushion' the effects of future depressions. In the early 1930s, America was in distress and needed urgent help. The Republican Presidents had presided over the boom of the 1920's and believed in "laissez-faire" capitalism.
The presidential campaign of 1932 was chiefly a debate over the causes and possible remedies of the great depression. Herbert Hoover, unlucky in entering the White House only eight months before the stock market crash, had struggled tirelessly to set the wheels of industry in motion again, but constrained by a traditional conception of the federal government's proper role, he could take no drastic action. His Democratic opponent, Franklin D. Roosevelt, already popular as governor of New York State during the developing crisis, argued that the depression stemmed from the American economy's underlying flaws, which had been aggravated by Republican policies during the 1920s. President Hoover replied that the American economy was fundamentally sound but had been shaken by the repercussions of a worldwide depression, whose causes could be traced back to the world war. Behind this argument lay a clear implication: Hoover preferred largely to depend on natural processes of recovery, while Roosevelt was prepared to use the federal government's authority for bold experimental remedies. The election resulted in a smashing victory for Roosevelt, who won 22,800,000 votes to Hoover's 15,700,000. In 1933 the new president Franklin Roosevelt, brought an air of confidence and optimism that quickly rallied the people to the banner of his program, known as the New Deal. "The only thing we have to fear is fear itself," the president declared in his inaugural address to the nation.
President Roosevelt tackled each of the problems through the first and second New Deals. The New Deals were a series of Acts and schemes, which Roosevelt hoped, would pull America out of the depression. Roosevelt decided to tackle the economic problems before he did anything else because he knew that a strong and reliable money system would build up confidence in the Americans, which would act as a foundation for the American economy. The main aims of Roosevelt's New Deal were firstly to revive businesses, industry and farming. Secondly to help the unemployed find jobs and in the meantime provide them with food and money.
In 1933 Roosevelt proved to the Americans that the promises he made before he was president were not just 'vote winners' because he started to help straight away. The first of Roosevelt's schemes was the '100 days'. The '100 Days' was a relief program in which Roosevelt passed 15 laws which tackled some of America's biggest problems, all within 100 days. First of all, Roosevelt introduced the Emergency Banking Act (EBA). The EBA was designed to end the banking crisis in America. All banks were closed for ten days and only those solvent were approved by the federal ...
This is a preview of the whole essay
In 1933 Roosevelt proved to the Americans that the promises he made before he was president were not just 'vote winners' because he started to help straight away. The first of Roosevelt's schemes was the '100 days'. The '100 Days' was a relief program in which Roosevelt passed 15 laws which tackled some of America's biggest problems, all within 100 days. First of all, Roosevelt introduced the Emergency Banking Act (EBA). The EBA was designed to end the banking crisis in America. All banks were closed for ten days and only those solvent were approved by the federal government and allowed to reopen. Roosevelt used the radio to talk directly to the citizens of America. On the radio Roosevelt explained his policies through a series of 'fireside' chats. He explained that he was doing something to help America and that he would need their cooperation. The public was obviously convinced that Roosevelt was on their side because when the banks reopened, many people began to reinvest their money in the reopened banks. Within the '100 Days' relief program, there was also a rapid program of legislation, which would help solve the country's problems. The other Acts within the '100 Days' were the AAA, TVA, HOLC and NIRA (these Acts/schemes will be explained later). All of these schemes were aimed to bring relief to as many people as they could and to bring the relief quickly. Unemployment was also a major problem in America in the 1930s. Firstly, there was immediate relief for the unemployed through a $500'000'000 Federal aid package. Roosevelt knew that this aid was only temporary so he introduced huge public work schemes to keep unemployment down. There were three main work schemes to provide jobs for the unemployed. The Civilian Conservation Corps (C.C.C.) set up work camps, which would provide work for the young. The type of work they had was forestry, prevention of erosion etc.
The Civilian Works Administration (C.W.A.) was a work creation programme for 4 million men. However, these jobs were of little value. The Works Progress Administration (W.P.A.) replaced the C.W.A. The W.P.A. conducted large public works. It gave jobs to about 2 million people and kept them busy on projects such as schools, roads, Dams, community schemes etc. The W.P.A. also had work for artists, actors, writers etc. The WP.A. employed people and gave them back their self-respect. All of these schemes were "pump-primers ". The government 'pumped' money into the economy, which would encourage the economy to start up again the best example to show the success of the public work schemes, is the T.V.A. (Tennessee Valley Authority). Farmland in the Tennessee Valley had become very poor because of over-cultivation, flooding and soil erosion. Only one farm in 50 had electricity and half its population of 2.5 million people was living below the poverty line. The T.V.A. was an ambitious policy intended to provide cheap electricity, stop floods, and to make the soil fertile again. Twenty dams were built to generate electricity and millions of trees planted to prevent further soil erosion. The scheme worked. By 1943, for example, 80 % of the valley farms had converted from kerosene lamps to electricity and farmers were doing better than they had ever done before. Rivers could now be controlled; there was no more soil erosion and navigation improved.
As more and more people went back to work. Roosevelt introduced Acts, which would protect workers' rights. The people were desperate for work and Roosevelt knew that some employers might try to take advantage of them. In 1933 Roosevelt introduced the N.I.R.A. (National Industrial Recovery Act). The main function for this act was to create purchasing power, which would help industry recover and stimulate employment. Within this Act the N.R.A (Nation Recovery Administration) was set up. The N.R.A. was aimed at employers and encouraged them to cut out unnecessary competition, to lay down minimum wages and maximum hours and to allow formation of unions. Employers who did follow these guidelines were awarded with a Blue Eagle Badge, which showed that they were participants. The N.I.R.A also set up the P.W.A (Progress Works Administration), which created employment in heavy construction such as dams etc. However, some employers failed to implement the N.R.A. guidelines and disappointed workers went on strikes. In 1935, the Supreme Court declared N.I.R.A. unconstitutional. However, in the same year, the government then introduced the Wagner Act, which safeguarded the right of workers to join unions. By 1939, 9 million people had joined a union.
In 1933, Roosevelt introduced the A.A.A. (Agricultural Adjustment Act). This Act was aimed to increase farmers' incomes. The A.A.A. was one of the most controversial Acts, which Roosevelt had introduced. In order to increase farmers' incomes, animals had to be killed and crops had to be ploughed and destroyed. The reason why this Act had so much opposition was because farmers had started to put the prices of food up at a time when thousands of people were starving. Also, poorer farmers didn't benefit from this Act and the drought of 1933 caused "dust bowl" effect in the Mid-West. However, the general effect of this Act was good because farmers began to regain their self-respect and confidence and they did better.
But the New Deal's cornerstone, according to Roosevelt, was the Social Security Act of 1935. Social Security created a system of insurance for the aged, unemployed and disabled based on employer and employee contributions. Many other industrialized nations had already enacted such programs. Although conservatives complained that the Social Security system went against American traditions, it was relatively conservative. Social Security was funded in large part by taxes on the earnings of current workers, with a single fixed rate for all regardless of income. Therefore it proved unpopular amongst some. However, the S.S.A. was very important because it 'cushioned' the effects of the 1938 depression. The H.O.L.C (Home Owners Loan Corporation) was set up in 1933. It was designed to help mortgage payers who were temporarily out of work. Roosevelt cared a lot for the people of America and that is why he passed so many laws in order to protect their rights and to help them when they were out of work.
After looking at all the different laws passed by Roosevelt and their general effect on the economy, I can say that Roosevelt's New Deal were successful. However not everything went as Roosevelt planned. Unemployment was down in the mid-1930s but it shot up again in 1938, which showed that Roosevelt's solution was not permanent. However, unemployment went back down in 1940 because there was a great demand for war goods due to the problems arising in Europe. Farmers were also having problems. Their prices were better but the problems such as 'dust bowls' and poor crop yields were still there. The depression returned to America in 1937/38. However, the S.S.A. was prepared for this and it 'cushioned' the effects. People did not starve and they received unemployment benefit. There were no 'Hoovervilles' like there had been previously when there was no welfare scheme to help the people.
Even though Roosevelt's New Deal had some success, it had a lot of opposition. The republicans and the rich opposed the New Deal for many reasons. They opposed the increase in the power of the federal government over the states because they thought that the individual state leaders were being forced into implementing Roosevelt's schemes. The republicans also opposed the increased presidential power and some even claimed it was dictatorship. They also opposed the increased bureaucracy. In 1932 there were 500'000 US civil servants and by 1939 there would be 920'000. Republicans claimed that Roosevelt was not a 'saviour' and that unemployment would have gone down anyway and criticised Roosevelt for high government spending. Other reasons why the rich opposed the new deal are that they were the ones who were being taxed. Enemies of Roosevelt despised him because although a rich man himself, he had chosen to help the poor and was therefore branded a 'traitor to the class'. Rich businessmen hated Roosevelt because they thought that his policies interfered too much with their businesses.
Roosevelt also had opposition from the Supreme Court. The Supreme Court was alarmed at the amount of power Roosevelt had gained and said that he was behaving like a dictator. The Supreme Court was constantly declaring Roosevelt's New Deal laws as unconstitutional. Roosevelt was not happy with this because the judges in the Supreme Court were undoing all the work he had done. Roosevelt then threatened to retire all of the judges who were over 70 hoping to replace them with younger ones (who would be more willing to agree with him). Because of this threat Roosevelt had even more opposition than before. However, the judges didn't declare any of Roosevelt's laws unconstitutional after the threat.
Not all of Roosevelt's opposition were against him because they thought that he was helping the people too much and was wasting money. Huey Long who was the senator of Louisiana, for example, was opposed to Roosevelt because he thought that Roosevelt was not doing enough to help the people. Long called for heavy taxation of the rich and in total confiscated over 5 million dollars. His 'Share our wealth' scheme, long claimed, would give each American family $6000 to spend. This would boost the economy and pull it out of the depression. His book, Ever Man A King, published in 1933, promised economic security for all. However, Huey Long was extremely unpopular with the rich and a doctor who had been ruined by Long's schemes murdered him.
Even though Roosevelt's New Deal had so much opposition, overall, it was still popular. Roosevelt aimed to please the poor and the working class and they all thought he was a saviour. His popularity was proved in the 1936 Presidential elections when he won with 61% of the votes. He was voted for again in the 1940 presidential elections. This shows that the public opinion was behind him. Roosevelt's main opposition in the presidential elections was Landan. However, he did not pose a great threat because he was 'buried' in the presidential elections. The USA certainly did benefit from some of the schemes from the New Deal. Production rose from 1933 until the war in 1941 and unemployment fell rapidly. (There was a dip in both production and unemployment in 1937, but this was only temporary). However, the government had to borrow heavily to achieve this. The real recovery of the U.S. economy came with the Second World War. Because of war production, unemployment was at it's lowest ever.
I believe that the New Deal was one of the greatest economically feats in American History and in almost no ways was it a failure. What was truly novel about the New Deal was the speed with which it accomplished what elsewhere had taken whole generations. Many of the reforms were hastily drawn and weakly administered; some actually contradicted others. During the entire New Deal period, despite its speed in decision and execution, public criticism and discussion were never interrupted or suspended; in fact, the New Deal brought to the individual citizen a sharp revival of interest in government. The New Deal established federal responsibility for the welfare of the economy and the American people. In its early stages, the New Deal began where progressivism left off and built upon the Hoover program for fighting the depression. But Roosevelt soon took the New Deal well beyond Hoover and progressivism, establishing large-scale social programs and government participation in economic activities. Despite the importance of this growth of federal responsibility, the New Deal's greatest achievement was to restore faith in American democracy at a time when many people believed that the only choice left was between communism and fascism. Its greatest failure was its inability to bring about complete economic recovery. Some economists were calling for massive deficit spending to promote recovery; and by 1937 the New Deals own experience proved that pump priming worked, whereas spending cutbacks only hurt the economy. Roosevelt remained unpersuaded and the depression lingered on until U.S. entry into World War II, which finally brought full employment.
Jonathan Baker
Page 1
