The Great Depression

In 1932, the USA was in an economic depression. The Great Depression. President Hoover introduced the “Old Deal” to protect American industries by aiming to prevent the price of imported goods from being lower than the price of local goods. He felt it was up to individual Americans to sort out their own economic problems.

With the failure of the Old Deal, Franklin D. Roosevelt offered a “New Deal” for America. The Democratic Party nominated Roosevelt to stand for president in 1932. Being more flexible and more willing to experiment the Hoover, Roosevelt won the 1932 elections, have more the 60% of the votes.

Roosevelt’s New Deal focused on three things: Relief, Recovery and Reform. These aims were to bring relief to the poor, help the country recover to industry and agriculture, and to prevent another depression by introducing social reforms. The New Deal was not a set plan or strategy, but rather a series of improvisations and experiments to survive the depression and preserve capitalism.

During the Great Depression, many banks had failed, wiping out families savings. People had lost confidence in the banks. To restore this confidence, on his second day of office, Roosevelt declared a four-day “Banking Holiday”, where he closed all the banks in order to re-organise themselves. Congress passed the Emergency Banking Relief Act, which only allowed banks with enough money and properly managed accounts to re-open. Roosevelt explained the complexities of the banking problem to the public in his first “fire-side chat”. This restored the people’s confidence in the banks.

The Depression also made the level of unemployment sky-rocket. To fix this problem, Roosevelt launched many new agencies with the Works Progress Administration (WPA), which created four million new jobs during the 1930’s. Some of these agencies were the AAA, CCC, SEC, FERA and the SSA.

The Agricultural Adjustment Administration (AAA) made the government pay farmers not to work. This caused prices to rise and halted overproduction.
The Federal Emergency Relief Administration (FERA) gave direct relief ($) to those who needed it. The Social Securities Act (SSA) was established to provide old-age pensions for workers, survivor’s benefits for victims of industrial accidents, unemployment insurance and aid for dependent mothers and children, the blind and physically disabled. The SSA received its funds from government taxes.

Although Roosevelt was victoriously re-elected in 1936, his reform programme slowed. Factors, such as his failure to re-organise the Supreme Court to get more support for his policies, led to more opposition to government spending and taxes. This was his greatest mistake.

Some of the positive out-comes of the New Deal was that it restored optimism and hope to American’s and provided the necessary relief to many.

But, there were negative out-comes as well. Of these was that it did not really fix the depression and it left the nation with much debt. It also left people too dependent on the government.