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Roosevelt's New Deal and Its Success

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On October 24th, 1929, the great crash of the American stock market triggered an unprecedented economic crisis, which was quickly spread to the entire capitalist world. It was the deepest, longest, and the most widespread crisis in American history. At that time, the President of the United States Hoover stubbornly adhered to the laissez-faire policy, which intensified domestic contradictions and abandoned the entire society. Soon after, Franklin Roosevelt became the President of the United States. Instead of implementing the laissez-faire, he intervened comprehensively in the economic market by carrying out the New Deal to relieve the United States’ crisis between 1933 and 1939. The New Deal, which is a set of domestic programs with a series of large-scale legislations, involved almost every aspect of social and economic life. Roosevelt made revolutionary changes with his New Deal, which focus on finance, agriculture, and industry. He passed laws to relieve the depression during the First One Hundred Days. It improved the quality life of numerus Americans and made the American capitalism move towards a more mature stage of development. The implementation of the New Deal was partly successful since part of the American population, such as African Americans or Mexican Americans, did not benefit from the new deal, but it did soothe the U.S. economy and there were many people who benefited from the policies and agencies. To demonstrate the success of the New Deal, I will look at finance, then I will discuss about agriculture, industry and social welfare.

Roosevelt’s New Deal began with financial consolidation. On March 6th,1933, three days after taking office, Roosevelt declared a national banking holiday. This was the first step he took to rebuild the banking and economic structure. Then the congress passed Emergency Banking Act, which was a system of individual checks and permits for solvent Banks, and Glass-Steagall Banking Act. Thanks to these measures, bank credit was restored, and bank deposits increased by nearly $2 billion in less than a year. In the early 1930s, it was hard for the Federal Reserve to made an efficiency monetary policy. However due to the political management and negotiation, banking laws had been made major revisions. Thus, to some extent, EBA helped to set the nation’s banking system right and had a historic impact on the Federal Reserve. Overall, the act was a success. The public rebuilt its the confidence in the government’s actions and the national banking system. Since speculation and overselling stocks and bonds triggered the Wall Street Crash, FDR passed the Securities Act to encourage integrity in trading. These reforms saved the American system and promoted the normal operation of the financial system. They also provided a prerequisite for the recovery of Industry and agriculture. 

After stabilizing the collapsing banking system, Roosevelt focused on people. As Schlesinger pointed out in his article that “the depression, like the Communist offensive today, put democracy to the challenge.” During the 1930s, Roosevelt raised the bright light of the Western liberalism that the democracy had the energy, the strength, and the capacity to meet the challenge. His “alphabet agencies”, such as FERA, CCC, CWA, and PWA, helped over nine million despairing Americans in the short term. To meet the urgent needs of the unemployed, the Federal Emergency Relief Administration (FERA) directly allocated cash to the needy and provided money to fund welfare programs. CCC was also known as the Civilian Conservation Corps, which was established in 1933 during FDR. It provided three million of job position to the young men on environmental conservation projects. It is one of the most successful programs in New Deal. This program solved financial problems of numerous needy families. According to the statistic, enrolled young men sent to home more than $400,000,000 of what they earned. At the same time, it also improved the local environment and communities. The CCC planted more than three billion trees and established more than 700 national and state parks, which people can still visit nowadays. Also, the CCC fought forest fires, constructed trails and shelters, control floods, and built wildlife refuges. However, the most disadvantage of CCC was that it only benefited males, which means female cannot get benefit at all. Civil Works Administration (CWA) was also successful as it employed 4.2 million people. Together, these alphabet programs and agencies provided millions of jobs for unemployed people and improved the public building. According to the later data, the GDP climbed 2 percent, but even as output increased, the unemployment still increased 7 percent between 1933 and 1934.

To stimulate the recovery the American agriculture, FDR published some reforms to help farmers. Agricultural Adjustment Administration (AAA), which aimed at boosting agricultural prices by reducing surpluses, was his first action. In this case, farmers would benefit rather than the consumers. More than 3 million farmers joined the program and the farm income increased by more than 50 percent. It was impressive gains. Nevertheless, there were some drawbacks. First, since the AAA stressed reducing the production, crops were wasted and the livestock were killed, with millions of people were sill starving. Second, most benefits of the AAA were gained by the large farmer rather than the poor tenant farmers.Also, it was controversial that there were only seven out of hundreds of various corps could get the subsidy. So farmers continued producing, which could be hard to reduce surpluses for the government.

Rehabilitating industry was another direction that FDR emphasized. National Industrial Recovery Act (NIRA) was the core of the recovery of the U.S. industry. Public Works Administration (PWA), a long-term government agency (1933-1939), which was created to reduce unemployment by constructing public buildings under the NIRA. It created more than 70 percent of the nation’s schools, one third of its new public-health facilities, and 50 airports

However, National Recovery Administration (NRA), the other agency under NIRA, was not a success. It was supposed to the assist the labor union to fight with the corporations and eliminate unfair trade practices. But at the end, it had to shut down as big business toke advantages by sacrificing consumers and small business.

FDR also tried to make effort on social welfare. Social Security Act, which was enacted in 1935, was an example. It aimed at helping the old, the unemployed, and the disabled. One of the SSA was about the old-age insurance. It financed through deductions from the taxes paid by the workers. To some degree, it decreased the consumer purchasing power because the payment that the employees received was less. Also, it only applied to commercial’s and industrial’s workers. Thus, not all Americans can benefit from the policy. Farmers and people who were not work in the commerce and industry could not get the retirement benefit. However, Social Security program can be the most successful domestic program in U.S. history, since there are still many Americans get Social Security benefit. 

Roosevelt was elected in March 1933, which was a dark time for the United States – one-third of people unemployed, many industries paralyzed, and most of the banks shut down. However, by implementing a series of legislations, he made major changes in the nation. It helped restored the public’s confidence in financial system and the American democracy. It also provided the economic security for the majority of ordinary people in the United States and improved the living conditions of the general public. It eased the social crisis caused by the economic crisis. It is Roosevelt who lifted the nation’s spirits. More importantly, Roosevelt’s New Deal provided valuable experience on the formulation of economic and political policies in other western countries. Although Roosevelt’s New Deal could not solve all the problems caused by the economic crisis and did not directly end the great depression, it still achieved remarkable results in terms of economic recovery.

Reference List

  1. Hodges, J. (2008). New Deal. In Ely, J., Bond, B., & Wilson, C. (Ed.), The New Encyclopedia of Southern Culture: Volume 10: Law and Politics (pp. 230-232.). Retrieved from https://www.jstor.org/stable/10.5149/9781469616742_ely.82
  2. Leuchtenburg, W.(1964). The New Deal. The Review of Politics, 26(4), 572-574. Retrieved from https://www.jstor.org/stable/1405407
  3. Schlesinger, M., (1961). The Politics of Upheaval. The Virginia Quarterly Review, 37(2), 314-318. Retrieved from https://www.jstor.org/stable/26442707
  4. McSteen, M., (n.d.). Fifty Years of Social Security, Social Security History. Retrieved from https://www.ssa.gov/history/50mm2.html
  5. History. (2010). Civilian Conservation corps. Retrieved from https://www.history.com/topics/great-depression/civilian-conservation-corps
  6. Mcgrathow, J. (n.d.). the Civilian Conservation Corps Worked. Howtuffsworks. Retrieved from https://money.howstuffworks.com/economics/volunteer/organizations/civilian-conservation-corp.htm
  7. Fechner, R., (n.d.) ‘The Civilian Conservation Corps Program’, in Robert Fechner, The Annals of the American Academy of Political and Social Science, 194, 129. Retrieved from https://www.jstor.org/stable/1022150
  8. Rauch, B., (1994) “The History of the New Deal”, The American Economic Review, 35(4), p. 724. Retrieved from https://www.jstor.org/stable/1809414
  9. Burns,H., (1974) The American Banking Community and the New Deal Banking Reforms, 1933-1935’, The Wisconsin Magazine of History, 59(4), 330. Retrieved from https://www.jstor.org/stable/4635077
  10. Amadeo, K., (2019). Unemployment Rate by Year Since 1929 Compared to Inflation and GDP. The Balance. Retrieved from https://www.thebalance.com/unemployment-rate-by-year-3305506
  11. Emergency Banking Act of 1933. (2013). Retrieved from https://www.federalreservehistory.org/essays/emergency_banking_act_of_1933
  12. Ganzel, B., (2003). AAA, Agricultural Adjustment Act, LivingHistiryFarm, Retrieved from: https://livinghistoryfarm.org/farminginthe30s/water_11.html

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