During and after the First World War, under the New Deal, America benefited from an economic boom which was largely due to a substantial income from the European market.
This period saw a great increase in industrial production and improvements in working conditions, as well as electricity being supplied to most of America. The boom however, was short lived and quickly followed by a depression which saw, the Wall Street crash, overproduction, mass unemployment, homelessness and, of course depression.The President at the time was Hoover, a Republican who did very little to help reverse the effects of the depression, believing instead in policies such as rugged individualism, which basically meant that the American people were on their own. In the 1932 Presidential election, a new candidate appeared with plans to turn the economy back around, offering the people a new deal to get the nation back on its feet. The American people responded to this in great numbers, and Roosevelt was successful in 42 of the 48 states, a landslide victory.This shows that a substantial proportion of the American people welcomed the idea of a new deal and whole-heartedly believed that it would be of great benefit to them.
The New Deal which Roosevelt spoke of, was the name given to the policies followed by the governments in order to deal with the depression. This New Deal can be divided into three stages; the first new deal which spanned from March 1933 to January 1935, the second New Deal which spanned from January1935 to January 1937, and the third which spanned from 1937 to 1941.Before the new deals were put into action, there was a period known at the hundred days, in which Roosevelt made his intentions clear and began to lead the way to economic victory. The first of Roosevelt’s actions during the hundred days was to end the banking crisis which stemmed from the Wall Street crash, in which over 5000 banks went bankrupt meaning that millions of people lost their life savings as well as their faith in the country.
FDR closed and surveyed every bank in America before reopening those which he believed were financially sound. In what was known as the Emergency Banking Act.This restored some of the people’s faith in the way the government was run and laid the foundations for economic recovery. Another of Roosevelt’s actions during the Hundred days was the establishment of the many “Alphabet Agencies” which were intended to each serve a different purpose, and address the need to supply relief to certain socio-economic groups.
These agencies, such as the “CCC” (Civilian Conservation Corps) and the “AAA” (Agricultural Adjustment Administration), these relief and adjustment agencies targeted particular areas greatly affected by the depression in an effort to bring them back in to the 20th century.Agencies like these continued working as a successful part of the New Deal, right up to 1942. Whilst such agencies gained great support and employed many, they also amassed opposition, especially the AAA as agriculture was one of the areas worst affected by the depression, this was one of Roosevelt’s most controversial acts. The main policies of the AAA were aimed at obtaining and maintaining a suitable market price for farm produce. In order to do this, animals had to be killed and crops had to be ploughed and destroyed so as to prevent the surpluses which had caused the bottom to fall out of the agricultural market prior to this.The reason why this Act had so much opposition was because food prices were increasing at a time when millions were living well below the poverty line and farmers could not see how wasting valuable crops would help them. Also small, labour intensive farms certainly did not benefit, especially during the drought of 1933, also known as the dust bowl effect. However, as with all things the most modern, mechanised farms did begin to prosper and display signs of economic turnaround.
Unemployment was a very major problem in America during the depression as over 25% of the population was unemployed.First, FDR ploughed $500 million into relief schemes for the homeless and unemployed, and then he created the Civilian Conservation Corps. The “CCC” set up work camps to provide jobs for the young; these jobs were involved in forestry, conservation, National parks etc. The Works Progress Administration (W. P. A. ) conducted large public works giving jobs to around 2 million people, as well as constructing roads, dams and schools. All of these schemes were “pump-primers “, meaning that the government pumped money into the economy to encourage it to “start up” again.
More people returning to work meant that there would be more money in the economy due to there being more consumers with higher buying power, which would cause a large influx of capital into the economic pump, helping to eliminate the depression. Roosevelt realised that in order for this to happen people would have to feel safe and secure at work, so he allowed trade unions and introduced acts to protect the rights of worker’s from employers who may have wished to take advantage and reap the benefit of mass unemployment through paying extremely low wages and providing no benefits for their employees.Such acts created minimum wages and maximum working hours, as well as trade unions. Businesses did not support the New Deal, and certainly did not appreciate government interference in their affairs. They were angered by the allowance of trade unions, which prevented them from exploiting their workers at a time when working conditions could have been stripped down to the bare minimum and many safety measures and expenses could have been cut.Minimum wages did not go down too well with employers either as labour could have been made incredibly cheap during the period of mass employment, but instead was maintained at its current cost or increased in order to raise the standard of living for workers, regardless of their employer’s views. The Tennessee Valley Authority (TVA) was a great nuisance for businesses, as it focused on providing government assistance and employment for those living in the poorer regions and states known as the “Upper South”. This covered seven states and over 55,000 square kilometres.
It aimed to provide employment and relief to those living in the area, and it did this through providing mass employment in “boondoggle” jobs like building dams to prevent flooding and produce electricity and helping local farms. By1945, the TVA was able to provide electricity for 75% of the farms in the area as opposed to only 2% in 1933. The Tennessee Valley Authority annoyed private businesses as it nationalised all of the major industries, meaning that private businesses were competing directly with the government.This caused a loss of custom for such private businesses, and so caused their profit levels to fall below the operational level making many local businesses bankrupt. Due to the problems businesses faced because of the TVA, a group of business leaders known as the Liberty League was formed to combat and oppose the New Deal.
To fund schemes like the CCC and the TVA, taxes were raised, however not all taxes were raised to the same level. The richer population were forced to pay far higher taxes than the rest of the population in order to obtain the amount of capital required for such economic developments.Understandably they were very annoyed with this, and many threats of opposition and violence towards the New Deal were given, but nothing serious came of it. Whilst many Americans may later have disliked and even acted against the New Deal, it is fair to say that most welcomed the New Deal, at least in the beginning, and a majority appreciated the New Deal for considerably longer, as is evident in the many re-elections of Roosevelt, who won the Presidency more times than any other.Despite some Roosevelt’s policies being unpopular, they were all effective in fulfilling their purpose and benefited the majority of the American people, even to this day, as is proven by the continuation of the Tennessee Valley Authority and the fact that there has not been another depression in America since, and America now leads the world in most areas.