After the continuous downward spiral following the Wall Street crash in 1929, America had hit rock bottom and went through a long depression. The New Deal came in 1933 along with Roosevelt when he was elected, and became president. The aim of The New Deal was to do whatever was needed to rescue America from its depression.
By the time Roosevelt came into power America had been in depression for almost four years and a very large amount of people had withdrawn their money from their savings accounts in banks. More and more money was being withdrawn as time went on and it was feared that soon enough, everyone would withdraw their money and all the banks would go bust and close, thus decreasing the probability that the revival of America’s economy would come any time soon.
Therefore this was acted on very quickly – after only 7 hours the banking act was passed by the congress, giving FDR new powers with which he temporarily closed the banks. As a result nobody could withdraw their money so there was some money left in the economy.
One of the main aims of The New Deal was to rebuild people’s confidence, if FDR could do this, it would help a great deal with the other aims of The New Deal.
To help society to get back up on it’s feet, the government and FDR lent out money left, right and center. Money was lent to businesses in order for them to expand and therefore be able to take on more workers who would then be earning money and so reversing the spiral effect.
The Federal Emergency Relief Administration distributed soup to those who needed it and also offered temporary accommodation to those who had nowhere to live but the streets, this, as with the banking crisis and the failing businesses, was acted on very quickly. That is one of the major pros of the New Deal: the initial relief, and the speed and efficiency with which it was conducted.
As well as all the other efforts, FDR made some very convincing and influential speeches to help bring confidence back into society, he was a good personality, and the first president to actually project a personal image upon the public, with this and his boldness, people had faith in him. He let people know that in order to rescue the country they must do their part too. By saying such strong things as “We have nothing to fear but fear itself…” people began to understand the situation a bit more and therefore their confidence gradually increased.
By 1937, America’s government debts were very, very high and by many cautious advisors FRD was given the word to stop. FDR didn’t dare go any further into debt and so he cut government spending. Almost immediately unemployment rose again. Thankfully for FDR, soon enough the Second World War blew up and saved America by creating numerous job opportunities and expanding the budget.
Many, many administrations were set up as part of The New Deal programme such as:
– Aid For Mortgages: Refinanced mortgages in order to keep people in order to keep people in their homes. 20 per cent of farm mortgages were refinanced so that the farmers were still able to work.
– Civil Works Administration: Set up to create minimum wage jobs.
– National Industrial Recovery Administration: Regulated industry by assuring workers a minimum wage, the right to form trade unions etc, by allowing companies to fix prices.
– Public Works Administration: Was set up by the NIR with $3, 300 million for major projects such as road building, slum clearance etc but was declared unconstitutional in 1935, some work was taken over by other agencies.
– Agricultural Adjustment Act: Paid farmers to reduce production of goods in order for the demand to increase and increase gross farm income. However this had some side effects, such as the eviction of thousands of black farm workers in the south.
– The Reconstruction Finance Corporation: Invested government money in Banks so that they had more credit.
– The Civilian Conservation Corps: Provided young men with 6 months work, mainly on conservation work.
All of these organisations worked together and all did their bit to help get the economy back on its feet. Some folded due to being declared unconstitutional, but their work was soon picked up by other organisations.
The New Deal took effect quickly and efficiently and at times it seemed as if FDR wasn’t planning what he was doing, but just improvising on the experiences of the previous experiment. If this was the case, it certainly seemed to work. Confidence was successfully restored into the people of America as unemployment levels declined steadily, interrupted only by the increase in 1937 due to the cuts in government funding.
However, The New Deal had many flaws, the main one being the withdrawl of government funding from the programme in 1937. On occasion it seemed that things weren’t thought out as well as they should have been. For example, the Agricultural Adjustment Act. Deliberately reducing the production of good food when there are still thousands of people starving was immoral, and eventually the act was declared unconstitutional.
The New Deal in general was very efficient and put into action very quickly. However, once it had started, everything seemed to slow down and the bad spots started to be recognised, but they were soon corrected. Roosevelt was very good with his public speeches, gaining their trust and with it an increase in their confidence. The main aim of the programme was to restore confidence, in order for people to reinvest in the economy, and over a period of around seven years this was certainly achieved successfully.