The effects of the policies of the New Deal can still be felt today. The New Deal may not have ended the depression of the thirties but they were the foundation for many of the policies in place today that help Americans survive during tough times. The twenties had been characterized as the prosperous twenties, a time when employment trade and family income were at all time highs. America had made the transition from an agricultural state to a industrial state. Mass production and the assembly line had revolutionized production and there was plenty for all.
Big business not only boomed in America but also abroad. Government had started to play a role in peoples lives as never before. There were however problems, even though Americans prospered as never before there was still a division of wealth that government refused to deal with. It was said that one percent of the population owned over 60 percent of the countries wealth. Employees wages rose slower than profits from the goods they produced, and owners continued to produce more goods ignoring this fact. Farmers who had never recovered from the war time recession continued to have little purchasing power, and their annual income continued to fall.
Although factory workers income rose during the twenties unemployment continued to be high, mass production allowed employers to produce more with fewer workers. There were no federal programs like unemployment or welfare assistance to aid unemployed workers therefor poverty rose and peoples purchasing power fell. Another problem was foreign economic lending that had taken place during W.W.I America had become the primary lender to the allies, and after the war many were unable to pay their debts especially Germany. In order for nations in debt to profit they had to export more than they were importing, and the creditor had to import more than they were exporting, this was not the case with America.
They continually had trade surpluses with their European allies. They also imposed high tariffs to protect their industry and make it impossible to have equal exchange with its allies. The other thing the government did was continue to make loans, and encourage private lenders to make loans to foreign businesses so they could pay their debts, and buy American goods. This didn’t make sense to me, it seemed that we would be getting paid with our own money. As times got hard lenders refused to make loans, and demanded payment on loans they had already made. This forced many foreign companies to go into default.
The purchase of American goods stopped, causing many American businesses that relied on foreign purchases to suffer. Farmers suffered the most. As things continued to decline in America and over seas it was evident that the time of prosperity was over. Economic instability had started to affect the stock market.
The market continued to ignore the failing economy. Stock prices continued to soar, and business leaders forecast a rapid recovery. On October 2, 1929 millions of shares of common stock went up for sale this made brokers nervous, the market lost over four billion that day. No one knows what sparked this mass sell of stock the economy seemed stable and there was no shortage of investment funds. The market continued to go up and down until October 24 “black Thursday” prices fell and didn’t recover.
This would prove fatal. The stock market crash in October 1929 marked the beginning of The Great Depression, a difficult economic period for the United States and other countries. Unemployment increased and the economic security of many people was threatened. Farmers lost their land, homeowners their homes, and workers their jobs. In the years following the stock market crash, thousands of banks closed and many Americans lost their savings.
The republicans failed to recognize the causes of the depression and failed miserably trying to end the depression. Hoover had been a popular president and his candidacy had been considered successful. The depression would take its tole on him and the Republican Party, the American People would be looking for a change. The country had fallen into deep depression, and America put its hops of recovery on one man, the 32nd President, Franklin D Roosevelt; and his promise of a new deal. Born at Hyde Park, New York, on January 30, 1882, he was the only child of James Roosevelt and Sara Delano Roosevelt. His father, a semi-retired railway executive, was a cousin of Theodore Roosevelt, the 26th president of the U.S.A.A handsome youth, he was an excellent athlete, expert at boating and swimming, and he also collected stamps, birds, and ship modelshobbies that he pursued all his life. His formal education began at the Groton School in Massachusetts, where the headmaster, Endicott Peabody, stressed to his affluent young students their obligation toward those who were less fortunate in society.
After graduation from Harvard University in 1904, Roosevelt attended Columbia University Law School without taking a degree and was admitted to the New York State bar in 1907. In 1905, he married a distant cousin, Eleanor Roosevelt, President Theodore Roosevelt gave the bride away. Franklin Roosevelt’s political career began with his election to the New York State Senate as a Democrat in 1910. He quickly gained attention as the leader of an upstate coalition that fought the influence of New York City’s Democratic machine. James M. Cox of Ohio, the party’s 1920 nominee for the presidency, chose Roosevelt as his running mate because of his family name, but the Cox-Roosevelt ticket proved to be no match for the Republicans under Warren G. Harding. Roosevelt faced the greatest personal crisis of his life when he was stricken by polio at his Canadian summer home on Campo Bello Island, New Brunswick, in 1921.
He hid his deep physical agony with a cheerful demeanor. After coming to terms with his physical limitations Roosevelt resumed his political career. He was encouraged to run for governor of New York. During two terms as governor of New York (1929-1933), Roosevelt established a reputation as a reforming progressive in the Theodore Roosevelt tradition and as a champion of relief for impoverished upstate farmers. Later Roosevelt would blame the farm depression as the root cause of the great depression. With the aid of a progressive Democratic coalition in 1932, Roosevelt won the party’s presidential nomination, then easily defeated Hoover in the national election.
Roosevelt campaigned on promises to bring America out of the depression that it had fell into. It was termed “The New Deal” for the American people. In his first inaugural address he declared: Congress shall fail to take these courses and in the event that the national emergencyis still critical I shall not evade the clear course or duty that will then confrontme. I shall ask the Congress for the one remaining instrument to meet the crisisbroadexecutive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact to be invaded by a foreign foe”. Almost immediately after taking office, Roosevelt called on Congress to convene and began what would be known as the Hundred Days, which lasted until June 16, 1933. (All presidents that followed Roosevelt would be judged on their first one hundred days.) On March 6 Roosevelt called a nationwide bank holiday, and on March 9, Congress passed the Emergency Banking Act, which provided for federal bank inspections.
In the summer of 1933, the Glass-Steagle Act set much more stringent rules for banks and provided insurance for depositors through the newly formed Federal Deposit Insurance Corporation. These acts helped to restore confidence in banks after widespread failure. People started to trust the banks again and started to deposit their money into banks as they once had. Two acts, one in 1933 and one in 1934, mandated detailed regulations for the securities market, enforced by the new Securities and Exchange Commission (SEC). Several bills provided mortgage relief for farmers and homeowners and offered loan guarantees for home purchasers through the Federal Housing Administration.
The Federal Emergency Relief Administration which was headed by Harry Hopkins, a social worker appointed by Roosevelt, expanded existing relief grants to the states and resulted in assistance for more than 20 million people. These policies provided much needed financial assistance for many Americans and helped many hold on to their homes that they had defaulted on or were in danger of defaulting on. The SEC required most issuers of securities making public offerings in interstate commerce to make known in a prospectus all pertinent facts concerning those offerings. The commission also monitors trading in securities on exchanges and in over-the-counter markets, including short selling and options trading, and regulates the activities of brokers, dealers, and others in the securities business.
The Civilian Conservation Corps (CCC) provided work relief for thousands of young men under a type of military discipline. The CCC provided for the enrollment of unemployed and unmarried men between the ages of 17 and 23 who were U.S. citizens. Members received a base pay of $30 per month and lived in work camps that were generally operated by the Department of War.
The agency employed about 3 million men they worked on projects such as reforestation, construction of fire-observation towers, laying of telephone lines, and development of state parks. The program was to only last as long as the country was in a depression. Congress next established the Tennessee Valley Authority (TVA) to develop the Tennessee River in the interest of navigation and flood control and to provide electric power to a wide area of the southeastern United States. One of the more important and controversial acts of the new deal was the Agriculture Adjustment Act this provided several mechanisms to help raise agricultural prices, but the one most extensively used provided for government payments to farmers who destroyed or did not grow surplus crops. At a time when many Americans didn’t know where there next meal was coming from, the government was paying farmers to destroy food or just not produce food. After much criticism this act was found unconstitutional. Another policy of the new deal was The National Recovery Act. This encouraged management and labor to establish codes of fair competition within industry.
The most important part of this plan was section 7a. This gave labor the right to bargain collectively. This policy also said that employers must pay minimum wage and put a roof on maximum working hours per week. This bill would later be declared unconstitutional by the supreme court, which said that the president was taking to much legislative power. Another attempt by Roosevelt to stimulate employment during the depression was the National Industrial Recovery Act (NIRA) this was a innovative New Deal measure.
It provided for two major recovery programs to assist the nation’s economic recovery. The act authorized an expenditure of $3.3 billion for an expansion of public works. Roosevelt established a new Public Works Administration (PWA) and appointed Secretary of Commerce Harold Ickes as its head.To ensure orderly and fair competition in business, the act authorized the president to set up a National Recovery Administration (NRA) to draft a set of codes for each of more than 500 industries. The problems with these plans was that there was no way to make sure that all businesses were abiding by the rules of the two administrations. The plans did little to stimulate employment and later the supreme court said the codes of the NRA were unconstitutional.
The hopes of 1933 for early recovery proved illusory. Many of the hastily drafted early bills were declared unconstitutional by the Supreme Court. These reverses, plus increasingly political opposition to Roosevelt, triggered a second flood of legislation, beginning in 1935, which some observers called the Second New Deal. The second New Deal would consist of higher taxes on the rich, regulation of public utilities , and subsidies to those living in rural areas so they could get telephone and electric. The National Labor Relations Act of 1935 gave federal protection to the bargaining process for workers and established a set of fair employment standards.
The National Labor Relations Act, also known as the Wagner Act for its sponsor, Robert Wagner, guaranteed workers the right to organize and bargain through unions. Prior to this the government was anti union. These acts signaled governments change of philosophy. This allowed people to openly chose who would represent them in labor negotiations. This led to a rise in the number of organized workers in America.
The Fair Labor Standards Act of 1938, was the last major domestic program launched by the Roosevelt administration, it mandated maximum hours and minimum wages for most categories of workers. Perhaps of greatest enduring significance, Congress in 1935 enacted the Social Security Act, which contained three major programs a retirement fund, unemployment insurance, and welfare grants for local distribution (including aid for dependent children). These programs, coupled with a new subsidized public housing program, began what some now refer to as a welfare state. The New Deal didn’t end the depression but it provided a strong governmental intervention, that would eventually lead to recovery.
A lot of the legislation put into effect by Roosevelt administration failed or didn’t have the affect that was hoped. I have always been a believer that the only way to recovery is to stimulate the economy through war and not policy. The New Deal changed the relationship between the government and the people of the United States. In addition to increasing the involvement of the government in people’s lives, the New Deal created a number of agencies that still exist today. If not for Roosevelt’s vision we may not have social security, pension plans, the FDIC or welfare and unemployment relief. Many criticize these plans but for many Americans during the depression and today these policies have given them a way to hold on for a better day.
