The New Deal History in United States

Introduction

The first part of the 20th century was a hard time for many countries as they had to recover after WWI, rebuild their economies, and enter the new era characterized by numerous challenges and significant problems. This resulted in the emergence of multiple problems in all critical spheres of people’s lives, starting from the social, ending with the economic one. For the USA, the situation was even more complex because of the Great Depression that began in 1929 after a fall in stock prices[1].

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This accident significantly affected the state and its economy and preconditioned a significant deterioration of the quality of people’s lives. For this reason, there was a critical need for a new course of action to stabilize and improve the situation. President Roosevelt’s New Deal became a set of programs and regulations to bring short-term relief to the economy and help the nation to survive through the recovery from the Great Depression and restoration of the American Nation’s prosperity.

Background

The necessity of the New Deal was preconditioned by the existence of serious problems in the sphere of economy and the tendency towards the gradual worsening of the situation. From 1929 to 1933, the manufacturing output continued to decrease, which resulted in the one-third reduction that was called Great Contraction[2]. This negative process affected existing prices and triggered their blistering collapse, also causing deflation and inflation[3].

As a result of these two negative traits in the economy, the unemployment rate increased to 25% and continued to grow[4]. Finally, the work of the banking sphere was paralyzed because of the closure of banks across the country. It preconditioned the loss of all savings by depositors and the emergence of new problems in the sector[5]. The absence of governmental insurance or social programs became another factor that deteriorated the situation and preconditioned the high need for immediate actions to solve the most critical issues and improve the situation.

Banking Sector

Regarding the given situation, Roosevelt’s first major concern was the attempt to repair the banking sector and ensure that these financial institutions work appropriately. Bank runs were one of the first essential problems as numerous individuals withdrew their deposits, being afraid of the collapse[6]. It preconditioned the further deterioration of the situation and new withdrawals. To eliminate this negative trend, the President accepted the idea of a banking holiday. Trying to minimize people’s fears and panic, Roosevelt communicated with the nation via the radio, explaining the central reasons for bank runs and justifying the need for actions he introduced[7].

In such a way, all banks were closed to avoid the further deterioration of the situation and the introduction of new regulations to align their effective functioning. The Emergency Banking Act became an appropriate solution regarding the crisis as it helped to reopen sound banks and provide them with federal loans to satisfy people’s demands[8]. Small banks were also united in greater ones to empower the financial system and achieve success.

All these actions helped to stabilize the banking sphere through the minimization or elimination of fears related to the high probability of banking collapse and problems with deposits. The high level of people’s trust in the sector and their readiness to use financial institutions’ services are the fundamentals of a healthy economy[9]. Otherwise, the banking sector will suffer a serious decline and experience the inability to meet the current demands.

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Correctly realizing the situation, Roosevelt introduced the course aimed at stabilization through the explanation of its core elements to the population and mitigation of fears and risks[10]. Supported by effective legislation and financial programs, this method helped to achieve success and improve the current situation by stabilizing the sphere and promoting the image of banks, which was critical for the USA at that period of time.

Unemployment, Poverty, Economy Recovery

Another aim of the New Deal was to help the economy to recover and provide relief for the poor and the unemployed to improve the quality of their lives and find stable jobs. Realizing this situation, workers tried to resist by communicating with the government, but the atmosphere remained tense[11]. One of the first actions aimed at the improvement of the situation in the sphere of jobs was the organization of Public Works Administration (PWA), the agency focused on the creation of public works effective distribution of funds needed to create new working places for individuals who suffered from the Great Depression and problems associated with it[12].

As a result of this decision, thousands of people, including women who were previously discriminated, acquired an opportunity to work in airports, hospitals, schools, and other projects financed by the government[13]. Regarding the fact that new buildings were organized massively during those years, this method provided millions of Americans with an opportunity to improve their financial states. During Roosevelt’s rule, a number of unemployed persons were engaged in the public sector working for the improvement of landscapes, the environment, and the surrounding area[14]. It helped to find one of the possible solutions to the topical problem of unemployment.

Another step for the improvement of the state of the poor was the introduction of new regulations for rural areas where the level of poverty was extremely high. That is why the President also launched a number of programs to improve this sector, such as Resettlement Administrating, Rural Electrification, and other projects sponsored by the administration and the government; moreover, additional training for workers from these areas was introduced for them to acquire new skills and find jobs in other spheres[15].

This solution became an effective measure to struggle against further deterioration of the poor and improve the economic situation in the state. New workers helped to revitalize the economy and contribute to its slow growth. At the same time, new taxpayers provided a stable income for the budget that was critical for the creation of new projects and further improvement of the situation in the area.

In such a way, the improvement of the state of poor people and the creation of new workplaces can also be considered a step towards the rise of the economy, which suffered from the decline of production, bank runs, low incomes, and aspects associated with the Great Depression. However, significant successes in the banking and employment spheres helped to slow down the speed of recession and promote the first positive changes[16].

Moreover, the monetary reform that suspended the gold standard and forbade the export of gold helped to stabilize the currency[17]. It was decided not to guarantee the price of gold, which resulted in the revitalization in the banking sphere and further progress regarding the attempts to struggle against the Great Depression and inflation.

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Great Depression

Correctly realizing the necessity to mitigate the negative consequences of the trends mentioned above, Roosevelt’s New Deal was focused on the main areas that suffered from the Great Depression most of all. In such a way, until 1937, industrial production was raised by 25% due to the interventions in the work of the banking sphere, monetary reform, and elimination of unemployment[18]. Moreover, the program created the basis for the state’s further rise as during the years of WWII; the USA managed to overcome the negative impact of the Depression and avoid the majority of existing problems in the economy. For this reason, the plan offered by the President helped to work directly with the consequences of the Great Depression and create potent tools to stop it.

Critique

Regardless of the fact that the New Deal became a turning point in the modern history of the USA, there were still opponents of the given plan who criticized it for the too severe control of the government that was one of the essentials of the suggested set of measures. In fact, the President acquired the opportunity to interfere with the fundamental areas of the state’s functioning and introduced regulations to attain the needed progress to support particular legislation[19].

Moreover, it was compared to Nazism in Germany as Hitler faced the same problem that emerged after the Great Depression and had to act similarly; the concentration of power in the hands of the government and the President was considered a dangerous precedent[20]. At the same time, there were some failures and recessions soon after the implementation of the program, which also provided the basis for vigorous debates.

Significance

Nevertheless, analyzing the progress achieved by the New Deal and the role it played in the restoration of the USA in the period of the Great Depression. The decision to close banks and reconsider the work of the sector impacted the formation of the modern banking system in the state. At the same time, the monetary reform remains still topical as the dollar is not linked to gold which is one of the most important issues of the US economy.

Moreover, the introduction of the projects aimed at the reduction of the level of poverty and unemployment helped to generate an industrial potential that was later used by the state while struggling against Germany and supplying other states with the needed weapon, food, and equipment. That is why, regardless of the existing claims towards the nature of the program and its success, there is credible evidence showing that it was a necessary step needed to ensure the further development of the company and overcome the crisis triggered by the Depression and Recession.

Conclusion

Altogether, the Great Depression became a serious challenge to the USA and its economy. It preconditioned a collapse of the banking sector, extremely high unemployment t rates, and the emergence of negative tendencies in various industries. For this reason, there was a need for effective and severe measures to regulate the further evolution of the state. Roosevelt’s New Deal became a potent option that helped to reconsider the work of the pillars of society and economy and create the basis for further success and the state’s blistering rise during the second half of the 20th century.

Bibliography

Cousins, Norman. Wil Women Lose Their Jobs? Edited by Eric Foner. New York, NY: W. W. Norton & Company, 2016.

Hoover, Herbert, On the New Deal and Liberty. Edited by Eric Foner. New York: W. W. Norton & Company, 2016.

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Letter to Secretary of Labor Frances Perkins. Edited by Eric Foner. New York: W. W. Norton & Company, 2016.

Leuchtenburg, William. Franklin D. Roosevelt and the New Deal: 1932-1940. New York, NY: Harper Perennial.

Moser, John. The Great Depression and the New Deal: Core Documents. Ashland, OH: Ashbrook Center.

Roosevelt, Franklin. Speech to the Democratic National Convention. Edited by Eric Foner. New York: W. W. Norton & Company, 2016.

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StudyCorgi. (2021, June 12). The New Deal History in United States. Retrieved from https://studycorgi.com/the-new-deal-history-in-united-states/

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1. StudyCorgi. "The New Deal History in United States." June 12, 2021. https://studycorgi.com/the-new-deal-history-in-united-states/.


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StudyCorgi. "The New Deal History in United States." June 12, 2021. https://studycorgi.com/the-new-deal-history-in-united-states/.

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StudyCorgi. 2021. "The New Deal History in United States." June 12, 2021. https://studycorgi.com/the-new-deal-history-in-united-states/.

References

StudyCorgi. (2021) 'The New Deal History in United States'. 12 June.

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