History Essay, Research Paper

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During the 1930’s American citizens witnessed a breakdown of the Democratic and free enterprise way of life. The government saw that the free enterprise system was failing. The New Deal increased the government’s regulation and intervention and the economic system, thus temporarily abandoning the capitalism system and turning toward socialism to find the answer. The answer…the New Deal.

Socialism is usually thought of as a form of government that advocates public ownership and public control of wealth. In other words, a socialistic government wants the wealth of the nation spread out in such a way that the money is equally distributed among the country’s citizens. Socialism is in favor of tearing down the class structure and forming a classless society. In this way, it was born out of Marxism, whose founder was Karl Marx. Leaders of the Communist Party of the Soviet Union said that their country used socialism as a major step towards “building communism”. However most socialist political parties in democratic countries of the West rejected the Communist idea of socialism. Socialists prefer the government ownership of industries that are vital to a country’s welfare. These include the coal, oil, iron, and steel industries. The basic idea favored by all Socialists is the public ownership and use of property in order to extend the benefits of wealth more equally. Many economic, political, and social factor lead up to the New Deal. When staggering statistics such as 25% unemployment, and the fact that 20% of NYC school children were underweight and malnourished hit the White House, the government knew something had to be done. With the economy at on all time low people wanted change, Roosevelt’s legislative program represented a new way of government for capitalism in America. Roosevelt first used the term “new deal” when he accepted the Democratic presidential nomination in 1932. He said “I pledge you, I pledge myself, to a new deal for the American people.” When Roosevelt became President on March 4, 1933, business was at a standstill and a feeling of panic hit the nation. Roosevelt responded with a controversial policy that rocked the nation and what our nation stood for. Roosevelt’s New Deal programs aimed at three R’s-relief, recovery, and reform. The government established short-range goals that included relief and immediate recovery, especially in the first two years. They then set up long-range goals that included permanent recovery and reform of current abuses particularly those that produced the boom-or-bust catastrophe.

The Congress authorized the National Recovery Administration (NRA) in a daring attempt to simulate a nationwide comeback. This scheme was to perform immediate relief with long-range recovery and reform. It was designed to assist industry, labor, and the unemployed by setting standards for prices, wages, and hours. It also guaranteed the labor’s right to organize unions and to bargain collectively with employers through agents of their own choosing. The NRA gave the President power to regulate interstate commerce. This power was originally given to Congress. While the NRA was effective it was bringing America closer to socialism by giving the President unconstitutional powers. The Supreme Court later ruled the NRA unconstitutional.

The Federal Emergency Relief Act (FERA) was the first major effort of the new Congress to cope with the millions of adult unemployed. The main importance was immediate relief of economic disaster rather than long-range recovery. This agency was founded in 1933 to cooperate with the states in relieving hardships caused by unemployment and drought. By letting the unemployed draw unemployment payments, it moved American society towards what has been called “the Welfare State.” The goal of this program was to bring the unemployed to a higher financial level so that the working class could survive in order to become self-sufficient. This is an example of socialist thinking because socialist policy strives to insure the financial well being of all citizens.

The Depression was a major devastating factor in America. Something different was needed to pull America out of this economic disaster. Was FDR’s New Deal the thing to do it? The New Deal brought America one-step closer towards socialism. This step was temporary needed to pull the vast members of poor people out of the Depression and back on their feet, these plans had very good intentions, but for one reason or another, failed to be as effective as the legacy of the New Deal. This deal by Franklin Roosevelt won the support of the American people and brought this nation out of depression to a certain extent. This was to be the example for the other deals listed above, but none of them had the same affect as this radical new idea, which even President Roosevelt was unsure of. What helped him was that the entire country was behind him, something that the other President?s lacked. The citizens of the United States were ready for a change, and Roosevelt tried to restore confidence in his inaugural speech. In one hundred days, FDR pushed program after program through Congress to create jobs, provide relief, and get the economy going with very little resistance

World War I had turned the U.S. from a debtor nation into a creditor nation. In the aftermath of the war, the U.S. was owed more money–from both the victorious Allies and the defeated Central Powers–than it owed to foreign nations. The Republican administrations of the 1920s insisted on payments in gold bullion, but the world’s gold supply was limited and by the end of the 1920s, the United States itself controlled most of the world’s supply. Besides gold, which was increasingly in short supply, countries could pay their debts in goods and services. However, protectionism and high tariffs kept foreign goods out of the U.S. Recall that the Hawley-Smoot Act (1930) set the highest schedule of tariffs to date. This protectionism produced a negative effect on U.S. exports: if foreign countries couldn’t pay their debts, they had no money to buy American goods.