New Deal Depression Essay, Research Paper

During the early 1930’s, most of the world fell into the worst depression in history. The United States, unfortunately was not excluded for this catastrophe.There had been others, but this depression was unique in its severity and its consequences. At the very lowest point, which was in 1933, one American workerout of every four was jobless. Not everyone was poor, .1% of the people had 34% of the money. (class notes) The bad times continued throughout the 1930’s tothe dawn of WWII. When searching for the cause of this catastrophe, an answer can be had in the nearest encyclopedia. Encyclopedia.com had this to say aboutthe cause of the depression: The severe U.S. economic crisis of the 1930s, supposedly precipitated by the 1929 stock market crash. Certain causative factors aregenerally accepted: overproduction of goods; a tariff and war-debt policy that curtailed foreign markets for American goods; and easy money policies that led tooveruse of credit [called margin] and [wild] speculation on the stock market. This opinion is a common one. There was no one to blame but ourselves. War hadtorn Europe and we just didn t spend enough to keep the world s economy going. Who was going to save us? In his inaugural address, the president said, Theonly thing we have to fear is fear itself. This was indeed his mentality throughout his presidency. His (first) New Deal is the program he used from 1933 to1939 for relief, recovery, and reform. These new policies aimed to solve the economic problems created by the depression of the 1930’s. If you werewondering, this somewhat corny name came from a speech he had given. When Roosevelt was nominated, he said, “I pledge you, I pledge myself, to a new dealfor the American people.” This New Deal included federal action of immense proportions to stimulate industrial recovery, assist victims of the Depression,guarantee minimum living standards, and to prevent future economic crises. Many economic, political, and social factors lead up to the New Deal. The statisticsof the time, such as the previously mentioned 25% unemployment rate, made it clear immediate action was necessary. In the first two years, the New Deal wasconcerned mainly with relief. The government helped the poor and jobless by setting up shelters and soup kitchens to feed the millions of unemployed. Afterthose first two years the focus shifted towards recovery. Several agencies were created to take on the task of recovery. The National Recovery Administration(NRA) was the keystone of the early new deal program launched by Roosevelt.(Nash p529) It was created in June 1933 under the terms of the NationalIndustrial Recovery Act. The NRA permitted businesses to draft “codes of fair competition,” with presidential approval that regulated prices, wages, workingconditions, and credit terms. Businesses that complied with the codes were exempted from antitrust laws, and workers were given the right to organize unions

and bargain collectively. After that victory, the government set up long-range goals. These goals aimed for permanent recovery, and reform of current abuses.The abuses receiving the most attention were those that produced the boom-or-bust catastrophe. Even though the NRA was effective, it was bringing Americacloser to socialism (or even the dreaded communism) by giving the President unconstitutional powers. This went on until 1935 when the US Supreme Courtdeclared the NRA unconstitutional. Another New Deal measure under Title II of the National Industrial Recovery Act of June 1933, the Public WorksAdministration (PWA), was designed to stimulate US industrial recovery by pumping federal funds into large-scale construction projects. (Nash, p528) The headof the PWA, Harold Ickes, exercised extreme caution in allocating funds, and this did not stimulate the rapid revival of US industry that New Dealers had hopedfor. The PWA spent a large deal of money enabling contractors to employ workers who would otherwise have been jobless. The Fair Labor Standards Act(1938) established a federal Minimum Wage, maximum-hours policy and allowed unions again (recall that the NRA is gone). This minimum wage seems meagerby today s standards at a measly 25 cents per hour. The law was intended to prevent competitive wage cutting by employers during the Depression. After the lawwas passed, wages began to rise as the economy turned to war production. This act also created the National Labor Relations Board, which arbitratedmanagement vs. worker disputes (class notes). There were many other acts and parts to the New Deal, too many to mention actually. The Depression was adevastating event in America, and by regulating banks and the stock market the New Deal eliminated the dubious financial practices that had helped precipitate theGreat Depression. However, Roosevelt’s favorite plan to fix things, deficit spending, proved to be ineffective in averting downturns in the economy. So how didthe Depression End? Encyclopedia.com says, The policies of the NEW DEAL relieved the situation, but complete recovery came only with the heavy defensespending of the 1940s. Roosevelt s New Deal helped, but what the US really needed was to make thing that make people die. Ironic how preparing to killpeople brought happiness to the USA isn t it? Works referenced in the making of this paper (In order of usefulness) Nash, Gary et Al. The American People Harper Chapter 24 Collins College PublishersNew York, New York. 1996 Wheeler, Bruce and Susan Becker. Discovering the American Past Chapter 7 Houghton Mifflin Company Boston, New York.1998 http://www.encyclopedia.com Accessed November 17,