After the wall street crash of 1929. USA fell in to a dark age known as the great depression (1930s). Nobody had jobs and those who did couldn't even afford food, Since all the prices were too high.Industries and businesses faced low demand for their products as people tried to save what little money they had. Banks collapsed as loan repayments went unpaid and unemployment reached unprecedented levels. All over America people were living in poverty.The laissez-faire politics of the Republican Party that had helped create the economic boom of the 1920s no longer seemed relevant. In 1932, the American people elected the Democrat, Franklin D. Roosevelt, because he promised to tackle America's many problems."I pledge you, I pledge myself, to a new deal for the American people" - Franklin D. Roosevelt
Roosevelt tried to achieve: Help the victims of the Depression. Millions of ordinary Americans faced unemployment, hunger, and poverty. Roosevelt was determined to help them. Encourage economic recovery. The Depression was a disaster for America. Roosevelt knew that he had to take action to encourage recovery, to get the nation back to work. Reform the economic system. The whole economic system would have to be altered so that there would never again be a Depression as bad as the 1930s. To achieve these objectives, Roosevelt decided that direct action and intervention by the federal government would be necessary. The days of laissez-faire, of the government doing as little as possible, were over.
The 'Alphabet' agencies, FERA, AAA, NRA, PWA, CCC, TVA These were certainly the best known aspects of the New Deal. In effect, they were new government departments set up to implement Roosevelt's policies. For example: Federal Emergency Relief Administration (FERA). This helped the poor in a number of basic ways, such as giving clothing grants and setting up soup kitchens for the poor. Agricultural Adjustment Act (AAA). This tried to help farmers by controlling farm production and stabilising prices. It was an attempt to end the over-production and falling agricultural prices that had crippled American farmers. National Recovery Administration (NRA). This tried to help industry and factory workers by increasing wages and improving hours and conditions. Public Works Administration (PWA). This created jobs by paying unemployed people to build schools, bridges and dams. This was replaced by the Works Progress Administration in 1935. Civilian Conservation Corps (CCC). Similar to the PWA, this department provided jobs to large numbers of young men in conservation schemes in the countryside. Tennessee Valley Authority (TVA). This scheme brought hydro-electric power to seven states in the Tennessee Valley, one of the worst affected areas of the country. Dams and power-plants were built, creating many jobs. In addition to this, Roosevelt's administration carried out major reforms to the American Stock Exchange and the banking system. There were two key elements in Roosevelt's plans to repair the economic damage caused by the Wall Street Crash. These were, ending the practices of cheap credit from banks and irresponsible share trading on the Stock Exchange.
Did the New Deal work? This is a serious question for historians. The United States did eventually recover from the Depression of the 1930s - but how much of this recovery was the result of the New Deal? The only thing we have to fear is fear itself.Franklin D. Roosevelt This famous remark by Roosevelt is important in any assessment of the New Deal. As the Depression gathered pace after 1929, Americans had lost confidence in their government's ability to deliver prosperity. The New Deal helped to restore that confidence. Roosevelt's public image was one of strength and assurance, of a powerful and reassuring leader.Through the New Deal measures he gave the impression of a man who was taking charge, who knew what he was doing. At the time this was immensely important. Unemployment The numbers out of work fell steadily after Roosevelt took over - from 14 million in 1933 to under 8 million by 1937. Clearly, the New Deal, through the work of the "Alphabet" agencies, did help restore confidence and help alleviate poverty.However, in 1938 unemployment increased again to more than 10 million, after Roosevelt reduced government spending. It only began to fall steeply again in 1939 when the USA began to build up its armaments in case of war. This led to huge increases in jobs in industry. Relief from poverty In its efforts to help the poor and the destitute, the New Deal had many successes. The many relief schemes provided jobs and support for millions of people. The help itself may have been fairly basic, but, at least the government was now taking responsibility for the welfare of US citizens. The days of laissez-faire were gone. Public works Under the New Deal, the country gained from public works projects - dams, roads, airfields, schools, bridges, reforestation schemes, and similar projects. These brought lasting benefits to local communities.An example was The Tennessee Valley Authority, which carried out a long-term transformation of some of the USA's most deprived areas by developing irrigation and hydro-electrical projects. The banking system American banks were regulated and properly vetted. This helped restore public confidence in them and helped place them on a more secure and stable footing - ready to support steady and sustained economic growth. Political effects The New Deal restored the confidence of the American people in their government. They retained their belief in democracy at a time when, in Europe, democracy was facing major challenges from far-right, anti-democratic politics. Effectiveness of the New Deal It could be said that Roosevelt's New Deal helped restore confidence to American companies and citizens. The New Deal identified problems, such as banking irregularities, and tried to address them. Roosevelt's public work schemes also helped to ease the burden of unemployment.Although the actual amount of success of the New Deal can be argued over, Roosevelt's measures had at least held together the economy of the USA and provided relief to the victims of the Depression. Also, while some European nations turned to extreme totalitarian political systems as a response to the Depression, Roosevelt had preserved the democratic tradition of America.Realistically, the economy of the USA only fully recovered with the outbreak of World War II. With European industry and agriculture shattered by the conflict, American factories and farmers reaped the benefits. The need to raise a US army also solved the unemployment crisis.