The New Deal of Franklin Roosevelt - Essay Example

of the History and Political Science of the Teacher November 15, The New Deal Franklin D Roosevelt got elected as the President of the United States of America in the year 1932, running on an election campaign promising a New Deal to the citizens of the nation. There is no denying the fact that President Roosevelt lost no time in fulfilling his promise of the New Deal, once he got elected. New Deal primarily signified a series of reforms initiated by President Franklin D Roosevelt aimed at ameliorating the diabolical impact of the Great Depression on the American economy. The governments before Roosevelt believed that the people should stick with and support the state through tough and bad times. In that context Franklin D Roosevelt set a new precedent by holding that it is the state that should come to the rescue of the masses in times marred by economic downturn and the subsequent issues and difficulties, supported by his “conception of government power as a force to be utilized aggressively.”1 It goes without saying that Franklin D Roosevelt was not alone in determining the broader framework of the New Deal, but rather he was advised and supported by an array of academic scholars and liberal experts, who were referred to as the ‘brain trust’. The purpose of coming out with the New Deal was to chart out the best course of action for the nation struggling with widespread economic downturn. Hence, the first hundred days of Franklin D Roosevelt’s ascendency saw the initiation of an array of bills aimed at resuscitating the economy by reducing poverty, curtailing the rate of unemployment and to assure a speedy recovery of the economy that was down and sick. In that context it is totally true to claim that the New Deal did a lot in putting the American economy back on the track by correcting the systemic problems marring the economy and by curing the attendant flaws and anomalies. Before delving on the beneficial impacts of the New Deal on the American economy, it is utterly relevant to consider the ailments that were imminent on the American economy before the New Deal came into existence. Before the New Deal was initiated, people all across America were under the sway of a depression ridden economy and were facing a range of issues and problems. By 1929, the American economy was suffering from a state of Depression that was marked by a dearth of money in the economy and a very high rate of unemployment. The fall of the stock markets helped this state of economic downturn graduate to what is popularly known as the Great Depression. The citizens who had invested in the stock markets not only lost their investments, but also ended up being in a state of dearth and unemployment. With the loss of their investments, people found it totally impossible to pay their personal bills and bank loans. Moreover, the Great Depression also badly influenced the nation’s banks and financial institutions. With the banks closing their doors, people lost most of their savings. With the inability of the masses to invest in the economy and not being in a position to purchase goods and services, the businesses also got sick and consequently many businesses had to shut down owing to a dearth of revenue and capital. Thereby, President Franklin D Roosevelt was quiet aware of the fact that he was being elected in an economic scenario that was bleak and depressing and that the people expected him to come out with measures that could resuscitate the economy and bring the things back on the track. Hence, the New Deal contrived by the Roosevelt government was a direct response to the expectations and aspirations of the masses and it did a lot to rescue the depression ridden national economy because, “during the campaign he had preached that the Federal government would have to assume an unprecedented role in delivering relief to the destitute and stern discipline to the business community…. “ 2 It is a fact that during the Great Depression, the citizens had not only lost their faith and trust in the American economy, but were also downright cynical about the banks and financial institutions and had lost trust in the ability of the state to rescue an economy that was going down the drain. The Roosevelt administration was moved by, “the terror stricken look on the faces of the people, many of whom were hearing for the first time the bleak rumors that the last of the banks had closed that morning.”3 It was imperative for a freshly elected President to take measures that could restore the popular trust and sentiments. Hence, just after assuming the office of the President, Franklin D Roosevelt shut down all the banks in the nation and the Congress passed the Emergency Banking Act and Federal Deposit Insurance Corporation.4 These two acts were passed with the aim to resuscitate the health of the ailing banks and financial institutions and to restore the public trust and confidence.5 The Emergency Bank Act armed the state with the power to have a look into the health and condition of the banks, thereby sending the message to the masses that all was not wrong and that the government had taken the initiative to guide and cure the ailing banks in the times marked by depression and economic slowdown.6 Also, the Deposit Insurance Corporation was contrived by the government to insure the deposits that were in excess of $5,000.7 With a financial system that was almost on the verge of collapse, these measures went a long way in restoring the faith and trust of the ordinary investors in banks and financial institutions. These measures set aside the fear and apprehensions of the people moved by the belief that they were poised to lose all their money and savings if the banks collapsed. A check and analysis by the government inspectors led to the conclusion that many of the banks were not that sick and this led to the opening up of many of the banks.8 This motivated and encouraged the people to deposit their savings in the banks that consequently imbued the economy with the requisite capital and a sense of confidence and trust.9 Thereby, the New Deal was not merely about catering to the sterile economic conditions but also happened to have an undeniable human angel that aimed to resuscitate and restore the public trust in the economy. The other thing about the Great Depression was that not only the economy faced a situation of soaring unemployment rates; the private firms also lacked the capital and the trust to invest in an ailing economy. Therefore, in the absence of the private investment, it was up to the government to pump money into public works to reinvigorate and restore the economy. Roosevelt government knew that, “This Nation asked for action, and action now.”10Hence, the Federal Emergency Relief Administration was contrived that pumped in almost $5 million into the starved local relief agencies.11 The objective of this measure was to assure that the people get access to work and employment and that they do not have to rely or depend on charity.12 This program envisaged by the Roosevelt government was aimed at funding and supporting public works programs to create employment and to rest the credit crunch. Before the initiation of the New Deal, many of the relief programs were deteriorating in the absence of the requisite funds. This program revitalized these relief programs by providing them with the much needed money and help. In that context an another aspect of the New Deal that was Civil Works Administration did a lot in providing employment to the unemployed by engaging them in the construction and repair of public infrastructure like roads, bridges, parks, airports, etc.13 The Civil Works Administration employed nearly four million people and went a long way in boosting the sinking moral of the masses. It is to be noted that the Great Depression forced the closing down of many industries and businesses owing to a steep fall in the industrial prices and a shrinking ability of the people to spend money on goods and services provided by the private business. Roosevelt intended to be proactive in his approach as he said in his campaign address, “Our Vision for the future contains more than promises.”14 It cannot be denied that an industrial revival was a must for the restoration of a depression ridden economy and no government aiming to bolster the economy could chose to ignore this fact. Besides, the failing business sentiment was also causing much unemployment and poverty. Hence, the National Industrial Recovery Act was passed in 1933 to help the jobless workers and sick businesses.15 The National Industrial Recovery Act aimed to restore the declining prices, to improve working conditions in the industries and to set the minimum wages. This Act not only rested a short run fall in prices, but also rescued the falling demand by increasing the wages. Thereby, this act went a long way in resuscitating the industrial growth and creating employment. Also, the National Labor Relations Act was enacted in 1935 to address the “The inequality of bargaining power between employees … and employers.”16 The fall in the economy was also making people lose their money, assets and homes. Hence, Home Owners Loan Corporation was created that helped the middle class citizens retain their homes by refinancing their mortgages.17 This did much to boost the dwindling public sentiment and saved many people and families standing on the verge of homelessness. Yet irrespective of the wide spread measures taken by the government lying within the scope of the New Deal, there were segments of the society that were highly vulnerable, like women, aged people and families that had lost their bread winners in industrial accidents. Much needed to be done to help and rescue these sections of the society trapped in the times that were already difficult. In the light of this fact the Social Security Act was passed that extended help, aid and pensions to the unemployed workers, families of the workers lost to industrial accidents, aged people, the unemployed, blind and physically challenged people, and dependent women and children.18 Hence the Social security Act constituted the human face of the New Deal and immensely helped in restoring the public sentiment by addressing the needs of the vulnerable segments of the society. The other big factor that the New Deal aimed to address was to initiate economic activity and economic growth in parts of the nation that were not that developed and thereby lagged behind other areas in terms of financial wherewithal and employment opportunities. In the line of this imperative, Tennessee Valley Authority was created with the objective of creating jobs in an area that was least modernized.19 In the context of this program, the reactivation of a hydro electric plant in this area not only created job opportunities in this area, but also made arrangements for cheap electric power so badly needed by the local industry. The New Deal also saw the adoption of measures like Public Works Association that launched and initiated ambitious public works projects like the Grand Coulee Dam, which created much job opportunities and helped the state pump funds into an ailing economy.20 The New Deal also recognized the fact something urgently needed to be done to revitalize the sick capital market. Federal Securities Act was passed in 1933 and this lead to the creation of the Securities and Exchange Commission poised to regulate the stock markets and to assure a full disclosure of the stocks being sold in the market.21 There is no denying the fact that the adoption of these measures intended to regulate and guide the capital markets were of critical importance in these times, so as to help the small investors and to arrest the shrinking investor confidence. Hence, while assessing the effectiveness and usefulness of the New Deal, it does need to be considered that the New Deal was required to serve two important purposes, one to rescue an ailing economy and the other to revitalize the dwindling public sentiment. Thereby, the measures enshrined in the New Deal took care of both these imperatives and played a vital role in influencing the American economy. In retrospect it may be feasible to criticize the measures inherent in the New Deal. However, the reality is that during the Great Depression people were badly in need of a program that could ameliorate their plight and restore their faith. Hence, the New Deal was just the right solution to a grave problem. Bibliography Eden, Robert. The New Deal and its Legacy. New York: Greenwood Press, 1989. Hiltzik, Michael. The New Deal: A Modern History. New York: Free Press, 2011. “National Labor Relations Act”. National Labor Relations Board. http://www.nlrb.gov/resources/national-labor-relations-act (Accessed November 14, 2013). Roosevelt, Franklin D. “First Inaugural Address 1933’. Bartelby.com. http://www.bartleby.com/124/pres49.html (Accessed November 14, 2013). Roosevelt, Franklin D. “Speech at Madison Square Garden, 1936”. Miler Center. http://millercenter.org/president/speeches/detail/3307 (Accessed November 14, 2013). Read More