The FDRs New Deal Response to the Great Depression - Essay Example

The FDR’s New Deal Response to the Great Depression The FDR’s New Deal Response to the Great Depression The New Deal program The New Deal entailed a series of economic measures initiated to alleviate the negative effects of the great depression. In addition, the program was designed to reinvigorate the crashed economy, so as to restore the confidence of American citizens in their banks and key institutions. One of the initiatives brought by the New Deal was the Banking Act of 1993, which helped stop the panic that had gripped Americas banking system. Pundits claim that the success of the newly introduced banking act depended on Americans faith and willingness to invest their money in the country’s local banks. To ensure that this become a success, FDR used radio as a mode of communication to convince American populace that the crisis had come to an end and that their deposits were safe following the introduction of the Federal Deposit Insurance Corporation (FDIC)1. The New Deal also created the Works Progress Administration (WPA), the Agricultural Adjustment Administration (AAA), and the Civilian Conservation Corps (CCC). The most eminent measure of the New Deal was the establishment of the 1935 Social Security Act, which resulted in the formation of Social Security Administration, employment compensation, as well as the national system of old-age pensions. According to a report, the Social Security provided federal financial assistance to the handicapped, orphans, and the blind. Additionally, the New Deal also gave way for the formation of a number of regulatory agencies, such as the Federal Housing Administration (FHA), which made homeownership affordable to millions of average Americans, the National Labor Relations Board, the Securities and Exchange Commission (SEC), as well as the Federal Communications Commission and the Civil Aeronautics Authority2. Despite the fact that the New Deal initiative lessened the impacts of the Great Depression, it did not end the depression. Report indicates that unemployment remained extremely high throughout the 1930s despite the New Deal being in place. At the same time, the economic growth remained slow. According to a report, America’s economy only recovered during the third term of Roosevelt’s reign when the increased demands of mobilization for World War II restored the country to full employment. In fact, report indicates that Adolf Hitler did more to end the Great Depression that Roosevelt did3. There are those who consider the New Deal as a good initiative for the U.S. government policy today. However, research indicates that the New Deal program negatively affected the poor Americans. Report indicates that New Deal policies such as Tennessee Valley Authority monopoly took away an estimated 750,000 acres of land. The land dispossessed by this policy was mainly land belonging to poor citizens. For example, poor black sharecroppers who had no property were not compensated at all4. The policy also resulted in violation of the rights of women, as far as participation in the country’s politics is concerned5. The legacy of the New Deal The legacy of the New Deal today pertains to the reforms it introduced which have been unmatched in the history of America. This is based on the fact that the New Deal program introduced by Roosevelt drastically changed the relationship between the capitalist market, the government, and the citizens, establishing for the first time in America an activist state dedicated to giving American citizens a measure of security against unpredictable changes of the market6. The historical context of New Deal The Great Depressed in the U.S. is said to have begun on 29 October 1929 just a day after the “Black Tuesday.” The depression crashed the American stock market, which had been strong and roaring for more than a decade, thereby plunging the country into a worse economic downturn. The crash resulted in bank failures as over 11,000 banks closed down; companies also became bankrupt forcing them to layoff many employees. In addition, the country’s money supply also diminished significantly, inflation skyrocketed, and over thirteen million people became jobless. Reports indicate that the crash saw over $75 billion in equity capital being lost on the Wall Street. The country’s gross national product also plunged to $74 billion down from $104 billion7. The impacts of the Great Depression caused many jitters from Americans prompting President Herbert Hoover to call for patience and self-reliance. Report indicates that initially President Hoover thought that the crisis was just a passing incident that does not require the government’s intervention. However, the situation worsened in 1932, when the Great Depression reached its peak that saw more than one-quarter of American workforce being rendered jobless. The situation prompted President Hoover to find a way of stabilizing the economy, as well as creating jobs for its populace. This resulted in the formation of the New Deal as a response program initiated by the FDR8. Many historians have regarded the New Deal as ‘new’, rather than a ‘deal’ since it brought new reforms and measures that restored the confidence of the American people in the country’s banks and key institutions. The new deal also made it possible for Roosevelt to establish a dominant political coalition, and creating a democratic majority that lasted for more than a century. In addition, the structural stability and social security created by the New Deal’s reforms underscored the postwar economic boom described by many economists and historians as the “golden age of American capitalism”9. The implementation of the New Deal received criticism from both the political right and left. For example, the conservatives have criticized the policies of FDR arguing that it went too far by bringing too much government intervention in the economy. In fact, the conservatives termed the program as a ‘socialist’ reform. Report indicates that groups such as the Du Pont family strongly opposed the editorship course brought about by the New Deal. Critics of the left, on the other hand, argued that the New Deal failed to go far enough, in redistributing political and economic power to the marginalized groups in society, which included women, farmers, labor movements, and minorities. According to the critics of the left, in order for the program to be effective, the Roosevelt Administration ought to have introduced a far more comprehensive program of direct foreign aid to the jobless and the poor10. Based on the arguments of both right and left, I am of the opinion that the left’s argument is more credible than the right. This is because the New Deal failed to solve the problems of the marginalized in a society that felt the heavy impact of the Great Depression. We are told that despite the implementation of the program, unemployment rate still skyrocketed, and the marginalized continued being left behind without assistance. However, generally speaking, the FDR was right in its approach since it helped restore the confidence of the overly discouraged American citizens. This is evident from the manner FDR managed to convince the American population through media dubbed ‘Fire side Chats’, which significantly restored the spirit of the country as it worked to remove the economy out of the Great Depression11. The conspiracy of the prominent businesspersons to overthrow FDR and replace it with a fascist government was not warranted. This is because the FDR established the New Deal that helped create a reformed capitalism. In addition to the American Civil War (1861-1865) and the American Revolution (1775-1783), FDR brought about a ‘Third American Revolution’12. However, America’s foreign policy of the 1930s is regarded as an isolationist policy. This became apparent following the U.S. rejection of the League of Nations. In addition, the U.S. also adopted a cautious non-entanglement foreign policy. This became apparent when the U.S. Secretary of State announced at the Washington Naval Conference that Japan, Britain, and the U.S. all needed to remove dozens of warships to end the dangerous Pacific arms race13 Bibliography Badger, Anthony J. The New Deal: The Depression Years, 1933-1940. New York, NY: The Noonday Press, 1989. Fraser, Steven, and Gary Gerstle. The Rise and fall of the New Deal Order, 1930-1980. Princeton, NJ: Princeton University Press, 1989. Kinzer, Stephen. OverThrow"-Americas Centurary of Regime Change From Hawaii To Iraq. New York, NY: Henry Holt and Company, 2007. Leuchtenburg, William E. Franklin D. Roosevelt and the New Deal. New York, Harper and Row, 1963. Patterson, James T. Grand Expectations. New York, NY: Oxford University Press. 1996. Powell, Jim. “How FDR’s New Deal Harmed Millions of Poor People.” http://www.cato.org/publications/commentary/how-fdrs-new-deal-harmed-millions-poor-people. Reischauer, Robert D. Countdown to Reform. New York, NY: The Century Foundation Press. 1998. Read More