USA-New Deal

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The New Deal-Summary

Following a landslide election victory, Roosevelt faced the enormous task of restoring confidence in a shattered economy. At first glance, Roosevelt's privileged background might have made it difficult for him to understand the problems faced by those who were unemployed or poverty stricken. However, in 1921 an attack of polio had left Roosevelt permanently crippled, and his ongoing battle against this terrible illness enhanced his ability to relate to ordinary Americans.

As he entered the White House, the scale of the problem he faced was immense. By the winter of 1932-1933, the country seemed to have reached rock bottom. Roosevelt's personal solution, the New Deal was the largest, most expensive government programme in the history of the American presidency. However, historians do not necessarily agree as to whether the New Deal was a success or a failure.

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What did the first New Deal consist of?

Psychological support: -Roosevelt skilfully used his inaugural address to reassure the American people that "the only thing we have to fear is fear itself - nameless, unreasoning, unjustified terror". -Fireside chats - in March 1933, about 60 million Americans gathered around their radios to be told in a warm tone - ""I can assure you that it is safer to keep your money in a reopened bank than under the mattress"". -Stabilised the banking system - with the banking system in crisis, the president declared a nationwide bank holiday to allow time for people to regain their nerve. The Emergency Banking Relief Bill brought all banks under federal control. All banks considered solvent were allowed to reopen under licence. Roosevelt had given the banking system much needed time and space to avoid panic.

Practical support: -The Tennessee Valley Authority (TVA) - responsible for flood control, building dams and constructing new towns. -The National Recovery Administration - this agency negotiated with the major industries to create fair prices, wages and working hours. -The Agricultural Adjustment Act (AAA) - aimed at reducing farm production and boosting farm prices.- The Civilian Conservation Corps (CCC) - offered short-term work to young men on conservation projects.- The Public Works Administration (PWA) - constructed schools, hospitals and other public buildings.

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The second New Deal

Although Roosevelt restored hope and staved off the collapse of the banking system, the problem of unemployment was more difficult and at the start of 1934 there was still 11.3 million people out of work. Some historians have said that failing to deal with unemployment was the biggest weakness of the New Deal. Criticism of Roosevelt emerged from several directions. With the 1936 presidential election on the horizon, the New Deal began to change direction. Some historians have interpreted the change by saying there were two New Deals - the first dealing with the immediate emergency of 1933-34 and the second, which emerged in 1935-1936, offering more radical, reforming policies: The Works Progress Administration - this agency employed people to build schools, hospitals and other public buildings. The Rural Electrification Administration - this agency aimed to bring electricity to America's farms. The National Labor Relations Act (Wagner Act) - this act aimed to improve relations between workers and employers, especially as 1934 had seen a series of violent industrial disputes.

Some historians say that, where the first New Deal aimed to save America and its capitalist economic system, the second New Deal aimed to change America.

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Critics of the New Deal

Conservative opponents said Roosevelt had spent too much government money.

  • The wealthy businessmen behind the American Liberty League argued that by increasing taxation and encouraging the development of the trade union movement, Roosevelt had betrayed his own class (Roosevelt was from a very wealthy family).
  • Many ordinary people began writing letters saying things like this one from a man in California - "you are multi-millionaires, what do you care for the masses of the people?".
  • Huey Long - the Governor of Louisiana, known as The Kingfish, launched the Share our Wealth campaign in which personal fortunes of more than $3 million would be redistributed to ordinary citizens.
  • Father Charles Coughlin - a Canadian priest - broadcast popular sermons on the CBS network, promising to nationalise the banks.
  • Dr Francis Townsend planned to boost the economy by raising pensions for the over 60s - in return, they would spend $200 a month to increase demand for consumer goods.
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Success or Failure?

Successes

Roosevelt restored confidence in the American people. Millions of people were given work in government projects.

A lot of valuable work was carried out by the in building schools, roads and hospitals. Roosevelt rescued the banking system from collapse and saved capitalism.

Failures

There was a new recession - the 'Roosevelt recession' in 1937.

Unemployment was not conquered by the New Deal.

Many of the jobs created by the New Deal were only temporary.

The New Deal was the most costly government programme in American History and some of its projects could be accused of wasting money.

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