Franklin Roosevelt and His New Deal

Th WEEK (Political History- 2, Europe and America)

The Great Depression.

The effects of the Great Depression was huge across the world. Not only did it lead to the New Deal in America but more significantly, it was a direct cause of the rise of extremism in Germany leading to World War II.

What caused the Great Depression, the worst economic depression in US history? It was not just one factor, but instead a combination of domestic and worldwide conditions that led to the Great Depression. As such, there is no agreed upon list of all its causes.

The Great Depression was a period of worldwide economic depression that lasted from 1929 until approximately 1939. The starting point of the Great Depression is usually listed as October 29, 1929, commonly called Black Tuesday. This was the date when the stock market fell dramatically 12.8%. This was after two previous stock market crashes on Black Tuesday (October 24), and Black Monday (October 28). The Dow Jones Industrial Average would eventually bottom out by July, 1932 with a loss of approximately 89% of its value. However, the actual causes of the Great Depression are much more complicated than just the stock market crash. In fact, historians and economists do not always agree about the exact causes of the depression.

Throughout 1930, consumer spending continued to decline which meant businesses cut jobs thereby increasing unemployment. Further, a severe drought across America meant that agricultural jobs were reduced. Countries across the globe were affected and many protectionist polices were created thereby increasing the problems on a global scale.

Franklin Roosevelt and His New Deal

Herbert Hoover was president at the beginning of the Great Depression. He tried to institute reforms to help stimulate the economy but they had little to no effect. By 1933, unemployment in the United States was at a staggering 25%. Franklin Roosevelt became president on March 4, 1933 and immediately instituted the first New Deal. This was a comprehensive group of short-term recovery programs. It not only included economic aid and work assistance programs but also the end of the gold standard and of prohibition. This as then followed by the Second New Deal programs which included more long term assistance such as the Federal Deposit Insurance Corporation (FDIC), the Social Security System, the Federal Housing Administration (FHA), Fannie Mae, the Tennessee Valley Authority (TVA), and the Security and Exchange Commission (SEC). However, there is still question today about the effectiveness of many of these programs as a recession occurred in 1937-38. During these years, unemployment rose again. Some blame the New Deal programs as being hostile towards businesses. Others state that the New Deal, while not ending the Great Depression, at least helped the economy by increasing regulation and preventing further decay.

In 1940, unemployment was still at 14%. However, with America's entry into World War II and subsequent mobilization, unemployment rates dropped to 2% by 1943. While some argue that the war itself did not end the Great Depression, others point to the increase in government spending and increased job opportunities as reasons why it was a large part of the national economic recovery.

The New Deal was the name that United States President Franklin D. Roosevelt gave to a complex package of economic programs he effected between 1933 and 1935 with the goals of what historians call the 3 Rs, of giving Relief to the unemployed and badly hurt farmers, Reform of business and financial practices, and promoting Recovery of the economy during the Great Depression.

When Roosevelt took office on March 4, 1933, the nation was deeply troubled. Every bank in the nation had closed its doors and no one could cash a check or get at their savings. The unemployment rate was 25% and higher in major industrial and mining centers. Farm prices had fallen by 50%. Mortgages were being foreclosed by tens of thousands.

Historians distinguish a "First New Deal" (1933) and a "Second New Deal" (1934-36). Some programs were declared unconstitutional, and others were repealed during World War II; in early 1937 almost no new programs were initiated because of the opposition of the new Conservative Coalition

Date: 2015-12-24; view: 890