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The New Deal and its Effects on America

Franklin Delano Roosevelt’s New Deal, an unprecedented initiative that created many new United States federal government programs, positively affected millions of unemployed individuals and numerous private and public enterprises. Roosevelt introduced and promoted this New Deal program during his 1932 presidential campaign, and won in a landslide as the nation was in the grips of the Great Depression. The New Deal’s short and long-term effects were numerous, and many of its programs have endured into the 21st century.

Historians and economists still debate the New Deal’s merits and shortcomings, but this sweeping, dynamic program undoubtedly affected millions of desperate, hurting Americans in the 1930’s and beyond. The stage was set for the Great Depression and The New Deal in the previous decade, known in the United States as the “Roaring Twenties. This decade of American economic prosperity, for individuals and businesses, was ultimately proven to be excessive and unsustainable in the following, harrowing decade.

During the Twenties, “the average American was busy buying automobiles and household appliances, and speculating in the stock market” (PBS, 2009). A large portion of purchases by individuals was done on credit, and the stock market was widely perceived to move in only one direction, steadily up. Stock speculation was rampant and credit flowed freely, which led to high levels of personal debt. Then, “on Black Tuesday, October 29, 1929, the stock market crashed, triggering the Great Depression, the worst economic collapse in the history of the modern industrial world” (PBS, 2009).

In its wake, a vast number of banks failed and more than 15 million American became unemployed. By the time of the 1932 presidential election, huge numbers of Americans were in dire straits and clamoring for radical relief and change. Roosevelt and his New Deal were in the wings. Roosevelt’s grand campaign promises and his visions of radical, beneficial change and relief led to his landslide 1932 presidential election victory. By the time he was inaugurated in January 1933, unemployment in the United States was at a staggering 25% (United States Bureau of Labor Statistics, 2009).

President Roosevelt thought that he had a passionate, desperate mandate for radical change, and he initiated and implemented his New Deal with a whirlwind of rhetoric and bold action. He explained the need for the New Deal this way: “While [Republicans] prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human beings” (Bandyk, 2008). In his first one hundred days as president, Mr.

Roosevelt implemented a dizzying array of new federal actions and programs that he hoped would alleviate citizens’ suffering and begin to raise the United States out of its monumental economic woes. “His first act as president was to declare a four-day bank holiday, during which time Congress drafted the Emergency Banking Bill of 1933, which stabilized the banking system and restored the public’s faith in the banking industry by putting the federal government behind it. Three months later he signed the Glass-Steagall Act which created the FDIC, federally insuring deposits” (PBS, 2009).

Of course, the FDIC is one of the many New Deal programs that still exists today. After the banking system was stabilized, Roosevelt’s next immediate and overwhelmingly pressing concern was to stem and reverse America’s pervasive, stifling unemployment problem. Perhaps the most famous and most immediately impactful program for the vast number of unemployed Americans was the New Deal’s Works Progress Administration. This mammoth public works program employed more than 8. 5 million people, and these newly employed masses built bridges, roads, public buildings, public parks and airports (PBS, 2009).

This very costly government initiative brought hope and earnings to millions of Americans, and the WPA spent “more than $11 million in employment relief before it was cancelled in 1943” (PBS, 2009). This vast governmental expenditure to fight rampant unemployment and rescue the economy ceased in the midst of America’s involvement in World War II. Therefore, many historians and economists argued then and still argue today whether the New Deal rescued America from its dire economic straits or whether our plunge into the world war rekindled the economy.

It is undeniable that the New Deal provided quick, quantifiable relief to millions of suffering unemployed Americans and their families for several years. The nation’s unemployment rate stood at 25% in 1933 and fell each year through 1937, when it leveled at 14% (Bureau of Labor Statistics, 2009). However in 1938, according to BLS, the downward unemployment rate had reversed and had again risen to an alarming and debilitating 19%. This reversal provided ammunition to those who believe that government stimulus spending, at the complete expense of federal taxpayers, is wasteful, inefficient and ineffective.

This debate rages on today as our country is in the throes of a very significant economic downturn with many similarities to the conditions that existed in the Great Depression. Many lessons can be gleaned from President Roosevelt’s ambitious radical New Deal policies and programs. It is debatable whether massive federal stimulus spending and stringent regulation over private institutions are wise and necessary again today. However, some see a clear verdict of the effectiveness of the New Deal.

“The strengthening of the social safety net during the 1930’s stimulated the economy while also providing assistance to those waiting to feel the economic recovery for themselves,” and “history will again demonstrate that government spending and investment are important tools in confronting an economic crisis” (Frisch, 2009).

References Bandyk, M. (2008, April 11). Did the New Deal work? usnews. com. Frisch, K. (2009, February 9). Right-Washing the New Deal. mediamatters. org. Public Broadcasting Service. (2009). The New Deal. pbs. org. United States Bureau of Labor Statistics. (2009). bls. gov.

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