How Effectively The New Deal Counter the Impact of The Great Depression

It came with a speed and ferocity that left men dazed.” This quote from the New York Times shows how unexpected and ferocious the Wall Street Crash of 1929 was for everyone. It resulted in the US economy entering a state of Great Depression. The Depression had devastating effects for the American citizens leading to suicidal tendencies for many, as well as starvation and poor morale. President at the time, Herbert Hoover, tried to combat the effects of the new deal however was very unsuccessful as shown by historian Douglas H. Strong who said “The complexity and urgency of the nation's economic problems were too great for a solution based on voluntary cooperation.”

President Roosevelt came into power in 1932, three years after the wall street crash. He was far more successful than his predecessor as he came up with a New Deal to help recover the US economy to its once Great state and I believe was relatively successful in doing so. The historian David Kennedy argues in Roosevelt's favour saying that “By any standard, the achievements of the Hundred Days were impressive.” Whereas historian Jim Powell disagrees as he said “New Deal policies were dubious when considered from the standpoint of their effects.” This therefore shows how divided historians’ views of the New Deal are.

The New Deal was implemented in order to achieve 3 aims for the US government after the Wall Street crash. These aims were: Relief, Recovery and Reform. They needed to provide Relief to the people due to the fact that people were becoming homeless and in poverty at an unprecedented rate, with many people becoming mentally ill. This therefore makes Relief arguably the most important aspect of the New Deal. Recovery relates to the US economy regaining its strength, this is important as inflation was making lots of things, such as food very expensive and at the same time unemployment was rising thus leading to the American people not being able to, or at least struggling to, afford to put food on their table. However, some elements of his policies regarding both Reform and Recovery were not or only somewhat effective due to the role that WW2 played. Finally Reform was needed in order to prevent this ever happening again in future therefore not as important in the short term.

However in the long term and even today it is important for the American economy as some policies still stand and help the catastrophic consequences of the Great Depression to never happen again. The policies implemented by Roosevelt still stand today and provide the basis of the American economy. Overall therefore, I believe the New Deal had limited success at countering the ferocity of the Great Depression. ReliefI believe that Relief was the most successful of the three aims in the New Deal, this is due to the need for it along with the success of it, and such success was down to many methods such as the Alphabet Agencies and speeches. Before the New Deal the US was very underprepared with very little provisions for unemployment. For example, there was no unemployment benefits this of course left the people very vulnerable if anything were to happen. However, the people felt confident that nothing would happen as they were told time and time again that there would not be a Depression, as demonstrated by leading US economist Irving Fisher, 'There may be a recession in stock prices, but not anything in the nature of a crash.'. An official government source states that in 1929 unemployment was at 3.2%, this thereby rose to 25.2% by 1933; meaning that roughly 12,830,000 people were unemployed in the US at that time. As the government had no preparation for the unemployed many lost their homes and livelihood. Marriage rates dropped from 1.23 million in 1929 to 982,000 in 1932, due to tension and strain. Furthermore, Suicide rates rose from 14 per 10,000 in 1929 to 17.4 in 1932. These statistics show how the crash affected the American peoples day to day life, showing how it damaged their mental state and happiness. These government statistics are corroborated by a letter from an everyday man who said “Can you be so kind as to advise me as to which would be the most humane way to dispose of myself and family, as this is about the only thing that I see left to do.” this letter shows how the depression led people to consider suicide as a means of escape from homelessness and starvation. This is then further supported by my own knowledge as indeed I know that many methods were immediately set up in Roosevelt's first 100 days to try and counter the catastrophic repercussions on every aspect of people’s life, such as Alphabet Agencies which were created to relieve the effects of unemployment and strain on people’s lives. The Civilian Conservation Corps (CCC) gave countless young men a new self-respect and confidence boost as well as giving them valuable experience to help them gain jobs and become better and more effective workers in the workplace.

Another Alphabet agency, The Federal Emergency Relief Administration (FERA), this agency helped the poor by giving clothes and set up soup kitchens. This helped those who had very little after the inflation. Each state was to set up an office and the government were to give them $1 for every $3 they spent on Relief, thus making it easier for each state to help their general public by subsidising the cost of doing so. Further successes in providing Relief is evident as there was increasing morale due to Roosevelt's ‘Fireside chats’, which were radio speeches but they gave much hope and optimism to the public as they gave a sense of homeliness for the people as shown by historian Henry Louis Mencken who said “like a father discussing public affairs with his family in the living room.” This shows that Roosevelt built up a relationship of trust with all of the American people he could reach.

This effect is further evident as many American citizens would write to him, sending letters thanking him for all that he has done to help them and everyone else, one such letter stated “I never heard of a President like you.” Thus showing how the people saw him and how he had a relationship with all of his people.Indeed, historian Anthony Badger further supports this view, he said “He inspired a new generation of public servants for whom government service was an honourable, disinterested calling” This interpretation shows the modern historian's view of what Roosevelt had achieved, showing that they believed that he was an inspirational and charismatic speaker, so much so that people wanted to follow his footsteps into a job in the public sector because they believed so strongly in the government due to Roosevelt. They further made the public confident that he knew how to get them out of the Depression and thus improved their general outlook and countered the effects of the Depression I have previously stated such as marital tension and mental wellbeing. Even Winston Churchill believed in him, saying “He is the truest friend; he has the farthest vision; he is the greatest man I have ever known.” this view shows how others in power think of Roosevelt and his policies, however is not corroborated by President truman upon being asked to be Roosevelt's Vice President “Tell him to go to hell; I'm for Jimmy Byrnes.” This shows that not all politicians believed in Roosevelt or agreed with his policies.Another source from the time shows that the New Deal was successful under the hands of Roosevelt but not with the Supreme Court involved. It appears to show President Roosevelt saving ‘Uncle Sam’, the significant figure representing America, from drowning in a sea of Depression. However, the quotation to go with the source states “I'm sorry, but the Supreme Court says I must chuck you back again.” This therefore shows a view that Roosevelt is a saviour still, but that the American Supreme Court is telling him to stop saving the people of America as he has been doing.

The reasoning for this is the fact that the government did not support Roosevelt towards the end of the first New Deal in the mid-1930s. This was because Roosevelt had been spending millions on Relief at the expense of the American taxpayer and also major private business owners, as lots of his policies took business away from them such as the Tennessee Valley Authority (TVA), taking business by providing hydroelectric power to millions. The source therefore gives further reason as to the fact Roosevelt did everything he could to bring Relief and was thereby successful by using the tools he was given.However, the New Deal was not totally successful at providing the Relief. An example of how Relief is not successful is that the FERA agency, which had the job of giving out Relief payments, had employees who had the mentality that many other less affected people had which was that if you were poor then it was your own fault, this thereby led to those who waited for a Relief payment, had to do so in appalling conditions, crammed into tiny buildings which were guarded by hostile policemen. The payment itself was unsuccessful as the amount just was not enough to keep all of the people in need afloat, In 1935 it was paying about $25 per month to an average family however the minimum monthly wage for a family to survive on was $100. As a result this statistic shows how the people of America were suffering still despite the effort of Roosevelt and his New Deal. This statistic is supported by Harry L. Hopkins, the man in charge of the FERA agency “During 1932 and 1933 a growing number of unemployed teachers applied for relief after their resources had become exhausted.” This quote shows that everyone was unable to find a job and may show a side effect of the depression being a fall in education.

Another failure of Relief is that it in fact caused damage to minorities such as the blacks and females. Indeed, I know that this is true as blacks were said to be 'last hired, first fired' which shows their inability to get and keep a job as they were primarily given to whites.Overall, Relief was for the most part successful, however not totally. The Alphabet Agencies were successful but did not work to their optimum efficiency thus doing less than what they could have. Furthermore, the inherent need for Relief thereby makes it the most important and necessary aspect of the New Deal and this explains why so much was done and how it was instigated with a tremendous boom. I believe that Recovery was less successful at countering the Great Depression than relief for many reasons.

Between 1929 and 1932, which was the period in which hoover was trying to counter the Great Depression, the Americans GNP (Gross national product) fell vastly from $203.6 billion to $144.2 billion thus showing the fall in the value of the goods and services made by the US. Furthermore, within the same period of time the growth rate of the American economy rose from an already high 6.7% to 14.7%, thereby showing massive inflation between these two periods. This is further shown in the same period, as unemployment grew from 3.2% to 24.1%, all before the New Deal. In 1933 once the New Deal was implemented and after Roosevelt's first one hundred days, unemployment still grew but at a far lesser rate, from 24.1% to 25.2% thereby showing a very fact acting success of Recovery. Furthermore, by 1932, banks were closing at a rate of 40 per day. In March 1933, Roosevelt declared that all banks in the country were too close to give them time to create a plan to bring about their own Recovery this was a success as the banks now had a plan and some structure to follow.

The RFC invested in lots of banks that were at risk of closing down and helped them stay afloat by taking on their debts. Meanwhile Roosevelt gave a fireside chat to improve the banking economy “I can assure you that it is safer to keep your money in a reopened bank than under the mattress.” This source shows that Roosevelt is trying to persuade people to put their money into the banks in order to rebuild the economy and bring about Recovery. It was a major success and gave a massive boost in the confidence of the American banking system it was so successful that it reverted some of the damage done with solvent banks even reopening. The number of out of work citizens fell steadily after Roosevelt took over, from 14 million in 1933 to under 8 million by 1937. Clearly, the New Deal, through the work of the 'Alphabet' agencies, did help restore confidence and help alleviate poverty. For example, the Tennessee valley authority (TVA) was created to harness and control the Tennessee River which ran through seven of the poorest states in America and increase the wellbeing of the two million populates in the area. This agency had many aims such as: constructing 20 large dams to stop the major flooding that affects the areas time after time, set up fertilizer manufacturing to create jobs, increase welfare and educational programmes and most majorly perhaps, to create hydroelectric power for the area as at the time they only had enough supplies to power two out of every one hundred farms. The TVA was largely successful as it greatly modernised and improved the living standards of the people affected and doubled the annual income they received between the 20 year period of 1929 and 1949.

However, Recovery also had failures, one such failure is shown in 1938 as unemployment had increased once again to more than 10 million, this had happened after Roosevelt reduced government spending. I know that Roosevelt once again decided to start spending again being granted a $3.8 billion budget for which he had to create employment opportunities. Indeed I know that this only stopped unemployment rising with slow returns, and it only began to fall steeply again in 1939 when the American industry began to build up its armaments in case of war breaking out. This therefore led to huge increases in jobs in the industry market, as shown by historian Burton w. Folsom who stated “Those war jobs seemingly took care of the 17 million unemployed in 1939.” this shows that world war two had a significant impact on the economy and thereby brought about Recovery, it is likely that without the jobs created by the war threat Recovery would have happened far less slowly and may have even got worse before it got better.

Furthermore, Roosevelt took little effort to stop inflation as he actually wished for a Greater amount, this was because he wanted the value of the dollar to decrease so goods would then become more expensive and this would lead to an increase in the amount of money in circulation, but doing this would decrease spending and was not very effective at all, it merely worsened the value of foreign currencies and possibly hurt their relationships with these same countries. The Agricultural Adjustment Act (AAA) agency was a success in the sense that it met its objective of increasing farmer income and increasing the price of goods produced by them, however, it was a highly controversial way in which they achieved it, by slaughtering piglets in order to increase the value of meats, buy this led to a massive national outcry from the Americans as many people were starving and was a step in the wrong direction for Roosevelt's relations with his people. Historian Jim Powell supports this as he shows how the AAA doesn’t help everyone “The New Deal displaced poor sharecroppers and tenant farmers, a large number of whom were black. High farm foreclosure rates persisted during the New Deal, indicating that it did almost nothing for the poorest farmers.” This interpretation indicated that it was largely just the bigger farms who profited off of the AAA, it also shows how the New Deal was unsuccessful in bringing Relief as it negatively affected the black population.

To further support Recovery failing this source displays a representation of Roosevelt as a child who is talking to his ‘uncle’ who is in fact Uncle Sam again. It shows the opinion that he does not really know how to get America out of the Depression and that he cannot do what is needed of him as he is just an innocent child that does not understand. The Christmas stockings shown on the fireplace mantle, represent the alphabet agencies, set up by Roosevelt in order to bring about Recovery and Relief. These stockings show that Roosevelt has just put them up in hopes to gain something from Santa on Christmas. It shows that he was hoping it would just work as if by magic and did not truly know whether the agencies would or would not work. This source is further supported by the historian David Kennedy as he said “The precise battle plan of the New Deal’s attack on it remained difficult to define. Little coherent pattern could be detected in the unlikely mixture of policies that had been adopted.” This further demonstrates that Roosevelt did not know what he was doing and the language used seems to show that Roosevelt just tried to spread out the agency to cover every basis of the Depression. Overall, Roosevelt’s ideas were not always liked by the government, by 1935 the Supreme Court was overturning New Deal legislations and put an end to some Agencies. Roosevelt, had gained much opposition from the wealthy and also big businesses as he was affecting their revenue by helping the public through ways such as helping them with electricity in the TVA agency and buying gold at higher rates, as well as stopping international trade of gold.

In conclusion, I believe that Recovery was far less of a success than Relief as it acted too slowly and barely at all, Recovery was primarily brought around by the massive boost created by the Second World War and opportunities it created in manufacturing and in joining the American army and other forces.ReformI believe that Reform was a success however less of a success than the other two aspects of the New Deal. I believe it was successful as it stopped future corruption and allowed a fairer and less convoluted economy. Before the New Deal it was evident there was much corruption and this led to the fall of the economy in America, such as: bank officials were able to take out their own personal loans in the banks that they actually worked in, work heads, such as the Secretary of the interior, actually tapped the phones of their employees to make sure that there was not any corruption going on. One of the New Deals policies to bring about Reform is the Glass-Steagall act, this act meant that: small banks were no longer allowed to invest large amounts, bank officials could no longer take out personal loans from their own banks, insurance payments for investments were handled by a third party in order to stop any wrongdoings and corruption from firms.

All of these aspects allow to help stop what had caused the Wall Street crash in order to stop it from happening again. Another policy to create Reform in the US economy was the securities act of 1934 which was implemented to stop insider trading. It is evident that this was successful as it was enforced so well by the government and trade markets that they caught and prosecuted one of their own.This historian Robert McElvaine’s view shows how important these two acts were to Reforming the US economy. “The Emergency Banking Act and the Glass-Steagall Act, despite the bankers’ complaints about deposit insurance, greatly strengthened the nation’s private banking system.” This interpretation seems to give further weight to the suggestion that Reform was a success as it states that the outcome led to a stronger and more secure banking system, it also appears to be a valid source as it demonstrates the knowledge of opposition to Roosevelt. Furthermore as Roosevelt still implemented these acts even with the opposition shows how he wanted the best for the whole population. I believe that Reform however did not counter the Great Depression and therefore is not effective as it was merely just a precaution so that it nothing like the Great Depression would happen again. Even with this it too was not even fully successful, the two previously mentioned acts both had failures within them. For example the Glass-Steagall act was up for much criticism for Roosevelt's use of it as it was in fact the previous president, Hoover, who had come up with it, however Roosevelt was the one to actually implement it, which led to him being scrutinised by his peers. Moreover people though Roosevelt should have been more radical, much like his usual nature and other policies. Another example of how Reform was a failure is that people did not have a lot of faith in the securities act as they believed that it was able to be exploit it. Furthermore, the people that worked in Wall Street heavily opposed it as for them it was such a major change and stopped their ability of making a lot of money so easily, their opposition came with the threat of them actually moving the exchange to their neighbouring country of Canada. All in all, I believe that Reform was a successful aspect of the New Deal in that it accomplished what is had set out to do, however I do not believe that it was very effective at countering the impact of the Great Depression as that is not what it was intended to do, although it could be argued that it did counter it in the way that it gave confidence to the people that Roosevelt was not going to let the American economy or people get into the state that they were currently in ever again. To further support the view that Roosevelt couldn't achieve his aims comes from historian Robert S. McElvaine who said “He sought recovery and more limited reform. Two years after his election, he had failed to achieve enough of either, and pressures on him to move further to the left began to mount.”

This interpretation shows how Roosevelt could not do enough to specifically target and get rid of the areas of his New Deal that still plagued the US. However the use of the word “enough” shows me that he did still manage to make a positive change and make things better, but again it was too little to bring the economy back fast enough.Clements, P. (2008). Prosperity, depression and the New Deal. London: Hodder Education. Conc-Overall, I believe that the New Deal was effective at countering the impact of the Great Depression to an extent. It was mainly successful in providing Relief as it itself provided the American people with a lot of confidence, both that they would get back to the way they were and confidence in Roosevelt to get them there. This is hugely important due to the psychological effects of the Great Depression which led to rising suicide rates and very high marital tensions with less marriages occurring due to it. This is why I believe Relief was not only the most successful aspect of the New Deal but also the most important. I also believe that Recovery was somewhat successful at countering the Depression as it stopped foreign trade in order to recover their economy first, however I also believe that the opportunities provided by World War two were far more successful at providing Recovery to the US economy. As unemployment was so low, new employment opportunities were not being created fast enough and what was provided by the Alphabet Agencies was not enough, therefore without the world war and the millions of employment opportunities provided by it the US economy would have taken far longer to recover. Finally, I believe that in the short term Reform was the least important aspect of the New Deal and this explains why when compared to the other two R’s why so little was done, as it was more of a long term situation and there were many other more immediate matters to attend to.

On top of this Reform did not have the job to counter the New Deal but one that meant that nothing like it would happen again by putting an end to what had caused it. However it was still a successful act, even with the few acts that had been passed, due to the rising confidence from investors that their investments would be protected and that they are being sold to honestly for actual gain.