How Did Roosevelt Solve the 1930’s Usa Economic Crisis? Essay Example

the economic boom, and now suffering depression, all they wanted were the good old days back.

The Wall Street Crash was one of the main factors that crippled the American economy. By 1929, so many people were investing in the stock market and making huge profits that most companies were vastly over valued.As soon as some experts realised that it could not last as it was, and began withdrawing their shares, others followed suit until everyone knew there was something wrong, and tried selling their shares. This resulted in mass panic, and a lot of people couldn’t find anyone to sell their shares to.

Because so many people had bought their shares on credit, they were left in debt which they could not repay. This caused a knock-on effect on the banks, which were owed huge amounts of money which would not be refunded. There was mass unemployment in the depression - as so many usinesses had to close so people lost their jobs. Also, owners of companies often did not have enough money to employ a full team of staff anymore, so they had to make job cuts. This was common on farms. Unemployment, of course, lead to poverty.

People could not find jobs and were left with no money, so they and their families suffered. When the production line arrived in the 20’s, it was a great new way of manufacturing goods, making it cheaper and faster than ever before. Wealthy people suddenly purchased a modern range of consumer goods, in particular fridges, cars and radios.This meant that by the 30’s, everyone who could afford these luxury items had either bought them, or

could not afford them, so now nothing was being bought. This caused factories to produce less, which meant they cut their work staff, along with wages when profit became low. In the countryside, agriculture was in ruin.

Even though it did not benefit hugely from the booming 20’s, it hit an all time low. With new technologies, farmers were producing huge amounts of food more easily than ever before. This overproduction led to demand falling, which dragged the prices down as well.To make things worse, many farmers thought that making yet more food would give them a higher profit, but it simply pushed the prices lower. Also, a vast area of farm land (the Tennessee Valley) was turning rapidly into wasteland as it was flooded and dried out constantly by the weather.

To top off the economical and agricultural problems, big tariffs were set on imports and exports. This discouraged people from selling and buying abroad, but created problems when no-one in the country wished to buy goods. Exporting would have been a good way of increasing demand, but unfortunately it was not exploited.Discrimination and prejudice were a huge problem in America’s society.

Racism practically ruled the streets. Whites thought nothing of blacks, and they had almost no civil rights. Mobs would lynch blacks for crimes they didn’t commit, and the police would do nothing. Most black families lived in poverty. This was another big problem, the rich/poor divide in America.

You were either working class white or black and poor, or white and rich. There were few in-between, and there were very few wealthy black people. President Roosevelt set up many different agencies to

try and solve the problems above.He threw huge amounts of money at these organisations, because he knew that action needed to be taken quickly. They were known by their initials, and named the “alphabet agencies. ” There was success in all of them, although some more than others.

One of the main aims of the agencies was to eliminate unemployment, and this was especially targeted by the CCC, the WPA, the CWA and the PWA. It meant that people with no jobs could sign up for a government provided job – short or long term – and generally carry out hard labour for a low wage. This may sound bad, but compared with no job at all it was a life saver for many Americans.It was a success, but without the economy recovering from the disaster of its current state, unemployment could not be cured easily.

In 1933, when the agencies were introduced, unemployment was at an all time high, and it fell from there but only sank dramatically because of WWII. Roosevelt had a lot of work to do getting industry back on its feet. The main agencies set up to deal with this problem were the PWA and the NRA. The PWA not only gave jobs to the workers involved, but the knock on effect was that people were employed in the places they built.

The PWA built nearly all of the schools in America, and lots of the dams.The main aim of the NRA was to improve workers lives. They made a code which wasn’t compulsory for businesses to sign, but was encouraged. This meant that there was now a minimum wage,

better working conditions, shorter hours, and in general higher wages. Also the factory owners benefited with increased profit so they could employ more men.

The TVA was an organisation set up to protect the Tennessee Valley area. Soil erosion had caused the Valley to become waste land, so the TVA built a series of dams along the Tennessee River, stopping floods in the wet season and droughts in the summer.Not only did this regenerate the farmland, but it provided electricity for the area, along with thousands of jobs. The AAA was created to force food prices up over a long period, and generally give help to farmers with their farms.

The FCA helped farmers regain their repossessed farms, by lending money. This financial support was only available to one fifth of farmers though, and many still suffered. Unfortunately the modernised techniques spread by the AAA put many farm workers (especially migrants) out of work. There was no longer a need for so many hands on the farm.

One of Roosevelt’s election propositions was that he would take immediate action against the depression when he came to power. One of the most impacting changes he made was to close all banks. Four days later he opened banks which he had selected and trusted, and they were supported by government funding. With banks now open and new rules so that the Wall Street Crash could not happen again, people began to have faith in the banks again. This would mean more public input into the economy.

The FERA was set up solely to give relieve to people living in poverty. 500 million was given and mainly spent on

blankets, nursery schools, employment schemes and soup kitchens. It did not reach everyone who needed help, but certainly had a big effect. However, there were many problems Roosevelt and his New Deal did not solve. The economy had not healed as deeply as everyone had thought, and in 1938 unemployment shot up again. The previous year, Roosevelt had cut some of the budget and the workforce, and it proved that the economy still could not function properly without heavy government support.

Thousands of black Americans benefited from the New Deal agencies, especially the CCC, the slum clearance and the housing projects, but Roosevelt did not seem to act against racism. He left black people insecure without civil rights, open to lynching and discrimination, because he did not want to loose support from southern, racist states. Native American Indians were given a lot of government help in 1934, which let them buy land where they could practice their traditions, laws and culture. This still didn’t mean people welcomed in society – they were seen as outcasts and not accepted.

Because of the New Deal, women were “promoted” in the social society, given more important jobs, and gained some respect which countries in Europe wouldn’t have until women were employed in the Second World War. Still, they faced discrimination and were not treated equally to men as Roosevelt made no real effort to iron out prejudice. Roosevelt faced a huge amount of criticism in his presidency. This was mainly from the rich businessmen, who felt like they were being robbed of their taxes because they didn’t see any of their money again – it went to the poor and

the agencies.They accused Roosevelt of being a dictator and said he was trying to turn America into a Communist state, and that he was trying to run smaller private companies out of business with the agencies like the PWA.

Their criticisms were fair – because it could be said that increasing taxes on the rich and decreasing it on the poor would discourage people from working hard and earning money, but it was obvious that the majority of people in America supported Roosevelt because in the 1936 election he won by the highest margin ever achieved by an American president.I think that the New Deal was one of the most successful economical turnarounds in history. The American government really showed what they were capable of achieving in a time of great crisis – which had presented them with the opportunity to perform in the first place. By the end of the New Deal, faith was restored in the American government and way of life. The New Deal’s success was across the board, the banks and stock market had recovered from the Wall Street Crash, the economy was growing, although it would take longer than expected to recover, and the unemployment problem was sorted.

These problems seemed to be sorted only temporarily, but I predict that after a generation the government would have been able to pull out their funding. Luckily for them, they did not have to wait that long, because Hitler started WWII. This meant that millions more jobs were created, and huge amounts of money were made on imports and exports. Poverty especially became less common in America through the New Deal, as more

and more help was given to the poor.

Farmers’ lives, which had never been too good, were improved immensely and they finally started making large turnovers.The Tennessee Valley was protected, which saved a massive amount of land from ruin, and dams and other big structures were built which are still in use today. The government proved that they were clean – they were handling the largest sums of money on the planet and none of it just happened to slip into a secretary’s wallet. The failure of the New Deal was Roosevelt’s reluctance to act against discrimination and prejudice. Black people were left with no rights to protect themselves, Natives were outcast from society, women were second class citizens and migrants were unwelcome.

This was because he was prepared to sacrifice their rights over his popularity. In conclusion I think that the New Deal was vital for America. Without Roosevelt and his government working away with new ideas to improve the standard of living for all, America could have ended up with a backward economy like Russia in the beginning on the 20’Th century. The American economy was crumbling at an important time in the world, and the government glued together the pieces and started again. It was a great success.