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Preview Test

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Did the New Deal prolong the Great Depression

” There is nothing to fear but itself,” claimed American President Franklin Delano Roosevelt during his first speech as president.

The word was in the throes of a severe depression.

America’s newly elected president jumped without hesitation into his series of aid programs called the New Deal.

With the goal of providing relief, recovery, and important, he began creating reforms and changing policies for his country in order to alter the effects of the market slump.

However, history shows that the changes he implemented only served to worsen the country’s problems.

In 1929, the stock market experienced the worst economic crash in its history.

This led to the period known as the Great Depression.

It was characterized by higher consumer prices, increased unemployment, and decreased income.

All workers and industries were affected adversely.

The depression lasted over ten years, with banks closing and businesses failing.

Over fifteen million Americans, about twenty-five percent of the workforce, become unemployed.

Americans blamed President Herbert Hoover for the crisis.

When Hoover’s term as president ended, the majority of American citizens selected Franklin Roosevelt of the Democratic party to the presidency in 1932.

He entered office with many promises to the American people and stepped into action immediately after his term began.

He mandated a four-day bank holiday, during which Congress enacted the Emergency Banking Relief Act to stabilize the banking systems.

He laid the groundwork for his New Deal reforms during the first one hundred days of his term.

As the depression stretched on, it became evident that Roosevelt’s quick, aggressive action was detrimental to many people.

A) For example, in an effort to reduce unemployment, Roosevelt created the National Recovery Administration (NRA).

B) One of the stipulations of the NRA was that if fifty percent or more of an organization’s workers wanted to be part of a union, then that organization would automatically become part of a union.

Also, its employees all had to join that union.

C) The problem was that many unions at the time would not accept African Americans.

D) Therefore, many African Americans who belonged to an organization that became unionized lost their jobs.

The government’s new program took jobs away from people who needed them, emphasizing the inconsistency and self-contradiction of the New Deal.

The progressive ideas of the New Deal called for a government-run economy, somewhat fashioned after the Russian government.

Based on the idea that the market was unstable, Roosevelt believed that intervention by the government was necessary in order to balance the various interests of farmers, business, and labor.

Therefore, by using his authority, the president pushed the government to became more involved in the affairs of the American population than ever before.

It monitored as well as limited everything from market prices of goods to veteran pensions.

Since Roosevelt himself did not have enough knowledge in the area of economics, many of his acts solved immediate economic difficulties, but introduced new problems.

Some of his policies were actually contradictory.

For example, one of Roosevelt’s advisors asked him to choose a speech, one defending high tariffs and the other in favor of lowering tariffs.

Roosevelt told the advisor to simply “weave the two together.” His Agricultural Adjustment Act raised food prices above market level.

It was an act that helped farmers, but hurt the rest of the population.

Yet, as he increased food prices to help farmers, the NRA simultaneously raised the prices of manufactured goods and equipment.

This hurt the farmers who relied on the equipment.

Relief spending was meant to help the unemployed.

Conversely, corporate income taxes, Social Security taxes, and minimum wage laws led to higher unemployment.

This endless spiral of government action and the effects it had on the people of America likely prolonged the Great Depression.

While the stock market crash led to government action, those governmental policies led to increased problems.

They also added to the time spent trying to recover from the depression.

The purpose of the reforms was not to create havoc, and the changes for the American people were well intended.

The problem came when actions were not fully thought through and were implemented quickly, regardless of the effects they would have.

It is unknown whether or not the Great Depression would have ended more quickly without such intense government involvement.

However, with ten years of struggle and another mild recession in the midst of those year, a different plan of action could have greatly benefited the American people.