How Did The New Deal Strengthen Or Weaken The Usa Capitalism
The New Deal
During the 1930's, America witnessed a breakdown of the Democratic and free enterprise system as the United States fell into the worst depression in history. The economic depression that beset the United States and other countries was unique in its severity and its consequences. At the depth of the depression, in 1933, one American worker in every four was out of a job. The great industrial slump continued throughout the 1930's, shaking the foundations of Western capitalism. The Great Depression forced Americans to come together and find someone to help them climb out. On March 4, 1933 Franklin Roosevelt wondered if it were possible to "do anything to save America now." With millions of people tightening their belts, Roosevelt decided to gather a group of lawyers and university professors called the "brains trust" …show more content…
to advise him on economic policy. From this Roosevelt started what he called the "New Deal" which had three aims: relief, recovery, and reform. The New Deal had influences not only during Roosevelt's presidency but also the others who followed. The early New Deal unfolded in the spring of 1933 with a chaotic three month burst of legislation known as "the hundred days." This plan had three parts to it, recovery through planning and cooperation with business, furnishing relief for the unemployed, and to begin a reform of the economic system. To start Roosevelt said that banks come first. Without sound credit structure, there could be no borrowing, without borrowing there could be no investment, and without investment, no recovery. Roosevelt meant to save capitalism by regulating and reforming it. The day after FDR's inauguration he ordered every bank in the country closed for what he called a "bank holiday." From this FDR introduced the Emergency Banking Act (EBA) extending federal assistance to banks, which helped banks keep their customers. Also, to guard against future stock crashes, financial reforms gave government greater authority to manage the currency and regulate stock transactions. Then in April 1933, Roosevelt dropped the gold standard and began experimenting with the value of the dollar to boost prices. Along with all this, deposit insurance came about under the "Glass-Steagall Banking Act" which insured deposits up to $2500. Banks began to turn it around which was a start to get people out of this depression. Roosevelt knew that saving the bank and financial markets meant little though if human suffering could not be relieved.
So FDR sought relief for the unemployed and poverty stricken people of the United States. To start he launched the Federal Emergency Relief Administration (FERA) which furnished more than $1 billion in grants to states, local areas, and private charities. This money was spent on projects such as repairing schools, laying sewer pipes, and building roads. From this came the Civilian Conservation Corps (CCC), a program that was important to Roosevelt because it combined his concern for conservation and his compassion for the youth. Along with these programs came one that aimed to help relieve unemployment, but did more than just that, the Tennessee Valley Authority (TVA). This area was one of the poorest areas of the country and from the TVA it not only gave people jobs it also saved three million acres from erosion, multiplied the average income in the valley tenfold, and repaid its original investment in federal taxes. Planning not just for regions but for the whole economy seemed to many New Dealers the key to
recovery. Business leaders began urging the government to allow businesses the opportunity to plan and cooperate, to help control ruthless competition that was driving down the economy. The legislation created two new agencies from this, the Public Works Administration (PWA) and the National Recovery Administration (NRA). First the PWA was designed to boost consumer purchasing power and industrial activity with a $3.3 billion public works program. The workers it hired would spend their paychecks and stimulate production, while its orders for factory and other goods would send capital through the economy. The second agency created, the NRA, aimed directly at controlling competition. From this businesses and the government drew up a "codes of fair practices" to help keep prices at bay. The NRA relied on voluntary participation and more than two million employers eventually signed up. But on May 27, 1935 the Supreme Court struck down the NRA declaring it unconstitutional stating that the government can not control all aspects of business. This decision left New Dealers shaken, without the ability to make rules and regulations all the executive agencies of the New Deal might die. Like planning for industry, New Deal planning for agriculture relied on private interests, the farmers, to act as the principal planners. One such Act was the Agriculture Adjustment Act (AAA) of 1933. This was an agreement among producers of basic commodities to limit their own production, in turn, the government paid farmers for not producing, while a tax on millers, cotton ginners, and other processors helped pay the costs. All of this would reduce surplus, increasing prices, helping agriculture to recover. This program, although it did help increase prices, was voided by the Supreme Court in 1936. They concluded that the government had no right to regulate agriculture, either by limiting production or by taxing processors. Other agencies followed trying to help impoverished farmers but the rural poor did not have enough political leverage to obtain sufficient funds from Congress. After years of Herbert Hoover paralysis, Roosevelt's first 100 days finally broke national despair. However, the economic depression would not go away. Although Roosevelt regarded recovery as his primary goal, the first New Deal never achieved it. Ideas and peoples circumstances improved, but the economy came along more gradual. Perhaps no one could solve the riddle of recovery, but Roosevelt had faith in himself. So in 1935 he began to address a second riddle, how to reform the system so that the Great Depression never happens again. With the presidential election of 1936 only a year away, Roosevelt and Congress produced a "second hundred days" of law making and a "Second New Deal." The emphasis shifted from planning and cooperation with business to greater regulation of business, broader relief, and bolder reform. A limited welfare state emerged in which the government finally had to commit to guaranteeing the well-being of needy Americans. The "second hundred days" produced a legislative barrage that moved the New Deal toward Roosevelt's ultimate destination. Where government would permanently look to soften the impact of industrial excesses, protect the needy, and compensate for the boom-and-bust business cycle. To do this Roosevelt proposed several Acts to try and push our economy along. To help many Americans who were still jobless, Roosevelt set up the Emergency Relief Appropriation Act of 1935, setting aside $4.8 billion for relief and employment. The majority of this money was going to the Works Progress Administration (WPA), which initiated the largest work-relief program in history. Before its' end in 1943, the WPA employed at least 8.5 million people and built or improved over 100,000 school, post offices, and other public buildings. Another program set to help push our economy was the Social Security Act (SSA) which sought to help those people who could not help themselves, pensions for retirees, and insurance for those suddenly laid off from their jobs. By giving all this away the government had to gain more control so they introduced the Banking Act centralizing the money market in the Federal Reserve Board. By controlling interest rates and the money supply, the government increased its ability to compensate for swings in the economy. Finally, Roosevelt reached out to farmers in the hill country, who had no electricity, by enacting the Rural Electrification Administration of 1935 (REA). At the time, less than ten percent of American farms had electricity. Six years later, forty percent did, and by 1950, ninety percent did. The New Deal which helped many people, did not reach out to everyone. Women and minorities discovered that the New Deal had limits to the changes it promoted. African Americans and Mexican Americans were still being segregated throughout industries. Both minority groups fought to gain political leverage only to come up short on most of their efforts. Like with minorities, women broke new ground in politics, but in general, the New Deal abided by existing social standards. Gender equality, like racial equality, was never high on its agenda. Reflecting old conceptions of reform, New Dealers placed greater emphasis on aiding and protecting women than on employing them. The New Deal lasted only five years, from 1933 to 1938, and it never spent enough to end the depression. Full recovery remained elusive, with over seven million Americans still without work. Although the New Deal pledged itself to the less fortunate Americans, it failed the neediest among them, sharecroppers, tenant farmers, and migrant workers. In many ways FDR's New Deal was quite conservative. Even its reforms followed the old progressive formula of softening industrialism by strengthening the state. Yet for all its conservatism and continuities, the New Deal left a legacy of change. Adding to the progressive goal of regulation, the New Deal added the more complicated task of maintaining economic stability. Under this, the government assumed a broader role in the economy than progressives had ever done. In its securities and banking regulations, federal insurance for bank deposits and requirements for wages and hours created stabilizers to avoid future breakdowns. Also Roosevelt and the New Deal strengthened the Federal Reserve System and enhanced control over credit which allows the government to shape the economy. Under the New Deal, many outstanding changes occurred, springing change in our economy and our work place. The New Deal, although it did not last, inspired everyone including future presidents to get a plan. Two future presidents inspired by Roosevelt's New Deal were, Truman and his "Fair Deal" and Lyndon Johnson's "Great Society. The New Deal strengthened democracy in America along with giving millions of Americans hope. Yet New Dealers from the president on down recognized that they could not do everything. Only future generations could say.
During the 1930's, America witnessed a breakdown of the Democratic and free enterprise system as the United States fell into the worst depression in history. The economic depression that beset the United States and other countries was unique in its severity and its consequences. At the depth of the depression, in 1933, one American worker in every four was out of a job. The great industrial slump continued throughout the 1930's, shaking the foundations of Western capitalism. The Great Depression forced Americans to come together and find someone to help them climb out. On March 4, 1933 Franklin Roosevelt wondered if it were possible to "do anything to save America now." With millions of people tightening their belts, Roosevelt decided to gather a group of lawyers and university professors called the "brains trust" …show more content…
to advise him on economic policy. From this Roosevelt started what he called the "New Deal" which had three aims: relief, recovery, and reform. The New Deal had influences not only during Roosevelt's presidency but also the others who followed. The early New Deal unfolded in the spring of 1933 with a chaotic three month burst of legislation known as "the hundred days." This plan had three parts to it, recovery through planning and cooperation with business, furnishing relief for the unemployed, and to begin a reform of the economic system. To start Roosevelt said that banks come first. Without sound credit structure, there could be no borrowing, without borrowing there could be no investment, and without investment, no recovery. Roosevelt meant to save capitalism by regulating and reforming it. The day after FDR's inauguration he ordered every bank in the country closed for what he called a "bank holiday." From this FDR introduced the Emergency Banking Act (EBA) extending federal assistance to banks, which helped banks keep their customers. Also, to guard against future stock crashes, financial reforms gave government greater authority to manage the currency and regulate stock transactions. Then in April 1933, Roosevelt dropped the gold standard and began experimenting with the value of the dollar to boost prices. Along with all this, deposit insurance came about under the "Glass-Steagall Banking Act" which insured deposits up to $2500. Banks began to turn it around which was a start to get people out of this depression. Roosevelt knew that saving the bank and financial markets meant little though if human suffering could not be relieved.
So FDR sought relief for the unemployed and poverty stricken people of the United States. To start he launched the Federal Emergency Relief Administration (FERA) which furnished more than $1 billion in grants to states, local areas, and private charities. This money was spent on projects such as repairing schools, laying sewer pipes, and building roads. From this came the Civilian Conservation Corps (CCC), a program that was important to Roosevelt because it combined his concern for conservation and his compassion for the youth. Along with these programs came one that aimed to help relieve unemployment, but did more than just that, the Tennessee Valley Authority (TVA). This area was one of the poorest areas of the country and from the TVA it not only gave people jobs it also saved three million acres from erosion, multiplied the average income in the valley tenfold, and repaid its original investment in federal taxes. Planning not just for regions but for the whole economy seemed to many New Dealers the key to
recovery. Business leaders began urging the government to allow businesses the opportunity to plan and cooperate, to help control ruthless competition that was driving down the economy. The legislation created two new agencies from this, the Public Works Administration (PWA) and the National Recovery Administration (NRA). First the PWA was designed to boost consumer purchasing power and industrial activity with a $3.3 billion public works program. The workers it hired would spend their paychecks and stimulate production, while its orders for factory and other goods would send capital through the economy. The second agency created, the NRA, aimed directly at controlling competition. From this businesses and the government drew up a "codes of fair practices" to help keep prices at bay. The NRA relied on voluntary participation and more than two million employers eventually signed up. But on May 27, 1935 the Supreme Court struck down the NRA declaring it unconstitutional stating that the government can not control all aspects of business. This decision left New Dealers shaken, without the ability to make rules and regulations all the executive agencies of the New Deal might die. Like planning for industry, New Deal planning for agriculture relied on private interests, the farmers, to act as the principal planners. One such Act was the Agriculture Adjustment Act (AAA) of 1933. This was an agreement among producers of basic commodities to limit their own production, in turn, the government paid farmers for not producing, while a tax on millers, cotton ginners, and other processors helped pay the costs. All of this would reduce surplus, increasing prices, helping agriculture to recover. This program, although it did help increase prices, was voided by the Supreme Court in 1936. They concluded that the government had no right to regulate agriculture, either by limiting production or by taxing processors. Other agencies followed trying to help impoverished farmers but the rural poor did not have enough political leverage to obtain sufficient funds from Congress. After years of Herbert Hoover paralysis, Roosevelt's first 100 days finally broke national despair. However, the economic depression would not go away. Although Roosevelt regarded recovery as his primary goal, the first New Deal never achieved it. Ideas and peoples circumstances improved, but the economy came along more gradual. Perhaps no one could solve the riddle of recovery, but Roosevelt had faith in himself. So in 1935 he began to address a second riddle, how to reform the system so that the Great Depression never happens again. With the presidential election of 1936 only a year away, Roosevelt and Congress produced a "second hundred days" of law making and a "Second New Deal." The emphasis shifted from planning and cooperation with business to greater regulation of business, broader relief, and bolder reform. A limited welfare state emerged in which the government finally had to commit to guaranteeing the well-being of needy Americans. The "second hundred days" produced a legislative barrage that moved the New Deal toward Roosevelt's ultimate destination. Where government would permanently look to soften the impact of industrial excesses, protect the needy, and compensate for the boom-and-bust business cycle. To do this Roosevelt proposed several Acts to try and push our economy along. To help many Americans who were still jobless, Roosevelt set up the Emergency Relief Appropriation Act of 1935, setting aside $4.8 billion for relief and employment. The majority of this money was going to the Works Progress Administration (WPA), which initiated the largest work-relief program in history. Before its' end in 1943, the WPA employed at least 8.5 million people and built or improved over 100,000 school, post offices, and other public buildings. Another program set to help push our economy was the Social Security Act (SSA) which sought to help those people who could not help themselves, pensions for retirees, and insurance for those suddenly laid off from their jobs. By giving all this away the government had to gain more control so they introduced the Banking Act centralizing the money market in the Federal Reserve Board. By controlling interest rates and the money supply, the government increased its ability to compensate for swings in the economy. Finally, Roosevelt reached out to farmers in the hill country, who had no electricity, by enacting the Rural Electrification Administration of 1935 (REA). At the time, less than ten percent of American farms had electricity. Six years later, forty percent did, and by 1950, ninety percent did. The New Deal which helped many people, did not reach out to everyone. Women and minorities discovered that the New Deal had limits to the changes it promoted. African Americans and Mexican Americans were still being segregated throughout industries. Both minority groups fought to gain political leverage only to come up short on most of their efforts. Like with minorities, women broke new ground in politics, but in general, the New Deal abided by existing social standards. Gender equality, like racial equality, was never high on its agenda. Reflecting old conceptions of reform, New Dealers placed greater emphasis on aiding and protecting women than on employing them. The New Deal lasted only five years, from 1933 to 1938, and it never spent enough to end the depression. Full recovery remained elusive, with over seven million Americans still without work. Although the New Deal pledged itself to the less fortunate Americans, it failed the neediest among them, sharecroppers, tenant farmers, and migrant workers. In many ways FDR's New Deal was quite conservative. Even its reforms followed the old progressive formula of softening industrialism by strengthening the state. Yet for all its conservatism and continuities, the New Deal left a legacy of change. Adding to the progressive goal of regulation, the New Deal added the more complicated task of maintaining economic stability. Under this, the government assumed a broader role in the economy than progressives had ever done. In its securities and banking regulations, federal insurance for bank deposits and requirements for wages and hours created stabilizers to avoid future breakdowns. Also Roosevelt and the New Deal strengthened the Federal Reserve System and enhanced control over credit which allows the government to shape the economy. Under the New Deal, many outstanding changes occurred, springing change in our economy and our work place. The New Deal, although it did not last, inspired everyone including future presidents to get a plan. Two future presidents inspired by Roosevelt's New Deal were, Truman and his "Fair Deal" and Lyndon Johnson's "Great Society. The New Deal strengthened democracy in America along with giving millions of Americans hope. Yet New Dealers from the president on down recognized that they could not do everything. Only future generations could say.