Great Depression: Roosevelt’s New Deal
Americans were fleeing economically demolished areas such as the Dust Bowl but as the saying goes, “ You can run but you can’t hide.” This goes for both individuals and businesses such as banks. The Great Depression impacted everyone. Banks were hit hard immediately after the stock market crashed.. Customers rushed to the bank to withdraw their money. With the banks money supply depleted, there was no money to lend. One way banks earn money is by the interest off of money they lend out. In addition, the money they had already lent out was not repaid by businesses and farmers who had failed. By 1933, 11,000 of the nation’s 25,000 banks had disappeared. Generally, Hoover believed in a free economy and restrictions on government. He mapped out steps to recovery which were consistent with his ideals. He did not believe in going to war to spur the economy or in government take-over of business and industry
President Hoover signed two pieces of legislation to address the concerns of the banking system. The two bills that he signed were the Reconstruction Finance Corporation Act (FRCA) and the Banking Act of 1932. The FCRA was intended to provide emergency financing for financial institutions and to aid in financing agriculture, commerce, and industry. The Banking Act was designed to improve the facilities of the Federal reserve system for meeting the needs of member banks in bad circumstances . Congress gave them missions one being a lender by extending loans to banks experiencing financial distress.
In addition to the Finance Corporation Act and the Banking Act, he signed the Smoot-Hawley Tariff Act. In June 1930, Smoot-Hawley raised already high U.S. tariffs on foreign agricultural imports. The purpose was to support U.S. farmers who had been ravaged by the Depression. Instead, it raised food prices. It also compelled other countries to retaliate Most economists blame it for worsening the Great Depression. Global trade went down by 65%.
America was in a predicament and many in America wondered if the nation would survive. American’s grew increasingly upset with President Hoover’s perceived lack of action. There were multiple demonstrations conducted in the capital but the one that drew the most attention was the Bonus Army March of 1932.
In 1924, Congress rewarded VETERANS of WORLD WAR I with certificates redeemable in 1945 for $1,000 each. Because the economy was so bad and the veteran’s needed the money, they asked Congress to redeem them early. Fifteen thousand veterans’ met up and marched to the capital to voice their request. Congress rejected their demands and most veterans returned home. Others stayed because they had no other options. They were a peaceful group yet, some, including Hoover, thought they were a threat to national security. They were removed from their Shanty homes and the Shanty villages were burnt down. The public was outraged that these WW1 veterans were treated so poorly. The economy continued to spiral down and Hoover’s chances of re-election spiraled with it.
A common theme during this tumultuous time in U.S. history was poverty. Many families in the Great Depression were too poor to afford housing. Far too often, they were evicted and with nowhere to go, they moved to “Hoovervilles.” These were areas next to cities where they build homes out of cardboard, trashcans and any other usable supplies they could find. The name “Hooverville” was intended to mock the president as they blamed him for the depression.
Many of those living in Hoovervilles were farmers who lost everything in the Dust Bowl. The Dust Bowl was a natural disaster that affected the Midwest in the 1930’s. It was the worst drought in America in 1,000 years. It was called the “Dust Bowl” because when the winds blew, they raised enormous clouds of dust and then deposited mounds of dirt on everything. The dust suffocated animals and destroyed a large part of agriculture production. The Dust Bowl made the Great Depression worse. The farmers lost their livelihoods and their homes.
With each economic catastrophe, President Hoover’s popularity declined causing him to lose the Presidential election of 1932 to Theodore Roosevelt. Hoover’s inability to manage the Great Depression was the main issue surrounding the election. It was due to the unpopularity of Hoover as to the reason why his Republican Party lost over 100 seats to the Democratic Party. It was the first time that a party suffered triple losses. It was the American’s cries for help and they were hoping that Theodore Roosevelt was just the man to lead them out of economic despair.
Great Depression- The Roosevelt Presidency
President Theodore Roosevelt knew that the country was suffering and that the public wanted to stay informed. He used “Fireside Chats” has a way to stay connected to the masses. These “chats” were radio broadcasts that informed the public about how everything was going on during the Great Depression. He was transparent with information and used simple language so that the public would understand. These chats were not only important because of the information being communicated but also because it helped to build trust with the government.
The “Fireside Chats” were just one change that occurred that had a positive outcome. Within days of taking office in 1933, President Franklin D. Roosevelt passed emergency legislation that would begin to restore confidence in the American banking system. In June of that year, FDR signed into law the Banking Act of 1933 also known as the Glass-Steagall Act. The Banking Act established the FDIC or the Federal Deposit Insurance Corporation. The FDIC would insure commercial bank deposits of $2,500 with money collected from the banks. The FDIC did not insure investment products such as stocks, bonds, mutual funds or annuities. The FDIC successfully restored confidence in the nation’s banks and encouraged savings because people no longer feared that all their money would be lost in a bank.
Another agency that had a role in the new government was the SEC. The U.S. Securities and Exchange Commission (SEC) is a federal agency that regulates the U.S. stock market (Links to an external site.). Congress created the SEC in 1934 to restore the public’s confidence in financial markets. To succeed, public corporations had to register their stock sales. That meant they had to identify their major stockholders. Before the Act, a small group would hold a majority share of stocks. They could manipulate the markets without anyone knowing. Now, there is stockholder transparency as well as transparency of a company’s performance that allows the average American to make educated financial investment choices.
In addition to the FDIC and the SEC, the CCC or the Civilian Conservation Corp was an agency that gave millions of young men work on environmental projects. The CCC planted more than three billion trees. They also constructed trails in parks throughout the country. They helped form the national and state park systems. The CCC was part of the New Deal legislation and was highly successful putting hundreds of thousands of men to work.
The New Deal was Roosevelt’s plan to turn the economy around . It consisted of not only the creation of the agencies listed above but also the creation of the Civil Works Administration (CWA), the Farm Security Administration (FSA), the National Industrial Recovery Act of 1933 (NIRA) and the Social Security Administration (SSA). They provided support for farmers, the unemployed, youth and the elderly. New Deal programs included both laws passed by Congress as well as presidential executive orders during the first term of the presidency of Franklin D. Roosevelt.
Parts of Roosevelt’s plan were not successful. Roosevelt faced opponents of the New Deal. He was accused of attempting to neutralize Supreme Court Justices by expanding the court up to 15 judges. Allegedly he wanted to make it more efficient. Critics accused Roosevelt of trying to “pack” the court and therefore neutralizing Supreme Court justices hostile to his New Deal. During the previous two years, the high court had struck down several key pieces of New Deal legislation on the grounds that the laws delegated an unconstitutional amount of authority to the executive branch and the federal government. President Roosevelt issued a proposal in February 1937 to provide retirement at full pay for all members of the court over 70. If a justice refused to retire, an “assistant” with full voting rights was to be appointed, thus ensuring Roosevelt a majority. Most Republicans and many Democrats in Congress opposed the so-called “court-packing” plan.
Roosevelt’s New Deal was not an exact science to fixing all of the problems during the decade of the Great Depression. Both Roosevelt and Hoover helped to turn the United States around by recognizing the causes: The Stock Market Crash, The Bank Failures, and The Reduction in Purchasing Across the Board, The American Economic Policy With Europe and The Drought Conditions. Hoover was unsuccessful in creating trust with the public which will be the lasting legacy of his presidency, Roosevelt saw the need to be relatable and transparent with information to earn the public’s trust back in the government as well as the financial investments needed to pull the country out of the depression. The determination of the government and our fellow citizens quieted the storm and restored the United States to the confident, financial powerhouse that it once was and Americans could now sing “Dog gone I mean the panic is NOT on.”.
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