‘The New Deal failed to revive the US economy’
Explain your answer, using Sources 10, 11 and 12 and your own knowledge of the issues relating to this controversy.
It is thoroughly debated whether the New Deal did actually provide the momentum to boost the US out of the depression, or whether it was merely coincidental factors such as WWII which provided the real recovery. Johnson insists that the New Deal was in fact counterproductive and hampered the economy and that it was WWII that masked the New Deals failure and helped reboot the economy. This view is rebuffed by Jenkins and Shakes who believe that the New Deal, although far from being perfect provided the stability for recovery to occur and thus kick-started the economy.
Johnson overall picture of the supposed New Deal recovery was that is was ‘slow and feeble’ with its impact being virtually non-existence or in fact stunting growth. This is reinforced by Shlaes, ‘NRA were so inflexible they frightened away capital and discouraged employers from hiring workers. . With Johnson stating the only ‘good year was 1937 when unemployment being at 14.3%’ though rising again to 20% in 1938. Throughout the 30s the levels of unemployment never dropped below 10% and that it was only when ‘America on the brink of war’ that unemployment passed below 5% and production levels ‘finally passes 1929 levels for good’. In Johnson view it was WWII which eradicated unemployment and ramped up production levels without which the US would have still been stuck in an economic slump. Furthermore to indicate the failure of the New Deal, there still were huge inconsistences in the distribution of wealth, with only 12.6% of all rural farms having electricity, a resource taken for granted by people in the big cities.
Jenkins however stated that ‘people also became significantly better off as the decade progressed’, unemployment was decreasing slowly as Alphabet agencies employed more people. The PWA and the CCC overall employed over 500,000, this in turn slowly restored confidence to the majority of people and encouraged growth. A significant indicator of this is highlighted by the fact the GDP ‘bounced back to $113billion by 1937’ when compared to only $99billion 4 years ago. Additionally Roosevelt’s recreation of a new efficient banking system, it provided much needed confidence boost to investors and provided them with a stable