The New Deal Term Paper

Submitted By krmcl24
Words: 1944
Pages: 8

HST 208
The New Deal After the economic collapse in 1929, Americans looked to Franklin D. Roosevelt to save the country from economic ruin. Roosevelt and the Democratic Party responded with the New Deal. The New Deal used federal authority to regulate the economy, control corporate power, and modify the free market’s distribution of economic resources. In 1929, the stock market collapsed. People stopped purchasing goods and companies began reducing production and firing workers. The economy continued to collapse. Businesses had no other choice, but to lay off even more workers, reducing the production, and leading to further layoffs. The unemployed were desperate. The states tried to provide relief, but without a stable economy it was worthless. The United State had entered the Great Depression by 1930. By 1933, twenty-five percent of the work force was unemployed and industrial production went down to fifty percent. But because unemployment was widespread, more goods were being produced than could be consumed. Businesses were desperate to increase sales, so they lowered their prices. Prices were so low that the businesses could not afford to pay off loans and make new investments. States passed debt suspension laws to slow the foreclosures on farms, homes, and businesses. They tried to reduce industrial and agricultural production so the prices would increase and businesses could begin profiting again. But the federal system hindered state efforts. It was difficult because if a state tried to raise prices by limiting production, businessmen and farmers in other states aren’t stopped from increasing their output to take up the slack of the other state in an effort to stay afloat in the failing economy. Businessmen and farmers turned to the national government. It was essential to control production, divided up shares of the market, and regulate prices to stabilize the economy. But if business agreed to do so, they would be violating antitrust laws. President Hoover tried to encourage businesses, labor, and farm organizations to cooperate to fight the Depression, promising to suspend enforcement of the antitrust laws. He also urged banks to increase lending to get more money into circulation. These voluntary measures failed and Hoover turned to the federal government and its ability to spend money. In 1929, Hoover and the federal government used two-plus billion dollars to enable farmers to control production and stabilize prices, create a government owned bank, and lend money to homeowners. But that still wasn’t enough. Hoover was disgusted with the budget deficit and did not want to spend more. He rejected helping the states with relief for poor and unemployed. Conservative ideas about economics and government were shamed due to Hoover’s inability to battle the Depression. The Great Depression proved that issues beyond individual control affected peoples’ lives and made it difficult to attribute success and failure to matter of individual character. Some redistribution of wealth would benefit individuals who were affected, but also the economy as a whole. The Depression also proved that the American economy was national. The states could not protect their citizens from nationwide trends. But the federal system began its efforts because no state could afford to cut production, raise prices, or improve working conditions unless a neighboring state did the same. The country needed help. They needed a plan. In 1932, Americans rejected Hoover and elected Democratic candidate, Franklin D. Roosevelt. With his “brain trust,” a group of university scholars and liberal theorists, Roosevelt pursued the best course of action for the nation. Roosevelt's "First 100 Days" concentrated on the first part of his strategy: immediate relief. From March 9 to June 16, 1933, he sent Congress a record number of bills, all of which passed easily. The economy had hit bottom in March 1933, then began a