Roosevelt’s New Deal Flashcards
Where is Wall Street?
Where the New York Stock Exchange is situated
Explain the Wall Street crash (1929)?
During the economic boom years of the 1920s, shares prices rose steadily.
Many peoples had made fortunes buying and selling shares at profit.
Many ordinary people put their life savings into shares.
In October 1929, investors began to question whether shares were really worth the prices being asked.
Some investors no longer their money was safe with the stock market. Therefore started selling large numbers of shares to try get their money back.
29 October, was a rush of frightened investors trying desperately to sell their shares. (Excess of shares, shrinking demand=shares cheaper)
Shares essentially lost their value.
People lost their money, and could not buy goods. Demand for goods dropped, factories closed and workers lost jobs.
Boom came to dramatic and sudden end.
Collapse of stock market led to economic collapse: Great Depression.
Discuss the election of Roosevelt
By 1932 the American people had lost confidence in President Herbert Hoover and his Republican government.
In the presidential elections held in November 1932, the opposition Democratic Party candidate: Franklin D Roosevelt, won against Hoover.
In his election campaign, Roosevelt promised government action to help the poor and unemployed and to give more protection to workers.
He also promised to end prohibition.
Because of his policies and tireless travelling to meet the voters, people felt he cared about their problems unlike Hoover who believed it was the individuals fault if they were poor.
The Great Depression was at its worst when he took office in March 1933.
Unemployment had reached 16 million and country was in the middle of a massive banking crisis. He realised pure capitalism wouldn’t work if left to itself. Government would have to become involved.
What was the new deal’s 3 main aims?
RELIEF: provide immediate relief to those affected by the depression.
RECOVERY: promote recovery of economy by getting industry going again and people working.
REFORM: introduce fundamental reforms of whole economic system to ensure similar crisis wouldn’t happen again.
What were “Fireside chats”?
A series of radio broadcasts aimed at ordinary citizens in which Roosevelt explained the measures the government was taking.
By communicating his optimism he was able to restore people’s confidence which was essential for economic recovery.
Banking problems
Loss of confidence in banks.
Limited investment in stock markets and banks.
Run on banks.
Mortgages not repaid-limited income of banks/loss of money.
Banking=corner-stone of the capitalist economy.
Essential for the USA to have a stable and functioning banking system.
New deals banking solutions
Emergency Banking Act introduced in first 100 days.
The government closed all banks and only allowed financially sound ones to re-open.
They passed laws which guaranteed the investments of small investors and stopped unsound business practices on the stock exchange.
Government made loans available to help people pay their mortgage bonds and avoid losing their homes.
Unemployment problems
Spiralling job losses-16 million unemployed
Poverty and homelessness
Loss of dignity/morale
No state social welfare available-no gov systems in place to address this problem
New deal unemployment solutions
Government bonds.
Economy act-$1 billion saved.
Beer and Wine Revenue Act: March 22, 1933; Roosevelt signed act. Levies a federal tax in all alcoholic beverages to raise revenue for the federal gov and gives individual states the option to further regulate sale and distribution of beer and wine; jobs created in alcohol industry.
Gov set up public works projects: Civilian conservation corps (CCC) and public works administration (PWA).
CCC gave work and taught skills to 3 mil unemployed young men from cities in work camps set up in rural areas.
PWA provided gov funding to build schools, hospitals, bridges and other public buildings.
Second New Deal: social security act 1935-established a system of old-age pensions, health benefits, unemployment insurance, child welfare, poor relief.
Agricultural problems
Over-production
Low prices
Loss of farms (mortgages)
Farming methods
New deal agricultural solutions
AAA:
To reduce surpluses and stabilise prices, AAA paid farmers subsidies to reduce production and destroy crops and livestock.
This helped farmers who owned land to recover.
TVA:
Built dams
Control flooding
Provide hydro-electricity for industries
Planted trees to stop erosion
TVA created thousands of jobs, improved living conditions for millions (also addressed unemployment)
Industry problems
Loss of jobs
Markets reduced-limited consumers
Prices
Low wages
Labour laws/exploitation
New deal industry solutions
Wages increased so workers could buy more-stimulate production.
Stabilised prices, businesses could make profit and employ more workers.
National Recovery Administration (NRA) drew up codes for each industry which business leaders were encouraged to sign.
These codes fixed prices, limited working hours, set minimum wages and banned child labour.
(Also addressed unemployment)
Second new deal: national labour relations act/Wagner act 1934
Opposition to new deal
Opposition mainly from business owners, the wealthy. Ordinary largely supported ND.
WEALTHY/BUSINESSES:
Felt Roosevelt going too far in interfering in business.
Resented paying social security contributions-reduced profits.
Believed ND weakened capitalist principles.
Felt union activities threatened individualism associated with capitalism.
Considered Roosevelt traitor to his class.
Felt ND head towards socialism.
Despite this, Republican Party suffered huge defeats in 1932 and 1936 elections.
REPUBLICANS:
Regarded ND as top-heavy federal centralisation and believed ND programs and policies were dangerous.
Would result in high government spending, increased taxes and growth in bureaucracy.
HOOVER:
Believed ND experimentation would deepen effects of depression.
Believed ND hold back recovery.
