Did the New Deal Solve the Depression?

Topics: Great Depression, Keynesian economics, New Deal Pages: 2 (488 words) Published: March 18, 2013
“It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something, “-Franklin D. Roosevelt. That’s just what he did with the New Deal. He tried his best to solve the depression but ended up only making it worse. The New Deal did not improve the depression. With his election in 1932, FDR promised a New Deal for America. That New Deal was supposed to revive the economy and bring relief. With 40% of the banks closing down, FDR tried to recover them by issuing the Emergency Banking Act. It created a system of sound banks under the Treasury’s supervision. With this act introduced, billions of dollars were flooded back into the reopened banks, stabilizing the issue. Thinking that the cause of economic instability was a slowdown of farming, FDR enacted several acts to help the farmers. This entailed keeping production prices down and keeping sales prices up. In the end this helped the farmers. With these examples, it may seem like he helped a great deal, huge issues still remained. The unemployment rate remained the same throughout the depression. A quote from one of FDR’s best friends, H. Morgenthau Jr. reads,” I say after eight years of this administration we have just as much unemployment as when we started.” Unemployment remained above 20% at the time. In addition, due to the deficit spending, national debt doubled. With all the work programs FDR set up, it was costing more than the government could afford. This brought the top marginal rate to over 60% throughout the depression. If you are trying to help people does it make logical sense to make them pay you? No, it doesn’t. FDR’s programs trying to help the people ended up doing nothing. I do not think the New Deal solved the Depression. If anything, it just dragged it out. The programs the government set up had to be paid with taxes, which meant an increase in taxes, which basically brought them in a complete circle. The government should have just...
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