New Deal Essay

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1932. Famine and homelessness afflicted millions across the country. Small shanty-towns called “Hoovervilles” popped up on the outskirts of towns and in the open areas of cities, and served as home to the most downtrodden of society. Over nine thousand banks had gone bankrupt since 1929, along with them millions of dollars that had been entrusted to their care. Franklin D. Roosevelt inherited the leadership of a nation containing thirteen million unemployed living in utter poverty. Although criticized by his political contemporaries for the vague nature of his “New Deal,” FDR came into office with a vision that, if employed effectively, would boost people’s confidence in the economy and lift the spirits of millions nationwide. “The New Deal” may have only been marginally effective in repairing the economic woes of the United States on a pure numbers basis, but it ultimately succeeded in stabilizing the “depression” in America. In my analysis, the success of the New Deal rested in the positive psychological ramifications it manifested nationwide. The New Deal brought about lasting changes in government policy, and the way Americans would perceive the federal government. According to William E. Leuchtenburg, FDR came into office after a “lame duck” session that had lasted from February to December that had only weakened the public’s already low perception of Congress. Further, American and European observations at the outset of FDR’s presidency remarked that the common, jobless poor seemed to have lost all vigor for life; listless and calmly accepting their fates, rather than taking to the streets in violent protest. Unlike their European contemporaries, the American people felt simply defeated and hopeless, without the agency to force positive change. President Hoover tried repeatedly (unsuccessfully) to coerce the President-elect into accepting his view of the Depression as well, while FDR carefully built a “brains trust” of intellectuals, theorists, and colleagues to develop the New Deal into a tangible program when he took office. A major obstacle to implementing New Deal programs was a strong push from the Republican side for a return to a Smithian laissez-faire society with traditional values and a myriad of small businesses controlling the bulk of the economy. New Dealers maintained that this idyllic trip down memory lane was mere illusion, and the best way to solve the country’s economic woes was to foster business-government cooperation with an emphasis on balance. As the first part of the New Deal, in the first 100 days, the FDR administration’s goal was to restore hope and courage to the American people, and stop economic hemorrhaging. In early March, FDR issued a (legally questionable) presidential edict to proclaim a national bank holiday to protect both the banks from mass withdrawal runs and the national treasury. FDR addressed Hoover’s financial advisers’ and the deficit hawks’ concerns through the introduction of the Economy Act, which cut $500 million total out of veterans’ pensions and federal employees’ salaries in order to balance the “regular” federal budget. FDR sent the Emergency Banking Act to Congress on March 9, 1933, effectively reopening 75% of Federal Reserve Banks, and granted authority to large banking institutions to purchase smaller banks, but with strictly defined rules and regulations. As part of the act, the Federal Deposit Insurance Corporation was established to provide insurance on banking deposits up to $2500, effectively ending the risk of bank runs. Alcohol once again was sold legally on April 7, 1933 after FDR requested Congress to pledge an early end to Prohibition, and the American people began to become reassured in financial recovery with help from FDR’s “fireside chats.” The Thomas Act gave FDR the authority to inflate money and take the dollar off the gold standard, effectively allowing the economy to expand and diversify. The Securities Act of 1933 created the Securities...
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