How Did The New Deal Strengthen Or Weaken The Economy

“Even though the New Deal programs of Franklin D. Roosevelt were massive in their size, they did not effectively solve the economic problems created by the Great Depression in the United States”. To what extend do you agree with this statement?

The Great Depression in the United States began in 1929 and carried on into the 1930s. THis period of time was difficult for most Americans, as many were unemployed, poor and yet still had to support their families. The main economic problems of the Great Depression included a lack of business investment, reduced consumer spending power, unemployment and a poor banking system. Franklin Delano Roosevelt, the president at the time, knew that something had to be done immediately. Thus, he established
Roosevelt was very much opposed large businesses from the beginning. In his first inaugural address, he declared that money changers were now expelled from the temples of the federal government. In essence, he declared the end to the reign of large businesses and the free market. According to historian Jim Powell, Roosevelt made an enemy out of big businesses, and very many of his New Deal programs attacked these firms. This is shown through one of Roosevelt’s most hard-hitting programs, the National Recovery act of 1933, or the NRA. THe NRA was aimed at protecting workers’ rights - putting a cap on hours worked per week, minimum wage, and protecting children from harsh labor conditions (e.g. 0-16 year olds were not allowed to work in factories). Additionally, while GM and Chrysler joined the NRA, Ford did not and when they all bid to manufacture 500 trucks for the CCC, Ford won because they had the lowest bid and they paid higher wages than Dodge. This shows how other businesses were restricted by the NRA because Ford was able to win the bid and pay their workers better. Furthermore, with average wages increasing by 70% during the Great Depression, firms’ costs of production increased. This, coupled with the fact that demand for consumer goods decreased, meant that firms made less profit and revenue. This prompted firms to lay off workers. By 1930, 500,000 African Americans were
FDR was known for his sky-high taxes. In fact, he even taxed alcohol and increased taxes for wine and beer by up to 40%. He also made personal wealth taxes more progressive - as people with income up to $9000/year were taxed at 30% and those with $9000/year or higher were taxed at 40%. By the 1940s, states’ revenue increased to $4 billion from $2.1 billion in 1930. Economist Benjamin Anderson thought that these taxes would have “paralyzing” results, and they did. With less money in their pockets, consumers could not spend as much. Furthermore, many New Deal programs that affected businesses, like the NRA, also affected households. Unemployment rose to 20% in 1932. With no income, people spent less. There was also the issue of hunger and lack of money to even purchase food. The Agricultural Adjustment Act of 1933 cost the government $20 billion to destroy 10 Although this helped prices rise, it wasted precious food for hungry people, and made it so that they could not afford to feed their