Economic Recovery of the 1930s Essay
Economic Recovery of the 1930s
“The economic recovery of the 1930s can be explained entirely by the effects of the New Deal.” How valid is this view? In 1932 Franklin D Roosevelt won the presidential election as a response to the “Great American Depression” which saw the collapse of the USA’s economic life continuing throughout the 1930s as a result in the inadequate action of Presidents Calvin Coolidge and Henry Hoover to alleviate the sheer hardships that came with the depression. Roosevelt and the Democrats took a more interventionist approach to recover the economy, provide relief for the unemployed and enact reform in order to create a fairer society. “The economic recovery of the 1930s can be explained entirely by the effects of the New Deal.”
The “New Deal” was the interventionist programme Roosevelt initiated to tackle the issue and is key in explaining the USA’s economic recovery of the 1930s and is split into two factors in order to determine the validity of the previous statement; the first hundred days known as the First New Deal and from1935 to 1937 known as the Second New Deal. However, there were other factors which were important in the recovery of the USA’s economy. The growing power of the Federal Government to defend these reforms.
The rearmament in preparation for the Second World War that reduced unemployment and increased industrial production. However, it was Roosevelt himself that revitalised the economy as he went a long way to rebuild confidence with the American public. Therefore the New Deal was undoubtedly a considerable factor in explaining America’s economic recovery but other factors although associated with the New Deal were independently important in the economic recovery.
The economic recovery of the 1930s can be explained by the First New Deal, to an extent. During the first 100 days of Roosevelt’s office a flood of new legislation most becoming laws quickly providing relief and recovery. This meant that “Alphabet Agencies” were established and run by groups of Americans known as “The Brain Trust” in order to carry out work in tackling relief and recovery. The National Industrial Recovery Act passed on the 16th of June 1933 introduced joint economic planning between the Government and industry to stabilise prices, expand purchasing power, relive unemployment and improve working conditions. This was important as it represented greater government intervention in regulating and planning the country meaning that businesses would return to a living rate again by address issues such as banking and lack of intervention which were initial kick-starters of the depression. The Public works Administration created jobs for unemployed industrial workers through large scale work schemes such as building schools, hospitals and parks which were of public benefit.
This was effective in providing both relief and recovery as it created jobs for industrial workers as well as assisting the recovery of the economy by building necessary institutes for a functional economic system. Finally the Work Progress Administration (WPA), aimed to offer carefully chosen jobs that would be beneficial to the individuals community and was one of the most effective agencies. The WPA was one of the country’s largest employers between 1935 and 1941 at a staggering 2 million per year particularly employing the unskilled into large building schemes but also artists, actors and photographers into civic duties. Additionally around 11,000 schools and public buildings had been built nationwide along with 43,000 miles of road.
This was important as the number of unemployed people significantly decreased which in turn led to an improvement to the economy as the employed raised revenue through taxation and because people would soon be purchasing more goods from important trades as the wages were respectable. However, the WPA only employed people for a year meaning that people would become unemployed again leading to a fall in investment into the economy taking the USA back to square one. Overall the First New Deal was successful in providing emergency relief and recovery as after the 100 days; national income rose by 23%, unemployment dropped by 2 million and factory wages rose.
The impact of it was felt by millions and the money people were making meant that they began spending which brought the nation’s trade and business back to life, this was referred to as “priming the pump” as the Government’s spending fuelled the nation’s economic machinery and it started to move again. However, Roosevelt’s measures were being challenged in court and many were declared as unconstitutional and therefore illegal, restricting the progress and impact the New Deal could have. Additionally The First New Deal focused more on relief and less on reform and recovery which had shortcomings so it can be criticised for not being more radical and completely changing the USA and therefore cannot explain the economic recovery of the 1930s as factor more work needed to be done through
The Second New Deal and other factors.
The Second New Deal can also explain the economic recovery of the 1930s to an extent. By, 1935 Roosevelt’s New Deal was being greatly challenged by the courts and a newer more radical House of Representative, in order to solve this issue Roosevelt started over and produced a new flood of legislation. This legislation was more extensive than before and aimed to radically change the USA by focusing towards socio-economic reformation by improving long term living and working conditions due to the widening gap between the rich and poor which contributed market saturation.
The social security act of 1935 provided a state pension scheme for the old, widowed, and disabled as well as poor children with payments ranging from $10 to $85 a month, paid from taxes on earnings and employer’s profits. This was important as it was the first attempt to provide for those at the highest risk of falling into poverty and it was the longest lasting New Deal. However, Welfare legislation lagged behind Europe as only 24 out of the 48 states at the time had old age pensions. Additionally there were wide gaps in payments between different states. The National Labour Relations act of 1935 gave the right of union to workers. This was important as the Government became integrated into industrial relations and resulted in the exponential increase of union membership and power.
Finally The Wealth act of 1935 sought to raise revenue for the New Deals by now targeting wealthy with taxes, referred to by William Randolph as “soak the successful”. However very little was raised as loopholes were exploited by the most elite lawyers as the wealthy could afford them. Overall was a successful response to the opposition he faced from the courts. However, the issue remains that Roosevelt was attempting to radically change socio-economic situation in the USA at the expense of the rich and this reform promised by The Second New Deal was not fulfilled to an entirety. Therefore The Second New Deal and as an extension the first did cannot entirely explain the USA’s economic recovery although it undoubtedly contributed and helped other factors such as the increased power of The Federal Government which the New Deals helped to increase though they stand by themselves individually to explain the recovery.
The increased power and role of the Federal Government in social and economic affairs was another important factor in the overall explanation of the USA’s economic recovery. During this period Roosevelt’s New Deals faced opposition which led to Roosevelt using methods to challenge them as he believed he was elected to save big business and was disappointed by their lack of support. In 1944 Congress opposed to the Farm Security Administration of 1935 after it had already helped to settle 11,000 families and provided 41,000 long-term low interest loans to help tenants and sharecroppers purchase their own farms due to its provision of medical schemes for black and white migrants. Although a result of prejudices and partly a result of the New Deal this shows the increased role of the Government in deeming the act illegal and the act making it to that point on the New Deals part. Additionally it highlights how the success of the New Deal may have been restricted.
In order to stop the Supreme Court, Roosevelt himself put forward the Judicial Reform act which appointed six additional judges that agreed with him to the pre-existing nine in order to help with the workload. This was important as the power he exerted over the Supreme Court, meant resistance to the New Deals was reduced increasing the power of the executive branch which aided the alphabet agencies’ progress in economic recovery. It also meant that people began to look more towards the Federal Government for help instead of the State Government. However, the judges were aware of this and restricted their duties.
Overall the expanding role of Federal Government can explain the economic recovery of the 1930s as it gave the executive more powers to pass legislation that would improve the economy such as the New Deal particularly the survival of the Social Security Act and people look towards the federal government which increased their role in society which meant they could work towards economic recovery. Therefore the success of the New Deal is a result of this increased executive branch presence as it allowed Roosevelt to pass them, meaning that the New Deals alone can’t entirely explain the USA’s economic recovery. However, it was Roosevelt’s efforts in renewing the public’s confidence that explained the economic recovery as the New Deal would not have been successful in motion or in the legislative process without the support of the public.
Arguably Roosevelt’s efforts in building the public’s confidence in the Government and its role in the economy explained the economic recovery of the 1930s almost to an entirety as the New Deal carried some of the confidence. Roosevelt was popular among the public as they believed he cared about them as he was the first president to speak to the dispossessed and the have-nots in society, for example he spoke to those who had concerns with the Government regulating banks as part of the New Deal by ensuring their safety in using them. He said, “I can assure you that it safer to keep your money in a reopened bank than under your mattress.” Thousands wrote letters to him to show their appreciation. This was important as Roosevelt’s popularity among the electorate meant he won four presidential elections and the Democrats were voted into both Houses of Congress with a secure majority of 2/3 in the senate and ¾ in the House of Representatives proving his popularity.
This meant he was able to increase the role of Federal Government and improve the economy as he could only pass the New Deals with the support of the electorate and have them contribute to the economy with their confidence in the system as prior to him showing care the public were suspicious. However, not all of the elected Democrats agreed with the New Deal for example Ed Johnson who strongly disagreed with it saying it was “the worst fraud perpetuated on the American people.” Roosevelt also appointed an unprecedented amount of Catholics, Jews, blacks and women and used radio to keep the public updated. This was important as Roosevelt was appealing to minority groups which at the time were having severe problems and including the public in political affairs meaning that they would back the New Deal which would ultimately improve the USA’s economic situation and it made important social changes to minorities which were affected by poverty the most therefore improving their economic status was vital in economic reform.
Therefore the confidence that the public had in Roosevelt and the Government in addressing social reform explains the economic recovery during the 1930s as the backing he received was vital in the passing of the New Deals as he spoke to them like no other president which meant he remained in office for four terms and had more powers to pass acts in order to recover the economy. This means that the other factors would not have had any impact without the support he had from a public confident that he could save the economy. Therefore the New Deals do not explain the economic recovery of the 1930s entirely as there were more important factors alone and that affected the New Deals themselves, particularly the confidence in the economic system that Roosevelt worked hard to build. However, there were still shortcomings of the legislation passed by the New Deal as a result of this confidence, which the Second World War helped in the USA’s economic recovery.
An additional, important factor to be considered in explaining the economic reform of the 1930s was the rearmament in preparation for the war. In 1937 a new, less severe depression had arisen because Roosevelt had cut the federal Government’s spending budget causing a fall in the stock market and industrial production as well as a 4 million rise in unemployment. In response to the outbreak of war out with the USA Roosevelt convinced Congress to invest billions in National defence, improving the economy as he increased the wages of military personnel and offered subsidies for defence manufacturing which proved effective as unemployment plummeted to 10% during the war. Additionally the conservation during the war saved money and the immigration particularly Jewish people from Germany to California led to an economic boom.
This was important as the war Kick-started the economy as the increase in wages and economic production during the war lowered unemployment and improved the economy post war as this industrial boom continued. Overall this contributed greatly to the economic recovery of the 1930s meaning that the New Deal cannot not entirely explain this recovery. However, it stills stands that the confidence built by Roosevelt explains the economic recovery as though the end of the war saw the end to the Great Depression it was Roosevelt’s support that got him to investing in defence which began the war’s industrial production.
Therefore the New Deal can only partially explain the economic recovery of the 1930s as though they provided relief, recovery and worked towards reform, the New Deal did not radically change the face of the USA which did happen later but not as a result of the New Deal. This means that the statement is invalid as though the New deal was undoubtedly a considerable factor in the USA’s economic recovery other factors were also important. The growing power and role of the Federal Government in economics meant that Roosevelt had the power to pass the acts of the New Deal and the public looked towards the Federal Government meaning economic recovery could be initiated nationally.
The rearmament in preparation for the Second World War was more important as it significantly reduced unemployment and increased industrial production which planted the seeds for a post-war economic boom ending the Great Depression. It was Roosevelt’s personal work in building public confidence in the economy which proved to be the most important factor as it provided Roosevelt with the support to remain in office, change the role of the Federal Government which in turn meant he could get backing from both Congress and the public to improve the economy and later invest in the war industries that without would have kept the depression going post-war.