The New Deal: Was It Detrimental to the American Economy? Essay

The Stock Market Crash of 1929 sent the United States into a deep and crippling depression. Roosevelt, elected president for 1933, came into the middle of this. All unsuccessfulness of getting the economy back on track could, up to that point, be blamed on the Hoover administration. However, throughout the twelve plus years he remained in office, Franklin D. Roosevelt did not do much to help, either. In fact, some historians argue, he slowed the progress of recovery, and his New Deal proved detrimental to, what it seems, at least, was his goal: to restore the United States economy to pre-1929 status or better.

However, others still might argue that he had more power-hungry goals. Evidence seems to add up in favor of Roosevelt being a man who did great things for his country. Roger Biles, in A New Deal for the American People, mentions several acts that he calls “’stabilizers’ that have been more successful in averting another such depression (221). ” These include the Securities and Exchange Act of 1934, which made it a governmental responsibility to supervise the stock market, and the Federal Deposit Insurance Corporation (FDIC), which gave the government more power over state banks thus decreasing the number of bank failures.

This bigger, more involved government appeared sudden, but welcomed. It came “at a time when the only Washington bureaucracy most of the people encountered…was the US Postal Service (Biles 222). ” The government set up welfare and “was supporting farmers, monitoring the economy…subsidizing housing (Biles 222). ” Those affected by the Depression, out of jobs and homes, needed these programs to survive. How does this new dependence effect decisions in the White House? The people needed jobs, but places that previously had job opportunities had closed down or had not been making enough money to afford hiring.

So, “Roosevelt’s policies…served mainly to stimulate the consumer goods industries (Best 230). ” However, that did not mean much. It was on durable goods (housing, radios, home appliances, clothing, etc. ) that people were not spending money. “Between 1929 and 1933, expenditures on personal durable goods dropped by 50 percent (Best 230). ” The government effectively kept unemployment rates up by doing this and, therefore, it remained that that percentage of the population depended on the government for survival.

So, ultimately, the economy would continue to make minimal advances and the government would need to get even more involved in the lives of citizens. Who votes someone out of office that helps them? As long as the Roosevelt administration kept giving people exactly what they wanted and no other candidate would, the people would vote him in. In no way did the government not have the possibility of improving the economy in a more effective manner than with the New Deal, though.

In 1929, the United States had the lowest unemployment rate of countries in the League of Nations, but “by mid-1938, only three nations had higher unemployment rates. ” What had the war-torn countries, so economically devastated after World War I, done differently from the United States? Roosevelt implemented anti-business policies, although the country’s government had long been run by big business. “It was an attitude of hostility toward business and finance, of contempt for the profit motive of capitalism, and of willingness to foment class antagonism for political benefit (Best 232). Even in 1937, when many former supporters of the New Deal realized business needed to be relied upon, “Roosevelt was busy pressing a new legislative assault against them (Best 234). ” In 1938, with an unemployment rate of 19. 1 percent, Roosevelt’s anti-business proposal had been denied twice by Congress, but he brought it up again. Congress again voted down his “legislative assault. ” The people, too, knew that business need be an ally instead of an enemy. Despite this, Roosevelt continued to try and pass New Deal programs with no change and without that popular consensus in mind.

New Deal programs did come to some positive outcome. From its height in 1933, the unemployment rate did go down. “Farm income and manufacturing wages also rose (Biles 221). ” However these changes were small and did not mean much at all. Another program, the NRA, “restricted production, elevated prices, and reduces purchasing power (Biles 221),” and this shows complete opposite growth from the goal of inflation. In 1936, the federal government had a deficit of $4. 43 billion. This, at a time when about five percent of the population paid income taxes, did not eave a positive impression on anyone, especially considering that 9 million Americans also did not have a job. The tolls of impractical government spending, the job market, wages, and high prices showed through in the minds and lives of the people. Death by accidental falls, as they are named in documentation, increased significantly during the 1930s, and suicide rate stayed about the same. The Depression caused many families to be broken apart because of financial struggle. Also, thousands of people died from starvation. Men lied about in the streets and had nowhere to go.

People worked themselves to death to provide for their families. Spending money on personal items, such as make-up and toys, seemed unreasonable. The only thing these people saw to do was spend what they had to and save what they could. Keynesian economics advises against this, in a recession, but Roosevelt, apparently, did not support this idea and therefore did not suggest people do this, though it might very well have helped the economy. The New Deal did not have the desired effect on the economy, if it was to help it, at all.

Eve after a war against all-controlling government, Roosevelt successfully deepened the impact government had on the every-day lives of United States citizens. It kept its power by not treating the economy with a partnership with business, thereby slowing down economic progress and keeping the American people reliant on the government, causing it to need more control over everything. If the New Deal did not have that malicious intent, then it epically failed to be an effective answer to the Great Depression.