The Great Depression

The New Deal is a series of programs and policies created from 1933 to 1938. The programs and policies created under the New Deal were created by the Congress and President Roosevelt and the main goals of the New Deal were Relief, Recovery, and Reform. The New Deal is divided into two parts- the First New Deal (1933-1934) and the Second New Deal (1935-1938). In the First New Deal, many of the policies, which were created, occurred within the first 100 days of President Roosevelt’s presidency. This dealt more with recovery, mainly of banks, farms, and labor. The Second New Deal dealt more with economic security, like unemployment insurance and working standards.

 

Its main purpose was to end the Great Depression, but it failed to do so. Instead World War II was the event that ended the Great Depression. There are several reasons to why the New Deal was unable to end the Great Depression. The first reason why the New Deal failed was because many of the policies and programs that were created were not able to accomplish their own goals and had to be repealed. One example of this is the National Industrial Recovery Act (NIRA), which created the National Recovery Administration (NRA). This was the most far reaching effort created in the New Deal. It was designed to help with labor, industries and the unemployed. Government planners and business leaders were to work together to set standards for wages, number of hours of work, and working conditions. But this program was not any help to the starving unemployed. The NRA was later declared unconstitutional because it “delegated legislative powers to the president and attempted to regulate local businesses that did not engage in interstate commerce”. Another program that failed was the Agriculture Adjustment Act (AAA). The main goal of the AAA was to provide stability to farmers by raising the price of crops. In the AAA, farmers were provided with subsidies- payments from the government- to reduce the production certain crops. So the government actually paid the farmers NOT to grow crops. The main idea behind this was that, this would decrease the surplus, which, in turn, would cause the farm prices to rise to a better level. The only people that benefitted from this program were those farmers that actually owned the farm property. So most tenants continued to suffer. In 1936, the Supreme Court declared the AAA as unconstitutional and it was struck down. The Supreme Court annulled several laws in the First New Deal, and it seemed as though it was going to fall apart.

 

 

 

 

 

 

 

 

 

Another reason why the New Deal was not able to end the Great Depression was because many of the programs intentionally created only temporary jobs. One example of a program that created temporary jobs was the Civil Work Administration. This was designed to provide only temporary jobs during the hard cold winters. This eventually employed 4 million workers and they were given mostly construction jobs.  So even if the unemployment rate decreased, when these programs were implement, it was only for the short run; once the worker were done with their jobs, they would become unemployed again, and the economy was left where it started.

 

 

 

 

 

 

 

 

 

 

 

 

 

Another reason why the New Deal was unable to end the Great Depression was because of the Roosevelt recession. In 1937, the economy faced a huge downturn in the economy, which was called the Roosevelt Recession. Government policies had caused this decline. For example the Social Security Act, which provided insurance to the unemployed, required people to pay taxes on their payrolls. Also President Roosevelt wanted to decrease government spending because the New Deal involved a lot of spending which led to deficit spending. There was still the belief that a balanced budget was the best way to insure a stable economy. President Roosevelt decided to decrease deficit spending in 1937 because he believed that the worse of the Great Depression was over. The size of the Worker Progress Administration, which involved in providing employment on useful projects, was reduced. When Roosevelt cut back on government spending, it again caused the economy to fall again. The unemployment rates jumped from 14.3% to 19%- this was the first increase in unemployment since President Roosevelt became president. The economy was almost back to where it had started.

 

High unemployment was another reason why the New Deal was unable to end the Great Depression. Many of the programs and policies created with the New Deal did help America’s GDP and did stimulate the economy, but high unemployment was the most consistent problem of the Great Depression. In 1940, the unemployment rate was still at 15%. It was an improvement from the 25% unemployment when Roosevelt first became president, but it wasn’t enough to bring the economy out of the depression.

 

 

 

 

 

 

 

 

 

 

 

In conclusion, there are several reasons why the New Deal was unable to end the Great Depression. Many of these reasons could have been easily solved, but due to the inefficiency of the government and its lack of knowledge of the economy, these reasons became a barrier in trying to solve the Great Depression.