America’s Great Depression & Roosevelt’s New Deal Legacy
The Great Depression: An American Crisis
Seeds of Economic Turmoil
The industrialization process in the United States started after the Civil War. Between the end of the 19th century and the beginning of the 20th century, American economic expansion was at its peak. However, this economic growth ended with the Great Depression, which began as a financial crisis in Wall Street in 1929.
The Depths of the Depression
The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from 1929 to 1939. It began after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors. Over the next several years, consumer spending and investment dropped, causing steep declines in industrial output and employment as failing companies laid off workers. By 1933, when the Great Depression reached its lowest point, about 15 million Americans were unemployed, and nearly half of the country’s banks had failed. Despite assurances from President Hoover and other leaders that the crisis would run its course, matters continued to worsen over the next three years.
Roosevelt’s Response and the New Deal
Initial Actions and Restoring Confidence
When President Franklin D. Roosevelt was elected in 1933, he took immediate action to address the country’s economic failures. He first announced a four-day bank holiday, during which all banks would close so that Congress could pass reform legislation and reopen those banks determined to be sound. The reason for this bank holiday was the government’s fear, as civilians had lost all confidence in their banks. Many wanted to withdraw their deposits, but the money wasn’t available as it had been used for other operations. Roosevelt also began addressing the public directly over the radio in a series of talks known as “fireside chats.” In these talks, he explained the economic crisis, which went a long way towards restoring public confidence.
Introducing the New Deal and its Foundations
Perhaps President Roosevelt’s most impactful measure was the New Deal. Its main inspiration came from John Maynard Keynes, whose “water pump” theory explained that the US economy was like a non-functioning water pump. This theory suggested that for the economy (the pump) to function again, the federal government needed to take an active role in “priming” it.
Core Objectives of the New Deal
The New Deal was a series of programs and projects instituted during the Great Depression by President Roosevelt aimed at restoring prosperity to Americans. When Roosevelt took office in 1933, he acted to stabilize the economy in several ways:
- Providing jobs and relief to those suffering, with the National Industrial Recovery Act (NIRA) as a key tool. This act guaranteed workers the right to unionize and bargain collectively for higher wages and better working conditions.
- Making efforts to ensure that banks in Wall Street could not commit fraud again.
- Providing subsidies for unemployed people.
- Creating infrastructure projects.
Landmark New Deal Programs and Agencies
During this time, many projects and programs were implemented, including:
- The Civilian Conservation Corps (CCC)
- The Works Progress Administration (WPA), which focused on building infrastructure like post offices, bridges, schools, highways, and parks, and also provided jobs to artists, writers, directors, and musicians.
Other institutions aimed at restoring dignity and prosperity included:
- The Securities and Exchange Commission (SEC)
- The Tennessee Valley Authority (TVA)
Perhaps the most important of these was the Social Security Act, which guaranteed pensions to millions of Americans, set up a system of unemployment insurance, and stipulated that the federal government would help care for dependent children and the disabled.
Long-Term Impacts and Considerations
Social Security and Public Health
To further our understanding of the Social Security measures implemented in the New Deal, we must note that there was no concerted effort to create a national public health system in the United States at that time. In fact, it wasn’t until years after the end of World War II that programs such as Medicare, Medicaid, and the Veterans Administration were established.
World War II and Economic Resurgence
It wasn’t until World War II that the measures applied during the Great Depression made a significant impact on the US economy. The United States had remained largely intact during the war, while most of Europe had been a battlefield and suffered terrible consequences. This situation placed the United States in a superior position regarding its economic power.