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Ariel Van Netta AMH 2020 How Successful was Roosevelt’s New Deal in Solving the Economic and Social Problems of the Great Depression? Franklin Delano Roosevelt was elected the presidential candidate for the Democratic Party in the summer of 1932 as the nation was witnessing the worst economic depression in history. As he accepted his nomination, Roosevelt addressed the American people and their plight in the depression, telling them that, “I pledge you, I pledge myself, to a new deal for the American people. After winning the presidency later that year, Roosevelt’s promise to the American people would manifest itself in a slew of laws and government programs. Roosevelt’s New Deal has been credited with saving the American economy, although many believe it was actually World War II that ended the Great Depression. After the stock market crash in 1929, the United Sates was entrenched in the worst economic depression in American history. In the 1920’s, stocks were the hottest commodity in the marketplace.
Banks began loaning money to stock buyers, even letting them use the stocks themselves as collateral. Easy credit, inflated currency, and margin loans had given a false representation of the strength of the market and eventually it collapsed. (Hamby) Consumers who had borrowed money for stocks were now defaulting on their loans and banks began to flounder. As thousands of banks failed so did businesses. People were laid off, many filed bankruptcy and soon the country fell into economic despair.
When Roosevelt began his presidency in the spring of 1933, nearly all banks in the country were closed by their governors, and Roosevelt kept them all closed until he could pass new legislation. On March 9, Roosevelt sent to Congress the Emergency Banking Act. The act was passed and signed into law the same day. It provided for a system of reopening sound banks under Treasury supervision, with federal loans available if needed.
Within three days, three-quarters of the banks in the Federal Reserve System had reopened. Within a month, consumers were putting their money back into banks, which began stabilizing the banking system. Later banking reforms included insuring of deposits through the Federal Deposit Insurance Corporation. Roosevelt and congress then took action to suspend the gold standard for United States currency through a series of executive orders and acts of congress including the Emergency Banking Act and the 1933 Banking Act.
Markets immediately improved in response to the suspension, although it was thought to be temporary. (Schlesinger A. ) The Works Progress Administration was a massive federal jobs program that hired unemployed breadwinners for the purpose strengthening their family’s well-being as well as boosting consumer demand. The jobs varied but consisted of mainly of construction of public roads, buildings and parks. Over the course of its life (1935-43) over eight million Americans worked on WPA projects. (Rauch) Bibliography