Franklin D. Roosevelt (FDR) was nominated as the President of the United States in the summer of 1932. Roosevelt, in his acceptance speech, addressed different problems faced by the American people due to the Great Depression. He pledged to offer a new deal to resolve the grave scenario. Roosevelt already had tested his programs to confront the impacts of the Great Depression during his tenure as Governor of New York. Roosevelt won by a huge margin.
The economy was facing a total collapse when FDR assumed power as the President. Unemployment hit thirty percent; inflation was at its peak, while GDP was critically down by fifty percent. This phenomenon is called the ‘Great Depression,’ which hit the highest level in the early part of 1933. (Powell, 2004).
The main goals of FDR included recovery relief and reform; relief for individuals who were not able to provide for themselves; recovery of the economy- from depression towards boom- so that the businesses would be in a position to commence providing employment to people again; reform of the economy and government to avoid the repetition of problems that continuously existed during the industrial era.
FDR’s years in office during the 1930s can be divided into two periods; the First New Deal, from 1933 to 1935, was characterized by certain relief programs for addressing the immediate unemployment problems. On the basis of an assumption that the robustness of the federal government is required to remove the impacts of depression, the first New deal focused on emergency relief programs, banking reform laws, agricultural and work relief programs. (Mcelvaine, 1993).
The Second New Deal, from 1935 to 1937, was characterized by specific reforms. Members of Congress called for more basic programs of society and not only relief of the symptoms of economic and social problems. (Barnanke, 2004) The Second New Deal included; Social Security Act, union protection programs, and specific programs to support migrant workers and tenant farmers. The proponents of New Deals assert that the programs supported in improving the lifestyles and living standards of people experiencing the negative impacts of depression. The programs under New Deal, in the long run, set a fundamental precedent for the government to undertake a primary role in the social and economic affairs of the country. (Sowell, 2007).
Many significant institutions and laws that specifically form the basis of today’s American economy can be traced to the era of the New Deal. The legislation extended the authority of the federal government in agriculture, public welfare, and banking. It established a minimum level of wages as well as hours on the job. New Deal served as a catalyst for the huge expansion of labor unions in many industries, including automobiles, rubber, and steel. Agencies and programs, viewed as indispensable in the modern economy, were created, such as the Securities and Exchange Commission, the Social Security System and Federal Deposit Insurance Corporation, etc. (Smilely, 2003).
FDR’s new deal focused on emergency measures such as make-work and social relief program. Moreover, on a strategic level, programs aimed to develop and reconstruct the entirely ruined infrastructure of the nation. It could be concluded that FDR’s New Deal was successful in pulling the economy from Great Depression and has a perpetual impact on the economy of the United States.
- Barnanke, B (2004) Essays on the Great Depression. Princeton University Press. Barnanke has included a collection of essays in his book. He is scrupulous and careful econo-metrician in his argumentative discussion about the decline of economy after Great Depression. He has provided a complete overview of the macroeconomics of the Great Depression.
- McEclvaine, R (1993) The Great Depression: American 1929-1941. Three Rivers Press. Robert McEclvaine’s description of the cultural shock and economic collapse brought by the Great Depression is presented in the book. The author has stated the responses of Roosevelt and Hoover that shaped the modern day anticipations of the role played by federal government in the daily routine lives of people. The book specifically deals with the events after World War I and events involving U.S in World War II.
- Powell, J (2004) FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression. Three Rivers Press. Jim Powell focuses on the effects of major policies implemented by Roosevelt. Powell has portrayed the sketches of the major players also. He has discussed the Social Security System in relation with unemployment and the phenomenon of higher taxes as well as new labor laws along with their impact.
- Smilely, G (2003) Rethinking the Great Depression. Ivan R. Dee, Publisher. Gene Smilely has endeavored to link the events of Great Depression with overproduction, inequality of wealth and speculation in stock market. These along with some other causes led to the New Deal implementation. These events have been investigated and their effects have been presented in the book.
- Sowell, T(2007) Economic Facts and Fallacies. Basic Books. Thomas Sowell in economic Facts and Fallacies has attempted to expose some of the famous fallacies regarding economic issues and has included many beliefs disseminated in the mass media by politicians. Sowell has published popular and scholarly articles on economics and some interesting facts and figures about Great Depression.