HOW SUCCESSFUL WAS THE NEW DEAL? (ECONOMIC EFFECTS OF THE NEW DEAL (KU…
HOW SUCCESSFUL WAS THE NEW DEAL?
ECONOMIC EFFECTS OF THE NEW DEAL
Overall, in terms of economic improvements, the new deal was limited and therefore not as significant as the second new deal . GPD increased and unemployment was reduced but not to an extent that solved all problems. There was still too many unemployed and GPD growth was too low to be considered a success. Therefore all though the New Deal was partly successful in solving some of Americas problems, it cannot be regarded a complete success
Although the American economy never reached the heights of before the depression, the new deal saw a number of positive economic results. Between 1933 and 1939 gross domestic product increased by 60%, from $55 billion to $85 billion.
This was significant as the amount of consumer products bought was increased by 40%, proving that the new deal was successful in its attempt to fix Americas banking system.
However the impact of this was limited as unemployment continued to be a problem, never running at less than 14% of the working population
The new deal was impressive in its economic effects. From 1933-34 national income rose by 23%, whilst unemployment dropped by 2 million.
This was not significant as this still meant that 21% of the working population of the working population were without a job, highlighting the limited impact this had on improving the confidence and lives of the American public and the banking system
FIRST 100 DAYS AND CONFIDENCE BUILDING
The emergency banking act (9th MArch 1933) was set up so the accounts of all banks in the US were inspected and only those with properly managed accounts were allowed to reopen.
This was significant in building confidence and was furthered by FDIC.
Savings of up to $5000 were guaranteed by the government, even if a bank collapses, restoring trust in the American public.
The significance of this Act was limited as FDRs banking measures were favoured larger banks and often gave them control of smaller banks
Furthermore the success of the emergency banking act was limited as the act favoured the rich and powerful and did little to improve the lives of the poor.
The economy act 1933 cut the pay for all those working for the government and armed forces, and the budgets of government departments.
This was successful as it helped the American economy and nearly $1 billion were saved and available for spending in other areas
However the impact of this factor was limited as it did not save the $1 billion FDR had hoped. The supreme court overruled cuts to veterans pensions and government spending in other areas dwarfed the saving made by the Act.
Overall, this was a significant factor in restoring confidence to the American people. The belief that the economy would recover was arguably just as important as improving the economy itself.
Without the confidence building measures the New Deal would have undoubtedly been less successful and the American economy would have taken much linger to recover.
FIRST NEW DEAL
Overall the significance of the first New Deal was that it restored American Confidence in the economy. However, the first new deal did little to provide help for those already faced without work and in poverty therefore it did not solve Americas problems aswell as the second New Deal did.
The Agricultural Agency was set up to increase profits for farmers, they faced public outcry for slaughtering 6 million piglets.
This was significant as although some of the carcasses were processed and fed to the unemployed, most were wasted and so those in poverty were not given a helping hand
However the AAA worked efficiently to deal with the overproduction. By 1935 the total farm income rose from $4.5 billion in 1932 to $6.9 billion in 1935, highlighting the success of the Act.
The CCC was formed on march 31st, this agency was designed tot tackle the problem of young unemployed men between the age of 18-25.
This was significant as the young men got food and clothing and most importantly a sense of purpose.This also helped me gain new skills that could help get them new jobs afterwards
However, the impact of this act was limited as only men under 25 were able to take part in these, therefore did nothing to help with men over the age and all women.
SECOND NEW DEAL
The WPA was set up under the leadership of Harry Hopkins, one of FDRs closest advisors. The WPA were responsible for building and improving a further 85000.
This was significant as it provided work to unemployed workers who could not find work elsewhere and employed roughly 2 million Americans a year.
However the impact of this was limited as the programme was very expensive to run, by 1940 US national debt stood at $43 billion, more than doubling since 1933.
Before the Second New Deal only 37 states offered any form of OAP and only one Wisconsin, provided unemployment benefits. The 1935 social security act was a radical change, forcing states to provide a system of social security.
This was significant as the Act introduced pensions which were to be paid at a minimum of $10 and a maximum of $85 per month depending on how much an employee had paid in.
Furthermore this factor meant that some of the nations poorest were excluded from receiving a pension or unemployment benefits such as farm workers and servants meaning the act failed to help the poor escape the clutches of poverty.
Overall the Second New Deal was more important in solving Americas problems than the first 100 days because the second new deal was more radical and increased the level of government intervention. Furthermore it ensured that there was a basic safety net in the form of social security existed for all Americans.