The New Deal was extremely significant as it helped America recover from the Great Depression. Roosevelt introduced the New Deal on becoming President, to tackle the economic and social problems created due to the Wall Street Crash and the Great Depression. It was mainly aimed at the three “R”: Relief, Recovery, and Reform. The main focus was on stabilizing the economy and providing jobs and relief to the poor that helped reduce unemployment. The New Deal also had many social benefits, thus proving how it were an extremely significant factor in American history from 1933-1942. However, the New Deals did have its flaws. Unemployment only fell USA’s entry into World War II. Also, after the Roosevelt cut the bidget of the New Deal in 1937, the economy went back into recession.
The New Deal was important as it helped stabilize America’s economy after the Wall Street Crash. One of the main problems affecting the American economy was its loss of confidence in the banks. During the 1920’s, approximately 3000 banks had gotten involved in speculation and failed, and so people had stopped trusting banks in fear of losing their money and they started storing their money and valuables in safety deposit boxes at home. Since now banks no longer had sufficient money, they stopped lending to businesses and called back loans from businesses due to which businesses had to cut back on expenditure and dismiss workers, who now bought even less; and since the American economy relied on mass consumption, it crashed. Through the Emergency Banking Act, which was a part of the first New Deal, Roosevelt ordered all the banks to close and to remain that way until government officials had checked them over. Only five thousand trustworthy banks were allowed to reopen. The government of even financially supported them if needed. Along with this, Roosevelt and his advisors, who were also known as the “brain trust,” introduced a few rules and regulations to prevent speculation so that America might not have to witness another crash. These agencies helped restore the confidence of the American population in banks and the stock market since they marked them as trustworthy; it restored their confidence in the banking system. People could now put their money in the banks without being afraid of losing it, and this was vital to the New Deal being a significant factor in the American history since it helped stabilize and stimulate the economy. Roosevelt even kept in touch with the public through his radio program called “fireside chats” in which he explained his policies in detail to them. Almost sixty million people listened to it. It helped them trust the New Deal since it helped increase transparency between the government and the people. It gave the people assurance that the New Deal was bound to work and that made them trust it, which was again, vital to the recovery of the American economy. The Public Works Administration built public works which improved America’s infrastructure. The main purpose of this was to restart the construction industry while also building all that would be vital when America recovered. Not only did it create millions of jobs, but it also helped revive the American economy and stabilize purchasing power. All of this helped make the New Deal a significant factor in American history from 1933-1942.
However, the American economy still took longer than the European economies to recover from the crash. The business community and Republicans such as Alfred Landon argued that the schemes in the New Deal were communist and unsuitable for the USA. They felt that the New Deal was doing too much and also that Roosevelt was acting like a dictator since some of the schemes were unconstitutional; the Supreme Court had not approved them. For example: the National Recovery Administration had been proved to be an agency that had not been approved by the Supreme Court. They also stated that a few agencies such as the Tennessee Valley Authority were creating unfair competition for businesses that were privately owned since they had more funding and produced on a larger scale.
On the other hand, Dr. Francis Townsend opposed the New Deal saying they were doing too little. He established quite a few “Townsend Clubs,” which campaigned to give people over the age of 60, the retirement age, a pension of 200 dollars every month. Assuming they spent it that month, the economy would stimulate, as consumption expenditure would increase. Still, low confidence persisted. Throughout the 1930’s, only 75 per cent of what used to be invested before was invested. Growing opposition from not only the republicans and radical critics, but also the Supreme Court showed how the New Deal was limited in effect. Also, when Roosevelt cut the budget of the New Deal in 1937, the economy went back into recession. All this proves how the New Deal had flaws and thus, was not that significant a factor in American history from 1933-1942.
Another reason the New Deal was important was because it helped reduce unemployment. After the Wall Street Crash, the number of unemployed people had reached almost 14 million. Many families lived in primitive conditions, and a few had to shift into Hooverville’s, the shanty towns on the outskirts of the city, to find accommodation. In such a time, agencies such as the Public Works Administration and the Tennessee Valley Authority provided millions of jobs. The Civilian Conservation Corps helped unemployed men by letting them work on environmental projects for a period of six months, which could be extended. The money that they earned was generally sent back to their families. Almost 2.5 million men who were unemployed before now had jobs. By The Works Progress Administration, or the Works Progress Administration as it was later renamed, gathered all organizations whose main objective was to create jobs. Along with all these agencies who made the New Deal significant by decreasing unemployment, there was also agencies, such as the Federal Emergency Relief Administration, which provided relief to the poor, spending more than 500 million dollars to do the same. In the end, unemployment did fall from 14 million in 1933 to 8 million in 1937, making the New Deal a significant factor in American history. Also, by 1938, the Public Works Administration, Works Progress Administration and Civil Works Administration, all three of which aimed to create jobs, had become the countries biggest employers.
On the contrary, there were still 9 million unemployed in 1939 and 6 million in 1941, as a result of Roosevelt cutting the New Deal budget in 1937. Also, it is only when the United States entered into World War Two in 1941 that unemployment fell drastically. Because of war, more workers were needed to create artilleries and more soldiers were needed to fight, unemployment fell highly.