The New Deal

The Great Depression in the United States began in October, 1929. That is when it is said that the 'stock market' crashed. When some companies need money, they offer shares or parts in their companies to other people for a certain amount of money. These are called stocks. From day to day, these stocks are valued at different prices due to changing conditions in business.

In 1929, stock prices dropped to extremely low prices. Many people lost all the money they had. After that, 13-15 million people lost their jobs because businesses were failing. Men couldn't support their families. They begged for food and waited in long lines for free food to be given out.

At first, President Herbert Hoover thought that the problem was temporary. By 1933, however, the financial condition was extremely bad. The new President, Franklin Roosevelt, put into place a program called The New Deal. He asked a group of his advisers called the 'Brains Trust' to come up with ways to solve some of the problems.

In 1933-1934, the President focused on ways to help the poor. From 1934-1939, the program focused on policies and plans to help the country recover from the financial crisis. President Roosevelt brought about changes in the banking system which would help prevent another depression from happening. The three words he emphasized were 'Relief, Recovery and Reform.' All the programs involved in this action were called together 'The New Deal.'

Relief meant to give direct help to the poor and jobless. Recovery meant to create jobs and grow the economy. Reform meant to aid the financial situation by making new laws for the banks. For one week in March, 1933, he closed all the banks. During that week, he passed the Emergency Banking Relief Act.

Each agency/program had letters designating the name, so they were called 'alphabet soup' agencies. For example, in 1933 President Roosevelt passed the NRA, National Recovery Act. In 1935, he passed the National Labor Relations Act, the NLRA. He also set up the CCC, Civilian Conservation Corps, a program to employ 250,000 men working on projects including preservation and development of natural resources, like national parks. The plan focused on providing jobs for men 18-28.

The FDA, Federal Housing Administration, was set up to give loans for people to buy houses. This would also help construction workers as well as home buyers. The REA, Rural Electrification Administration, provided electricity for those who lived in rural areas.

The New Deal was successful in part because President Roosevelt (FDR) was a strong figure who gave inspiration to the people. He gave regular radio broadcasts called 'Fireside Chats' to keep Americans informed about what was going on and to encourage them that all would be well.

Many parts of the New Deal were very successful. The banking system was reformed. Child labor was abolished. Young children could no longer work in factories under bad conditions. Many building projects were completed, including, bridges, highways and airports.

There were also some bad results of the New Deal. Businesses thought that the President didn't favor them because he encouraged workers to go on strike if they weren't happy with certain aspects of their company. Also, many of the jobs created were only temporary, so unemployment occurred again.