America before and at the time of the World War II. Hirishima 1945: right or wrong?

Causes

The Great Depression and the New Deal. The difference of the Roosevelt Administration from all previous administrations.

The Great Depression began with the Wall Street Crash of October, 1929 and rapidly spread worldwide. The market crash marked the beginning of a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth and personal advancement. Although its causes are still uncertain and controversial, the net effect was a sudden and general loss of confidence in the economic future. The usual explanations include numerous factors, especially high consumer debt, ill-regulated markets that permitted overoptimistic loans by banks and investors, the lack of high-growth new industries, and growing wealth inequality, all interacting to create a downward economic spiral of reduced spending, falling confidence, and lowered production.

Industries that suffered the most included construction, agriculture as dust-bowl conditions persisted in the agricultural heartland, shipping, mining, and logging as well as durable goods like automobiles and appliances that could be postponed. The economy reached bottom in the winter of 1932–33; then came four years of very rapid growth until 1937, when the Recession of 1937 brought back 1934 levels of unemployment. The depression caused major political changes in America. Three years into the depression, Herbert Hoover lost the 1932 presidential election to Franklin Delano Roosevelt in a sweeping landslide. Roosevelt's economic recovery plan, the New Deal, instituted unprecedented programs for relief, recovery and reform, and brought about a major realignment of American politics.

Current theories may be broadly classified into two main points of view. First, there is orthodox classical economics, monetarist, Keynesian, Austrian Economics and neoclassical economic theory, which focuses on the macroeconomic effects of money supply, including Mass production and consumption. Second, there are structural theories, including those of institutional economics, that point to underconsumption and over-investment (economic bubble), or to malfeasance by bankers and industrialists.

There are multiple originating issues: what factors set off the first downturn in 1929, what structural weaknesses and specific events turned it into a major depression, how the downturn spread from country to country, and why the economic recovery was so prolonged.

In terms of the initial 1931 downturn, historians emphasize structural factors and the stock market crash as well as bank failures, while economists point to Britain's decision to return to the gold standard at pre–World War I parities ($10.98 Pound). The vast economic cost of World War I weakened the ability of the world to respond to a major crisis.

Banks began to fail in October 1930 (one year after the crash) when farmers defaulted on loans. There were no federal deposit insurance during that time as bank failures were considered quite common. This worried depositors that they might have a chance of losing all their savings, therefore, people started to withdraw money and changed it into currency. As deposits taken out from the bank increased, the money multiplier decreased, which means money circulation is slowed down. This led to a decrease in the money supply, and an increase in interest rate and a significant decrease in aggregate investment.

The US government's commitment to the gold standard prevented it from engaging in expansionary monetary policy. High interest rates needed to be maintained, in order to attract international investors who bought foreign assets with gold. However, the high interest also inhibited domestic business borrowing.^{[ citation needed ]}

Economists dispute how much weight to give the stock market crash of October 1929. According to Milton Friedman, "the stock market in 1929 played a role in the initial depression." It clearly changed sentiment about and expectations of the future, shifting the outlook from very positive to negative, with a dampening effect on investment and entrepreneurship, but some feel that an increase in interest rates by the Federal government could have also caused the slow steps into the downturn towards the Great Depression. Thomas Sowell, on the other hand, notes that the rise in unemployment had peaked at 9% two months after the crash, and had fallen to 6.3% by June – he blames the later unemployment rate on the tariffs that Hoover passed against the advice of economists in that same month, and says that six months after their implementation unemployment rose to the double digit figures that characterized that decade.

The US interest rates were also affected by France's decision to raise their interest rates to attract gold. In order to attract gold to their vaults, France increased their interest rates. In theory, the US would have two potential responses to that: Allow the exchange rate to adjust, or increase their own interest rates to maintain the gold standard. In those days, the US was pegged to the gold standard. So, people converted all their dollars into franks to buy more French assets, the demand for the US dollar fell, and the exchange rate increases. So the only thing the US could do to get back into equilibrium was increase their interest rates.

The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were responses to the Great Depression, and focused on what historians call the "3 Rs": relief, recovery, and reform. That is, Relief for the unemployed and poor; Recovery of the economy to normal levels; and Reform of the financial system to prevent a repeat depression. The New Deal produced a political realignment, making the Democratic Party the majority (as well as the party which held the White House for seven out of nine Presidential terms from 1933 to 1969), with its base in liberal ideas, big city machines, and newly empowered labor unions, ethnic minorities, and the white South. The Republicans were split, either opposing the entire New Deal as an enemy of business and growth, or accepting some of it and promising to make it more efficient. The realignment crystallized into the New Deal Coalition that dominated most American elections into the 1960s, while the opposition Conservative Coalition largely controlled Congress from 1938 to 1964.

Historians distinguish a "First New Deal" (1933) and a "Second New Deal" (1934–36). Some programs were declared unconstitutional, and others were repealed during World War II. The "First New Deal" (1933) dealt with groups; from banking and railroads to industry and farming, all of which demanded help for economic recovery. A "Second New Deal" in 1934-36 included the Wagner Act to promote labor unions, the Works Progress Administration (WPA) relief program, the Social Security Act, and new programs to aid tenant farmers and migrant workers. The final major items of New Deal legislation were the creation of the United States Housing Authority and Farm Security Administration, both in 1937, then the Fair Labor Standards Act of 1938, which set maximum hours and minimum wages for most categories of workers^[1] and the Agricultural Adjustment Act of 1938.

Despite Roosevelt campaigning heavily against anti-New Deal Republicans and anti-New Deal Democrats, Republicans gained many seats in Congress in the 1938 midterm elections and the Democrats opponents of the New Deal retained their seats,^[2] resulting in the WPA, CCC and other relief programs being shut down during World War II by the Conservative Coalition (i.e., the opponents of the New Deal in Congress); they argued the return of full employment made them superfluous. As a Republican President in the 1950s, Dwight D. Eisenhower left the New Deal largely intact. In the 1960s, Lyndon B. Johnson's Great Society took New Deal policies further. After 1974, laissez faire views grew in support, calling for deregulation of the economy and ending New Deal regulation of transportation, banking and communications in the late 1970s and early 1980s.^[3] Several New Deal programs remain active, with some still operating under the original names, including the Federal Deposit Insurance Corporation (FDIC), the Federal Crop Insurance Corporation (FCIC), the Federal Housing Administration (FHA), and the Tennessee Valley Authority (TVA). The largest programs still in existence today are the Social Security System and the Securities and Exchange Commission (SEC).

The New Deal O n a cold, grt'y Saturday in Much 1933. Frank lin D.

Roosevelt roo k the oar h as President of the United

States. For J hun dred days. from March 8 to June 16

he scm Congress a flood ofpro posa ls for new laws.

The Amcr rcan people had asked for action. In the

"Hundred Days" Roosevelt g;tvc it [0 them.

Manv ofrhe new laws set up govctn rncnr

orgJ.llizJrlons called "agencies' to hel p the na tion to

recover from th e: Dep ression. Th e C ivilian

Conservati on Corps (CCe) fou nd work (or man y

thousands ofyo un g men. The f ederal Emergency

Relief Administration (FERA) gave individual states

government money to help their unemployed and ho meles s. 'I'hc Ag ricu ltural Adjustment

Administratio n (AAA) set out to raise crop prices by

pay ing farm er s (0 produce less. T he Tennessee

Valley Authority (TVA) buil t a network of darn s to

make electricity and Stop flood s in a poor

southeastern rcg ron oftilt' United States. And the

Nation allk covcry Administration (N HA) worked

to make sure that businesses paid fair wages and

d lJ rgt-d fair prices. The Amer ican people knew both these an d lat er New

Deal organizat ions by thei r initials. Let us look more

closel y at the work o f some ofthese "alphabet

agencies.

Roose vel t belie ved that his most urgent task was to

find people work. He was especially an xious ab ou t

the young. Thousands were stealing rides 011 fre ight

trains and wandering abour the country sea rching for

j obs. Roosev elt set up th e CCC to hel p them. By

August 1933, the CCC had already placed 250,000

yo ung men III camps all over the count ry. They were

hard at work cutting fire- lanes through forest s,

st rengthening river banks aga inst floo ding, planting

trees III places where the soil was being blown J\va y.

The government gave th e CC C workers food and

she lter and a wage ofa dollar a day. Many sent this

wage home to help their less fort unate rela tives.

A later alphabet agency was the Wo rks Pro gress

Administranon (WPA). Roosevelt set up the WI'A in

1<)35. Like the CCc, it aimed to set people to work

on j obs that were useful to th e community. 13y 1937

its worker s had built thousands ofmiles of new roads

and thousands ofschools and hospitals. The WPA

even foun d work for unem ployed w riters an d artists.

T he write rs produced guidebooks to states and cities.

The art ists painted pictures on the walls of po st

offices and other pu blic buildi ngs.

Alphabet agencies like the C:CC and the WPA pur

mi llions ofpeople to work. Between 1935 and 1941

the WPA alone pro vided eight million j obs. T his

meant tha t people were able to support themselves

on ce more. T he y regained their independence and

self respect. This was not all. The money they were

paid helped to bring trade back to life. Shops had

customers agam. Factories became busy once more.

Farmers had someone to buy th eir produce.

This w as what Roosevelt had hoped for. l ie believed

tha t putting money IIH O people's pockets was lik e

pour ing fue l into an engmc that had stopped to ma ke

it start aga lll. T he engllle co uld th en once more drive

the economic machinery th at earned the country it s

living.

Roosevelt help ed industrial workers in orhc r ways.

In 1935 he persuaded Congress to pass a law to

proteJ:t their right tojoin labor unions. He hoped this

would give worke rs J bcrrer chance to ba rgain with

employers.

But some big cmplovc rs c-Hcnry Ford was onehated

labor unio ns. They dis missed any worke r who

joined one. St rikcs and figb ring bro ke om in

indust rial areas o f the cou ntry as uruons struggled to

win recognition. To stOp the trouble another union

law was passed. This was called the Wagner Act.

afte r the man who guided it throu gh Congress. The

Wagner Act gave every worker the right to j oin a

union, and it set up a body called the Nation al Labor

Board to protect this right.

Bur despite New Deal reforms like these, millions of

Am ericans stil llived in fear. What if their job s

disappeared again? Would only a breadline stand

between them and starva tion on ce more? " No,,.

Roosevelt told them. In 1935 he brought in a law

called the Social Security Act. One part ga\T

government pen sions to peo ple unable to provide for

rhcmsclves c- old people, widows and the blind. for

example. Anot her part gave the United States its first

system ofunemploymcnt insur ance. The money to

pay fo r these benefits came from special taxes paid by

bot h workers and employe rs. T he unemployment

scheme did not cover all workers at first. But in later

years more and more were pro tected by it.

Not all American s suppo rted Roosevelt 's New Deal

poli cies. Some said rhar the count ry could not afford

the money that he was spending. Others said that

much of rhc mon cy was being wasted anyway. They

feared. roo, that Roosevelt's policies would make

people idle and sto p them standing on their own feet.

" You can' t make the world all planned and soft."

complained o ne businessman. "The strongest and

best survive - tha t's the law o f nature after all."

But such cr itic ism s made lit tle differ ence to

Roosevelt' s populari ty with the vo ters. To millions

ofAmericans he was the man who had given them

Jobs and saved their homes and farms. In 1936 they

re-elected him President by the largest maj ority of

votes in the couu erv's history. As one wit pm it.

" Everyone was aga inst the New Deal but the

voters." Thirty years later a New York taxi dri ver

still remembered how many Americans felt about

Roosevelt III those years. " Roosevelt?" he said III a

24 H U U5lV EI.-I \ N EW DEAl.-

television intcrvicv v, " l ie was God in this country."

Even so. it was not Roosevelt' s New Deal that ended

unempl oyment in the United States. The German

dictator, Adolfllitler, did that.

Hy 1939, despite the New Deal. ten million

American workers aga in had no jobs. Then. in

September 1939. Hi tler 's armies marched into

Poland. The Second World War bega n. The United

Stat es quickly became the main supplier o f \·veapons

to the countries fight ing Hitler - what Roosevelt

descri bed as " the arsenal o f democracy." American

factories began working all day and all night. The

number ofpeop le without jobs fell. In 1941 the

United States joined the war itselfand

unemployment disappeared. President Roosevelt

was now tOO busy to give atte nt ion to further

reforms at home. " Old Dr. New Deal has to be

replaced by Dr. Win- thc-War." he said. His New

Deal was ov er.

Roosevelt's effo rts as " Dr. Will-the-War" wore him

out. By 1945 he was a sick man. A few weeks befo re

the end o f the war, Oil the morning of April 12, he

suffered a stroke. Within hour s he was dead. His Vice

President. Har ry T ruman. took ove r as President of

the United Scares.

By this time nearly all Ameri cans were bet ter off than

they had been in the da rk days ofthe Depression.

Some argued that this was due mainly to the coming

ofwa r. ti nt many thought the main cause was the

New Deal. Peo ple stillarg ue about th is. But there is

no argu ment abou t the importance of the Nl'\V Deal

in ot her ways.

The New Deal altered Americans' ideas about the

righ t ful work of their national govcnunenr. Before

the New Deal most thou gh t of the gove rnment as a

kind of policema n. It was there j ust to keep order,

while factor y owners and businessmen got 011 with

making the count ry richer. The Depression

weak ened this belie f Roosevelt taught Amer icans to

look to th e gO'it"rnmellt to sec that eve ryone had a

fair chance to obtain what he called " the good tlungs

oflife." Many Ameri cans still remember him with

respect and affection.

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