Assess the Impact of Government Intervention in Ending the Great Depression in the Usa Essay Example

Assess the Impact of Government Intervention in Ending the Great Depression in the Usa Essay Example Assess the Impact of Government Intervention in Ending the Great Depression in the Usa Essay Assess the Impact of Government Intervention in Ending the Great Depression in the Usa Essay Essay Topic: In the Us Letters From an american Farmer The Great Depression began with the Wall Street Crash of 1929, marking the beginning of a decade filled with high unemployment, poverty and a loss of confidence in the economy. Industries and firms suffered greatly particularly in the agriculture, manufacturing and automobile sectors. The governments of the time led by Republican Herbert Hoover (1929-1932) and Democrat Franklin D Roosevelt (1933-1945) were critiqued heavily by society on how they responded to the depression. Their methods of intervention have attracted a number of views over the years in how effective they were in ending the depression. Hoover was seen as following a somewhat laissez-faireâ„ ¢ attitude when it came to the depression, highlighted in his limited attempts to halt this downward economic spiral. On the other hand, Roosevelt took immediate steps in trying to end the depression has soon as he came into office. When the depression began in 1929, Hoover was positive that the natural economic market forces would fix this downward spiral, therefore minimal government interference was required. He held the idea that the spiritual resources of the American peopleâ„ ¢ were linked to a free market and economic prosperity. He believed that relief measures were strictly for the local authorities and that private charities should take care of the needy and unemployed. He continued to take this position in 1931, where he believed that America had reached a turning point in the depression. He maintained his policy of a balanced budget and minimal government intervention. However, despite his stance, it was clear that Hoover could no longer remain inactive and turn a blind eye to the massive problems that were facing the USA. He indeed made many attempts to combat the depression, more than any president had done before. The problem was that no previous president had faced a depression of this magnitu de. Hooverâ„ ¢s administration set up a Farm Board to help keep the prices of farm produce steady. This would be done through buying surplus farm products at the commercial rate. However by 1932, the Farm Board had spent its budget of $500 million and grain prices fell again. This initiative had a substantial impact on the agricultural sector, and reflected highly on the governmentâ„ ¢s attempt at intervention. Hoover had made two mistakes with the Farm Board which led to its failure. He did not give them a big enough budget and he did not introduce laws to cut surpluses by reducing production. His efforts to persuade farmers to reduce production voluntarily also went unheard. Later on, President Roosevelt avoided making the same mistakes in 1933 when he tackled the problem of poverty amongst farmers. Tariffs were also increased as part of Hooverâ„ ¢s attempt to halt the depression. The Hawley Smoot Act was passed in 1930 which tariffs by 50% on 1000 farm products and manufactures goods that were imported from foreign countries. However this intervention also had a negative impact on halting the depression as countries retaliated by raising tariffs on American goods entering their country. This only decreased the level of trade in the USA and contributed to the downward economic spiral, thus having a disastrous impact for Hoover. Roosevelt later learned from this mistake and signed the Reciprocal Trade Agreements Act in 1934 to gradually reduce tariffs. The next attempt that Hoover made to halt the depression was by promoting voluntarism among the American people. He encouraged firms and industries to adopt his policy of voluntary non-coerciveâ„ ¢ cooperation in an attempt to keep wages and production steady. This was not effective however in stopping high unemployment and l ower wages. Hooverâ„ ¢s most ambitious measure came in 1932 when he signed a bill which created the Emergency Reconstruction Finance Corporation (RFC). This would authorise massive loans to insurance companies, railroad companies and banks allowing them to promote investment in the hope that this would fuel industrial recovery. The RFC was granted $500 million with the option of borrowing an additional $1.5 billion. Historian Fiona Venn highlight some of the problems with the RFC and how it had some negative impacts on America. She says that individual businesses were too worried by long-term business prospects that they were not interested in borrowing. She also says that these loans were aimed at restoring confidence in the whole economy rather than meeting the needs of the most vulnerable in it. Despite all of these attempts to halt the depression, none of them succeeded in getting the job. Hooverâ„ ¢s administration always fell short and their measures had a limited impact. Hoover failed to understand the magnitude of the problems and was not effective in coming up with ideas that would be capable of dealing with them. While Hoover was by no means unresponsive to the depression, he did lack the ability to properly combat the problems. He did not lack compassion or humanity as many people like to believe. Rather, his commitment to the Republican ideals of a balanced budget and free market economy, combined with his faith in voluntarism, override his capacity to remove American from the depression. Historians acknowledge that Hooverâ„ ¢s efforts to halt the depression were inadequate and absolutely useless in the face of unprecedented problems which were beyond his capabilities. Most American voters blamed Hoover and the Republicans for the depression. It was little surprise then that Democrat Franklin Roosevelt (FDR) won the 1932 presidential election in a landslide victory. FDR was a much more flexible and positive leader who was inclined to take action straight away on the problems that faced him. Many have praised Roosevelt as one of Americaâ„ ¢s greatest presidents. The quality of his success lied not so much in his political experience but in his personality. He was optimistic, intelligent, strong-willed and confident with a political awareness of the issues that were around him. FDR knew that action had to be taken right away to combat the depression, and this can be seen in the many interventions that he took in his first days of office. He achieved so much in his first 100 days as president that there is now a benchmark set for all future leaders to see if they can reach his success. While his measures did not eradicate the problems, they did hav e a huge positive impact in relieving economic hardship and attempting to lift the United States out of the depression. The economic situation had deteriorated even further by the time that Rooseveltâ„ ¢s inauguration had arrived in March 1933. FDR needed to act quickly in order to lift the public out of despair and address the many problems that were facing the nation. Historian Anthony Badger wrote that Roosevelt lifted the paralysing fear that had settled on the country the first modern American president who could carry his message directly to the people.â„ ¢ FDR came into office pledging a new deal for the American people.â„ ¢ This led to an unprecedented level of activity in his famous first 100 days, which was aimed to lift the USA out of the depression. Roosevelt invited a group of able and confident lawyers and businessman to generate many ideas and create enthusiasm about combating the depression. This group was known as the Brain Trust. With the help of these men as well as his administration, Roosevelt launched a program of emergency measures to tackle the depression, which would later become known at the 100 Days.â„ ¢ The 100 days program had three main aims: to stop people from starving and descending into poverty; to revive the American economy; and to reform the USA as a great country. The First New Deal is another name for the series of economic programs and legislation put into place to tackle the depression. The aim of this was to save American capitalism and this was done through a variety of measures. In March 1933, Roosevelt declared a four day bank holiday in response to all of the banks which had been forced out of business. The meant that the government closed all of the national banks and prevented people from withdrawing their savings. After carrying our detailed enquiries, the government allowed some of the banks which were considered honest to be re-opened. They also gave them loans to continue operating. These reforms had a significant impact in moving America forward and beating the depression as it restored the publicâ„ ¢s faith in the banking system. Another measure from FDR was reducing the value of the American dollar by 40%, in the hope that it would make American products cheaper for foreigners to buy and thus increase export sales, which wo uld boom the economy. FDR also set up the Federal Emergency Relief Administration (FERA), which would provide $500 million to help the states pay for emergency schemes such as soup kitchens for the homeless. This was an effective step to tacking the depression as it occupied 4 million people by the winter of 1933. At the same time the problems facing farmers and the average homeowner were deteriorating. A quarter of the farmers had lost their land and thousands of householders had lost their homes. This was because they were not able to make the repayments on their mortgage. To try and fix this issue, Roosevelt persuaded Congress to pass two new government bodies which would help these groups. The Farms Credit Administration (FCA) made loans to 20% of farmers, while the Home Owners Loan Corporation (HOLC) made loans to over a million householders to prevent them from losing their property. This initiative was actually quite effective as it took much of the pressure off the banks. Congress passed the Agricultural Adjustment Act (AAA) in an attempt to increase the incomes of farmers. This was another intervention measure that had significant impacts, particularly on the agriculture industry. It was to be done by the government paying farmers to destroy existing crops and to cut back on future production so that prices would increase for farmers and they could use the extra cash to buy manufactured goods. Whilst many farmers did receive extra income from this initiative, the cost of manufactured goods was rising, defeating the whole purpose of the plan. Some farmers were even left worse off after the AAA was passed because the owners of the land evicted them in order to claim subsidies. On the other hand, farmers who owned their land benefited greatly from the AAA. Another important government intervention was the creation of the Civilian Conservation Corps (CCC), which was a relief measure developed to improve land conservation. This was one of the major aims of the New Deal. The CCC enlisted men between the ages of 18-25 whose parents were unemployed, who would do jobs such as planting trees, building reservoirs and clearing beaches. The men were quite happy to do this as they were provided with food and clothing as well as a wage of $30 a month. Some people criticised the CCC however as being a cheap labour scheme, yet joining was not compulsory and there was never a shortage of volunteers. Despite all of these initiatives, unemployment was still high and industrial production relatively low. However, the government was seen to be doing something about the depression and this gave the public confidence in their leaders. FDR encouraged this feeling with his radio broadcasts and explained his policies to the American people in simply, friendly language. He also encouraged the public to write to him about their problems and received up to 800 letters a day. Roosevelt was definitely a peopleâ„ ¢s president and one of the most popular leaders of his time. The alphabet agencies that were created was another effective scheme by FDR which were aimed at organising millions of people into jobs. It began with the 100 days and involved various legislation aimed at relief, reform and recovery.â„ ¢ One of these organisations was the National Recovery Administration (NRA) which aimed to persuade industries to introduce codes of fair practice which would maintain wages and prices above a certain level. Employers were encouraged to improve working conditions by providing a minimum wage and abolishing child labour. In return, businesses would be promoted favourbly to consumers. Roosevelt tried to build up enthusiasm for the NRA through large advertising campaigns. While these seemed to be working at first, there were still many difficulties. Some employers broke the codes of employment and small businesses found it hard to make a profit. Despite the various actions that Roosevelt took and his efforts with the New Deal, there was still many problems and much criticism. As the New Deal progressed, it became obvious that relief and recovery measures were inadequate to meet the enormous needs of US society. The American economy was in a state of collapse. There was still the huge issue of unemployment even with the significant amounts of public spending and hectic legislation in 1933. The New Deal modified American capitalism by providing for an increased government role in the supervision and regulation of the economy. Yet, even after the effects of the New Deal had been seen, American remained one of the most backward industrial nations of the world. In his election promise of 1932, Roosevelt had promised to balance the budget. By 1934 his conservative opponents were criticising him for spending too much, encouraging the growth of trade unions and regulating working hours and pay. Important businessman set up the Ameri can Liberty League against Roosevelt. All of these criticisms lead to the more radical Second New Deal. The Second New Deal came as a result of Roosevelt feeling the pressure ahead of the upcoming 1936 election. At the start of 1935, 11 million people were still out of work and industrial relations had deteriorated even further. FDR introduced social welfare to provide relief to those who were struggling. The Social Security Act 1935 was the first attempt to provide welfare to the poorer people of America. It introduced old age pensions for those over 65, as well as unemployment insurance and disability allowances. It was intended that the unemployment insurance would be provided by the individual states, with aid from the federal government. However so many people applied for this benefit that many areas tried to avoid paying the welfare. This was a backwards step for social security in America. Many people, especially Hoover and the conservatives, disapproved of social security as they thought it encouraged people to be lazy. Others considered the pension to be insufficient for old p eople to live on. However FDR considered social welfare to be one of the most important parts of the New Deal. Overall, whilst many people are divided about the effectiveness of Hoover and FDR in halting the depression, it cannot be said that they didnâ„ ¢t make any attempts to solve the problems. Hooverâ„ ¢s ideas had a little impact in halting the depression, with FDRâ„ ¢s having a rather huge impact in helping the USA.