Roosevelt's New Deal and its place in history

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reforms of Franklin Delano Roosevelt as the Great Depression gave rise to them, forever in the history of the world economy.What is so famous "New Deal" and whether he could really win the economic crisis?

Background In the 1920s, nothing foretold troubles.On the contrary, in the United States after the First World War began to rise in the economy.Production volumes increased, and with them grew and confidence that America - a place where there are no crises.But the reality seemed deceptive.

At the pace of industrial production increased and the cost of the shares.Stock market speculation became a craze Americans.Everyone wants to make money on the stock exchange at least some penny, not being afraid to take this loan from a bank.As a result, the value of shares more removed from the actual figures.By the end of 20-ies in the economy slump.To smooth the consequences, the Federal Reserve has included a printing press and increased the number of loans.But the bulk of the money went not to the industry and the stock market.This contributed to the fact that the stock market has become a pyramid scheme, which simply collapsed, burying under its ruins the whole economy.In October 1929, the New York Stock Exchange collapsed: the value of the shares fell and began their mass sales.And then - a chain reaction: with the shareholders and the company went bankrupt.Thousands of people in an instant became unemployed.

crisis has spread rapidly throughout the economy: industry, banks, agriculture.From 1929 to 1933.the number of unemployed has increased from 3 to 25%, ie one in four Americans was unemployed.Particularly strong crisis hit the small towns, many of them simply died out.

No wonder that after the next elections came to power is not the Republican and the Democratic Party.4 March 1933 its candidate Franklin Delano Roosevelt took office as President of the United States.Unlike his predecessors, he held a rather leftist and believed that the state should actively intervene in economic processes and to help its citizens cope with the crisis, rather than waiting until the economy "come to his senses."These beliefs are reflected in his reforms, known as the New Deal.


In mid-1933 a law was passed, according to which the enterprises introduced the so-called "codes of fair competition."These documents were entrepreneurs themselves, and approved by the President.They indicate the volume of production, the price for it, the order of distribution, as well as the conditions of employment of workers (minimum wage, maximum working week).Since the New Deal did not give the possibility of big businessmen artificially low price or reduce output.At the same time respected and interests of the workers.After the adoption of codes increased the role of trade unions, which are recognized as legitimate representatives of the employees.

Within two years after the adoption of the law all industries are under tight state control.Specially created the National Recovery Administration industry won the right to even close the business.


course Roosevelt was not limited to the reforms in the industry.The president sought to reduce the unemployment rate, which reached an impressive size.To this end, we organized a massive public works, to pay for which funds were allocated from the budget.One of the major projects of that time was the construction of hydropower plants on the river Tennessee.Particular attention was paid to youth employment - for the young unemployed Americans have been established camps where they could work for six months for $ 30 a month.Of course, these measures have not eliminated unemployment, but could it at least a little lower.


Falling prices for agricultural products led to massive ruin of farmers, poverty and hunger, which was then America was no less than the Soviet collectivized villages.Therefore, the New Deal provides for measures to revive agriculture.There have also been set up government bodies to regulate this sphere of economy.Initially, measures to save farmers looked pretty barbaric - the products were purchased and then destroyed.Economy stimulated to reduce acreage and pay a premium for it.These measures were primarily benefit large farmers.Small farmers the government has issued financial assistance for the resettlement on better land, purchase of farms.It stimulates the development of cooperatives.Farmers' debt problems were solved as follows: federal land banks gave them loans due to which farmers repay the debt owed to private banks.


Economic reforms and touched them.First of all, the government conducted a massive revision of the banks by transferring bankrupt under the control of the state.Adopted new rules for this market.Now banks are not able to work with securities.In addition, clearly defined rules of exchange loans.But the most important measure that the New Deal introduced in the banking sector was deposit insurance.Each bank to deduct a portion of their income into a special insurance fund, and the money paid out bankruptcy investors.This law has helped to stop the "flight of depositors' and raise confidence in banks, which is always staggers in times of crisis.


So, what gave the "New Deal" of the American economy?Unfortunately, the adopted reforms have failed to prevent a new crisis, which broke out in 1937, but they were able to prevent a social explosion that could easily happen in 30 years: it was then in America have developed all the conditions.Roosevelt's reforms have broader significance: they show that the state can and should take care of its citizens.They laid the foundations of state regulation of the economy, which is carried out in all modern capitalist countries.The system adopted measures allowed to smooth the devastating effects of the economic crisis.