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How Did The New Deal Affect The Economy

1139 Words5 Pages

Shpresa Frrokaj
Professor J. Norrgard
Section 52
22 November 2013
The New deal and its impact
The Great Depression was a tragic period on the American History. Although it is widely known that it was caused by the crash of the stock market, it is still debatable what caused the stock market crash. Analysts such as Paul Roberts and Lawrence Stratton agree that Federal Reserve’s Bank tight policies caused the economy to fall into a recession (3). Hoover and his economic policies did not prove to be successful. Companies went bankrupt, people lost their money, the unemployment rate went up along with the prices, whereas the exports decreased dramatically.
This situation was a not very pleasant one for the new president, Franklin Delano Roosevelt …show more content…

The Congress passed The Emergency Act. All the banks shut down, and only Federal Reserve-approved banks were allowed to operate in the whole country. In this way insolved banks were closed down and only those banks strong enough to operate were allowed to reopen. This make people trust the government and deposit more without the fear that their money would be lost. Other programs such as Civilian Conservation Crops established jobs for unskilled laborers, focusing on the conservation and the development of the crops. This not only showed that the government valued the environment, provided jobs and wages (although symbolic) to its people, but also showed that Americans can get together against a struggle to help their nation. Another significant New Deal program is Federal Emergency Relief Act – FERA. Working through Hopkins, Roosevelt focused on action rather than politics. Through FERA the government provided grants for agriculture, education, and a variety of relief programs, which in the same time proved employment for the people. The relief programs had a great psychological effect on the population. The programs reestablished the faith of people on the government, increasing their commitment to get out of the Great Depression and seek further development. Establishing the foundation for recovery programs which would come …show more content…

By implementing them the Government wanted to make sure that a second Great Depression will never happen again. Such programs/acts were the Federal Deposit Insurance Corporation (FDIC), the Wagner Act and Social Security Administration(SSA). The FDIC protected bank depositions and monitored soundness of them. It helped to restore the confidence in banks and encourage deposits rather than withdrawals. Another program was Securities and Exchange Comission (SEC). SEC was an agency that monitored the nation’s stock as well as ensured that no fraud will take place. It gave the government the possibility to plan for future goals , based on companies’ annual reports, which made it safer for the investors to invest. Lastly, one of the most important programs of the new deal, introduced during the reform period was Social Security Administration – a permanent agency designed to ensure that the older segment of society always would have enough money to survive, by paying part of the Social Security taxes on their

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