By Iman Kagimu
The Great Depression was one of the worst economic turndowns in the history of the entire world. The 1920’s in America were known as the “Roaring Twenties” due to the expansion of the economy, Harlem Renaissance, prohibition laws and increase of consumerism. The New York Stock Exchange reached its peak in August of 1929, and then production was declining, wages were lower, banks had an excess of large loans, the agricultural economy was struggling, unemployment was rising, and stock prices were higher than their value. On October 24, 1929 investors started selling overpriced shares leading to a record 12.9 million shares traded, it was called “Black Thursday”. On October 29, 16 million shares were traded and millions of those were worthless and investors that bought stocks with borrowed money were now wiped out. Businesses and factories started decreasing production, lowering wages and firing their workers. Thousands of families fell into debt and there was an increase of foreclosures and repossessions. By 1931, 6 million people were unemployed. Farmers were not able to harvest their crops so they left them to rot. President Herbert Hoover at the time believed that the government shouldn’t directly intervene in the economy and that it wasn’t their responsibility to create jobs and help the economy. In the election of 1932, Democrat Franklin D. Roosevelt won, he had a plan to help everyone.
On March 4, 1933 Roosevelt delivered his first inaugural address. He used the phrase “New Deal” to encompass the programs he wanted to design, his focus was on relief for the unemployed, recovery of the economy and reform of legislation and social welfare. He declared a four day bank holiday so people would stop withdrawing money and on March 9, Congress passed Roosevelt’s Emergency Banking Act which closed banks that were suffering and helped the ones that could survive. During his first 100 days in office, the new administration passed legislation to create jobs, stabilize agricultural and industrial production, and help the nation recover. He asked Congress to end Prohibition which led to the 21st Amendment, making it legal for Americans to buy beer. He created the Securities and Exchange Commission (SEC) to regulate the stock market and prevent another 1929 crash, which still exists today.
In his recovery plan, the Tennessee Valley Authority (TVA), Agricultural Adjustment Act (AAA) and Federal Emergency Relief Act (FERA) were established. The TVA built dams and hydroelectric projects that controlled flooding and gave electric power to people in the region. The AAA increased agricultural prices by giving government subsidies to farmers which would reduce their output. The FERA gave federal grants to states that funded salaries for government workers and direct aid programs.
The relief and reform plans consisted of the following acts. In 1935, Congress passed the Social Security Act which gave Americans with disability, unemployment and pensions for being older. Since it’s passing tens of millions of people have received financial assistance. The National Industry Recovery Act gave workers the right to unionize to help get them better wages and working conditions. The National Labor Relations Act (Wagner Act) passed which supervised the unions and protected the workers from their employers. The Fair Labor Standards Act created a 40 hour work week which also gave time and a half for overtime, created a minimum wage and restricted child labor. The WPA established job programs that employed 8.5 million people from 1935 to 1943. Those jobs included working on post offices, bridges, schools and highways.
Roosevelt’s New Deal gave the economy the jump start it needed. He was swift in responding to the needs of the economy and of the people. He gave people economic security and made it known that the federal government has a responsibility to ensure the economy and welfare of the citizens.