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THE GREAT DEPRESSION AND THE NEW DEAL

THE GREAT DEPRESSION AND THE NEW DEAL

This research paper summarizes the policies employed by the New Deal administrations of President Franklin D. Roosevelt to cope with the Great Depression and examines their effectiveness. The aims of those policies were fourfold, the restoration of confidence, relief, recovery and reform. The New Deal's efforts to restore confidence and to alleviate suffering accomplished their purposes. The application of Keynesian economics to stimulate the recovery only partially succeeded because halfmeasures were taken. Some reforms contributed to the long term stability of the economy but others were not completed for political reasons.

When he accepted the Democratic Party's nomination for the presidency in 1932, Franklin Roosevelt pledged "a new deal for the American people" (Atack, 1994, p. 625). When he assumed office, the American system of democratic capitalism faced a crisis of monumental proportions. Economic distress and social unrest were widespread. Since the crash of '29, the value of common stocks had declined from $89 billion to $15 billion. Between 1929 and 1932 GNP dropped in constant 1928 dollars from billions $197.1 to $143. Real output fell 29 percent. Total gross investment fell from 15 percent of GNP to one percent. Consumption dropped by more than one third. Unemployment increased from 3.2 percent in 1929 to 2125 percent in 1933. About 13 million Americans were officially out of work. Farm prices and farm income had appreciably fallen. (Atack, 1994, p. 583, Galbraith, 1984, pp. 9697 and Watkins, 1993, p. 55).

The first priority of the new administration was to restore the confidence of Americans in themselves and the economy and to instill hope. As Goldman (1977) put it, "as the depression ground past its third year, an unprecedented fear seeped through the nation" (p. 249). Of the approximately 9,000 banks which failed after 1929, 4,004 had closed th...

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THE GREAT DEPRESSION AND THE NEW DEAL. (1969, December 31). In LotsofEssays.com. Retrieved 07:15, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1689506.html