The Causes Of The New Deal

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Register to read the introduction… Gross Domestic Product levels during this period show that economic recovery began when Roosevelt took office. Furthermore, Charles W. McMillion, former contributing editor of the Harvard Business Review, notes that “the official U.S. Business Cycle Dating Committee established that the downturn that began in August 1929 ended in March 1933.” By 1936 GDP had surpassed the level of GDP that was in 1929, which signifies that economic recovery had been achieved. Industrial output had almost doubled since he took office by the fall of 1936. However, the recovery halted and the economy began to deteriorate sharply in the middle 1937 to early 1938. This period was known as the ‘Roosevelt Recession.’ FDR was adamant on balancing the huge budget deficit he created and as growth had increased it seemed as though recovery was on track. Therefore FDR saw this as a chance to reverse the policies of the New Deal, which proved to be disastrous. Fortunately, Roosevelt realised his error and in April 1938 got $3.75 billion in new spending from Congress, and the economy once again began to recover. This demonstrates that the (Second) New Deal achieved its objective of achieving economic recovery and restoring industry. Without it, it is clear that America would have suffered. FDR was also helped by Europe whose economies were recovering and from a weaker Dollar since coming off the gold standard. One …show more content…
He revealed to the nation “there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing.” This highlighted his intentions to rehabilitate the country’s banks and restore confidence among the nation through the New Deal. The aim of the Emergency Banking Relief Act was simply to restore confidence in the American banking system. However the vital factor for this to work was down to the actions of the people. If FDR’s first ‘fireside chat’, where he urged the people to have faith in the banks once again, had not worked, the banking system might have collapsed. The Glass-Steagall Act was passed soon after, which prohibited the mixing of banking, securities, and insurance businesses. The Federal Deposit and Insurance Corporation which insured deposits up to $2,500 also helped restore confidence in the banking system. Generally, the New Deal legislation was successful, and the American banking system returned to health in the years following World War II. This proves that Roosevelt achieved the goal he had set, although a large part of this economic and banking recovery resulted from the huge spending that was occurring in the European economies in the second half of the

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