America and Her Problems: The New Deal

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America and Her Problems: The New Deal


Four thousand eight hundred kilometres across the Atlantic, the USA remained virtually untouched by the rapid changes taking place in Europe. From 1919 onwards the Americans had isolated themselves from that war-scarred continent, retaining only an interest in financial matters. After all, Europe owed them $12 500 000 000. The United States was interested in maintaining prosperity in Europe: that was why she helped Germany over her inflationary troubles during 1923 – 24; why Americans invested their dollars in Europe’s industries; why the United States supported gestures of peace and goodwill, such as the 1928 Kellogg Pact. But she never committed herself, never signed the Versailles Treaty, never joined the League of Nations. Americans had rejected Woodrow Wilson’s ideas in 1920 and for the next twelve years ‘isolationist’ Republican Presidents led the American people.

The Crash

During the Twenties the Americans concentrated on their internal development. They had vast reserves of food and mineral resources. Their industries, which had made huge profits during the war, now mass-produced consumer goods such as radios, cars and washing machines. For many Americans it was an age of prosperity, though marred by gangsters such as Al Capone and by the persecution of the southern Blacks by organizations such as the Ku Klux Klan. But affluence did not last. The United States overproduced; millions of people ran up hire-purchase debts and soon money became scarce. Shareholders tried to exchange their investments for cash and in October 1929 share prices collapsed on their Wall Street Stock Exchange. This was the Great Crash, which led first to the American Depression and then to a slump in world trade. By 1930 the Americans were beginning to understand the misery of unemployment – something which Europe had already experienced. By 1932 over 12 million Americans had lost their jobs and more than 30 000 firms had gone bankrupt. The United States tried to call in her overseas loans and clamped down on the import of foreign goods. As a result Brazilian coffee growers destroyed their crops rather than flood a market already suffering from falling prices and in Germany unemployment returned overnight to give the Nazis their chance. In Canada, the Prairies were hit the hardest, and the farmers’ plight was worsened by a severe drought that created the dust bowl. Two political parties were born partly out of reactions to the economic hardship and working conditions of the time: the Cooperative Commonwealth Federation (CCF) and the Social Credit Party. Increased demands for food caused by the outbreak of World War II pressed Prairie wheat farmers back into profitable work.

Franklin D. Roosevelt

President Hoover had no answer to this breakdown in the American economy – and so the American electors were encouraged to vote for his Democrat rival, Franklin D. Roosevelt in the 1932 elections. Roosevelt was offering the American People a ‘New Deal’ – his answer to unemployment. Once elected, he gave vast sums of Federal aid to the 48 states so that they cold put money back into the pockets of wage earners. He introduced ‘social security’ – unemployment and sickness pay; he began great ‘work-finding’ schemes such as irrigation projects, bridge building and dam construction. Most famous was his Tennessee Valley Authority (TVA), a remarkable scheme which boosted agriculture and industry in a number of states. He had to face plenty of opposition from his political opponents. The Republicans disliked his interference in the affairs of individual sates and the charge of ‘Fascist dictator!’ was often bandied about. But the American people were behind ‘FDR’, who was destined to win the next three presidential elections.

Examples of Roosevelt’s New Deal Projects

CCC (Civilian Conservation Corps) – gave jobs to young unemployed Americans in U.S. forestlands, 2 ½ million found a job with the CCC
PWA (Public Works Association) – spent over $3000m on national construction to find work for the unemployed
HOLC (Home Owners’ Loan Corporation) – lent cash to those who could not keep up mortgage repayments
TVA (Tennessee Valley Authority) – Covered 41 000 sq. miles; provided cheap hydro-electric power, irrigation, fertilizers, new industries and retraining programmes; stopped flooding and soil erosion; transformed valley from poverty into a new age of prosperity
Said one American voter: “Roosevelt is the only President who has ever cared for people like us.”

America and the World

Slowly the Americans began to emerge from their depression at approximately the same time as war was once more threatening Europe. They were still determined to keep out of trouble, although Roosevelt was well aware of he dangers that existed in Germany and Japan. In 1935 and 1937 Congress passed ‘Neutrality Acts’ – the nation wanted peace No American, of course, could foresee that in the not too distant future his country would be at war with both Japan and Germany – and allied with a most unlikely partner, the Communist state of Russia.

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