The new treatment and its impact on the US economy
When Franklin D assumes. Roosevelt The Presidency in 1933 was approved several laws in Congress as assistance funds for unemployed, support prices for farmers, voluntary work service for unemployed under 25 years, large -scale public works projects, reorganization of private industry, creation of federal agency to save the Valle del Tennessee, mortgage financing, insurance for bank deposits and regulation of values transactions. These laws created new organizations responsible for carrying out these measures. The New Deal had been prepared during the presidential race by a group of intellectuals, which Roosevelt gathered around his, known as the ‘Trust Blains’.
The most important problem for Roosevelt was the almost total bankruptcy of the banking system, to such an extent that it was impossible to charge a check. Industrial production, meanwhile, had touched background in 1932. The banking crisis was essentially trustworthy and could be easily solved. In a radial discourse Roosevelt reported the population about the reopening of banks inciting to deposit since there were no more risks, so several individuals deposited again. The recovery of the banks was nothing more than the prelude to a thorough review of the financial system, severely distorted since 1929 by the contraction of credit, the increase in debts and the default of mortgages.
Another problem was unemployment. The first measure adopted in this field was the creation of work camps where the unemployed performed conservation tasks of natural parks and other green spaces. Although the Federal Government faced public works, these did not compensate for the enormous reduction experienced by spending at state and municipal level. The New Deal never had a specific program to lower unemployment through public works since they lacked beforehand projects and planning required time. The projects had to self-finance what made their elaboration difficult. In addition, to achieve maximum social benefit, as much labor should. Not only the New Deal could not significantly reduce unemployment, but the work granted were precarious as they were public works that by their very nature did not last long.
The New Deal constantly faced the dilemma of using money in relieving current suffering or stimulating the economy for the future. Much of the New Deal investments came from taxes, since otherwise, the federal government should have accepted a budget deficit. This meant that a part of the money destined to pay the salary of the new employees deduced from the salary that enjoyed a job. This proved that Roosevelt did not know in the background the measures recommended by Keynes since this indicated that the increase in spending, and consequent.
Another serious problem, was the low and permanent level of agricultural income. It was necessary to increase prices and this was achieved by decreasing agricultural production. To achieve this, premiums were granted to those farmers who wanted to produce less. This implied that at least a part of the rehave. However, the increased standard of farmers meant more money, more demand and more employment.
The second New Deal
The second New Deal was implemented in Franklin D’s second mandate. Roosevelt and consisted of the promulgation of a law on housing, the implementation of social security, the creation of regional planning bodies, support to unions and a more progressive fiscal system with higher taxes to income and thewealth. Likewise, the consequences of the new impositions to the rich were insignificant and there was no such redistribution of wealth. In 1929 the union constitutions unrestricted. Companies had to accept the freedom of syndication of their employees. The unionization of the workers of the mass production industries was achieved;All employees, whatever their qualification, should be integrated into the same industrial union while the federal government would use them as ‘transmission belts’ of state regulations on labor matters.
In these circumstances, the government made a serious economic error that would delay recovery in two years. In 1936, the rhythm of expansion was accelerated and prices quickly rose. Fearing a speculative boom, Roosevelt ended the budget deficit and the following year the economy plunged into a depression that did not suffer any other country and increased unemployment. As soon as the government reduced expenses, businessmen lost confidence and stopped investing. Roosevelt still did not understand fiscal policy, thought it was public works and not the budget deficit that promoted employment. Federal expenses increased in 1938 but the hostility towards the New Deal had increased. As unemployment lasted, Roosevelt’s impopularity grew.
While the second New Deal was said to. For having known a more radical solution was the savior of capitalism. The most enduring effect of the New Deal was to increase the power of the federal government and the particular president: the power of the states and the president and his cabinet were reduced to Congress as the main legislative source. American society experienced a deep transformation due to the increase in federal and presidential power over the economy. That is why the authentic legacy of the New Deal was to revolutionize expectations.
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