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New deal refers to the programs of economic reconstruction and regulatory reforms introduced by president Franklin D. Roosevelt to lift U.S.A. out of the great depression of 1930's. This program did not completely end the depression but it contributes substantially to give relief to the people affected adversely by the depression and to reduce the severity of the depression.
The new deal program contained three key elements. These were (1) providing relief to the people to alleviate their sufferings caused by the depression, (2) giving a push to speedy economic recovery, and (3) reforming the financial system.
The many reforms and programs under the new deal include following measures.
- Closer monitoring and regulation of banking operation to ensure healthy banking practices and to restore public confidence in banks.
- Regulation for stock issues and trading practices to protect interest of common investors.
- Assuring fair return to farmers for their produce.
- Curbing unhealthy price cutting by industry.
- Improving the condition and bargaining power of labour force.
- Creating employment to needy by undertaking useful conservation and other projects.
- Providing loans at low interest rates to help home owners repay their debts.
Scholars typically say there were three aspects to the New Deal -- the three Rs -- Relief, Recovery, Reform.
Relief was meant to help people right away if they were struggling because of the Depression. Programs included the FERA, the CCC and WPA -- these gave jobs or just plain money to people who needed them.
Recovery was meant to help get the economy going again. This would include things like the TVA and the NIRA.
Reform was meant to prevent another Depression. This included things like Social Security, the FDIC and the creation of the SEC.
One of the key elements of Reform mentioned in the list of acronyms is the creation of the FDIC; namely, the Federal Depositi Insurance Corporation, which, to this day, insures deposits up to a certain amount of money so that investors will not lose everything is there is another "crash." With his Emergency Banking Act of 1933, the Federal Reserve banks reopened, and billions of dollars of hoarded currency and gold flowed back into these banks, thus stabilizing them. This creation of the FDIC is one of the fail-safes that have prevented other recessions such as that of 1975 and the current one from becoming a full blown economic depression.
While the WPA of 1935, or Works Project Administration created jobs for men, it did not help women--other than widows or wives of disabled men--procure jobs until 1941. Federal Art Projects were also begun. One such project gave 162 trained artists the opportunity to paint murals or create statues for post offices.
Convinced that the economy would not stabilize until farming became prosperous, Franklin directed many programs to farmers. The AAA, Agricultural Adjustment Administration, began in 1933; its aim was to raise prices for commodities through artificial scarcity. So, the AAA paid farmers for leaving some of their land idle. While farmers incomes rose in the first three years of this program, a Gallup Poll revealed that most Americans were against this program. Nevertheless, the government to this day pays farmers not to plant and not to utilize all their land.
More income came to legitimate businesses with the repeal of Prohibition in 1933, as well. Also, in 1933, the National Industrial Recovery Act was passed insuring workers raises as the value of products increased.
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