Franklin Delano Roosevelt FDR was heroic personality and the only one who served as President of USA for three consecutive terms. His new deal program was so popular that actually saved America from the serious economic recession.
The Great Depression of 1930 a severe global economic downturn
The Great Depression was a catastrophic event that led millions of people in to poverty. People hardly got a meal, stood in bread lines and lived in shantytowns. The seeds of great depression were sowing in the golden era of 1920’s. At that time, the Stock market reached to its new heights. The investments on Stock market became a trend. Stock market crashed in 1929 and considered as a main cause of the great depression in USA, but it was not the only cause. The Europe economy in early 1920’s was already in tatters due to repayment of debts owed to America during WW1. Heavy reparation paid by Germany that resulted hyperinflation in Germany. On the other hand the USA economy was flourishing. Consumerism on its peak, and taxes were cut for heavy investments.
In the agricultural sector, the technology introduction maximized the production. Similarly, the modern inventions like washing machine became so popular consumer item. Many people bought these items on Credit. The mega building of The Empire State and Rockefeller were built in this decade of 1920’s.
The Stock Player tried their luck in stock market. Many of them invested in the stock market for the very first time. Stock market with increasing share prices attracted many people to make money quickly. People took loan to buy stocks. The economy boom was nonrealistic. It was a gilded economy. USA quickly reached a saturation point. The booming economy caused by stock market speculation was an illusion. On Oct 24, 1929 the stock market was crashed. On a large scale, people sold their shares. Over 12 million shares sold in a single day which in history known as Black Thursday. Many industries collapsed due to panic all around. People taking loans at large scale and now not able to return. Banking sector was also in crisis. Unemployment rose by 20- 30 %. Almost every sector, industry, agriculture and banks were default.
Franklin Delano Roosevelt New Deal Plan
In 1933, FDR came the President of USA. Soon after he took control, a new deal plan was announced. 3R (Relief, Recovery and Reform) was the core of his new deal program. When FDR came into power, the condition of unemployment was quite alarming. At that time, the country was facing the highest unemployment rate in the history. Thousands of people has lost their homes and savings. Most of them were also under the huge debt. In these circumstances, FDR came into power with a comprehensive set of legislations to support the people of USA and revive the country’s economy.
The new deal first priority was to stabilizing the banking sector. Many citizens had withdrawn their savings from the banks in the turmoil of economic recession. To regain their confidence FDR increased the government oversight on all commercial banks and provided bank insurance to guarantee the anytime availability of their deposited funds. In this way, he revived the people confidence on banking sector.
To provide relief to the citizen, FDR created Federal Emergency Relief Administration (FERA). A timely relief provided to citizen in the form of funds to afford clothing, food, groceries etc.
Similarly, Agricultural Adjustment Administration (AAA) formed to subsidized farmers. The other purpose of AAA is to educate the farmers to improve planting techniques.
To reduce unemployment, Civilian Conservation Corp (CCC) was established. Through this over 250,000 young men were employed in different sectors of livestock, agriculture, fire prevention etc. CCC also offered onsite food, shelter and education programs for workers. It was a huge relief for many of the citizens. Subsequent programs were also offered like Work Progress Administration and Tennessee Valley Authority, which gave employment in building roads, hydral electric projects, dams. These initiatives cut the unemployment on a larger scale.
This new deal program has benefited the Black Americans at large. They were segregated in the society but through programs of FDR, vocational trainings etc. more than 1 million black Americans become educated.
The country’s economy not fully recovered until WW II. However, the relief and reforms packages have saved America. It also facilitated many of the labor unions to understand their labor rights. Some critics of Roosevelt believed that the new deal program actually prolonged the depression, but it gave employment to millions. The countries like Pakistan, Sudan, or third world countries who suffered from serious economic crisis can learn through these policies and bring their economy back on track. Pakistan current unemployment rate is 7.2 % and 23 million children are out of school due to poverty. If the government of Pakistan able to adopt any of the policy of FDR than this number can reduce to half and it will be a kick-start to the economy.
Mr. Imran Yousaf is Mentor – Civil Services Examination, Pakistan.