New Deal Dbq

Roosevelt entered his first term with quite a mess to fix. The unemployment rate in 1932 was 23.3 percent and suicides had increased by nearly 10,000 than the previous years. America was in the depth of the Great Depression and in FDR’s own words. the nation needed a leader who doesn't “shrink from honesty facing conditions in our country today…leadership of frankness an vigor”. The economic situation had gotten so bad that a state of emergency was called to allow the President the room to properly address the problem. Unfortunately, Roosevelt and his Brain Trust had difficulty pin-pointing the exact cause of the depression. This miscalculation would lead to nearly a decade of political fumbles and the eventual prolonging of the depression.

In his first Inaugural Address, Roosevelt outlined what he perceived to be the root of the economic down turn. He claimed that the falling prices and unfair competition was the root of the Great Depression. He states
Values have shrunken to fantastic levels;taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; …farmers find no markets for their produce
He continues Plenty is at our doorstep, but a generous use of its languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind's goods have failed.
Roosevelt could not recognize that falling prices was an effect of the Great Depression, and not its cause. This coupled with influence from the Brandesians, a group of philosophical progressives, who felt that the Depression was inducted by Cooperate greed and mismanagement. The administration implemented a series of policies that would discourage business growth through a series of regulations and taxes. They proposed anti-competition and pro labor strategies such as the NIRA, and AAA. This was coupled with fiscal and monetary polices that would cause speculation and attribute to psychology of fear that plunged the nation further into the recession.
In the months leading up to his Inauguration, America was in the depths of panic. In his book Pride Prejudice, and Politics, Gary Dean Best outlines what the Federal Reserve Board reported on the banking holiday. Demand for withdrawals increased dramatically in February and early March, totaling to nearly two billion dollars with demands for gold reaching three- hundred million dollars. Best continues that Roosevelt failed to deny rumors that the country would be taken of the Gold Standard. The American people feared that if the rumor came to fruition, they would cause inflation and monetary instability. This would feed into the psychology of the depression generating great panic.
The American people were right to assume FDR’s motives for on March 6th, he instituted Proclamation 2039, in which he suspended all banking transactions effectively closing the nations banks. Citizen’s nervously waited for government inspections before they would reopen. This Proclamation also prohibited banks the ability to pay out in gold. This was followed by a gold buying program and subsequent removal from the gold standard. The government bought gold from its citizens in order to prepare for the inflation of money.
Roosevelt somewhat followed the Keynesian model which asserts that to deter depression, inflation is needed. By increasing the Federal Governments gold supply the administration was creating a means for this inflation. By 1934 the Federal Reserve had increased its gold holdings by sixty-nine percent allowing for more inflation.
Roosevelt enacted these polices in hopes of creating inflation. In his mind, inflation would raise prices and thus addressing the perceived cause of “falling prices”. Unfortunately, these polices had adverse effects. Between 1933 and 1934, world gold prices raised nearly sixty-nine percent, while domestic prices only increases by seven percent. This inhibited trade with foreign nations and lessoned the values of American goods abroad, decreasing exports, which in turn would increase unemployment and raise domestic prices to unaffordable rates.
To further address of falling prices, Roosevelt created the Agricultural Adjustment Act (AAA), which imposed taxes on agricultural which would later be used to pay famers to destroy their crops. The agricultural industry faced the brunt of the depression, over production had lead to a surplus and low prices. So once again, Roosevelt sought to artificially adjust prices in hopes of stimulating economic recovery. Farmers were paid to cease production, in order to create scarcity, thus raising prices. Like Roosevelt’s previous endeavors the AAA had unintended consequences. Because low prices were a symptom of the depression and not the cause, the manipulation of the market made it so people could not afford agricultural products.
Roosevelt Administration implemented the NRA which fixed prices and set regulations on minimum wage and hours. Under Federal regulation, business had to adhere to parameters that set higher wages, shorter hours, and lowered production costs. These directives stifled competition and ultimately made U.S. exports non competitive in the world markets. Firms that followed the regimentation would be awarded with a blue eagle emblem. The absent of an eagle was the star of judah of the Great Depression, people where encouraged not to do business with companies that deified government edict. This propaganda furthered the sense of distrust between the American people and the government, advance the psychology of the depression.
In the administrations eyes, the problematic falling prices was caused by unfair business practices.

The market created a breeding ground for competition, larger companies could afford to lower their prices. This in turn would stifle their competition, and shut out weaker business. Roosevelt felt that these practices were one of the root causes of the depression, calling for an end to conduct in banking and in business which too often has given to a sacred trust the links of callous and selfish wrong doing.
The NRA was created to regulate all aspects of business in order to “remove obstructions to the free flow of interstate and foreign commerce, witch tend to diminish the amount thereof.” Like the monetary policies before, the NIRA and NRA had disastrous repercussions that would ultimately deter business.
Looking to the Table 1, presented at the begging of Best’s book, we can see that unemployment rose from 24.1 to 25.2, once the NIRA was implemented. Likewise Table 2, shows that the balance of trade fell nearly 400 million dollars during the implementation of these programs.
Discontent of the NRA grew and in 1934, a “Field Day of Criticism” was started, in which business owners went to the Department of Commerce and listed grievances with the policies. These firms saw first hand the adverse implications of the NRA. The so called “fair competition.” This ties into the ultimate failure of the Roosevelt administration in its dealings with the

depression.
Wether or not he had correctly diagnosed the problem, FDR went out of his way to discourage business. His ever changing polices left businesses and people alike nervous. Always waiting for the next shoe to drop. The administration feed into the psychology of the depression by discouraging innovation, loans, and big business.
Because he was unable to correctly determine the cause of the Depression, Roosevelt attempted to fix a symptom. FDR constantly tried to fix unemployment, without addressing the root cause of rising prices and wages. FDR’s attempts to amend the situation ultimately lead to the second recession of 1937, which lasted until the start of the second World War. Looking again to Table 1, in Best’s book we can see that unemployment rose from 14.3 percent to 19.1 percent between 1937 and 1938. It is evident that Roosevelt’s misdiagnosis helped to prolong the depression. Progressive big government policies, brought to much regimentation to the market which discouraged the big business needed to stimulate economic growth.
Looking to today, we can see that similar policies have prolonged the recession of 2008. Government stimulus packages, and company buyouts have not generated the growth that was expected. The real unemployment nearing thirteen percent, the country has yet to get back on its feet. Granted this not much of a surprise because the economic policies of today have been dubbed the “New New Deal”.