In response to the Great Depression, the New Deal was a series of domestic economic programs enacted in the United States between 1933 and 1936. It involved presidential executive orders or laws passed by Congress during the first term of President Franklin D. Roosevelt. The New Deal changed the position and perception of the American Government. 

Situation

• After the Great depression hit (1929-1933), Americas manufacturing output decreased by one third.
• Prices fell by 20%, causing a deflation, making it incredibly difficult to repay debts.
• Unemployment in the U.S. increased from 4% to 25%. Additionally, one-third of all employed were downgraded to working part-time, at a lower wage.
• In total, almost 50% of the nations land had been unused.
• People had no trust in the economic and political power of US Government.
• The year 1932 held the promise of the newly elected President of the United States, Roosevelt, to lead the country out of crisis.

Objectives

• Immediate relief to help the unemployed and the poor after the Great Depression.
• Change the financial policy of the US.
• Regulate the financial market and establish social insurance through reform.
• President Roosevelt’s New Deal was based on government actions to improve America’s economy and unemployment rates.
• The New Deal was designed to encourage industrial recovery and implement financial regulation.

Assets

• The political will of a government led by a new president.
• High unemployment gave high urgency and cheap workforce.
• Roosevelt used public money and generated new public sources by introducing new taxes on income and alcohol.
• The US had an excess amount of poor quality land, that had been used inefficiently.

Strategy

• The combination of new rules, a new distribution of resources and money with a stronger performance of the government and a spatial-economic goal.
• The act called for industrial self-regulation and declared that codes of fair competition were to be drafted for the various industries. The government provided technical machinery for different industries to restore the economical system.
• The New Deal introduced laws such as the legal sale of beer and extra high taxes on the affluent society to finance the New Deal.
• The Government visibly held their responsibilities and took charge.

Actions

• The day after his inauguration, Roosevelt assembled a special session of Congress to declare a four-day bank holiday. On March 9 1933, he signed the Emergency Banking Act.
• In 1933, the Tennessee Valley Authority (TVA) was established. HEP stations were built, flood control and soil conservation was introduced. Regional economic development was supported that would rapidly modernize the region’s economy and society.
• The Agricultural Adjustment Act (1933) paid subsidies to farmers, as restrictions were placed on farm production. The objective of the AAA was for a reduction in food production, which would, through a controlled shortage of food, raise the price for any given food item through supply and demand.
• The money for these subsidies was generated through a tax on companies that processed farm products.
• In 1933, The National Recovery Administration (NRA) was installed to encourage industrial recovery and help combat unemployment. The administration made agreements dealing with hours of work, rates of pay, and the fixing of prices.

Effect

• While the New Deal did not end the Depression, it did give the U.S the confidence that the government was making improvements.
• Many of the New Deal agencies found work for the unemployed.
• The biggest effect on society was the increase in the size and power of the national government. People trusted the government to act urgently when needed.
• It was the entry into the Second World War which led to the improvement of the American economy.