What's the new deal

In October 1929, stock exchange trading collapsed. 40% of the paper value of the common stock was destroyed. A global economic crisis followed. In 1933 the value of the stocks traded in New York was only a fifth of the value in 1929. Shops and factories closed, banks were insolvent. Income on farms fell in half. In 1932, about a quarter of all Americans were unemployed. The basic problem was the immense disparity between production capacity and the ability of Americans to consume. Great inventions in production technology during and after the war raised production above U.S. purchasing power. Farmers and wage earners out.

The 1932 presidential campaign was mainly a debate about the causes of the economic crisis and possible remedies. The Republican Herbert Hoover wanted mainly to rely on the natural recovery effect, while the Democrat Franklin D. Roosevelt was ready to use the authority of the central government for experimental solutions. Roosevelt was chosen with his concept for more social justice, the "New Deal".

In a sense, it can be said that the New Deal only introduced social and economic reforms that many Europeans had been familiar with for more than a generation. What was really remarkable about the New Deal, however, was the speed with which things were achieved that had previously taken generations. Within three months, Roosevelt implemented a large number of laws aimed at rebuilding the economy. Jobs were created by building new roads, bridges, airports, parks and public buildings. The Agricultural Adjustment Act (AAA) was passed by Congress in 1933 to give farmers economic support and raise incomes. But during the 1930s, and particularly from 1935 to 1938, the Midwestern states were hit by a severe drought and high winds and dust storms devastated the lowlands known as the "Dust Bowl".

The New Deal resulted in a remarkable series of legislative initiatives. Considerable increases in production and prices were achieved - but it did not end the economic crisis. In response to pressure from right and left groups, President Roosevelt supported another set of economic and social measures (Second New Deal), including measures to combat poverty, measures against unemployment through job offers and the development of a social network. The Works Progress Administration (WPA), the most important aid organization of the so-called Second New Deal, attempted to offer work instead of social assistance. Buildings, roads, airports and schools were built. Actors, painters, musicians, and writers have been hired through the Federal Theater Project, the Federal Art Project, and the Federal Writers Project. But the cornerstone of the New Deal was the Social Security Act of 1935. It created an insurance system based on contributions from employees and donors for retirees, the unemployed and the disabled. In 1936, Roosevelt won the next presidential election by an even greater margin than in 1932.