The Reasons Behind Roosevelt's The New Deal

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The Reasons Behind Roosevelt's The New Deal

Franklin Delano Roosevelt came into power in America in 1932. At the

time, the American economy collapsed and the USA had entered a long

depression. The main reason for the depression was the Wall Street

crash, which affected all aspects of American life.

The worst problem was unemployment, by 1932; at least 12 million

citizens were out of work. As there was no unemployment pay, people

had to queue up for soup and bread, sometimes, the queues were 10,000

men long. Also, less people were buying clothes, as a result of this,

120,000 of the state of New England's 280,000 textile workers lost

their jobs. Companies were overproducing and people could not afford

the products, the companies were then going bankrupt, leading to a

vicious circle. These problems led to people losing faith and most of

all confidence.

Mortgages and rent payments could not be met, so people were moving

into 'Hoovervilles'. These were 'shanty towns', nicknamed after

Herbert Hoover, who was president at the time of the Wall Street

crash. Even people who had expensive cars, etc, before now had

nothing, some were even unable to pay for a bus fare.

People with jobs and profitable companies even lost out because 5,000

banks went bust and the financial system virtually collapsed.

Farmers suffered greatly, thousands of families who farmed had to sell

their farms as it became uneconomical to grow crops. Millions of

farmers went to live in the big cities hunting for work.

The value of America's foreign trade dropped from $9 billion to $3

billion, as other countries retaliated against US import tariffs. One

result of this meant that share values changed dramatically, for

example, the shares of the union cigar fell from $113 each, to just $4

each.

People blamed the depression on Hoover, as he and the government

believed in "Laissez-Faire", which meant that the government took a

back seat, did not interfere, and let the economy and companies etc,

run with no government help.

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