(a) Describe the main features of Roosevelt's New Deal, 1933-1939. [5] (b) Explain why the Great Depression caused a political crisis in the United States. ...

Part (a): Main features of Roosevelt's New Deal, 1933-1939

The New Deal was a series of programs and reforms designed to address the Great Depression through government intervention:

1. Alphabet agencies for employment: Roosevelt created numerous federal agencies to combat unemployment, including the Civilian Conservation Corps (CCC), which employed young men in environmental projects; the Works Progress Administration (WPA), which employed millions in construction, arts, and public service; and the Tennessee Valley Authority (TVA), which built dams and brought electricity to rural areas.
2. Social Security: The Social Security Act (1935) established pensions for the elderly, unemployment insurance, and aid for dependent children. This was the foundation of the American welfare state.
3. Industrial regulation: The National Recovery Administration (NRA) set codes for fair wages, working hours, and competitive practices in industry, attempting to stabilize prices and protect workers.
4. Agricultural support: The Agricultural Adjustment Act (AAA) paid farmers to reduce production in order to raise crop prices, addressing the catastrophic fall in farm incomes during the Depression.
5. Banking reform: The Glass-Steagall Act (1933) separated commercial banking from investment banking and created the Federal Deposit Insurance Corporation (FDIC), which guaranteed bank deposits and restored public confidence in the banking system.

Part (b): Why the Great Depression caused a political crisis in the United States

The Depression was not merely an economic downturn but a challenge to the legitimacy of the American political and economic system:

• Stock market crash: The crash of October 1929 destroyed billions of dollars in wealth, shattering the confidence of investors and the general public in the stability of the financial system.
• Mass unemployment: By 1933, unemployment reached approximately 25 percent, leaving millions of families without income, savings, or hope of finding work. In some industrial cities, unemployment exceeded 50 percent.
• Bank failures: Thousands of banks collapsed, wiping out the savings of ordinary Americans who had no deposit insurance. By 1933, approximately 9,000 banks had failed since the crash.
• Hoover's inadequate response: President Herbert Hoover's belief in "rugged individualism" and limited government intervention led him to oppose direct federal relief. His response was widely seen as too little, too late, making him a symbol of government failure.
• Hoovervilles: Shantytowns of homeless people, sarcastically named "Hoovervilles," appeared in cities across America, becoming visible symbols of the president's perceived indifference.
• The Bonus March: In 1932, thousands of unemployed World War I veterans marched on Washington to demand early payment of their war bonuses. When the army dispersed them with tear gas and bayonets, the spectacle further damaged Hoover's reputation.
• Questioning capitalism: The scale of the crisis led many Americans to question whether capitalism itself had failed. Some turned to socialism or communism as alternatives, while others simply demanded that government take a more active role in the economy.

Part (c): Did the New Deal save American capitalism?

Arguments that the New Deal saved capitalism:

• The New Deal restored confidence in the banking system through the FDIC and the Glass-Steagall Act, preventing future bank runs and stabilizing the financial foundation of the economy.
• Government spending on public works provided jobs to millions and stimulated economic activity, preventing a complete economic collapse that might have produced revolutionary conditions.
• Social Security created a safety net that reduced the appeal of radical alternatives by assuring Americans that the system would not leave them destitute in old age or unemployment.
• Reforms such as the Securities Exchange Act (1934) regulated Wall Street, preventing the worst speculative abuses that had contributed to the crash and reassuring the public that the market could be trusted.

Arguments that the New Deal had significant limitations:

• The New Deal did not end the Depression. Unemployment remained above 14 percent until World War II mobilization created full employment after 1941. The Depression's end was driven by wartime spending, not New Deal programs.
• Critics on the left, including Senator Huey Long of Louisiana and his "Share Our Wealth" program, argued that the New Deal did not go far enough in redistributing wealth from the rich to the poor.
• The Supreme Court struck down key programs, including the NRA (in Schechter Poultry Corp. v. United States, 1935) and the original AAA (in United States v. Butler, 1936), as unconstitutional overreaches of federal power.
• Conservative opponents accused Roosevelt of undermining free enterprise, expanding government dangerously, and increasing the national debt. Some business leaders compared him to a dictator.

Balanced judgment: The New Deal reformed and stabilized American capitalism rather than replacing it. Roosevelt's programs addressed the worst consequences of the Depression, restored public confidence in democratic institutions, and created a regulatory framework (FDIC, SEC, Social Security) that prevented future crises from reaching the same severity. However, it was World War II, not the New Deal, that finally ended the Depression. The New Deal's lasting achievement was not ending the crisis but transforming the relationship between government and the economy, establishing the principle that the federal government bears responsibility for economic welfare.