3.2.5 The Great Depression 1929-1939

During the first hundred days of Roosevelt's leadership there were huge changes in government policies. Congress passed every bill Roosevelt put forward, something that rarely occurs in the United States. Since Roosevelt's time in office, all U.S. presidents have been judged by their first hundred days in power.

Roosevelt's first set of programmes included immediate short term relief for people who could not get work. He set up new legislation for banks, and called a bank holiday as seen in the Money Supply Chart above.  This limited the amount of money customers could withdraw and helped re-stabilize the banks. Many banks immediately reopened, allowing cash to flow back into the system.

• He took the country off the gold standard and allowed the US dollar to float on the foreign exchange market. He cut the salaries of government employees and veterans' pensions by 15% which saved the government millions of dollars.

• Using the laws of supply and demand, Roosevelt raised prices for farm products by reducing the supply with the idea that the less that was produced, the higher the price and the higher the income to the farmer. In some cases, crops were plowed under or allowed to rot. Baby pigs were slaughtered. Farmers were paid not to grow crops. Food production was taxed.

• To deal with the widespread poverty in the South, people were hired to provide programmers to benefit society. Schools and roads were built, school lunches were provided, national forests were enlarged and people were hired to plant trees and to build dams to prevent flooding and generate electricity to modernize poor areas.
• Another popular move in his first hundred days was to get rid of the law that prevented the manufacture and sale of alcohol, called Prohibition, which had been in effect since 1919.
• A major program for public works saw $3.3 billion in taxpayers money go to private companies to build 34,599 projects.
• Industrial leaders were brought together to design codes for each industry, leading to a 45% increase in production.

In the spring of 1935, a second wave of changes included changes that benefited labour unions at the expense of business. Large numbers of people began to join these unions and as a result the labour unions supported Roosevelt. The Works Progress Administration or WPA created nearly 8 million jobs for the unemployed. Almost every region in the United States received funding to build a bridge or public building. Financial support for adult education and the arts was also provided in order to increase incomes.

The most important program of 1935, and possibly the New Deal itself, was the establishment of a social security network funded through payroll deduction. This program, the framework for today's welfare system in the U.S. included universal retirement pensions, unemployment insurance, and welfare benefits for poor families and the handicapped.