The Depression in Rural America
In difficult economic moments, the citizens always look up to the government to solve economic problems. At times, debates may arise as to whether the government should get involved in helping the poor and underprivileged or it is that involvement of government in the economy that endangers the freedoms and liberties. One such time was during the late 1920’s America’s Depression.
Nancy (2013) noted that, Hoover’s administration had the view that government shouldn’t control the business as this would sabotage the basis of liberty and freedom. He believed government control would give rise to increased corruption and abuse, stifle invention, hinder leadership development, cripple the individual mental development of America Citizens and further extinguish equity and opportunities.
Roosevelt had the greatest belief in empowering the people and engaging citizens at work. He advocated for government direct supervision of all forms of transportation and communications. The government started direct employment and use of the citizens instead of armed authorities to stimulate the use of natural resources in achieving developments. The state government implemented strict supervision of credit, investments, and banking but more importantly the introduction of a stable currency.
Prior to this uncertain and unexpected depression, America business was booming. In the 1920’s, a good number of America citizen resided in the urban areas. August 1929 the America Economic depression began. The Wall Street crash in October 1929 marked the start of declining GDP. The market crash followed the decade of high unemployment, low profits, reduced farm incomes, low profits and reduced opportunities for personal and economic growth which lead to loss of confidence in the government and economic future.
Several reasons that give rise to this depression included skyrocketing consumer debts, poorly regulated markets and optimistic loans by investors and banks. Agricultural productivity decreased to unimaginable levels due to low profits and lack of government incentives. The collapse of the stock market and the effects of the World War I was majorly the contributing factors. The government had failed, to regulate the stock market boom and also to regulate the private enterprise which meant that investors were at liberty to do anything they wished to do including overpricing the loans.
According to Nancy (2013), Herbert Hoover believed the solution to such a depression was self-government through devolution, encouragement of innovation through individual freedom and equity. It was his ultimate believe that the government role in the economy should be limited to natural resources conservation, flood control, scientific research and if it went beyond that and invaded the business activities, personal freedom and innovation would be endangered since they all depend on economic freedom.
Agriculture plight needed quick and immediate action to save the farmers from huge debts and the whole nation. Farm relief was one such measure that was deemed necessary to save the farmers. Hoover objected the notion of buying the surplus produce from buyers and selling them abroad and instead insisted that the government should facilitate farmers in setting up marketing organizations for their farm produce which lead to the legislation of the Agricultural market Act of 1929 by the Congress. In spite all these efforts, the American farmers were worse off than ever following the depression America plugged into.
Jobless employable citizens and homeless citizens felt the depression as unemployment rose to high percentages. Most of the Americans moved to farms to take up unskilled and casual employment. Most ended up living in shanties that they named “Hoovervilles” after President Hoover. Hunger was hitting all high levels as farmers became discouraged and lack the d the farming incentives. Americans started losing confidence in the government and this translated to major political changes. Even though Hoover worked hard to avert the crisis, his efforts did very little. The compact majority had lost confidence in his ability to solve the economic problems that faced the country (Nancy 2013).
Every citizen was wishing for good old days what president Warren Harding described as a “return to normalcy”. Americans hoped for a better future and they believed the only solution was to have a new leader who understood the problem and had solutions. They voted for President Delano Roosevelt in 1932 elections marking the end of Hoover tenure.
The New Deal
President Roosevelt administration main purposes were relief, reforms, and recovery. His New Deal phase one had three main goals; Economic improvement, provision to the suffering Americans and legislation to reduce the huge numbers of poor Americans
The First New Deal of 1933-1934 mainly targeted agricultural activities in the rural areas. Farmers were expected to produce fewer crops an objective that aimed at raising the farm produce prices. Roosevelt was determined to make a difference. In 1933, the Congress enacted the Agricultural Adjustment Act (AAA) to provide relief to farmers (Nancy 2013). This was aimed to raise farm produce prices since Surplus was the problem. The AAA set limits on the size of the crops that farmers would produce per farm. Those that agreed to the limit production were given some incentives which enabled them to pay back the bank loans. A remarkable increase in farm income was noticed from 1932-1935 by 50%.
Further, the government created programs to put unemployed citizens more so the youths to work. They introduced the Works Progress Administration (WPA) and hired many men to work on roads, drainage, and bridges. Unemployment reduced by over 3 million in 1935.
In 1935, the Congress enacted the Social Security Act which provided for the cash transfers and pension schemes to the retired and aged Americans. This Act also introduced the unemployment insurance scheme which checked on the unemployed and the needy welfare by giving them cash transfers for a period of time.
The black Americans in the rural areas were the highly affected by the economic depression. Roosevelt administration moved with speed to avert the crisis arising from the “jobs for Negros” which had led to the boycott of chain stores that majorly hired non-blacks. The black organizations were unified and this leads to an emergence of the North and South Negro Youth Congress in 1937.
Limitations of the New Deal Policies
Roosevelt new deal policies to a greater extent worked but it was only for a short while since most of them were unsustainable. The Civil Works Administration was a work relief program that gave employment jobs to the unemployed established in 1933 by an Act of Congress. However, this program couldn’t be held for long and was abandoned in June 1934. The government continued with relief programs to the unemployed rather than the welfare employment programs.
Agricultural Adjustment Act established through an Act of Congress in1933, had the sole aim of increasing the farm income by offering subsidies to the farmers who agreed to production cut. However, the Act became into law when the planting season was underway. The AAA and the CCC (Commodity Credit Corporations) program the farm production decreased as farmers produced less. This was a sorry state policy since the farm production didn’t meet the American food needs.
Social security Act enacted and passed by the Congress created a social welfare for the retired and the needy in the society. The government gave cash handouts to the needy and the unemployed and pensions to the retired. However, this scheme couldn’t last for long as the large numbers of the unemployed citizens wouldn’t solely depend on the few employed. The economy wasn’t growing at the faster rate that would sustain the program.
All in all, the government role in America grew than it was before the depression. The New Deal policies by Roosevelt government helped increase the American confidence and hope for the future. Most institutions were created at this time and up to date, those institutions prove to be invaluable to the economic growth of America.
Nancy A. Hewitt, Steven F. Lawson, “Exploring the American Histories”, Vol.2 2012, pp 748-752