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New Deal

Essay by   •  March 9, 2011  •  784 Words (4 Pages)  •  1,228 Views

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The New Deal has become famous for creating an "alphabet soup" of government agencies that were referred to by their initials. These agencies worked to accomplish the three main goals of the New Deal: to relieve those suffering from the effects of the Great Depression, recover the depressed the economy, and reform the society so such a crisis would be avoided in the future. Though not all of these agencies proved to be successful, some helped to shape America. The Federal Deposit Insurance Cooperation, proving to be the most effective, provided America with the courage it had lacked since the day of the stock market crash, the courage to trust the banking systems and reinvest their money, but the Indian Reorganization Act seemed to have no effect on the economy or any significance to the three aims of the New Deal.

By 1933, America had lost billions of dollars due to the bank failures, but had also just gained their only hope to rebuild their economy, Franklin Delano Roosevelt. Roosevelt recognized the country's lack of courage and took no time in addressing the situation. The famous line from his first inaugural address, "The only thing we have to fear is fear itself," encompassed the entirety of the problems faced by America's depositors with the banking systems.

Before Roosevelt's presidency, American banks were failing and closing all around citizens each day. In the time of the stock market crash, deposit insurance did not yet exist and without much cash on hand, banks become highly endanger of runs. A run was the result of the depositors becoming fearful of a bank closure and, in return, immediately withdrawing their savings. For the common American, the increasing problem of collapsing banks became an unnerving new development. Roosevelt addressed those problems of fear or distrust with the Federal Deposit Insurance Cooperation, or the FDIC.

The FDIC provided depositors with a new comforting fallback plan; their savings were protected by government insurance. The common depositor no longer needed to hide their money in the home safes or under their mattresses because if the banks failed, their money was protected by the government. Within a month of the cooperation, about one billion dollars in new depositors flowed into the American bank system. With this new law, Roosevelt had given back the banks their value of trustworthiness and began his successful New Deal.

The FDIC proved to be the most effective agency of the New Deal by taking the problem it was presented with, fixing it legally and efficiently, and pleasing the government and the society as a whole. The people were satisfied with the new trustworthiness of the banks and the government was thrilled at the sight of money flowing back into the bank system. The FDIC also took only one trial to fix the uprising

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