Large-Scale State




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Name: Home-Owners Loan Corporation


Date: 13 June 1933

Aim: To lend homeowners money at low rates of interest to help keep up with their mortgage repayments
Many Americans lacked a decent home to live in. Cities contained some of the worst slums in the western world. For the following three years the HOLC helped more than one million homeowners to keep their homes, by lending them money to see them through their difficulties at especially low rates of interest.
In 1934 the Federal Housing Administration was established. It gave ordinary families a better chance of buying their own homes. The Government gave help with mortgages. The FHA helped house buyers by making sure that they did not have to put down such a large deposit on a house as in previous years. They were also given longer to pay back the mortgage.

Name: National Industrial Recovery Act (NIRA)

Date: 16 June 1933

Aim: To introduce joint economic planning between government and industry to stabilise prices, restrict competition, expand purchasing power, relieve unemployment and improve working conditions.



Roosevelt on the NIRA:
The Law I have just signed was passed to put people back to work – to let them buy more of the products of the farms and the factories and to start our businesses going at a living rate again.

This important Act was in two parts and set up following administrations, both designed to help industry recover from the Depression:



  1. Public Works Administration (PWA)

  2. National Recovery Administration (NRA)



Name: Public Works Administration (PWA)

Date: 16 June 1933

Aim: To create work for unemployed industrial workers by beginning large scale work schemes of public benefit
Harold Ickes organised the PWA. He was very careful with the Government’s money. He believed that work schemes organised by the PWA should produce things of lasting use to the nation, and he hated the idea of paying workers to ‘boondoggle’ – doing work that was of no or little value. He was to create work for some of the millions of industrial workers who were unable to get jobs with private employers.
O
An Emergency Housing Section cleared large areas of city slums and replaced them with modern flats and houses. Unfortunately the rents of these new homes were at first too high for the former slum-dwellers to afford.
ne of the underlying aims of the PWA was to create purchasing power and so help private industry to recover from the Depression by providing people with the money to buy its products. In other words it was supposed to ‘prime the pump’.
Between 1933 and 1939 the PWA did all the following:

  • Spent $3.3 billion

  • Built 70% of America’s schools

  • Built 35% of America’s hospitals

  • Built 4 big river dams and bridges

  • Electrified the New York-Washington railway

  • Built two aircraft carriers, 4 cruisers and 4 destroyers for the US Navy

  • Built 50 military airports

  • Built a new sewage system in Chicago.

Many people admired Ickes and the PWA for their achievements. But the PWA only provided work for skilled and able-bodies workers. It did nothing for the millions who lacked a skill or trade.



Name: National Recovery Act (NRA)

Date: 16 June 1933

Aim: To provide industrial employers to pay their workers fair wages and to charge fair prices for goods
The main problem faced by business and industry was having more goods for sale than people could afford to buy. This meant that production and prices had to be cut and workers laid off or at least making them work longer hours for less pay. Profits for factory owners fell while unemployment rose. Workers sometimes tried to improve their pay and conditions by forming trade unions. But the factory owners went to amazing lengths to stop them.
The intention of the NRA was to persuade industries to introduce codes of fair practice that would maintain wages and prices above a certain level and, in some cases, restrict production. Employers were encouraged to improve working conditions by providing a minimum weekly wage and a maximum working day, abolish child labour and accept the right of their workers to organise trade unions. In return, businesses that co-operated with the scheme had the right to display the blue eagle symbol with the motto ‘We Do Our Part’. Consumers were encouraged to buy only from them.

The Cotton Textile code fixed a 40-hour week, abolished child labour under the age of 16, provided a minimum wage of $12 in the southern states and $13 in the north, and allowed cotton workers to join the trade unions.

Roosevelt tried to build up enthusiasm for the NRA by organising a huge advertising campaign, which included the New York parade. At first the campaign seemed to be working. Industrial production prices and wages all rose.




Problems


Unfortunately the NRA quickly ran into difficulties.

  • Some employers broke the codes agreed with their workers. No employer could be compelled by law to obey the rules. The result was that some employers, e.g. Henry Ford, simply ignored them. Although in theory they could be prosecuted for this, many were not.

  • Small businesses often found it difficult to keep to the terms of the codes and still make enough profit.

  • Employers who hated trade unions refused to sign the codes. When faced with anti-union employers some workers went on strike. By September 1933 nearly 300,000 workers were on strike, and the number was increasing rapidly.

  • Some employers refused to pay the minimum wages.

  • Some companies tried to use the codes as a way of raising prices to unfair heights.

  • Businesses that had signed the codes frequently complained about them. For example, small laundries that signed the Cleaners and Dryers code were in cutthroat competition with each other. They often accused each other of breaking the code on minimum wages. When the NRA took legal action against the laundries that broke the code, complaints were made that the Government was bullying small businessmen trying to make an honest living. If the NRA took no action, the other companies complained that the codes meant nothing since their rivals could get away with breaking them.

  • The NRA disillusioned many farmers, small businessmen and consume groups. Prices and production controls, they argued, were written primarily for and by large corporations. The effect was to keep prices up, stifle competition and retard economic growth.

The Act generated great enthusiasm but soon turned sour. Within a year of being created, it seemed that the ‘happy days’ were still a long way off in industry. The NRA was upsetting both the workers, whom it aimed to protect, and the businessmen, whom it aimed to encourage. It was difficult to enforce, too hastily produced and was drawn up by big business for their benefit. In January 1936 the NRA was invalidated by the Supreme Court, no one lamented its passing.




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