The New Era America of the 1920s had a seemingly thriving economy. However, that prosperity stimulated by optimism, easy credit, and manipulations was wiped out in one day. October 29, the infamous “Black Tuesday” momentarily revealed all hidden problems of the U.S. economy as the country sank into the crisis of unprecedented scope — the Great Depression. According to Goldfield et al. (2017), the Wall Street crash marked the beginning of the depression, but its roots stemmed from the unequal distribution of wealth, oligopoly domination, and flawed government policies. Therefore, the U.S. government faced the challenge of restoring the economy and addressing the issues, which led to massive unemployment, shutdowns of businesses, and a drastic reduction of purchasing power.
President Herbert Hoover could not overcome the Depression since he overly believed in voluntary efforts rather than direct government action. Hoover realized the importance of employment and stable wages in those difficult times. However, the corporations and government institutions were reluctant to act voluntarily and did almost nothing to aid the public. On the other hand, the president still hesitated to implement activist policies. As a result, Hoover’s indecisiveness angered the Americans, and he suffered a crushing defeat in the 1932 election (Goldfield et al., 2017). His Democratic opponent, the New York Governor Franklin D. Roosevelt, promised “a new deal for the American people” and started fulfilling that promise straight after getting in office.
Unlike his predecessor, Roosevelt acted directly, quickly, and decisively from the first days of his tenure. Congress passed several important laws during the famous Hundred Days of the New Deal (Goldfield et al., 2017). Those laws established a legal framework for the implementation of the new government policies, which were aimed at resolving the dire consequences of the Depression. Instead of Hoover’s non-interventionism, Roosevelt utilized the “above all, try something” approach to its full extent.
Firstly, the Roosevelt administration addressed the banking crisis by passing the Emergency Banking Act. The government extended assistance to remaining sound banks and reorganized the weaker ones (Goldfield et al., 2017). By doing that, Roosevelt and his team of advisors restored public confidence in the banking system. In addition, Congress created the Federal Deposit Insurance Corporation (FDIC) to guarantee bank deposits up to $2,500 (Goldfield et al., 2017). Those steps showed the Americans that the government could be supportive instead of ignoring their troubles.
Secondly, the New Deal included an overhaul of the U.S. financial system. Roosevelt’s administration tried to make it less vulnerable to speculations. The laws, such as the Glass-Steagall Act and the Securities Act, curtailed risky stock speculations and prevented insider trading abuses (Goldfield et al., 2017). The special Securities and Exchange Commission (SEC) was created to regulate the stock market (Goldfield et al., 2017). Furthermore, the government assisted Americans by establishing the Home Owners Loan Corporation and the Farm Administration (Goldfield et al., 2017). Once again, Roosevelt’s administration demonstrated its support by enabling the population to refinance the mortgages.
Finally, Roosevelt provided relief for the unemployed created by the Depression. The Civilian Conservation Corps (CCC) provided a job for 2.5 million young men and became one of the most popular New Deal Agencies (Goldfield et al., 2017). The Civil Work Administration (CWA) created jobs for 4 million men and women in the winter of 1933-1934 (Goldfield et al., 2017). While those jobs were not glamorous, they still provided employment and stable wages, much needed in the time of severe economic depression.
Despite the criticism from both the right and left sides, I would consider the New Deal not just good but a brilliant idea. President Roosevelt found the courage to admit that the traditional laissez-faire liberalism will not restore the U.S. economy. Sometimes desperate times require desperate measures, and Franklin Roosevelt deserves approval for understanding that and doing what was highly risky in 1930s America. Most importantly, the New Deal showed that the government is not necessarily an evil force that helps the privileged at the expense of the whole nation.
Reference
Goldfield, D., Abbott, C., Anderson, V.D., Argersinger, J.A.E., Argersinger, P.H., & Barney, W.M. (2017). The American journey: A history of the United States, volume 2 (since 1865). 8th ed., Pearson.