FDR's New Deal (Winter 2020 | Volume: 64, Issue: 1)

FDR's New Deal

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Authors: Douglas Brinkley

Historic Era: Era 8: The Great Depression and World War II (1929-1945)

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Winter 2020 | Volume 64, Issue 1

The stock market crash of 1929 burst the bubble of uncontrolled speculation and business expansion of the Roaring Twenties. At first, both President Hoover and most of the country thought any major economic downturn would follow the pattern of those of the past, purging marginal businesses, followed by reorganization and recovery. The president saw no need for government intervention in the economy, just as his predecessors had rejected it on similar occasions. He was pleased to follow Democrat Grover Cleveland’s observation during the economic decline of 1893: “It is the business of the people to support the government, but it is not the business of the government to support the people.” He listened to Secretary of the Treasury Andrew Mellon, who advocated a “do nothing” approach to economic lows. 

The Depression caused widespread misery as unemployment in the U.S. rose to 25%. Mark Barry, Library of Congress.
The Depression caused widespread misery as unemployment in the U.S. rose to 25%. Mark Barry, Library of Congress.

Hoover did, however, recognize that some steps might be prudent, and called conferences of business and labor leaders at which he got both to pledge to maintain production and employment levels. In 1930, the president also signed the Smoot-Hawley Tariff, setting the highest rates on imports in U.S. history, in the belief the measure would insulate the country from foreign competition. Leading economists of the time warned that the action would instead invite retaliation from other governments. They were right. Within a year, nearly all the countries with which the United States conducted important trade had raised their tariffs, dealing a blow to America’s export industry that deepened the growing depression.

There were some signs of improvement in 1931 but hopes for a quick recovery were dashed in May when Austria’s largest bank collapsed, sending ripples across the economies of Europe. A reflection of Europe’s growing financial anxiety could be seen in the German election of September 1930: The Nazi Party received eight times the number of votes it had two years earlier.

FDR offered a wide range of experimental programs to prove that neither American democracy nor its brand of capitalism were obsolete.

The 1932 presidential campaign took place in an atmosphere of national apprehension. Americans were looking for a bold leader to extract them from economic misery. There were those who warned it might be the last election held under the Constitution, that whoever became president in 1933 would have to lead or put down a revolution. That is exactly what happened, of course, but without the sinister cast the Cassandras had predicted. The Republicans convened in Chicago to renominate Herbert Hoover, despite his obviously slim chances of reelection. With no other ideas to turn to, the party’s platform endorsed the Hoover record, claimed credit for solving the economic dislocation of 1929, and blamed current circumstances on troubles abroad. 

It was clear, however, that the American system was in desperate need of revamping and that Hoover