Franklin D. Roosevelt's New Deal

Topics: Great Depression, Keynesian economics, Herbert Hoover Pages: 6 (2193 words) Published: August 3, 2011
In 1933, Franklin Delano Roosevelt referred to a ‘New Deal’ for the American people, which instigated a series of economic countermeasures to promote relief, recovery and reform in The Unites States. His ‘New Deal’ was moderately successful in allowing The United States to emerge from The Great Depression; and, in turn, it addressed the flaws inherent to Capitalism. In the 1920s, the form of Financial Capitalism that operated was unsustainable. The Republican government preceding Roosevelt, through taking action, proved itself to be deficient in handling the crisis of The Great Depression. Further, ‘The New Deal’ attempted to alter the operation of Capitalism with immediate success. This process was further abetted by external, influential factors, such as the rise of globalism. Whilst, to an extent, successful in achieving the aims, it is perceivable that “The New Deal’ had the potential to effect a far superior outcome. Nevertheless, did expedite the recovery process, and attend to the flaws in Capitalism. In the United States in the 1920s, after successive Republican governments, Financial Capitalism had proven to be unsustainable. In his treatise, “An Inquiry into the Nature and Causes of the Wealth of Nations,” Adam Smith defined the role of government as ‘Laissez-Faire.’ The chief proponent of this approach, the ‘Invisible Hand’ would, according to Smith, ensure self-regulation of the market. Republican president Calvin Coolidge, advocated Smith’s theory: “If you see ten troubles coming down the road, you can be sure that nine will run into the ditch and you will only have to battle with one.” (Clements, 2001, p. 132). Coolidge’s perspective represents a typical conservative viewpoint from the era; and in light of the prosperity, these views on the role of the president were persuasive. This implies that the majority of problems would be eradicated by self-regulation of the economy. Coolidge’s reliance upon regulatory market-mechanisms and unpreparedness to deal with difficulties can be seen in Hoover’s response, “… when the tenth trouble reached him he was wholly unprepared, and it had by that time acquired such momentum it spelled disaster,” (Sobel, 1998, p. 242). Hoover’s perspective is a far more moderate interpretation of Smith’s theories, in comparison with Coolidge. He explains that if problems in the economy were not countered promptly, they would be exacerbated. Under Coolidge, four problems emerged in Capitalism, but were not addressed: inequality of income distribution, foreign inability to pay loans, the formation of trusts, and stock-market speculation (Galbraith, 1958, p.297). These factors created a volatile economy dependant upon consumer confidence. Jonathan Leonard’s recount of The Great Crash highlights this: “Horrified brokers watched the selling orders accumulate. It wasn’t a flood; it was a deluge,” (Leonard, 1939). As a primary recount, this source affords an insight into the fear that spread rapidly. When confidence fell, speculation provided downward leverage throwing Capitalism into a spiral, in which, market mechanisms ceased to functioning order to prevent the pervasion of these destructive factors during the 1920s, government intervention was necessary. Arguably, this phase was merely an accentuation of the cyclical Capitalist phenomenon; however, The Great Depression was a period of unprecedented ‘bust,’ and there was no evidence of the reassertion of the Capitalist cycle. Throughout the 1920s and The Great Depression, governmental regulation was necessary to preserve Capitalism from its inherent flaws. Herbert Hoover’s Republican government demonstrated knowledge of necessary reactionary measures but failed to implement them effectively, in turn, prolonging the depression. His failure serves to highlight the crucial nature of FDR’s New Deal. Hoover’s concerns were similar to those of his successor, Franklin Roosevelt; however, the means through which they were addressed differed. Hoover...
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