Roosevelt and the American Economy

Roosevelt and the American Economy

The post-war period following World War I, also known as the Roaring Twenties, came to a dramatic end in October of 1929 and the crash of the U.S. Stock Market. While everything seemed optimistic and feasible after the Great War, and technology was everywhere, the 1930s were a decade of trial and error, of rebuilding, and of issues in Europe left over from World War I that would eventually culminate in another war. Looking back, we can understand how a lack of banking regulations, unsound investments, speculative trade agreements and certainly corporate greed led to the start of a 12-year economic slump that really did not end until the U.S. was fully in World War II.

With the defeat of Germany, Austro-Hungary, and the Ottoman Empire; the shift in the balance of power moved toward the only major participant not invaded on its own soil -- the United States. The U.S. grew in economic power after Versailles, assisting not only its former allies in rebuilding, but also a crucial and profitable effort to help finance Germany's rebuilding and aid the new Weimar Republic. However, the reality of the war is that it did not "fix" the issues in Europe, nor did it even come close to achieving the ideas of unity, peace and prosperity that President Wilson had promised. Because of this, the U.S. shifted to an aggressive economic power, but an isolationist in terms of foreign policy, with the overriding rubric being neural politically.

This was the world that Franklin Roosevelt inherited in January 1933.

America was at the depth of depression, there was a worldwide economic crisis, and Europe was experiencing revolution and social discontent. Before Roosevelt could even think about the looming foreign policy threat, though, he had to "fix" a bloodied and ineffectual economic system at home. His solution s was, the New Deal -- relief, reform and recovery for the Great Depression. Many believe the New Deal was one idea or program, but instead, it was a lengthy series of programs that were designed, over time, to restructure the American economy, stimulate economic growth, and help restore confidence and pride in the American public. These programs were really pushed between 1933 and 1936, with the goals of relief (job programs) reform (stimulating business and providing structure for banking), and to ensure that the events that caused the crash would never happen again (speculation, lack of confidence in American currency, farm and urban policy, and unemployment).

FDR had to first focus on something that would provide the quickest recovery for the most people. His administration pushed through a number of banking reform laws that were designed to prevent another crash, to find emergency money for the poor and unemployed who had nowhere else to turn, and to establish work programs so that the able bodied could work, help their family, and recover self-esteem. FDR also worked to repeal the Gold Standard so that the new economy would be based on more practical measures, and to repeal Prohibition. Relief was provided, then, in the so-called "alphabet programs, " which guided government dollars towards finding jobs and work for the unemployed, to establish social security, and money designed to help stimulate farming and agriculture and use a trickledown effect to stimulate the economy by providing more dollars for consumer and business spending. The 1934 Securities and Exchange Act also acted to reform the stock market, which in turn, spun other reforms in trade, business practices, and labor acts.