The New Roosevelt Course and Its Place in History

The reforms of Franklin Delano Roosevelt, like the Great Depression that gave birth to them , have forever entered the history of the world economy. What is so famous for the "New Deal" and whether it could really overcome the economic crisis?

Prehistory

In the 1920s, nothing foretold troubles. On the contrary, in the United States after the First World War, the economy began to rise. The volume of production increased, and with them the confidence grew that America is a place where there are no crises. But the reality seemed deceptive.

Along with the pace of industrial production, the value of the shares of enterprises also increased. Exchange speculation has become an American craze. Everyone dreamed of earning at the stock exchange at least some penny, not being afraid to take a loan for this in the bank. As a result, the value of the shares was increasingly removed from the real indicators. By the end of the 1920s, the economy was in decline. To mitigate its consequences, the Federal Reserve System included a printing press and increased the number of loans. But the bulk of the money went not to industry, but to the stock exchange. This contributed to the fact that the stock market turned into a financial pyramid, which simply collapsed, burying the entire economy under its wreckage. In October 1929, a collapse occurred on the New York Stock Exchange: the value of the shares fell, and mass sales began. Well and further - a chain reaction: together with holders of actions their enterprises also were ruined. Thousands of people became unemployed in an instant.

The crisis quickly swept the entire economy: industry, banks, agriculture. From 1929 to 1933 years. The number of unemployed grew from 3 to 25%, that is, every fourth American did not have a job. Especially the crisis hit the small towns, many of which simply died out.

Not surprisingly, after the next elections, the Republican Party, not the Republican Party, came to power, but the Democratic Party. March 4, 1933, her candidate Franklin Delano Roosevelt joined the US President. Unlike his predecessors, he adhered to rather leftist views and believed that the state should actively intervene in economic processes and help its citizens cope with the crisis, rather than wait until the economy "comes to life." These beliefs are reflected in his reforms, known as Roosevelt's new course.

Industry

In mid-1933, a law was issued, according to which enterprises entered the so-called "codes of fair competition". These documents were made by entrepreneurs themselves, but the president claimed. They indicated the volume of products, the price of it, the sales procedure, as well as the conditions for hiring workers (minimum pay, maximum working week). So the new Roosevelt course did not allow large businessmen to artificially lower prices or reduce production volumes. At the same time, the interests of the workers were also respected. After the adoption of the codes, the role of trade unions was strengthened, which were recognized as legal representatives of the employees of the enterprise.

Within two years after the adoption of the law, all industries were under strict state control. The specially created National Administration of Industrial Restoration has the right even to shut down the enterprises.

Employment

Roosevelt's course was not limited to reforms in industry. The president sought to reduce the unemployment rate, which reached an impressive size. For this purpose, mass public works were organized, for the payment of which funds were allocated from the budget. One of the largest projects of that time was the construction of hydroelectric power stations on the River Tennessee. Particular attention was paid to youth employment - camps were created for young unemployed Americans in which they could work for half a year for $ 30 a month. Of course, these measures did not eliminate unemployment, but could at least reduce it a little.

Agriculture

The fall in prices for agricultural products led to a massive ruin of farmers, poverty and hunger, which in the then America was no less than in the collectivized Soviet villages. Therefore, Roosevelt's new course envisaged measures to revive agriculture. Here, too, state bodies were established that regulated this sphere of the economy. Initially, measures to save farming looked rather barbaric - the products were purchased and immediately destroyed. The farms stimulated the reduction of crop areas and paid bonuses for this. These measures were beneficial primarily to large farmers. To small owners the state issued financial assistance for resettlement to better quality land, purchase of farms. The development of cooperatives was also stimulated. The problems of farmers' debts were resolved as follows: the federal land banks issued loans to them, due to which the agrarians repaid debts to private banks.

Banks

Economic reforms affected them as well. First of all, the government conducted a massive audit of banks, transferring the bankrupt state. New rules of work in this market were adopted. From now on, banks could not work with securities. In addition, the rules for providing exchange loans were clearly established. But the most important measure that Roosevelt's new policy introduced in the banking sector was deposit insurance. Each bank deducted part of its income in a special insurance fund, and when bankruptcy money was paid to depositors from there. This law helped to stop the "flight of investors" and build confidence in banks, which always staggers during the crisis.

Results

So, what did the New Deal give the American economy? Unfortunately, the reforms that were adopted could not prevent a new crisis that broke out in 1937. But they were able to prevent a social explosion, which could well have happened in the 1930s: for that, all conditions existed in what was then in America. The Roosevelt reforms had a broader meaning: they showed that the state can and should take care of its citizens. The foundations of state regulation of the economy were laid, which is implemented in all modern capitalist countries. The adopted system of measures allowed to mitigate the destructive consequences of economic crises.