Transcript

In 1933 when Franklin Roosevelt was inaugurated as president, he inherited an unprecedented economic crisis. There were more people unemployed, homeless, struggling and suffering, and more people going hungry every day than at any point in American history. He and his advisors faced a formidable challenge. How in the world could they get this economy going again when it had never before experienced such stress?

The answers were many. That is, his advisors had several conflicting notions of what had caused the Great Depression. One of the first problems was to determine why it had happened and, therefore, how they could address it. Instead of being able to determine with confidence why it had happened, Roosevelt received conflicting advice. In essence, he tried to do a number of things in hopes that all of them would address the economic crisis and begin to restore prosperity.

Another factor was that Franklin Roosevelt himself, even though he was willing to do more than any other president ever had in dealing with such an economic crisis, was fundamentally a fiscal conservative. That is, he did not like the idea of the federal government having to go into debt to deal with the crisis. He wanted a balanced budget.

A third factor was that the Democratic Party that had elected Franklin Roosevelt included a very significant conservative wing, mostly southerners, who were also reluctant to have the federal government expand too far, too fast in dealing with the unprecedented crisis.

Thus, even though Franklin Roosevelt and the New Dealers did more than ever before to try to inject new energy into the economy and deal with the unprecedented social effects of the Great Depression, they never did enough to truly stimulate the economy.

Roosevelt’s efforts put several million people back to work, many of them directly employed by the federal government or by state governments. That alone was not sufficient to deal with the tens of millions of people who were either out of work or underemployed. In other words, the federal spending was never enough to actually generate full employment or economic growth. And that was demonstrated only by the massive federal spending that was required by the Second World War.

When Franklin Roosevelt took office in 1933, 25% of Americans were out of work. By the time the war started, that figure was below 15% but that was still an unprecedented level. The fact that the wartime spending did provide full employment and generated economic recovery suggests that, had the administration been able and willing to invest even more into the workforce, it perhaps would have ended the Depression sooner than it did. However, politically, that would have been impossible for Roosevelt to pursue.

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