alThe Positive Role of Big Government in
The tumultuous years of the Depression left the United States in a financial ruin. Mass speculation had left the stock market a shambles, while overproduction by farms and under consumption by consumers had mixed to form a surplus of cataclysmic proportions. When Franklin Roosevelt took hold of the reigns of the country, he brought with him a New Deal, a series of programs aimed at getting the country back on its own two feet. Roosevelt planned on accomplishing this with the aid of a larger government role. This philosophy had many positive benefits.
The idea of a Big Government was not necessarily new, just under used. Throughout the administrations of Hoover, Wilson, and Coolidge, the political philosophy was one of “Ahead to the Past,” or “Return to Normalcy-” the way things were before the first World War. A very big part of this philosophy was that of a “laissez-faire” government, or, one that did not participate in business very visibly. The government had not played a role in the lives of the American citizen and American business for a long time, and it was going to be difficult to make a return to such policy. Business had grown as well as, if not better, than the period before the war. While these government policies made the rich richer, they also made the poor poorer. Such national policy does not work for the general well-being of a country.
Throughout the presidential campaign of 1932, Herbert Hoover stated that the New Deal was “radical,” that the measure prescribed in the program were far too severe. The common belief at the time was that internal economics were not to blame for the current downward trend, but abnormal stimuli from abroad. The failure of foreign markets, lingering war debts and reparations were all to blame for the problems at home. In keeping with the “Ahead to the Past” traditions of “laissez-faire,” Hoover declared that a Big Government policy would wreck the nation. (V)
However, economist John Maynard Keynes supported the theory of a reasonably more active government in the life of the national economy. In his statement to the New York Times, Keynes declared “The notion that, if the government would retire altogether from the economic field, business, left to itself, would soon work out its own salvation is, to my mind, foolish.” ( I ) Keynes supported the policies inferred by the New Deal program; he found them (policies) favorable to a return to economic stability.
In one of his earlier “fireside chats,” Roosevelt identified many of the problems of the country. He outlined the New Deal program for the country. Problems included the repair of trade and commerce levels, prices for basic commodities, and as a result of these prices, the integrity of banks, savings banks, and insurance companies. (III) Many of these problems warranted its own program to focus on the calamity. These programs in turn spawned agencies and other programs.
The programs formed under the New Deal program came to be known as “Alphabet Soup,” for the acronyms representing their names. Roosevelt felt that perhaps the greatest obstacle for the country was the return of people to work. He felt this could be accomplished by government programs and government policies. (IV) One important New Deal program was known as NIRA, or National Industrial Recovery Act, which gave birth to the National Recovery Administration and the Public Works Administration. The primary purpose of this program was to put people back to work. (II) Between the years of 1933 and 1934, employment rose by 2.5 million jobs, a substantial gain in the war on unemployment. The success of this program is twofold. By putting people back to work, they earn wages, which can then be used to purchase goods produced by companies-a continuous cycle of money. Such programs were extremely beneficial to the welfare of the nation.
Another marvelous invention from Big Government New Deal programs was the advent of the Government Bank Deposit Insurance, which insured all bank accounts up to $2500. This measure was relatively new, and aided in the restoration of faith in banks, savings and commerce. (VI). Before this undertaking, the government had very little, if anything at all, to do with the personal savings of citizens. Now, their savings were secure.
Near the middle of the decade, the New Deal program came under heavy criticism from the public. Many programs, though geared for the long-term gain, were being seen as failures in only their third and fourth years. Though many saw the New Deal as failure in its later years, Roosevelt stuck his policy as evinced in his 1936 Chicago Speech (VII). The goals made at the onset of his administration had been attained, and Roosevelt saw no reason for worry. The ideas of the New Deal and Big Government were succeeding.
Without the injection of a larger government into the affairs of national business, many of the events throughout the decade of the Thirties most likely would not have taken place, therefore prolonging the Great Depression. The services and programs provided by Roosevelt’s New Deal big government had brought the country out of the dark recesses of unemployment and returned it to the track to economic stability and prosperity. Without the New Deal and a larger government, the Great Depression could’ve been even greater.
I. John Maynard Keynes, New York Times June 10, 1934
“The notion that, if the government would retire altogether from the economic field, business, left to itself, would soon work out its own salvation, is to my mind, foolish.”
II. President Franklin D. Roosevelt, Fireside Chat of June 16, 1933
“The law I have just signed was passed to put people back to work, to let them buy more of the products of farms and factories and start our business at a living rate again. This task is in two states; first, to get many hundreds of thousands of the unemployed back on the payroll by snowfall and, second, to plan for a better future for the longer pull. While we shall not neglect the second, the first stage is an emergency job. It has the right of way.”
III. President Franklin D. Roosevelt, Fireside Chat, May 7, 1933
“Two months ago we were facing serious problems. The country was dying by inches. It was dying because trade and commerce had declined to dangerously low levels; prices for basic commodities were such as to destroy the value of the assets of national institutions such as banks, savings banks, insurance companies, and others. These institutions, because of their great needs, were foreclosing mortgages, calling loans, refusing credit. . . .”
IV. President Franklin D. Roosevelt, Inaugural Address, March 4, 1933
“Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war.”
V. Incumbent President Herbert Hoover, The State Papers & Other Public Writings of Herbert Hoover October 31, 1932
“Our economic system has received abnormal shocks during the last three years, which temporarily dislocated its normal functioning. These shocks have in a large sense come from without our borders.””If they (these changes towards Big Government) are brought about, this will not be the America which we have known in the past.”
VI. President Franklin D. Roosevelt, Fireside Chat, October 23, 1933
“The Government Bank Deposit Insurance on all accounts up to $2500 goes into effect on January first. We are now engaged in seeing to it that on or before that date the banking capital structure will be built up by the Government to the point that the banks will be in sound condition when the insurance goes into effect.”
VII. President Franklin D. Roosevelt, Speech, October 14, 1936
“What was it that the average business man wanted government to do for him- to do for him immediately in 1933?
1. Stop deflation and falling prices- and we did it.
2. Increase the purchasing power of his customers who were industrial workers in thecities- and we did it.
3. Increase the purchasing power of his customers on farms- and we did it
4. Decrease interest rates, power rates, and transportation rates- and we did it.
5. Protect him from losses due to crime, bank robbers, kidnappers blackmailers- and wedid it.”
VIII. President Franklin D. Roosevelt, Fireside Chat, July 24, 1933
“For many years , the two great barriers to a normal prosperity have been low farm prices and the creeping paralysis of unemployment.”