Lesson 13: Roosevelt's New Deal

From Prosperity to Crisis

In the 1920s, the U.S. economy was booming and new industries were developing rapidly. New products such as radios, refrigerators and vacuum cleaners began to enter the homes of the masses, and cars were no longer a luxury that only the rich could afford. However, under the surface of prosperity lay a great crisis. Productivity continued to increase and corporate profits rose sharply, but workers' wages grew slowly and purchasing power was severely lacking, leading to overproduction. At the same time, a large amount of money entered the stock market, stock prices rose wildly, capitalists prospered, and the general public used their limited savings to buy stocks, resulting in nationwide stock speculation. The basic contradictions of the capitalist system eventually led to the outbreak of the Great Economic Crisis.

In late October 1929, U.S. stock prices suddenly plummeted. From 1929 to 1933, the industrial output of the capitalist world fell by more than one-third and the trade volume by two-thirds, with the industrial output of the United States falling by more than 40% and the trade volume by 70%. A large number of businesses went bankrupt and banks collapsed. The number of unemployed people increased dramatically, with 15-17 million people unemployed in the United States and more than 30 million in the capitalist world as a whole. The poor were trying to get by by all means, often without food and clothing; the capitalists were willing to destroy large quantities of goods in order to maintain commodity prices and guarantee profits. Large quantities of corn, wheat, cotton and milk were used as fuel or dumped into rivers.

Roosevelt's New Deal

 In March 1933, Franklin D. Roosevelt was inaugurated as the president of the United States. In order to cope with the growing economic crisis, Roosevelt announced the New Deal as soon as he took office, using state intervention to turn the economy around.

During the New Deal, the U.S. economy slowly began to recover, industrial production resumed, employment gradually increased, and people's lives improved. The New Deal strengthened the macro-control ability of the U.S. government, restored the confidence of the American people, and had a profound impact on the capitalist world. However, the New Deal was a policy adjustment made by the U.S. government on the premise of maintaining the capitalist system. It did not change the essence of capitalism and could not solve the fundamental contradictions of American society.

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