The economic crisis of 30s of the 20th century is the most powerful crisis with the direst consequences of a global nature. The Depression changed the relationship between the American people and their government, caused the movement from the self-regulated economy to direct regulation by the government and became a period of great reforms. In the economic ideology of that time totally dominated the doctrine of the state noninterference in the economy - "laissez faire", postulating that market forces have unlimited opportunities for self-regulation (Shlaes). Another important component was a pronounced liberal-democratic ideology based on individualism, the principle of equal opportunities and social mobility. Taking into account the specifics of the US, which is expressed in a significant degree of economic freedom, the spirit of free enterprise, the majority of the population believed that the private property of any citizen depends entirely on his capabilities and will to work. However, during the late 19th century, in the country became active the process of economic monopolization, formation of trusts, giant industrial conglomerates that led to the concentration of wealth in the hands of a few representatives of the big capital (Beattie).
A pyramid was formed in the stock market, as a result of the share price rose regardless of the financial performance of companies. A significant part of investors used for the work on the stock exchange credit resources: they pawned shares, took a new loan, then bought new shares, etc.
This further contributed to the outflow of resources from the real sector, which stimulated a decrease in its performance. The speculation growth helped a low interest rate on the loan - about 3.5-4% (Crafts and Fearon).
At this moment, the government should have seen the problem and take action, however, stock market growth was creating the illusion of economic prosperity.
An emergency situation that has arisen in the United States during the crisis has been intensified by the reaction course of the federal government's policy. Throughout the 20's policy of the Republican administration was based on the ideology of "hard individualism". This especially consistently defended ultraconservative course representatives of the "old guard" Republicans headed by Coolidge and Mellon, who categorically rejected the possibility of any state intervention in business affairs, and set the government only task - to create the most favorable conditions for large corporations.
However, even in conditions of prosperity this option of individualistic ideology close to social Darwinism seemed anachronistic to many more modern-minded groups of corporate capital and its political representatives (Leonard). Contrary to this course they put forward another version of individualistic ideology - "the theory of controlled individualism." Supporters of this policy, and especially Herbert Hoover, who was in the 20's the minister of trade, also were against the state regulation and against direct state intervention in business affairs. However, unlike the Republican "old guard" they condemned the policy of absolute non-interference of the state in socioeconomic sphere. They thought that the course for the creation of "self-regulation of business," the system of the state encouraging the associative actions of various economic groups in society would help to achieve the best conditions for production and sales and the policy of "social partnership".
In 1929, president H. Hoover took this course. However, in the first months of the crisis, Hoover himself and members of his cabinet rejected the existence of a serious crisis. They assured Americans that the United States are not experiencing the crisis, but the temporary delay. Even when the harsh reality forced the president and his colleagues to recognize the seriousness of the situation, Hoover and his cabinet argued that the economic crisis should not be regulated with the efforts of the federal government, but by actions of business and other economic groups.
The anti-people nature of government policy manifested itself. The Hoover administration categorically rejected any proposals for government assistance to the unemployed, and especially the social security system. All plans for federal unemployment benefits until the summer of 1932 had been categorically rejected. Only in June 1932, in an atmosphere of the election campaign, was finally adopted a law about the financial assistance.
The US unemployment rate (Demeri)
The Great Depression showed the inability of traditional approaches to solving social and economic problems. In search of an effective anti-crisis funds in the majority of countries have come to the conclusion that without the intervention of government it is impossible to get out of the crisis.
Since the crisis was caused primarily by monetary reasons, to fight it could monetarist methods. But such methods are more effective in terms of inflation, and in the US during the crisis, prices have fallen. In addition, monetarism measures are not enough to overcome the decline in production and a significant reduction of unemployment. Therefore, the US administration has applied primarily economic (economic-organizational) measures, measures of state influence on the economy, finance, and the stock market. The stabilization of the US economy has begun after March 1933 when the country was headed by Theodore Roosevelt.
Resources from production were reallocated towards infrastructure. This was especially important for agricultural areas of the country. In the fight against unemployment, millions of Americans were directed to the construction of dams, roads, railways, power lines, bridges and other important objects. This facilitated the logistic, transportation, and gave additional impetus to business. The pace of housing construction has increased.
Nowadays, critics of Roosevelt policy search arguments to prove that “New Deal” was not effective (W. Reed). Roosevelt sought to consolidate the nation, and not take away various social groups on opposite sides of the barricades. Roosevelt actions meet these challenging requirements. That is why his "New Deal" entered the annals of history as one of the most successful social and political experiments and gave a strong impetus to the American society that has turned America into the undisputed leader of Western civilization. That is why other countries use the US experience and still pay attention to results of Roosevelt’s measures.
Works Cited
Shlaes, Amity. "When Less Led To More". The Economist. N.p., 2013. Web. 10 Apr. 2016.
W. Reed, Lawrence. "Great Myths Of The Great Depression". Mackinac.org. N.p., 2016. Web. 11 Apr. 2016.
Beattie, Andrew. "A History Of U.S. Monopolies | Investopedia". Investopedia. N.p., 2007. Web. 11 Apr. 2016.
Crafts, Nicholas, and Peter Fearon. Lessons From The 1930S Great Depression. London: Centre for Economic Policy Research, 2010. Print.
Leonard, Thomas C. "Origins Of The Myth Of Social Darwinism: The Ambiguous Legacy Of Richard Hofstadter's Social Darwinism In American Thought". Journal of Economic Behavior & Organization71.1 (2009): 37-51. Web. 11 Apr. 2016.
Demeri, M. Y. The Rise And Decline Of The American Empire. Bloomington: Archway Publishing, 2015. Print.
