What happened during the U.S. economic crisis of 1929

Roosevelt's New Deal

Roosevelt's New Deal 1. How Roosevelt implemented the New Deal In the history of economic development in the United States and the world, the economic crisis that broke out from 1929 to 1933 and the "New Deal" implemented by President Roosevelt "It left such a deep impression on people that it is unavoidable to study this period of history when studying modern capitalist economy. October 24, 1929, is known as "Black Thursday" in American history. Prior to this, in the summer of 1929, the United States was still singing and dancing. In the three months of the summer, the stock price of General Motors rose from 268 to 391, and the stock price of U.S. Steel rose from 165 to 258. People talked about nothing else when they met. , only talking about stocks, until September, the US Treasury Secretary also vowed to assure the public: "This prosperous scene will continue." However, on October 24, the U.S. financial sector collapsed. Stocks fell from their peak to the abyss overnight. Prices fell so fast that even the automatic stock market monitors could not keep up. The stock market crash led to continuous After four years of the Great Depression, the U.S. economy has fallen into the quagmire of economic crisis. The prosperous American society in the past has gradually been replaced by the bleak scene of inventory accumulation, workers' unemployment, and store closures. 86,000 companies went bankrupt, 5,500 banks collapsed, and the national financial community was in a state of suffocation. Years of hard savings of millions of Americans were wiped out. GNP dropped from US$104.4 billion at the outbreak of the crisis to US$74.2 billion in 1933, and the number of unemployed people dropped from US$104.4 billion to US$74.2 billion in 1933. The number soared from less than 1.5 million to more than 17 million, accounting for more than a quarter of the entire labor force. The overall economic level regressed to 1913. The value of agricultural products has dropped to its lowest point, and it is not uncommon for farmers to pour milk into the sea and burn grain and cotton in public. It was under such circumstances that Franklin Roosevelt replaced the anxious Hoover and was elected as the 32nd President of the United States. In response to the reality at that time and in compliance with the will of the broad masses of the people, he boldly implemented a series of policies and measures aimed at overcoming the crisis. This was historically known as the "New Deal". The main content of the New Deal can be summarized as the "Three R's", namely Recover, Relief, Reform. Because the Great Depression was triggered by a financial crisis caused by wild speculation. President Roosevelt's New Deal also started with financial consolidation. Among the 15 important pieces of legislation enacted during the period known as the "Hundred Days of New Deal" (March 9 to June 16, 1933), laws related to finance accounted for one-third. When Roosevelt was sworn in as president on March 4, 1933, almost no banks in the country were open and checks could no longer be cashed in Washington. At Roosevelt's request, Congress passed the Emergency Banking Act on March 9, deciding to adopt an individual review and licensing system for banks, and to allow solvent banks to resume operations as soon as possible. From March 13 to 15, 14,771 banks were licensed to reopen, 10,797 of which were eliminated compared with 25,568 before the crisis in 1929. The extraordinary measures taken by Roosevelt to rectify the financial system played a huge role in cleaning up the mess and stabilizing people's hearts. Public opinion commented that this action was like "a flash of lightning in the dark sky." While fixing the banks, Roosevelt also took actions to strengthen America's foreign economic position. Starting from the announcement of the cessation of gold exports on March 10, 1933, major measures were taken one after another: on April 5, it was announced that private storage of gold and gold securities was prohibited, and US dollar bills were stopped to be exchanged for gold; on April 19, gold exports were banned, Abandoned the gold standard; on June 5, public and private debts were abolished and paid in gold; on January 10, 1934, the issuance of US$3 billion in banknotes guaranteed by national securities was announced, devaluing the US dollar by 40.94. The devaluation of the U.S. dollar strengthens the competitiveness of U.S. goods with foreign countries.

These measures have played an important role in stabilizing the situation and easing the blood circulation of economic life. During the "Hundred Days of New Deal", while resolving banking problems, Roosevelt also tried his best to get Congress to pass the Agricultural Adjustment Act and the National Industrial Recovery Act. These two laws became the right and left arms of the entire New Deal. Roosevelt required capitalists to abide by the rules of "fair competition" and set the scale, price, and sales scope of each enterprise's production; he set minimum wages and maximum working hours for workers, thereby limiting monopoly and reducing and easing class tensions. contradiction. After receiving reluctant support from large businesses, Roosevelt then tried his best to win the support of small and medium-sized business owners. He said that it is important for large companies to accept the Industrial Revitalization Act, "but the area that will produce fruitful results lies in small employers. Their contribution will be to provide new job opportunities for 1 to 10 people. These small employers are actually the backbone of the country." "The development of small and medium-sized enterprises has played a positive role in the stability of American society and the recovery of the economy." Another important element of the New Deal was relief work. In May 1933, Congress passed the Federal Emergency Relief Act and established the Federal Emergency Relief Administration, which quickly allocated various relief funds and materials to various states. The next year, it changed the simple relief to "work-for-relief" to provide the unemployed with employment. Opportunities for public service maintain the self-reliance and self-esteem of the unemployed. In the early years of Roosevelt's administration, more than 17 million unemployed people and their relatives in the country relied on help and charity from state and municipal governments and private charities to make ends meet. But this part of the financial resources is nothing compared to such a huge army of unemployed people. Only the federal government can solve this complex social problem. The first measure of Roosevelt's New Deal was to urge Congress to pass the Civilian Conservation Corps plan. This plan specifically recruits young people aged 18 to 25 who are strong and have high unemployment to engage in tree planting and forest protection, flood prevention and control, soil and water conservation, road construction, opening of forest fire lines and setting up forest watchtowers. The first batch 250,000 people were recruited to work in 1,500 camps throughout the states. Before the United States entered the war, more than 2 million young people worked in this organization, and they opened more than 7.4 million acres of state-owned forest areas and a large number of state-owned parks. On average, each person works for 9 months per term, and most of the monthly salary is used for family support, which expands the scope of relief and the corresponding purchasing power in the entire society. For the millions of people who rely on states and cities for support, Roosevelt also urged Congress to pass the Federal Emergency Relief Act, establish a federal relief agency, reasonably divide the use ratio between the federal government and states, and formulate preferential policies to encourage local governments to use direct relief The poor and unemployed. During the New Deal, there were a wide variety of work relief agencies throughout the United States, which can be divided into two major systems: the Public Works Administration (the government has allocated more than 4 billion US dollars) and the Civilian Works Agency, which mainly engages in long-term project projects. Engineering Department (investing nearly US$1 billion), which has built 180,000 small engineering projects nationwide, including school buildings, bridges, embankments, sewer systems, and public buildings such as post offices and administrative offices, successively attracting It has provided jobs for 4 million people and found a place for the vast number of unskilled unemployed workers. Later, several new relief agencies were established. The most well-known among them are the Works and Construction Administration, which Congress allocated $5 billion to establish, and the National Youth Administration, which specifically targets young people. Together, they employ 23 million people, accounting for more than half of the country's workforce. By the eve of World War II, the federal government had spent US$18 billion on various projects and smaller direct relief costs. With this, the U.S. government had built nearly 1,000 airports, more than 12,000 sports fields, and more than 800 school buildings and hospitals, not only providing It created jobs for craftsmen, unskilled workers, and the construction industry, and provided a variety of jobs for thousands of unemployed artists. It was the most ambitious and successful relief program undertaken by the U.S. government to date.

This money passes through workers' pockets, through different channels and consumption, and then returns to the hands of capitalists, becoming the "inducing water" that stimulates private consumption and individual investment through government investment. The second phase of the "New Deal" that began in 1935, based on the first phase, focused on passing regulations such as the Social Security Act, the National Labor Relations Act, and the Public Utilities Act to consolidate the achievements of the New Deal in the form of legislation. Roosevelt believed that a government “that cannot care for the old and the sick, cannot provide jobs for the strong, cannot inject young people into the industrial system, and allows the shadow of insecurity to hang over every family, is not a government that can survive, or is the government that should exist," and Social Security should be responsible for the entire life "from cradle to grave." To this end, the Social Security Law was enacted, which stipulates that all wage earners who retire over the age of 65 can receive a monthly pension of US$10 to US$85 depending on the salary level. Regarding unemployment insurance, Roosevelt explained: "Not only will it help individuals avoid being dependent on benefits when they are laid off in the future, but it will also cushion the impact of economic hardship by maintaining purchasing power." The source of insurance benefits is half by employed workers. The employer and the employer each pay a premium equivalent to 1% of workers' wages, with the other half allocated by the federal government. This social insurance law reflects the strong desire of the working people and is welcomed and praised by the vast majority of people in the United States. On May 24, 1937, Roosevelt submitted to Congress a message on minimum wage and maximum working hours legislation that received widespread attention. The speech acknowledged that "one-third of our country's population, the vast majority of whom are engaged in agriculture or industry, do not have good food, clothing, and housing." “We must remember that our goal is to improve, not reduce, the living standards of those who are now malnourished, poorly clothed, and poorly housed. We know that when a large proportion of our workers are not employed, Overtime work and low wages cannot raise national income. Congress failed to act on the bill, which was re-introduced by Roosevelt on October 12, 1937, and was not passed until it was passed on June 14, 1938. This is the Fair Labor Standards Act (also known as the Wage and Hour Act). Its main provisions include a 40-hour work week and a minimum wage of 40 cents an hour; the prohibition of the use of child labor under the age of 16 and the prohibition of use in hazardous industries Workers under 18 years of age. The minimum wage regulations will be gradually adjusted in the future with the development of the economy. Although these social legislations belong to the category of social reform, they are of great benefit to the people, especially wage earners. In order to solve the problem of federal funding sources for the Social Security system, Roosevelt implemented an unprecedented progressive tax based on the amount of income and assets. 31% is levied on net income of US$50,000 and inheritance of US$40,000, and 75% can be levied on inheritances of more than US$5 million; corporate tax used to be 13.75%. According to the 1935 tax law, the tax rate for corporate income below US$50,000 was reduced to 12.5%, and the increase is 15% for those above US$50,000. By 1939, President Roosevelt's New Deal was a huge success. The New Deal touches almost every aspect of American social and economic life. Most of the measures are specific considerations for the United States to get out of the crisis and minimize the consequences of the crisis. Others are long-term plans based on the long-term development goals of capitalism. Its direct effect is It prevented the United States from a major economic collapse and helped the United States get out of the crisis. Since 1935, almost all economic indicators in the United States have steadily recovered. The gross national product has increased from US$74.2 billion in 1933 to US$204.9 billion in 1939. The number of unemployed people has dropped from 17 million to 8 million, restoring national trust. Confidence in the national system freed the United States from the threat of fascism to the democratic system, enabled the United States in crisis to avoid violent social unrest, created a favorable environment and conditions for the United States to participate in the anti-fascist war, and to a large extent determined the future of the United States. The direction of social and economic development in the United States after World War II.

It is true that the ultimate goal of Roosevelt's "New Deal" measures was to strengthen state capitalism in order to overcome the economic crisis and consolidate the capitalist system. The "New Deal" was an experimental treatment he tried to treat the diseases of capitalist society when conventional treatments failed. In fact, some measures of the "New Deal" also had shortcomings, which often became the reason for his political opponents to launch attacks. Classes whose interests were harmed during the implementation of the "New Deal" also resisted and slandered them. Even the Industrial Recovery Act and two other bills, which were an important part of the early New Deal, were ruled unconstitutional by the Supreme Court two years later. However, as long as we truly look at the "New Deal" with a historical materialist attitude, it is not difficult to see that the "New Deal" accurately grasped the pulse of American economic and social life, "enabling people to return to work and enabling our businesses to become active again." The slogan "Get up" is in line with the interests of the working people and fully arouses their enthusiasm. Roosevelt regarded it as the government's responsibility to maintain the normal operation of the national economy and ensure the employment of citizens. In particular, a large number of engineering projects built in the form of work relief not only greatly alleviated unemployment difficulties and stimulated the early recovery of the economy, but also built many infrastructure projects. Benefit the U.S. economy immensely. The New Deal left behind a large number of measures and policies to prevent the recurrence of the Great Depression, laying a solid foundation for the United States to enter World War II and its rapid post-war rise. As a result, Roosevelt became the most popular person in the United States and the world since Abraham Lincoln. President will forever be remembered in history. 2. How should we learn from the New Deal? Although our country’s economy has achieved a soft landing, the momentum of development is good, and the country’s economic strength has increased significantly. To prepare for a rainy day and take precautions before they happen, we should also clearly see that there are still many contradictions and problems in our country's economic and social development. Mainly: a considerable number of state-owned enterprises have difficulties in production and operation, the number of laid-off and unemployed people has increased, and employment pressure has increased; the agricultural foundation is still weak, blind investment and duplication of construction are common in economic construction, and the overall quality and efficiency of the national economy are not high; financial Supervision is not sound enough, and the financial order is relatively chaotic in some aspects; regional development gaps still exist obviously, income distribution relations have not been straightened out, and some people in both urban and rural areas are living a difficult life. The China Economic Prosperity Monitoring Center’s tracking and monitoring of 58,000 state-owned industrial enterprises showed that “the state-owned enterprise index fell again from January to April, reaching -109 points, 28 points lower than the period from January to March, and 103 points lower than the same period last year... State-owned enterprises The production and operation conditions of loss-making enterprises further deteriorated, the scope of losses expanded, and the amount of losses increased. From January to April, the amount of losses increased by 31.6%, resulting in a net loss of 88.7% of all state-owned enterprises." According to the 1997 Statistical Bulletin on Labor Development. It shows that “the number of jobs absorbed by the public economy has decreased. By the end of last year, there were still 6.343 million laid-off and unemployed people in state-owned enterprises across the country.” Among the country’s 846 million labor force, 7.1 million people are newly employed every year, accounting for about 80% of the total labor force. The rural labor force is often in a state of intermittent unemployment. It should be clear that the emergence of these problems is an inevitable phenomenon in the deepening of our reform and economic development. It is a problem in progress. It is fundamentally different from the massive unemployment phenomenon that occurred during the economic crisis in Western countries, and is also different from the phenomenon that occurred during the economic difficulties in our country in the 1960s. The employment demand is seriously insufficient. To solve these problems, we can only formulate policies and measures that are in line with China's national conditions based on the current reality. Reality is the repetition and continuation of history. Stones from other mountains can be used to attack jade. Although more than half a century has passed since the "New Deal" measures implemented by U.S. President Roosevelt in the 1930s, and the national conditions of the United States and the situation our country is currently facing are also very different, they have played an important role in solving some practical problems in our country's current economic and social development. , especially the launch of the market and the implementation of the "re-employment" project, there are still many lessons to be learned. 1. Strengthen financial supervision, implement correct monetary policies, and prevent financial risks. Modern financial policies have a great regulatory effect on the national economy, and modern economic crises are mostly caused by chaos in the financial sector.

Although many adjustments and reforms have been carried out in the past, due to historical conditions and macro-environmental constraints, many problems have not been fundamentally resolved. The contradiction with the development of the socialist market economy has become increasingly prominent, and has reached the point where reform is indispensable. The First Session of the Ninth National People's Congress has clarified the basic ideas for the reform of government institutions, and its own reform has gradually been included in the agenda of governments at all levels. The significance of institutional reform is not just to abolish institutions and reduce redundant personnel, but to completely transform the traditional way of governing the country, adopt advanced scientific methods, and quickly adapt to the requirements of the wave of economic globalization. According to this requirement, in line with the principles of streamlining, unification, and efficiency, we will focus on transforming government functions, realizing the separation of government and enterprises, and establishing a scientific and standardized operating mechanism. We will strengthen government departments that should be strengthened, merge those that should be merged, and cancel those that should be merged. and in accordance with the requirements of consistent powers and responsibilities, rationally adjust the responsibilities and authorities of departments, strengthen macro-control and law enforcement supervision departments, clearly divide the division of responsibilities between departments, improve the administrative operation mechanism, and never allow several departments to do the same thing phenomenon continues to exist, creating a good environment for reform, development and stability.