USA: The Depression and the New Deal
By the middle of the 1920s, the US was enough of an industrial powerhouse to be responsible for more than half the world's output of manufactured goods. After leading the way into a new era of prosperity, however, it suddenly found itself dragging the rest of the world down into economic collapse. It's hard to say exactly what triggered the Great Depression ; the consequences were out of all proportion to any one specific cause. Possible factors include American overinvestment in the floundering economy of postwar Europe, combined with high tariffs on imports that effectively precluded European recovery, as well as a quasi-superstitious faith in the stock market that had seen interest rates rise to a minimum of twelve percent in 1928. That faith was shattered by the Wall Street Crash of October 1929. On "Black Tuesday" alone, enough stocks were sold to produce a total loss of ten thousand million dollars - more than twice the total amount of money in circulation in the US. Within the next three years, industrial production was cut by half, the national income dropped by 38 percent and, above all, unemployment rose from 1.5 million to 13 million.National self-confidence, however shaky its foundations, has always played a crucial role in US history, and President Hoover was not the man to restore it. Matters only began to improve in 1932, when the patrician figure of Franklin Delano Roosevelt accepted the Democratic nomination for president with the words "I pledge myself to a new deal for America," and went on to win a landslide victory. At the time of his inauguration, early in 1933, the banking system had all but closed down; it took Roosevelt the now-proverbial "Hundred Days" of vigorous legislation to turn around the mood of the country.
Taking advantage of the new medium of radio, he used his "Fireside Chats" to cajole America out of crisis; among his earliest observations was that it was a good time for a beer, and that therefore the experiment of Prohibition was over. The New Deal took many forms and worked through many newly created agencies, but was marked throughout by a massive growth in the power of the federal government, which only now seems to be under threat. Among its accomplishments were the National Recovery Administration, which created two million jobs; the Social Security Act, of which Roosevelt declared "no damn politician can ever scrap my social security program"; the Public Works Administration, which built dams and highways the length and breadth of the country; the Tennessee Valley Authority, which by generating electricity under public ownership for the common good was probably the closest the US has ever come to institutionalized socialism; and measures to legitimize the role of the unions and revitalize the "Dust Bowl" farmers out on the plains.
Roosevelt originally saw himself as a populist who could draw support from every sector of society. By 1936, however, business leaders were making it clear that as far as they were concerned he had done more than enough already to kick-start the economy. From then on, as he secured an unprecedented four consecutive terms as president, he was firmly cast as the champion of the little man.
After the work-creation programs of the New Deal had put America back on its feet, the deadly pressure to achieve victory in World War II spurred industrial production and know-how to new heights. Once again the US stayed out of the war at first, until it was finally forced in by the high-stakes gamble of the Japanese, who launched a pre-emptive strike on Hawaii's Pearl Harbor in December 1941. In both the Pacific and in Europe, American manpower and economic muscle eventually carried all before it. Roosevelt died early in 1945, after laying the foundations for the postwar carve-up with Stalin and Churchill at Yalta, and thus was spared the fateful decision, made by his successor Harry Truman, to use the newly developed atomic bomb on Hiroshima and Nagasaki.
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