When FDR took office in 1933, he immediately focused government attention the domestic crisis. Most every facet of the American economy was broken, and Roosevelt knew he had to prevent another such catastrophe from occurring while solving the current one. In so doing, he turned his eyes away from international economic strife, continuing a US theme of domestic importance over international affairs (understandable, but interesting nevertheless). After World War II, however, the US drastically reversed this position by assuming dominion as one of two world powers. In any case, that is a topic for another time.
Rauchway’s text provides a much different perspective on FDR and the New Deal than Powell’s book. While Powell argues that FDR’s policies prolonged the Depression, Rauchway believes that Roosevelt saved America’s credit system and radically augmented a national economy, setting the foundations for economic dominance in the near future. These divergent views often involve the very same concepts and historical events, such as the bank holiday, the alphabet soup administrations, and so on and so forth. This only goes to show the immense complexity of the Great Depression as a historical mode of study. I think I will be fortunate to glean even a few original and personal ideas from my research in this inquiry.
Rauchway addresses the issue of banks, as Powell did. But Rauchway argues that by shutting down the banks and even forcing some to default, FDR saved them. He did this by forcing the entire monetary system to reinvent itself and create lasting economic reform. This is in direct contrast with the points raised by Powell, who claimed that FDR singled out big banks in an attempt to scapegoat them for the Depression and in so doing prolonged the crisis. I find Rauchway’s argument here to be stronger, though, because it relates more specifically to the overall Depression itself and less to the state of the banking system individually. In addition, Rauchway acknowledges some points Powell considers central: namely, the fact that many banks were forced to close doors as a result of the bank holiday. Still, Rauchway’s argument provides more convincing to the overall contrary.
There is yet another exciting link found in Rauchway’s argument: that the democratic party of the United States had, ever since the end of the Gilded Age, began advocating for the common man (labor) against the forces that sought to monopolize the country (capital). Democratic preferences for “soft money” meaning silver coin to alleviate economic problems for farmers and a desire for more money in circulation to help commoners pay debts are evidence of this political alignment. Here, political affairs tie into cultural clashes on the basis of economic struggles!
Roosevelt exercised incredible control over the floundering American economy, so much so that he had the power to completely overturn or damage it (and there are those who would argue that he did, to some extent). However, he did use that power to significant positive impact: for example, by empowering Wall Street insider information regulation through the Securities Exchange Act of 1934, or by establishing stronger political control of the Fed with the Banking Act of 1935. In many ways, FDR was also incredibly fortunate. New levels of gold inflow from foreign nations, desperate to pay off multitudes of debts, increased American stability and injected money into the economy, thus providing new jobs.
The Gold Standard decreed that countries only allow money circulation equal to their stock of gold. FDR did away with the standard, as did many European nations, instead altering it as another form of government intervention.
Part two of this series will address the governmental administrations and actions FDR undertook in combatting the Great Depression.
An American Inquiry 