To mark the 80th Anniversary of the Great Crash of ‘29, we asked 15 progressive thinkers to write about lessons learned and what lies ahead. Together, their reflections constitute a New Agenda for America — a message of how the ideals of a fair society should apply to the economic and social policies of our time.
The collapse of Wall Street that eighty years ago ushered in the worst economic crisis in America’s history. By the time Franklin Roosevelt took office three years later, the downturn had reached unimaginable proportions. The GNP had plunged by 67%; total stock values by over 80%; nearly 11,000 banks had closed their doors, bringing about the total collapse of the US banking system. Roughly 45 % of all homes were either in foreclosure or were in danger of being foreclosed; personal income had fallen by 44%, and more than one quarter-one quarter-of the national labor force was unemployed.
FDR assumed power at a time when the “state capacity” of the American government to intervene in the social and economic well-being of the average American was extremely limited. There had not yet been a New Deal, which meant no unemployment insurance or social security, no federal deposit insurance, no SEC to regulate the stock market, no minimum wage, no Home Owners Loan Corporation or Federal Housing Authority, and no major effort to build a modern infrastructure.
But this is not the whole story. The global crisis tested not only capitalism, but of democracy itself. Thanks to FDR’s efforts, the United States avoided extremist solutions and attempted to refashion capitalism in such a way as to restore the faith of the people.
Our government must play a role in providing the security and independence that the free market alone cannot. If we can embrace the spirit of innovation and faith in government that animated the New Deal, the prosperity that managed capitalism can bring is ours to enjoy.
David Woolner is is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute.