FDR: Economic Policies and Accomplishments
How FDR Beat the Great Depression
Franklin Delano Roosevelt was the 32nd U.S. President (March 4, 1933 - April 12, 1945). He was sworn at the height of the Great Depression. He immediately launched the New Deal to end it. In 1942, FDR faced the first attack on American soil at Pearl Harbor. Roosevelt spent more to gear up factories to produce the equipment needed for America to enter World War II.
Today, you have FDR to thank for Social Security, the U.S. minimum wage, child labor laws and insurance for your bank deposits.
FDR won the election by promising to take all necessary steps to end the Depression. He introduced Keynesian economic theory, which said government spending would boost economic growth.
The Depression had begun four years earlier with the stock market crash of 1929. As stocks lost value, investors switched to gold. As the price of gold rose, people redeemed their dollars for it. That was allowed at that time because the United States was still on the gold standard.
Soon, banks began failing, forcing everyone to hoard the precious metal. The depression worsened when the Federal Reserve raised interest rates to defend the dollar's value.
President Hoover did little to intervene, believing that the economy would heal itself. Instead, it worsened. During the year of the presidential campaign, the economy shrank more than 10 percent. The unemployment rate rose to almost 25 percent.
Those were just some of the effects of the Great Depression.
This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.
The first thing FDR did was close the banks to stop foreign speculators from depleting America's gold deposits. Ten days later, banks reopened after depositing all their gold with the Federal Reserve. (Source: "The Rise and Fall of the Gold Standard in the U.S." Cato Institute, June 20, 2013.)
Next, the new president ordered all citizens to turn in any gold coins to the nearest bank in exchange for dollars. In 1934, FDR took the United States off of the gold standard completely. The dollar promptly fell by 60 percent. That allowed the government to print as much money as it needed to boost economic growth, since dollars were no longer tied to gold. For more, see History of the Gold Standard.
FDR signed the New Deal into law in his first 100 days. It was an unprecedented government intervention. It created 42 new agencies, including Social Security, the Securities and Exchange Commission, and the Federal Deposit Insurance Corporation. Their purpose was to create jobs, safeguard investments and allow unionization.
Did the New Deal fail to stop the Depression? It seems so, since it took World War II to get unemployment below 15 percent. But FDR cut New Deal funding in 1937 to balance the budget.
That was too soon. There wasn't enough confidence in an economic recovery by then. The Depression returned with a vengeance the following year. For more, Timeline of the Great Depression.
FDR knew that the United States would eventually have to enter World War II. In 1939, Hitler invaded Poland. FDR convinced Congress to allow the United States to send military arms to France and Britain. In 1940, Hitler conquered France and began the bombardment of London. Congress reinstated the military draft. FDR increased the defense budget. To pay for it, he raised the top income tax rate to 81 percent. (Source: "World War II," George Washington University.)
On December 7, 1941, Japan attacked the U.S. Navy base at Pearl Harbor. Military spending quadrupled the debt to $23 billion. By 1943, the debt tripled to $64 billion.
Many experts point to the economic benefits of military spending. They claim it ended the Depression. But the Depression ended in 1937 thanks to New Deal spending. If FDR had spent that much on the New Deal, the Depression would have ended sooner than it did. Anytime the government triples the debt, it will help the economy. It doesn't have to be military spending to work.
The stress of WWII wore Roosevelt out. In 1944, his doctors found heart and circulatory disease and placed him on a strict diet. It was too late. FDR suffered a massive stroke on vacation in Warm Springs, Georgia on April 12, 1945. First Lady Eleanor Roosevelt was giving a speech in Washington D.C. The doctors waited until after the speech to inform her of his death. She arranged the funeral, including a slow train to carry his coffin from Warm Springs back to Washington. He was buried in the Rose Garden of his estate at Hyde Park, New York. (Source: "This Day in History," History.com. "Franklin D. Roosevelt," WhiteHouse.gov.)
FDR's Early Years
FDR was born in 1882 at Hyde Park, New York, into a wealthy family. He received a B.A. from Harvard in 1903 and studied law at Columbia. In 1905, he married Eleanor Roosevelt, the niece of his idol President Theodore Roosevelt. He passed the bar in 1907 and practiced law for three years before becoming a New York state senator.
President Wilson appointed him Assistant Secretary of the Navy (1913-1920) and Democratic nominee for Vice President in 1920. His ticket lost to Republican Warren Harding.
The following summer, he got polio. Paralysis forced him to use braces and a wheelchair for the rest of his life. He helped found the March of Dimes, which discovered the cure for polio.
He was appointed Governor of New York in 1928. Following his reelection in 1930, he began his campaign for Presidency in 1932. (Source: FDR Library.)
|Year||GDP Growth||Jobless Rate (December)||Debt (in billions)||What Happened|
|1935||8.9%||20.1%||$29||2nd New Deal|
|1937||5.1%||14.3%||$36||2nd term. Depression returned|
|1941||17.7%||9.9%||$49||3rd term. Pearl Harbor|
|1943||17.0%||1.9%||$137||Allies attacked Italy|
|1945||-1.0%||1.9%||$259||4th term. WWII ended|
Resources for Table
- Unemployment Rate by Year, BLS.
- National Income and Product Accounts Tables: Table 1.1.5. Nominal GDP, Table 1.1.1. GDP Growth Rate, BEA.
- Recession History.
- Great Depression Timeline.
- U.S. Headlines by Year, InfoPlease.
- Timeline of the Great Depression, Cal Poly College.
- FDR Heritage Timeline of Events
Other Presidents' Economic Policies
- Donald Trump (2017 - 2021)
- Barack Obama (2009 - 2017)
- George W. Bush (2001 - 2009)
- Bill Clinton (1993 - 2001)
- Ronald Reagan (1981 - 1989)
- Richard Nixon (1969 - 1974)
- Lyndon Johnson (1963 - 1969)
- John F. Kennedy (1961 - 1963)