The depression is particularly
difficult on rural America. And maybe nowhere is it worse
than in the rural South. In fact, Franklin Roosevelt,
early in his first administration, calls the South the nation’s
number one economic problem. So it’s not surprising that
the New Deal administration, all the different agencies that
he creates and so on and so forth, are in no small part directed
at solving the problems of rural America and the rural South. In their efforts to
do so, they also start to implement a new kind of
government policy, a policy that we often associate with the ideas
of the British economist John Maynard Keynes. Now, it’s not clear that
New Deal policymakers, and it’s certainly not clear that
President Roosevelt had Keynes in mind. In fact, some of his most
important publications don’t even come out until well into
Roosevelt’s second administration. But those thoughts, those
ideas are in the air. And what we see is a new
approach to the relationship between the government on the one hand
and industrial capitalism on the other that is going to affect some tremendous
changes in the American economy. So of course, in the first 100 days
after Roosevelt’s inauguration, his administration pushes a whole
array of laws through Congress. This period is called
the 100 days of Roosevelt because they concentrate very intensely
on creating a new wave of approaches to the economy. And part of this, all the
agencies, the alphabet soup as it’s called, with all the agencies
with their different acronyms, part of the purpose of this
is to instill confidence. There is a crisis of confidence in
the very idea of liberal democracy. As people in the United
States and Britain and places like that look at
countries with less free governments, let’s put it that way,
with governments that we would see as more
oppressive, less democratic, governments like the Soviet Union
or fascist Italy, what they also see is that these governments are taking
decisive action, decisive action that in some cases, is actually
putting people back to work or keeping them in work despite
the general economic slowdown that is starving businesses
all around the globe. So Roosevelt and other policymakers feel
that it is necessary to do something to change the impression that liberal
democracy simply cannot handle this crisis. And the traditional recipe,
the traditional playbook, has called for the government
to essentially do nothing, to allow the economy to hit rock
bottom as treasury secretary Andrew Mellon had advised under Hoover. As wages drop, as people are put
out of work, the price of labor is going to get low enough that
businesses will once again, eventually, start to invest. But that is what they’d
been trying, that is what the government had
been trying ever since 1929. And the unemployment rate
only was getting higher. The economy was only getting worse. And social unrest and real misery
was gripping the American people. So in addition to trying to instill
confidence, what is also on the books now, what is also proposed by
the new set of laws and agencies, is actually a new way for a liberal
democracy to deal with the economy, for the government, in fact, to
become more of an actor presence to intervene more
directly in the economy. And in doing so, what you see is that
the Roosevelt administration, the New Deal, creates a set of agencies that
are going to actively implement policies that are very much like the policies
that the British economist John Keynes will suggest. He’s already suggesting
it in some papers, and he will suggest it in
a book in just a few years. It’s an interesting
convergence of ideas. And the general thought
behind the acts that are taken by the New Deal
and the general thought behind the theories of Keynes is this. When the economy slows
down, when demand drops, the government should do something
to increase consumption and increase investment to prevent a spiral
of further unemployment. Because of course, as people were
thrown out of work, at a certain point, so many people had become unemployed
that the level of consumption, the level of purchases in the economy
was going to drop even further. Perhaps the economy would ultimately
enter a kind of death spiral. So something had to be done to
raise the level of consumption and raise the level of
investment in the economy. And Roosevelt in the New Deal looked
specifically at the rural economy where times were particularly bad,
and particularly in the rural South, to try to change some
of the dynamics that were making the bad effects, the
worst effects of the Depression, most deeply felt there.