Looking back at the impact of the New Deal on American politics in the 1930s, one is struck both by the actual changes it had on the course of American history and the conceivable changes that were avoided. The New Deal did not revolutionize American politics, but it changed the socioeconomic system in this country dramatically. The New Deal helped protect the- two-party system from threats of those who advocated a one-party system as well as from those who champion a third party movement. The New Deal also transformed basic economic principles of economics from a laissez faire capitalist society to a managed economic system. Had the New Deal not intervened in American life, it seems certain that the forces of discontent would have grown, exposing American politics to radical elements demanding economic redistribution and reactionary elements demanding a "strong man" president to restore law and order. This research examines the events of the 1930s that led to the New Deal and the role of Franklin Delano Roosevelt in forming a new society. The New Deal is further scrutinized for its continuing impact on party politics, social services and the American economy today.
Herbert Hoover and the Great Depression
Economic conditions in the United States between 1919 and 1928 are sometimes touted as having been prosperous. That is not exactly the case. In the course of that decade, net capital formation (creation of new capital goods) in relation to national income was 14% less than in the previous decade and 18% less than two decades earlier. From 1924 through 1929, investment in new capital goods was actually falling. On the other hand, the income of the wealthiest Americans was steadily increasing and their savings on the rise. These savings exceeded the investment needs for business expansion. There were more savings each year than productive new securities to be bought, and so investors were competing for the available ...