USA’s 1932 New Deal: A Forgotten Lesson

The 20th century’s Great Depression began on October 29, 1929, known as “Black Tuesday,” when the American stock market crashed, unleashing chaos on international financial markets. The major causes of last century’s crisis are almost identical to those with which we struggle now: massive stock market speculation, cheap credit, overproduction, lack of market regulations (or ignorance thereof) and the psychosis of consumption. In the 80 years between the Great Depression and the economic crisis of today, capitalism succeeded in beating the totalitarian regimes of nazism and fascism, and it survived the Cold War, whose victim was communism. However, capitalism now confronts a more powerful enemy — namely, its own essence. Absent natural enemies, capitalism has begun to devour itself.

The effects of the current crisis are much more serious not only in content, but especially in their reproduction by state institutions that would normally have been required to correctly identify and counteract them. The U.S. and the capitalist countries of the European Union responded to the first wave of bankruptcies and financial bottlenecks by allocating immense sums from national reserves for the recovery of the economic entities guilty of triggering the crisis in the first place, i.e., banks, insurance agents, mortgage companies and major corporations. In a damaging and futile gesture, pearls were cast before swine. The outrage and indignation provoked in American public opinion made history when in November 2008, executives from General Motors, Ford and Chrysler went to Washington in private luxury planes to ask the government for billions of dollars of aid to refinance the companies they run.

Money allocated directly as government aid, or indirectly through so-called nationalization to those who are guilty of setting off the crisis with their greed, has been wasted, so that in 2010 the situation is just as difficult, if not even more so, as it was in 2008, the year the international economic collapse began. The western EU states and especially the U.S. have forgotten the history lesson entitled “The New Deal.” Unique in history, this mobilization of American politicians, unions, workers in general and the American elite, with the common goal of saving the country from irreversible collapse, is attributable to President Franklin D. Roosevelt. The concept of the New Deal was launched by Roosevelt in 1932, in a speech given on the occasion of his designation as the Democratic Party’s candidate for the American presidency.

The New Deal represents a set of socio-economic measures adopted by the American legislature and implemented by the government at the initiative of President Roosevelt. Among the most important we find the establishment of the Reconstruction Finance Corporation, an entity through which liquidity was provided to the financial system; the adoption of the Securities Exchange Act, through which stock market transactions were drastically regulated and which established a legal framework for loans that banks could provide for such transactions; and the adoption of the Glass-Steagal Act, which separated investment banks from commercial ones, disciplining the capital market. Faced with terrifying rates of unemployment, the U.S. government established the Civilian Conservation Corps, which employed young people between 18 and 25 years of age in community work (land improvement, construction of roads and highways, etc.). Approximately 2 million Americans were enrolled in this program, and hundreds of national development sites were established.

These measures adopted as part of the New Deal led to gradual growth, so that near the onset of World War II, the U.S. had almost completely healed the wounds inflicted by the Great Depression. Will Romania have its own New Deal? Unlikely! The cancer of the Romanian social, economic and political systems stems not necessarily from systemic structure, but rather from the mentality of both the leaders and those led. It’s a mentality so old that only a disaster with the intensity of an apocalypse would have the power to destroy it, through the physical annihilation of those who bear it in their souls and spread it, poisoning the whole society. In the 1930s, shortly before the installation of King Carol II’s authoritarian regime, the dictatorship’s future foreign minister, Grigore Gafencu, noted in his personal diary: “If the mass of people (including officers and magistrates) belong to the East through poverty and ignorance rather than through administrative apparatus, they belong to the East through tremendous laziness, through an absolute inability for regeneration or for moral and intellectual renewal!” Has anything changed since then? Nothing! The genius Eminescu was right: “Different masks, same play; different mouths, same range.”