FDR on Government’s Role in the Economy Summary

  • Last updated on November 10, 2022

In this speech, given during his 1932 presidential campaign, Franklin D. Roosevelt laid out his reasons for believing that a new relationship or “social contract” between the American people and its government was needed. As economic conditions worsened during the Great Depression, Roosevelt proposed that the government needed to be involved in a new way to protect individual rights, this time not against political tyranny, but against the economic power of corporations. Roosevelt argued that this new relationship between individual Americans and their government could preserve the core values of democracy–such as the ability of individuals to succeed through hard work–against the threat of industries that had a stranglehold on labor, resources, and finances. This new relationship became the basis for Roosevelt's New Deal policies and programs after he won the 1932 election. New Deal programs were designed to reform the financial system, stabilize the economy, and provide employment using unprecedented government regulation and intervention. The philosophical basis for Roosevelt's activist agenda was articulated clearly in this speech.

Summary Overview

In this speech, given during his 1932 presidential campaign, Franklin D. Roosevelt laid out his reasons for believing that a new relationship or “social contract” between the American people and its government was needed. As economic conditions worsened during the Great Depression, Roosevelt proposed that the government needed to be involved in a new way to protect individual rights, this time not against political tyranny, but against the economic power of corporations. Roosevelt argued that this new relationship between individual Americans and their government could preserve the core values of democracy–such as the ability of individuals to succeed through hard work–against the threat of industries that had a stranglehold on labor, resources, and finances. This new relationship became the basis for Roosevelt's New Deal policies and programs after he won the 1932 election. New Deal programs were designed to reform the financial system, stabilize the economy, and provide employment using unprecedented government regulation and intervention. The philosophical basis for Roosevelt's activist agenda was articulated clearly in this speech.

Defining Moment

On October 29, 1929, a day that came to be known as Black Tuesday, the United States stock market crashed, sending the nation into the worst economic depression it had ever seen. The 1920s had seen unprecedented growth in finance and industry, as politicians loosened regulations and unapologetically pursued pro-business policies. There was no federal deposit insurance system for banks and no unemployment insurance. Labor unions, which traditionally offered a measure of protection for working people, were weakened by anti-immigrant and anti-Socialist sentiment, internal divisions, and economic prosperity, which lessened public support for labor activism. In the fallout from the stock market crash, corporations went bankrupt, banks failed, and by 1932, approximately one-quarter of the nation's workforce was unemployed. In industrial cities and major ports, unemployment rates reached even higher than the national average. Farm prices fell by more than 50 percent. President Herbert Hoover and many others in government saw the crash as part of a recession that would quickly right itself, and Hoover urged patience and private charitable assistance to the poor, believing that it was not the government's job to interfere with business and the economy.

By the election of 1932, many Americans were destitute, and it was clear that the Great Depression was not a short-lived economic downturn. The election pitted the incumbent Hoover, a Republican, against the popular Democratic governor of New York, Franklin Delano Roosevelt. Hoover argued that Roosevelt's belief in an activist, interventionist government might help in the short term, but would ultimately lead to Socialism. Hoover opposed direct government aid to individuals, believing it to be against the spirit of American individualism. Hoover failed to see that the nation had lost all faith in the ability of corporations and industry to help put the economy right, and people in bread lines were no longer interested in the philosophical underpinnings of the Hoover administration's refusal to intervene. Roosevelt spoke of the government's responsibility to protect the individual and blamed Hoover and the Republicans for the disastrous economic situation.

Roosevelt won the 1932 election by a landslide, extending Democratic control over the House and Senate as well. An era of Republican leadership ended, as Republicans had largely dominated the presidency since 1860, with the exception of Grover Cleveland and Woodrow Wilson. Roosevelt's election signaled the beginning of twenty years of Democratic leadership in the White House.

When Roosevelt took office in March 1933, he acted quickly to bring relief to the poor and unemployed and to stabilize the economy. In the first months of his administration, he closed banks that were insolvent and reorganized those that remained, urging the American people to return their money to savings and promising to protect their investments. Roosevelt oversaw the repeal of Prohibition, initiated several major public works projects, and supported subsidies for farmers. Roosevelt encouraged organized labor, as he saw unions as a way to protect workers. In his first one hundred days in office, Roosevelt made major regulatory and domestic reforms and had clearly kept his promise to offer a “New Deal” to the American people.

Author Biography

Franklin Delano Roosevelt was born on January 30, 1882, in Hyde Park, New York, to a wealthy family. He was a distant cousin of President Theodore Roosevelt. Roosevelt attended the prestigious Groton School and then Harvard University, where he graduated with a degree in history. Roosevelt met his fifth cousin and future wife, Eleanor, in 1902, and they married in 1905. Roosevelt passed the New York State bar exam in 1907 and worked as a corporate lawyer. Roosevelt won election to the New York state senate in 1910, and he worked to end the control of the Tammany Hall branch of the Democratic Party in New York. He was appointed assistant secretary of the Navy by President Woodrow Wilson in 1913, serving until he was selected as the vice presidential running mate of James M. Cox for the 1920 presidential election. Cox was ultimately defeated by Warren G. Harding.

Roosevelt was stricken with polio in 1921 and lost the use of his legs. Roosevelt served as the governor of New York from 1929 until 1932, when he ran for and won the presidency of the United States. His first term as president coincided with the lowest point of the Great Depression, and he immediately turned his attention to the relief of the unemployed. Roosevelt implemented the New Deal, a series of domestic programs designed to return the nation to prosperity. He was reelected by a wide margin in 1936 and then won an unprecedented third term in 1940 during World War II. He was elected to a fourth term in 1944, but he died in office on April 12, 1945. He was buried in Hyde Park, New York.

Document Analysis

Roosevelt begins this speech by providing some historical background from before the American Revolution. Throughout history, he argues, people have formed centralized governments in order to limit the power of the aristocracy and to protect the interests of the general public. When these centralized governments became too powerful, Roosevelt asserts, “popular participation and control” have coordinated to establish “limitations on arbitrary power.” Roosevelt compares American statesmen Alexander Hamilton and Thomas Jefferson and their differing visions of the role of government. Hamilton “believed that the safety of the republic lay in the autocratic strength of its Government, that the destiny of individuals was to serve that Government.” Jefferson, on the other hand, saw government as “a means to an end, not an end in itself” and believed that the government was created to serve the people and to protect their individual rights. Roosevelt argues that the protection of individual rights is not ensured by a total absence of regulation but rather through government policies that enable individuals to thrive and prosper. This idea is fundamental to Roosevelt's theory of government. Since its founding, he argues, the US government has understood that it “must intervene, not to destroy individualism, but to protect it.”

Most Americans prospered with minimal interference from the government in the first century following the country's founding. “So began, in American political life, the new day, the day of the individual against the system, the day in which individualism was made the great watchword of American life. The happiest of economic conditions made that day long and splendid.” In other words, while there were abundant natural resources, free land in the West, and nearly limitless opportunities for expansion, individual Americans could be left alone to make their way. People who worked hard were rewarded with success without the government's help.

Roosevelt draws a hard line between the preindustrial and postindustrial United States. He describes the Industrial Revolution as a “dream of an economic machine, able to raise the standard of living for everyone… to release everyone from the drudgery of the heaviest manual toil,” and he describes how the government, long accustomed to leaving individuals alone to make their way, found itself called upon to support industry so all Americans could benefit from the advances of the industrial age. Throughout the unprecedented industrial and financial growth of the nineteenth century, “the business of Government was not to interfere but to assist in the development of industry,” and government policies protected industries, such as railroads and shipping with tariffs, land grants, and other regulatory protections. Roosevelt describes this as a circumstantial shift from a government whose purpose was the protection of the individual to one whose primary goal was the support of business, with the theory that this would benefit all.

Roosevelt concludes with a call for a new role for the government, a return to Jeffersonian principles of the protection of individual rights and government in service to the people. Unfettered industry has failed to protect these rights, Roosevelt asserts, and “equality of opportunity as we have known it no longer exists.” It is time for the “soberer, less dramatic business of administering resources… of distributing wealth and products more equitably, of adapting existing economic organizations to the service of the people.” Roosevelt asserts that if he is elected, he will provide “enlightened administration” and will use government resources to help individuals protect their rights to a fair chance of success and security.

Essential Themes

This speech was a call to consider a new, activist role for government. Roosevelt wished to convince his listeners that the protection of individual rights, a foundational belief of American democracy, now required government intervention in a way that was not needed in a preindustrial society. Roosevelt positions himself as the candidate who will protect these rights by intervening and regulating private industry, and he introduces terms that indicated a radical departure from the free-market capitalism of his predecessor. The idea that the government had a role in limiting corporate power so that wealth could be more fairly distributed set the stage for the New Deal policies and programs of his presidency.

Bibliography and Additional Reading
  • Katznelson, Ira. Fear Itself: The New Deal and the Origins of Our Time. New York: Liveright, 2013. Print.
  • Parrish, Michael E. Anxious Decades: American in Prosperity and Depression 1920–1941. New York: Norton, 1992. Print.
  • Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins, 2007. Print.
Categories: History Content