The article examines the underlying causes of financial instability and economic decline during the Great Depression across various global economies (including Great Britain, France, Germany, Latin America, and Japan), with a primary focus on the United States. The study centers on the "New Deal" policy implemented by President Franklin D. Roosevelt's administration to mitigate the severe impact of the depression and restore economic stability.
The paper presents a comprehensive analysis of the key policy components, reforms, and interventions carried out during the First and Second New Deals: Industrial & Competition Policy: The National Industrial Recovery Act (NIRA), the National Recovery Administration (NRA), and the implementation of "Codes of Fair Competition," which suspended antitrust laws to prevent aggressive price deflation; Banking & Financial Markets: The Emergency Banking Act, abandonment of the Gold Standard, the Securities Act, and the creation of the Securities and Exchange Commission (SEC); Agriculture, Taxation & Social Welfare: The Agricultural Adjustment Act, the Social Security Act, the National Labor Relations Act, the Revenue Act of 1935 ("Wealth Tax Act"), and the Undistributed Profits Tax. The authors highlight the constitutional and economic tensions caused by extensive state intervention, including Supreme Court rulings (such as Schechter Poultry Corp. v. United States). The paper concludes that while the New Deal brought short-term stabilization, its regulatory expansion starkly underscored the necessity of protecting market competition and free-enterprise principles—a debate that was revitalized by Friedrich August von Hayek’s landmark 1944 work, The Road to Serfdom.
