The crash of the stock market brought many hard times.Franklin D. Roosevelt’s New Deal was a way to fix thesetimes. John Stuart Mill and John Maynard Keynes were twoeconomists whose economic theories greatly influenced andhelped Franklin D. Roosevelt devise a plan to rescue theUnited States from the Great Depression it had fallen into.John Stuart Mill was a strong believer of expandedgovernment, which the New Deal provided. John MaynardKeynes believed in supply and demand, which the NewDeal used to stabilize the economy.
Franklin D. Roosevelt’sNew Deal is the plan that brought the U.S. out of the GreatDepression.
It was sometimes thought to be an improvisedplan, but was actually very thought out. Roosevelt was notafraid to involve the central government in addressing theeconomic problem. The basic plan was to stimulate theeconomy by creating jobs. First Roosevelt tried to help theeconomy with the National Recovery Administration. TheNRA spread work and reduced unfair competitive practicesby cooperation in industry. Eventually the NRA wasdeclared unconstitutional. Franklin D. Roosevelt then neededa new plan.
Keeping the same idea of creating jobs he mademany other organizations devoted to forming jobs and in turnhelping the economy. One of those organizations was theCivilian Conservation Corps. This corps took men off thestreets and paid them to plant forests and drain swamps.
Another of these organizations was the Public WorksAdministration. This organization employed men to buildhighways and public buildings. These were only some of theorganizations dedicated to creating jobs. Creating jobs wasimportant because it put money in the hands of theconsumer. This directly affected the supply and demand. Themore money they had the more they could spend.
Thiswould slowly start a chain reaction and bring the economyback to the way it was before the depression. By the end ofthe 1930’s this plan had lowered unemployment to 17.2%.To make these organizations it was going to take money.
Roosevelt had to deficit spend, which is when thegovernment spends more than their budget in one year, inorder to obtain this money. Of course these ideas of supplyand demand and active government didn’t just come to him.He was influenced by John Maynard Keynes and JohnStuart Mill. There philosophies were the basis of the NewDeal.
John Stuart Mill, who began studying economics atage 13, was one of the most influential political thinkers ofthe mid-Victorian period. He believed in empiricism andutilitarianism. Empiricism is the belief that legitimateknowledge comes only from experience. Utilitarianism is thebelief by which things are judged right or wrong.
It is judgedaccording to their consequences. In a way he was ahypocrite. When the economy was good he believed inLaisezz-Faire, which means “hands off.” If the economy wasbad, though, he believed in an extended role of government.This simply meant that the government should take part inthe economy and try to make it better.
The New Deal was avery active government plan because it had the governmentworking directly to make jobs and fix the economy. Milldied in 1873 and would never had a chance to talk toFranklin D. Roosevelt. In a press conference Franklin D.
Roosevelt once said, “I brought down several books byEnglish economists and leading American economists, Isuppose I must have read different articles by fifteen differentexperts.”(Schlesinger, Pg.650) This writing indirectly steeredRoosevelt towards a plan which expanded the role ofgovernment. Mill gave Franklin D.
Roosevelt the basis of theplan, but it needed to be elaborated on. John MaynardKeynes was the man to do this. John Maynard Keynes, oneof the most influential economists of the 20th century.
Formany years he was an active voice in economics. In 1929 hewrote We Can Conquer Unemployment and in 1930 hewrote his Treatise on Money. Ten years before he died hewrote his General Theory of Employment, Interest andMoney. Above all he believed in supply and demand. Thiswas an indirect way to let the economy balance itself. Inorder for this system to work people needed money. Thiscould only be done by creating jobs. Keynes also believedthat to reduce unemployment the government needed toincrease the aggregate demand.
The aggregate demand is thetotal amount of goods being demanded. The governmentcould do this by creating jobs. These jobs would providepeople with money to spend on products. The ability to payand the increase desire to spend would increase the demandfor goods. The demand for goods would rise and thedemand for workers would rise. This would slowly reducethe unemployment rate and put the economy back where itwas before the crash of the stock market. In Arthur M.Schlesinger Jr.
‘s book The Politics of Upheaval it’s statedthat Franklin D. Roosevelt and Keynes communicated onseveral occasions such as, letters, English tea meetings, andmessages delivered via mutual friends. Although Franklin D.Roosevelt never publicly embraced Keynes’ theories, and attimes voiced disagreement with parts of his theories, therewere many similarities between the works of the two men.
Franklin D. Roosevelt took these philosophies and createdthe New Deal, which eventually brought the United Statesout of the Great Depression. John Stuart Mill gave FranklinD.
Roosevelt the idea of an active government and JohnMaynard Keynes showed him how to do it. AlthoughFranklin D. Roosevelt never really liked economists itappears that the work of many economists showed up in hisNew Deal. Although Mill did not directly influence FDR hisphilosophies were present in Franklin D. Roosevelt’s plan.
Also, Keynes theories were disagreed on time and timeagain by FDR, but in the end the New Deal was almost aperfect example of Keynes’ theories.