The statement best fits with Roosevelt's ideas on how to fix the Depression.
When Roosevelt assumed the presidency in 1933, several laws were quickly passed in Congress as welfare funds for the unemployed, support prices for farmers, voluntary work service for unemployed people under 25, large-scale public works projects, reorganization of private industry, creation of a federal agency to save the Tennessee Valley, financing of mortgages, insurance for bank deposits and regulation of securities transactions. These laws created new bodies responsible for carrying out these measures.
The most important problem for Roosevelt was the almost total bankruptcy of the banking system, to such an extent that it was impossible to cash a check. Industrial production, on the other hand, had bottomed out in 1932. The banking crisis was essentially trustworthy and could easily be solved. In a radio address Roosevelt informed the population about the reopening of the banks, encouraging them to deposit since there were no more risks, so several individuals returned to deposit. The recovery of the banks was only the prelude to a thorough revision of the financial system, severely distorted since 1929 by the credit crunch, the increase in debts and the default of mortgages.
Another problem was unemployment. The first measure adopted in this area was the creation of work camps where the unemployed carried out tasks of conservation of natural parks and other green spaces. Although the federal government faced the realization of public works, these did not compensate the enormous reduction experienced by spending at the state and municipal levels. The New Deal never had a specific program to lower unemployment through public works since projects were lacking beforehand and planning required time. The projects had to be self-financing, which made their preparation difficult. Furthermore, in order to achieve the maximum social benefit, it was necessary to employ as much labor as possible, whether qualified or unskilled, which is why these jobs were considered as a real alms. Not only the New Deal could not significantly reduce unemployment, but the jobs were precarious because they were public works that by their very nature did not last long.
The New Deal was constantly faced with the dilemma of using money to alleviate current suffering or to stimulate the economy for the future. Much of the New Deal's investments came from taxes, since otherwise, the federal government would have to accept a budget deficit. This meant that part of the money used to pay the salary of the new employees was deducted from the salary of the person who had a job. This proves that Roosevelt was unaware of the measures recommended by Keynes, as he indicated that the increase in spending, and consequently, in the deficit, was positive in times of crisis.
The second New Deal was implemented in the second term of Franklin D. Roosevelt and consisted of the enactment of a law on housing, the implementation of social security, the creation of regional planning bodies, support for unions and a more progressive tax system with higher taxes on income and wealth. Likewise, the consequences of the new impositions on the rich were insignificant and there was no such redistribution of wealth.
In these circumstances, the government committed a serious economic error that would delay the recovery in two years. In 1936, the pace of expansion was accelerated and prices rose rapidly. Fearing a speculative boom, Roosevelt put an end to the budget deficit and the following year the economy plunged into a depression that did not suffer any other country and increased unemployment. As soon as the government reduced spending, the entrepreneurs lost confidence and stopped investing. Roosevelt still did not understand fiscal policy, he thought it was the public work and not the budget deficit that promoted employment. Federal expenditures increased in 1938 but hostility to the New Deal had increased.
While it is said that the second New Deal was a 'turn to the left', it was not at all hostile to entrepreneurs, what it did was to put the bureaucrat where the businessman had failed until the private company could flourish again. The most lasting effect of the New Deal was to increase the power of the federal government and the president in particular: the power of the states was reduced and the president and his cabinet replaced the Congress as the main legislative source. American society underwent a profound transformation due to the increase of federal and presidential power over the economy. That's why the real legacy of the New Deal was to revolutionize expectations.
