If capitalism collapses, democracy may also fall apart. The market capitalization could evaporate by 90%, shaking the very existence of the United States. Tens of thousands of companies could go bankrupt, and over a thousand banks could close their doors. At that time, those who did not invest in stocks were almost treated like fools. President Roosevelt was elected, and he implemented what we know as the New Deal. So, did it actually have an effect? The academic evaluation is that it did not have a significant impact. Hello, I am Kim Bong-jung from Chonnam National University, and I am also the author of the recently published book titled The Illusion of Understanding America. There was an incident that nearly led to the downfall of the world's superpower, the United States: the Great Depression that began in 1929. In fact, depressions are common in any country, and they have occurred frequently in American history as well. But why do we refer to the Great Depression of 1929 as the Great Depression?

This was seen as a temporary phenomenon, whether it was panic or depression, within the cycle of a single game, which could be relatively easily and quickly overcome. However, the Great Depression that erupted in 1929, when viewed in terms of its scale and the duration of its global impact, can indeed be referred to as an event of the Great Depression. One might think this is an exaggeration, but it is by no means an exaggeration. When looking at American history, the Great Depression was an extremely significant event that shook the very essence of America's existence. Since the time of gaining independence from Britain, the economic aspect has been a very important part of the identity of the United States. Is there any other country in the world where democracy and capitalism are so closely intertwined? If capitalism collapses, democracy may also fall apart. What does this mean? In the early days, when Europeans began to cross over to America, of course, initially, most of them...

I came to America for religious freedom, but as I settled down, I eventually moved to the United States for economic reasons. So when we talk about the American Dream, we are almost always considering economic success. I came to America for this American Dream, but if the capitalism of this country collapses, then American democracy will inevitably fall as well. In fact, when the worst depression in history struck, distrust in American democracy and the American system arose within the country, particularly among college students, where communist and radical socialist ideas began to spread. Therefore, the Great Depression that began in October 1929 can be considered a historical event that could have led to the downfall of America, and it is not an exaggeration to say so. So, how severe was the economic depression? It began on October 24, 1929, known as Black Thursday, with the stock market crash, which led to a decline in market capitalization over the next three years.

Ninety percent evaporates, and tens of thousands of companies go bankrupt, with over nine thousand banks closing their doors. About fifteen million people become unemployed. In 1933, the unemployment rate during the Great Depression reaches a staggering 25%. One in four people who could work were unable to find jobs. This situation affects most of the United States, both urban and rural areas, severely hit by the economic crisis. In rural areas, the Dust Bowl, a series of dust storms, devastates the agricultural regions of Texas, Oklahoma, Kansas, and Arkansas in the American Midwest. As a result, many people from these areas leave their farms and homes to migrate elsewhere. They are referred to as Dust Bowl refugees. Around 150,000 people migrate to California during this time. Additionally, the population of hobos increases significantly. Hobos are young people who, when there are no job opportunities, hop on freight trains aimlessly.

To find jobs, people wandered across the United States, and it is said that there were at least 2 million and at most 3 million of them. Just imagine how many young people crossed the country in search of work. The psychological impact during the Great Depression was also significant, with unemployment rates rising by 30%. In New York, many people jumped from skyscrapers, and the Brooklyn Bridge became a symbol of that era. This illustrates just how dire the situation was at that time. To understand the Great Depression, one must also understand the preceding era. The decade immediately before was the 1920s, known as the Roaring Twenties, a time of extravagance and restlessness, which can be seen as a precursor to the coming Great Depression. Various terms define the 1920s, but essentially, the ten years right before the Great Depression marked the peak of prosperity in the United States.

At that time, the United States had just finished World War I and became the world's largest creditor. Before the war, the U.S. had lent about 4 billion dollars to European countries. However, after the war, European nations owed a staggering 10 billion dollars to the United States. It was said that the wealth of the world had shifted to America. Looking at the manufacturing sector, until the mid-1920s, American manufacturing accounted for a remarkable 40% of global manufacturing. In the automotive industry alone, it dominated 80%. This gives us an understanding of the scale of American manufacturing. It's not a problem for wealthy individuals to spend their money extravagantly in a capitalist era. However, the issue arises when a significant number of ordinary people also begin to indulge in this extravagant spending, with stock market investments being the most important factor.

The United States became immersed in a time of extravagance, and consumer culture flourished. What do you think was the most desired item during that period? Cars, radios, and fashion became extremely important shopping items. Additionally, new financial systems, such as installment plans, emerged, leading people to go into debt to purchase new goods. As a result, many became deeply involved in consumer culture. More seriously, many individuals took out loans from banks to invest in stocks. Those who did not invest in stocks at that time were often treated as fools. Furthermore, banks, without carefully considering the creditworthiness of individuals who were not yet qualified to repay loans, encouraged stock investments by granting loans. So, why did the Great Depression occur? It was due to a mismatch between supply and demand; factories believed that the boom would continue.

As overcapacity and overproduction continue, over time, the driving force of consumption weakens, leading to a buildup of goods in factories. Then, factories need to adjust their operations, which increases unemployment rates. Factory owners, who previously made profits, begin to invest their money in stocks. Thus, many wealthy factory owners invest in the stock market, while consumption continues to shrink, resulting in rising unemployment rates. The same goes for the general public; as factory operating rates decline, the number of unemployed people increases. However, more individuals attempt to turn their lives around through stock investments. In this situation of deepening income inequality, the government is not stepping in to solve these structural problems, nor are the citizens making efforts to escape the illusion of achieving the American Dream through unrealistic shortcuts. The question remains: can the government overcome the Great Depression?

What kind of policies were implemented? However, it's difficult to consider this from today's perspective. At that time, the government hardly established any measures. They adhered to the principle of laissez-faire, believing that the economic downturn was part of the cycle and that if left alone, it would be resolved by the invisible hand. The presidential candidate who took office in 1929 shared the same belief. Even after the Black Thursday in September 1929 and the full onset of the Great Depression in October, the presidential candidate thought, This is just a temporary phenomenon; if we leave it to the market economy, it will recover. However, it would have been better if it had just remained a theoretical discussion, but in 1930, the Smoot-Hawley Tariff Act was passed. This was the highest tariff law in American history, imposing a staggering 60% tariff on goods entering the United States.

In the name of protecting the manufacturing industry, will European countries just sit back? Of course not. They will implement retaliatory tariffs on American imports. This triggers a trade war, which will lead to a decrease in global trade volume. Consequently, the Great Depression worsens. Consumer prices rise, the unemployment rate increases, and international trade cooperation weakens due to various conflicts. Ultimately, the Smoot-Hawley Tariff Act undermines the crucial aspect of international cooperation needed to overcome the Great Depression. However, a question may arise: The Republican Party in the U.S. has traditionally been a staunch supporter of laissez-faire economics, so why did they support the tariff law? It was because a small number of legislators, particularly those from districts where agriculture and manufacturing were extremely important, supported the tariff law.

Unrelated issues also get buried in this flow. So, appealing to patriotism and the notion of reviving American manufacturing leads even Republican members to follow this trend. The Federal Reserve system has practically failed to play its role. The Federal Reserve was established in 1913, but when the panic occurred, it reduced the money supply, lowered interest rates to curb inflation, and implemented tight monetary policies. It also made bank loans harder to obtain. This worsened the Great Depression, especially as small and medium-sized enterprises found it increasingly difficult to secure loans, which further dampened their activities. Thus, the recession accelerated. In fact, until that time, the Federal Reserve had been accustomed to laissez-faire policies, so it couldn't implement effective measures. Rather, it was still inexperienced, and with the onset of the Great Depression,

It can be accurately expressed that the candidate did not implement a proper policy. The presidential candidate had no role to play, and as the Great Depression worsened, the Democratic Party nominated a presidential candidate for the first time in 12 years in the 1932 election. Franklin Roosevelt was elected president. His administration began in 1933, and the most decisive background for Roosevelt's election was the Great Depression, which led to the New Deal policy that we are familiar with. What is the New Deal policy? Understanding the term New Deal accurately can help clarify things. The term deal refers to being dealt new cards in a card game in the United States. It suggests that instead of the previously familiar laissez-faire system, we should create a new framework. Rather than laissez-faire, the new principle is that the government should actively intervene in the market economy to overcome the Great Depression. This is the fundamental principle of the New Deal policy.

At the same time, the President immediately implemented a bank holiday, not to give the banks a break because they had suffered, but because they had made mistakes and needed to take a step back to regain their composure. This was a significant aspect of the Great Depression. Banks were left defenseless, which led to a decline in their creditworthiness, and subsequently, bank runs occurred. A bank run is when depositors, out of fear, rush to withdraw their money, resulting in the bank's collapse. Due to these issues, the banks were temporarily shut down to give them a chance to rest. For banks that were deemed irrecoverable, they were allowed to go bankrupt, while the government supported those that had a possibility of recovery, providing various measures to strengthen them. This was done so that they could regain creditworthiness and reopen under the bank holiday system. And then...

The unemployment rate is also very important. To lower the unemployment rate, the government carries out public works projects. A representative example of this is the Tennessee Valley Authority project. This involves a massive development of the river basin overlapping regions such as Tennessee, Kentucky, Virginia, Georgia, Alabama, Mississippi, and North Carolina. The project focuses on hydroelectric power generation, flood control, land management, and environmental preservation. 

However, while issues like power generation and flood management are important, what was most crucial for Roosevelt was job creation. When people get jobs and earn income, they will spend money, buy goods, and as a result, factories will operate. This is why public works policies were implemented to activate the economic cycle. Furthermore, there was also the famous TVA project.

Near Las Vegas, Hoover Construction is where we pass through the Hoover Dam when we go to Las Vegas. It was fundamentally linked to the Tennessee Valley Authority development project. Additionally, there is the Civilian Conservation Corps (CCC), which primarily provides jobs for young people to contribute to national development. They focus on creating living forests and developing the national parks in the United States. Most of the national parks in America, such as Yellowstone, Yosemite, and the Grand Canyon, were revitalized by CCC members during that time. Now, did these New Deal policies effectively help overcome the Great Depression? Academic evaluations suggest that they did not play a decisive role in overcoming the Great Depression. The depth of the depression was too severe, and above all, the United States could not resolve the Great Depression on its own, especially since Europe’s economy had already collapsed.

There were limits to overcoming the Great Depression solely through effort. Ultimately, it was World War II that fully enabled the overcoming of the Great Depression. What was the most fundamental cause of the Great Depression? It was the imbalance between supply and demand. However, with the outbreak of war, products began to be produced through the military industry, leading to a boom in various manufacturing sectors through military supplies. The outbreak of World War II and America's involvement can be considered decisive factors in overcoming the Great Depression. 

What impact did the New Deal policies have on the Great Depression? Statistics show that the situation did not improve significantly, but it is true that the New Deal policies led to the implementation of public works projects and created jobs. Additionally, initiatives like the bank holiday contributed to restoring trust in the banking system, as well as the establishment of the Federal Deposit Insurance Corporation.

The FDIC was established to protect depositors, and through social security policies, a safety net was built. Pensions began to be paid to seniors aged 65 and older, unemployment benefits were provided, and support was extended to children of the disabled and low-income families. This laid the foundation for the social security system in the United States. While it cannot be said that such New Deal policies completely changed the course of American capitalism, they marked the beginning of a new foundation for capitalism in the U.S., which had previously been strongly influenced by the principles of laissez-faire. Most importantly, by demonstrating to the public that the government was actively working to overcome the Great Depression, it instilled hope that the economic crisis could be overcome. The Civilian Conservation Corps (CCC) can be considered a representative example, providing jobs to young people who were in distress.

I send money to my parents back home by being able to earn. Just ten years ago, it was a time of extravagance, right? What could be more important? Through national parks and forest creation, I felt a sense of pride thinking, Ah, I am doing something for my country. I believe this played a significant role as a psychological mechanism in overcoming the Great Depression. Moreover, during the Roosevelt administration, through various programs, hope and pride were instilled in those who had been marginalized, such as African Americans, Native Americans, and many artists suffering from unemployment. For example, although the institution of slavery ended long ago, as part of the New Deal projects, oral histories of the era of black slavery were recorded and created. This was a crucial part of American history, which would have been lost otherwise.

The New Deal was thought to be disappearing, yet oral history projects from the era of Black churches were implemented, and a foundation was established for Black theater artists to perform. Additionally, significant support was provided to musicians and visual artists. Musicians without work were given opportunities to hold small concerts in local neighborhoods, and visual artists were encouraged to create murals. Through these cultural New Deal policies, marginalized and unemployed artists were empowered, allowing them to take pride in being part of the American system. This cultural policy is not widely known, but it reveals what Roosevelt aimed to achieve through the cultural New Deal. It was not merely about strengthening the economic and industrial systems; it was also about embracing all marginalized Americans and reinforcing the democratic system of the United States.

It can be said that this is a massive American democracy revival program aimed at fostering trust and pride. The spiritual value of the New Deal cannot be measured by any figures or statistics. I believe Roosevelt was great precisely because he understood this spiritual aspect. When he took office in 1933, Roosevelt famously said, The only thing we have to fear is fear itself. This is often considered one of the greatest lines in presidential inauguration speeches in American history. I think he made this statement in his inaugural address because he grasped the psychological issues at play. When I worked at an American university, I assigned the Great Depression as a representative topic for reports in the semester. The reason is that I had not experienced the Great Depression myself, so I was curious about it. I asked American students to visit nursing homes or reach out to living grandparents to learn about the Great Depression.

When talking about the era, we conduct interviews and submit oral history reports. One interesting thing is that, according to the reports, many people recall that time fondly, saying, Ah, those were the good old days. However, during the Great Depression in America, it is puzzling why people would feel that way, especially when life was tough. The reason seems to be that, despite the hardships, families came together, and communities worked together to overcome crises. This sense of unity contrasts with the extravagant times before and the wandering youth of the 1960s that followed. The Great Depression likely instilled a sense of pride in American values, democracy, and institutions among those who lived through it. This is, in my view, a crucial aspect we should not overlook when remembering the Great Depression in America.

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