Chapter 04
Roosevelt’s New Deal as Slogans

III. Roosevelt Embraces the Soviet Beast

Back in 1932, amid a deep financial crisis, the United States held its presidential election. Franklin D. Roosevelt defeated Herbert Hoover to become the 32nd president of the United States and the second member of the Roosevelt family to hold the office.

When Roosevelt took office, the Great Depression was sweeping across the nation — factories had shut down, banks were collapsing, and farmers were going bankrupt. Yet he displayed absolute confidence, telling the American people: ‘the only thing we have to fear is fear itself.”

He claimed that the “First Hundred Days” of the New Deal had fully restored public confidence in the government. By the end of his first term, the national income of the United States had increased by 50%, and in 1936, he was re-elected president.

But what was the reality? The National Industrial Recovery Act (NIRA), which was intended to promote industrial recovery, actually greatly hindered industrial development. It allowed industrialists across various sectors in the U.S. to jointly set prices for their products — including wages and working hours that affected those prices. This overturned America’s traditional free-market system, in which businesses competed and innovated by offering products at different prices and quality levels. According to the law, every business within an industry was bound by the code of conduct — whether they participated in drafting it or not. Violating the code could result in fines at best, or imprisonment at worst.

The history of rapid development in the steel and automobile industries teaches us three key lessons: (1) To bring new and cheaper products to the market, competition is essential. (2) Competition is a sensitive and effective mechanism for determining prices and wages. (3) Many businesspeople seek to avoid competition — to secure their own market share. As a result of monopolistic practices within industries, small and medium-sized enterprises are squeezed out, losing their capacity and drive for innovation, ultimately forcing consumers to bear higher living costs.

The roots of these disasters, I believe, can be traced back to the emergence of the Soviet Union after World War I. Its forced collectivization and serfdom, combined with the plundering of food for export, caused a global agricultural crisis: an oversupply of agricultural products on one hand and excessively low prices on the other. Roosevelt’s Agricultural Adjustment Act, which set prices for agricultural products, paid farmers to leave land fallow, with mill owners and agricultural processors covering most of the costs, was a direct imitation of Stalin’s methods. The result was similarly Stalinist: bloated administrative bodies, political manipulation of crop prices, benefits for farm owners, and losses for consumers. After the Agricultural Adjustment Act became law, food and clothing prices rose. Given the ongoing Great Depression, many impoverished Americans faced hunger and wore tattered clothes. The reduced availability of clothing, beef, and bread led textile, meatpacking, and flour milling industries to lay off workers, causing more unemployment.