The Third Pillar: How Markets and the State Leave the Community Behind

by Raghuram G. Rajan

The New Deal had three main objectives – relief (of the destitute unemployed and poor), recovery (of the economy from the Depression), and reform (so that these conditions were not repeated). The administration tried to accomplish these goals through a variety of programmes and legislative efforts – at some level, it appeared that the government was willing to try anything, for nothing seemed to be working. Indeed, it was only with the ramping up of production for war in 1939 and 1940 that the United States really exited the Depression. Nevertheless, government action had some effects. Enormous public works, such as the construction of the Lincoln Tunnel and what came to be known as LaGuardia Airport, gave relief through paid employment and helped prevent an even greater collapse in activity. Financial sector reforms such as the Banking Act and the Securities Act, both enacted in 1933, brought stability to financial markets.

New deal post great depression