Progressing to a new strategy

The American middle class that emerged in the late 19th century treated with equal suspicion the big business elites and radical worker and farmer movements. Therefore, supporters of reform demanded that the government should implement market regulations to guarantee free competition and a free business environment. In 1887, the US Congress adopted legislation to regulate railway transportation, followed in 1890 by the Antitrust Act, although both were rarely enforced for a long period of time. Real progressive economic reforms began with Woodrow Wilson, a Democrat President who with Amendment XVI passed a moderate income tax and created the Federal Reserve System.

However, in the early 1920s the potential of the Progressive Movement eroded, even though the United States was still deep in appalling social inequalities. The country had no social security, a system which had already been put in place in many European countries. The Republican administration opposed initiatives to raise taxes to support social programmes, sticking to a policy of non-interference in the economy. The Great Depression of 1929- 1933 changed everything. Unemployment soared from 4% to 25%, while industrial output fell by one third and prices plummeted by 20%. Despite an excess of food supplies, people would occasionally starve to death. The country needed to be rescued from the crisis and Mr. Roosevelt instituted the New Deal soon after he was elected President in 1933.

President Roosevelt submitted nearly 70 draft bills to Congress to save the banking system and rehabilitate the main sector of the economy, all of which were immediately adopted. The number of banks was reduced by 4,000; many unemployed received jobs at publically-funded projects; and the social security system was introduced. The President openly experimented in seeking to find a cure for the country's economic ailments. Even though, some of his initiatives did not succeed, the New- Deal reforms proved that governments could find solutions to crisis situations. The Federal Government turned into an arbitrage in future conflicts between various social classes and groups.

By the end of the 1930s, American big business had lost its om­nipotence. It faced competition from a powerful workers' movement, farmers and consumers who were now protected by numerous public institutions. Many experts doubt that Mr. Roosevelt's achievements were completely behind a revival of the American economy in the years up to World War II. At the same time, it was his New Deal that laid the basis in the 1950s for a sustained economic boom in the US that improved living standards both for the middle class, and the poorest groups in society. Last but not least, Mr. Roosevelt inspired Lyndon Johnson to implement social reforms in the 1960s aimed at building a Great Society where there would be no poor people.