The causes of the Great Depression are complex, but it is clear that by 1929 production had outstripped purchasing power, and mistaken monetary and fiscal policies--not to mention the market bubble--only made a bad situation worse. In September 1929 the market started to decline. In October Wall Street financiers tried to prop it up but to no avail. Within two months the New York Stock Exchange lost $18 billion in value. The slide continued, and by mid-1932 85 percent of its worth was gone.
Millionaire Andrew Mellon, Herbert Hoover's Secretary of the Treasury, maintained that the economy would fix itself. "People will work harder, live a more moral life. Values will be adjusted and enterprising people will pick up the wreck from less competent people." (Seligman, 5) Americans had once accepted these platitudes, but knowledge of Wall Street malfeasance, resentment of Insull's ability to act with impunity, and the sheer pain of the Great Depression finally persuaded them that a change in American economic life was in order.
"Only a fool holds out for the top dollar," Joseph P. Kennedy once said. (Koskoff, 40) He knew the market well enough to act on his own advice, get out before the Crash, and put his fortune safely in government securities. He also knew politics well enough to realize that fundamental change was both necessary and inevitable. He became one of the few American businessmen to support Governor of New York Franklin Roosevelt in his presidential bid.
Kennedy worked hard for FDR in the 1932 election. On the morning of the convention nomination that practically guaranteed Roosevelt the presidency, Kennedy sat down with Roosevelt aide Raymond Moley to preview the acceptance speech that promised "a New Deal for the American People."
Franklin Roosevelt's New Deal became many things: a guarantor of labor rights, a provider of a social safety net for the poor and elderly, a transformer of the power and nature of government. But it began as an effort to pull the nation out of the Great Depression through what FDR called "bold, persistent experimentation." Joseph P. Kennedy expected to play a big role in that effort. He would have to wait, however, for FDR to make good on his promise to reform the sale of securities.
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