The Monetary Policy and Its Functions of the New Deal
|School||Northeast Normal University|
|Keywords||New Deal Monetary Policy The Emergency Banking Act Glass-Steagall Act|
By using historical and economy research findings, through the review and the analysis of the original investigation during the New Deal in 1930s, especially the data, in this paper author is trying to explore the background of the monetary policy, the specific content including and the functions it had.The first part examines the New Deal during the birth of monetary policy in the background. The U.S. economy has experienced Coolidge Prosperity in the 1920s, but simmering under the surface of prosperity. When the risks accumulated to a peak, marked by the stock market crash of 1929, officially came the Great Depression. The financial system expanded excessively, the margin trading and investment trusts is popular, the Fed was weak, installment and mortgage loans were in serious default risk,all this led to the outbreak of the banking crisis. Hoover was adhering to the conservative laissez-faire economic policy, and did nothing for the economic crisis.The second part describes the New Deal period of monetary policy content and features contained .In the first New Deal period, the Roosevelt administration has introduced a series of monetary policy. These include an overhaul of the banking sector Emergency Banking Act , Thomas Amendment which gave the president authority to expand the money issue, Glass - Steagall Act which established commercial banks and investment banking division, Securities Law of the truth and Securities and Exchange Law which rectify the securities market. In the second New Deal period, consists mainly of the Banking Act of 1935 which reconstructed the Federal Reserve System, 1935 Tax Law which reform the tax system, and a series of bills and administrative measures. This article discusses tow aspects of the New Deal features of monetary policy during 1930s. First of all, the New Deal monetary policy has obvious stages. In the first New Deal period it was main in the emergency, and the second New Deal period dominated by innovation. Secondly, during the implementation of monetary policy in the New Deal, the powers of Roosevelt gradually expanded,and the policy advanced steadily.In the third part of the paper, author analysis on the impact of monetary policy,from both internal and external aspects of the financial system of the New Deal period. Analysis of its function based on the analysis of investigation and historical data. First, the New Deal monetary policy restore the normal operation of the banking system, and the establishment of a new financial market regulation. Banking system gradually went out of the dilemma of the crisis, and generate a lot of far-reaching guidelines for new system. Secondly, the New Deal of monetary policy provides a tremendous support on federal projects and the accumulation of social capital. On one hand, it included funds of direct injection; on the other hand,it also contains a means of using the operation of capital to support them.