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1932 › Franklin D. Roosevelt (Democratic) › Control of credit expansion

Prevent another runaway credit expansion through government information, not government control of credit

pledge_forwarddirectional_stancecandidate_directevidence A Banking & FinanceEconomy & Fiscal Policy similar solutions · similar reasoning

Solution

Government to bring "enlightened information" to producers and consumers so they can avoid "headlong plunges into excessive debt"; explicitly not "complete Government control over the use of credit." Interference to stabilize business "kept at a minimum, limiting itself perhaps to wise dissemination of information."

Rationale

The 1920s boom rested on ungoverned consumer and business credit "encouraged ... by reckless statements from Washington."

Statements (1)

1932-10-06 · Radio address to the Business and Professional Men's League · generalcandidate_direct ✓ verified

That is not to say that I favor complete Government control over the use of credit, but that I do propose the use of governmental assistance in bringing to the attention of producer and consumer alike such enlightened information as will enable the people to protect themselves against unwarranted and headlong plunges into excessive debt.

Source: Radio Address to the Business and Professional Men's League Throughout the Nation (1932-10-06)

Follow-through

superseded

Instead of information alone, the Securities Exchange Act gave the Federal Reserve margin authority (1934) and the Banking Act of 1935 gave the Board control over reserve requirements and open-market policy — direct instruments Roosevelt had disclaimed in October 1932.

Mechanisms

Date	Type	Name	Effect	Consistent?	Source
1935-08-23	statute	Banking Act of 1935 charted on: Bank suspensions (all incorporated commercial banks) · Gross domestic product (nominal, annual) · Unemployment rate (BLS, 1948–) · Unemployment rate (NBER series, 1929–1942)	Central control of credit.	no	Franklin D. Roosevelt: Domestic Affairs \| Miller Center

Assessments

superseded William E. Leuchtenburg — Franklin D. Roosevelt: Domestic Affairs | Miller Center

A central banking mechanism replaced the 'information' approach.

Roosevelt in 1933 took America off the gold standard, and the Banking Act of 1935 gave the country a central banking mechanism for the first time.

1932-fdr-credit-control-by-information · created by claude-fable-5-1 · review: unreviewed