New Deal (West's Encyclopedia of American Law)
"I pledge you, I pledge myself, to a new deal for the American people." In July 1932, FRANKLIN DELANO ROOSEVELT said these words to the delegates at the Democratic National Convention, who had just elected him the party's candidate for president of the United States.
Roosevelt's New Deal was a response to the tumultuous events of the years leading to his nomination. After WORLD WAR I, the people of the United States experienced unprecedented prosperity. Consumers of all income levels were buying goods "on time" by putting a few dollars down and paying a few dollars a month. Record numbers of people were also using the installment-buying concept to purchase stocks. The number of stockbrokers grew from fewer than 30,000 in 1920 to more than 70,000 in 1929. Stockbrokers allowed their clients to "buy on margin," meaning that a customer only had to pay 105 percent down on a stock, with the BROKER lending the client the rest and being repaid when the stock went up in value. By 1929, the skyrocketing prices in the STOCK MARKET indicated continued prosperity to some economists, but to others it signaled impending doom. So much investment had been done on margin that stockbrokers had borrowed money from banks that by then were also heavily in debt. Stock prices began rapidly dropping in September 1929,...
(The entire section is 2455 words.)
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