How to End the Depression
What FDR had been doing was essentially creating a role for government which was to protect us against future depressions. These actions did have an effect on the present situation, yet the people who suggested them and FDR himself realized that they would not be enough to bring us out of the Depression; more needed to be done.
The answer most suggested by his liberal advisors was deficit spending, pumping money into the economy which the government did not have. The idea was to jump start the economy by increasing demand, hopefully returning the country to a normal situation. The New Economists who proposed this realized that it was not a perfect solution, however at the time it seemed to them to be the best possible answer, and so this was the route Roosevelt took.
For a time, it appeared to work. In 1933, the country slowly began to pull out of the Depression. Deficit spending seemed to be priming the pump, in effect restarting the economy to foster a return to normal economic activity. But in reality the "improvement" was only an illusion. When Roosevelt cut government spending in 1937, assuming that business would now take over, the economy slipped again.
Deficit spending failed because it didn't address the underlying cause of the Depression, the transitional nature of the economy. When the government cut its expenditures, the money spent on relief programs, there were still not enough jobs in the private sector to absorb those workers cut from the relief programs. There was a need for our economy to make the transition to full consumerism that would provide enough jobs for workers. This goal is hard enough for any country to achieve in normal times, but with the special circumstances of the Depression it became even more difficult. How does one get over the hump? How does one create a consumer society out of a society still consisting largely of unskilled agricultural and industrial workers? It might not be too unrealistic to suggest it was beyond the power of a democratic government to end the Depression
In fact, it took a German dictator, Adolph Hitler, to bring this country out of the Depression. The demands of the war effectively jump started the economy, insuring the needed economic transition. During the war employment skyrocketed and wages rose, putting money in people's hands, yet there was little to buy with the money. When the war ended, the pent-up demand broke free. Suddenly, a huge consumer market existed; people were ready to buy and to be employed by a vastly expanded industrial machine. In one five year burst of activity during the war, the government was able to get us over the hump and ended the crisis, something which no amount of deficit spending in any other situation would have been able to do. The government further guaranteed the transition with the G.I. Bill, the most effective social program in our history. Millions of men were able to go to college upon their return from the war. This effected a mass social change; it insured that those people would not return to the small towns and farms where they had grown up.