Abstract: Socializing Risk: Depression-Era Policy and a New Market for Debt

David Freund


Between 1932 and 1935, the U.S. government rapidly transformed its relationship to the private market for money and credit, setting up the mechanisms to promote a new kind of national economic growth by creating and sustaining a very safe and flexible market for both consumer and producer credit. While key policy interventions have received considerable attention from scholars, their implications for the history of American economic expansion and for popular conceptions of American affluence are generally mischaracterized because of economists' and most historians' assumptions about money's place in the dynamics of capitalist growth. This paper briefly outlines the heterodox critique of the neo-classical consensus regarding money (that it is "exogenous" to the process fueling growth), then revisits key interventions—the Glass Steagall Act of 1932, the Emergency Banking Act (1933), the Glass Steagall Act of 1933, and the Banking Act of 1935—to demonstrate how Depression-era reform initiated a two-part revolution in American opportunity politics: expanding the supply of money and credit by socializing risk (essentially subsidizing growth) while helping to codify and popularize the narrative that the state's expansive new role merely "shored up" existing markets and "unleashed" existing capital.