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During the 1930's American citizens witnessed a breakdown of the Democratic and free enterprise way of life. The government saw that the free enterprise system was failing. The New Deal increased the government's regulation and intervention and the economic system, thus temporarily abandoning the capitalism system and turning toward socialism to find the answer. The answer...the New Deal. Socialism is usually thought of as a form of government that advocates public ownership and public …

…itself controlled most of the world's supply. Besides gold, which was increasingly in short supply, countries could pay their debts in goods and services. However, protectionism and high tariffs kept foreign goods out of the U.S. Recall that the Hawley-Smoot Act (1930) set the highest schedule of tariffs to date. This protectionism produced a negative effect on U.S. exports: if foreign countries couldn't pay their debts, they had no money to buy American goods.