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What happened (or, more to the point, what didn't happen) to government during the Eisenhower, Nixon, and Reagan presidencies is in its way as much a measure of the depth of the New Deal revolution as what happened during the Truman, Kennedy/Johnson, and Clinton years.
The New Deal provided more assurance to bank depositors (FDIC), more reliable information to investors (SEC), more safety to lenders (FHA), more stability to relations between capital and labor (NLRB), more predictable
Many New Deal programs—farm subsidies, work relief projects, social insurance, and labor protection programs—discriminated against racial minorities and women, while profiting white men disproportionately.
- Overview
- Origins of the New Deal
- The First New Deal (1933-1934)
- The Second New Deal (1935-1938)
- The legacy of the New Deal
- What do you think?
When Franklin Delano Roosevelt took office in 1933, he enacted a range of experimental programs to combat the Great Depression.
The term New Deal derives from Franklin Roosevelt’s 1932 speech accepting the Democratic Party’s nomination for president. At the convention Roosevelt declared, “I pledge you, I pledge myself, to a new deal for the American people.” Though Roosevelt did not have concrete policy proposals in mind at the time, the phrase "New Deal" came to encompass his many programs designed to lift the United States out of the Great Depression.1
The New Deal created a broad range of federal government programs that sought to offer economic relief to the suffering, regulate private industry, and grow the economy. The New Deal is often summed up by the “Three Rs”:
•relief (for the unemployed)
•recovery (of the economy through federal spending and job creation), and
•reform (of capitalism, by means of regulatory legislation and the creation of new social welfare programs).2
Roosevelt’s New Deal expanded the size and scope of the federal government considerably, and in doing so fundamentally reshaped American political culture around the principle that the government is responsible for the welfare of its citizens. As one historian has put it: “Before the 1930s, national political debate often revolved around the question of whether the federal government should intervene in the economy. After the New Deal, debate rested on how it should intervene.”3
At the time of Roosevelt’s inauguration on March 4, 1933 the nation had been spiraling downward into the worst economic crisis in its history. Industrial output was only half of what it had been three years earlier, the stock market had recovered only slightly from its catastrophic losses, and unemployment stood at a staggering 25 percent.4
The First New Deal began in a whirlwind of legislative action called “The First Hundred Days.” From March through June 1933, at Roosevelt’s behest, Congress passed legislation aimed at addressing the banking crisis, unemployment, and weak industrial performance, among other problems, through an “alphabet soup” of new laws and agencies. Among these, some of the most important were:
The Agricultural Adjustment Act (AAA), which boosted agricultural prices by offering government subsidies to farmers to reduce output.
The Civilian Conservation Corps (CCC), which employed young, single men at federally funded jobs on government lands.
The Federal Emergency Relief Act (FERA), which gave federal grants to states that funded salaries for government workers as well as local soup kitchens and other direct-aid to the poor programs.
The National Recovery Act (NRA), which sought to boost businesses’ profits and workers’ wages by establishing industry-by-industry codes that set prices and wages, as well as guaranteeing workers the right to organize into unions.
The second phase of the New Deal focused on increasing worker protections and building long-lasting financial security for Americans. Four of the most notable pieces of legislation included:
The Works Progress Administration (WPA), which employed millions of Americans in public works projects, from constructing bridges and roads to painting murals and writing plays.
The Wagner Labor Relations Act, which guaranteed workers the right to form unions and bargain collectively.
The Social Security Act, which required workers and employers to contribute—through a payroll tax—to the Social Security trust fund. That fund, in turn, makes monthly payments to retirees over the age of 65, as well as to the long-term disabled.
Roosevelt’s New Deal sought to reinvigorate the economy by stimulating consumer demand. The New Deal embraced federal deficit spending to promote economic growth, a fiscal approach that came to be associated with the British economist John Maynard Keynes. Keynes argued that government spending that put money in consumers' hands would allow them to buy products made in the private sector. Then, as employers sold more and more products, they would have the money to hire more and more workers, who could afford to buy more and more products, and so on.5 In this way, Roosevelt and his supporters theorized, the Great Depression’s downward economic spiral could be reversed.
The New Deal was only partially successful, however. The Supreme Court ruled against several New Deal initiatives in 1935, leading a frustrated Roosevelt to suggest expanding the Supreme Court to as many as fifteen Justices (a political misstep that would haunt him for the rest of his career).6 Despite the New Deal's lofty dreams, the United States only fully recovered from the Great Depression due to massive military spending brought on by the Second World War.
How was the New Deal's approach to the crisis of the Great Depression different from previous responses to economic slumps in American history?
Which do you think played a larger role in ending the Depression: the New Deal or World War II? Why?
What aspects of the New Deal, if any, do you see in American society today?
[Notes and attributions]
Jul 10, 2024 · The New Deal was a series of large-scale relief programs and reforms that FDR implemented to counteract the economic effects of the Great Depression. The New Deal advocated government spending as a key economic driver boosting consumer demand.
- Kimberly Amadeo
Apr 7, 2021 · During the 1930s, the Public Works Administration, Works Progress Administration (later named the Work Projects Administration) and other New Deal agencies funded projects to build and improve...
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Below you can find summaries & statistics on key dimensions of economic recovery and social welfare in the 1930s, plus the role of New Deal programs in addressing each problem and the longer-term implications of the New Deal’s beneficial policies.
