The New Deal
Franklin Roosevelt's New Deal used federal power on an unprecedented scale to provide relief, promote recovery, and reform the economy.
Relief, recovery, reform
The New Deal is often summarised as the 'three Rs': relief for the unemployed and poor, recovery of the economy, and reform of the financial system to prevent another depression. Roosevelt experimented with many programmes, especially in his first 'Hundred Days' in 1933.
Banking and finance
Roosevelt declared a bank holiday and the Emergency Banking Act let sound banks reopen. His radio 'fireside chats' restored confidence. The Glass-Steagall Act (1933) created the Federal Deposit Insurance Corporation (FDIC) to insure deposits and separated commercial and investment banking. The Securities and Exchange Commission (1934) regulated the stock market.
Jobs programmes
The Civilian Conservation Corps (CCC) employed young men in conservation work, planting billions of trees. The Works Progress Administration (WPA, 1935) employed millions building roads, bridges, schools, and airports, and funded artists, writers, and musicians. The Public Works Administration funded large construction projects.
Agriculture and the TVA
The Agricultural Adjustment Act (1933) paid farmers to reduce production to raise prices, though it often hurt tenant farmers and sharecroppers who were pushed off land. The Tennessee Valley Authority (1933) built dams to provide electricity, flood control, and jobs in one of the poorest regions.
Social Security and labour
The Social Security Act (1935) created old-age pensions, unemployment insurance, and aid for dependent children, laying the foundation of the American welfare state. The Wagner Act (1935) guaranteed workers' right to organise unions and bargain collectively. The Fair Labor Standards Act (1938) set a federal minimum wage and banned most child labour.
Critics and the Court
Conservatives saw the New Deal as government overreach; populists such as Huey Long argued it did too little and proposed redistributing wealth. The Supreme Court struck down some programmes. In 1937, Roosevelt's plan to add justices ('court-packing') failed politically, though the Court began upholding New Deal laws.
Did it end the Depression?
The New Deal brought relief, lasting reforms, and partial recovery, but unemployment remained above 14% for most of the 1930s, and a recession struck in 1937-1938 after spending cuts. Massive spending during World War II finally ended mass unemployment. The New Deal permanently expanded the federal government's role in the economy.
Worked example
A young man in 1935 might join the CCC, earning 30 dollars a month, of which 25 dollars was sent home to his family, while planting trees in a national forest. His father might work on a WPA bridge project. His grandmother, from 1940, could receive a Social Security pension. The New Deal reached many families through several programmes at once, although some groups, such as farmworkers and domestic workers, were initially excluded from Social Security.
Key takeaways
The New Deal aimed at relief, recovery, and reform. The FDIC insured deposits and the SEC regulated markets. The CCC, WPA, and PWA created millions of jobs. The AAA raised farm prices; the TVA electrified a region. Social Security (1935), the Wagner Act (1935), and the Fair Labor Standards Act (1938) built lasting protections. Critics came from right and left; court-packing failed. The New Deal did not fully end the Depression, but it expanded the federal role permanently.
Flashcard
Relief, recovery, reform
Check your understanding
Which New Deal measure created insurance for bank deposits?