New Deal

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New Deal

Top left: Signing of the Tennessee Valley Authority Act, 1933 Top right: President Franklin D. Roosevelt Bottom: Works Progress Administration public mural
Location	United States
Type	Economic program
Cause	Great Depression
Organized by	President Franklin D. Roosevelt
Outcome	Job creation, social security, financial reforms, and agricultural support Expanded labor rights and unions Political power shifts to Democratic Party's New Deal coalition

This article is part of a series about Franklin D. Roosevelt
Early life Family Paralysis State Senator Secretary of the Navy 1920 Cox–Roosevelt campaign 44th Governor of New York Governorship 32nd President of the United States First & second terms, 1933–1941 Third & fourth terms, 1941–1945 Timeline Transition Inaugurations  first second third fourth First term First 100 days New Deal Glass-Steagall Act WPA Social Security SEC Fireside Chats Second term Supreme Court Packing National Recovery Act 1937 recession March of Dimes Third term World War II  Attack on Pearl Harbor Infamy Speech Atlantic Charter Japanese Internment Tehran Conference United Nations D-Day Second Bill of Rights G.I. Bill Harlan F. Stone Supreme Court nomination Wiley Rutledge Supreme Court nomination Fourth term Yalta Conference Declining health Death and state funeral Presidential campaigns 1932  primaries convention campaign election 1936  primaries convention campaign election 1940  primaries convention campaign election 1944  primaries convention campaign election Electoral history Legacy Criticism Foreign policy New Deal critics Civil rights record Presidential Library Memorial Depictions
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The New Deal was a series of domestic programs, public work projects, and financial reforms and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1938, with the aim of addressing the Great Depression, which began in 1929. Roosevelt introduced the phrase upon accepting the 1932 Democratic presidential nomination, and won the election in a landslide over Herbert Hoover, whose administration was viewed by many as doing too little to help those affected. It was widely believed that the depression was caused by inherent market instability, and that massive government intervention was necessary to stabilize and rationalize the economy.

During Roosevelt's first hundred days in office in 1933 until 1935, he introduced what historians refer to as the "First New Deal", which focused on the "3 R's": relief for the unemployed and for the poor, recovery of the economy back to normal levels, and reform of the financial system to prevent a repeat depression.^[1] Roosevelt declared a four-day bank holiday and implemented the Emergency Banking Act, which enabled the Federal Reserve to insure bank deposits; this was made permanent with Federal Deposit Insurance Corporation (FDIC). Other laws established the National Recovery Administration (NRA), which allowed industries to create "codes of fair competition"; the Securities and Exchange Commission (SEC), which protected investors from abusive stock market practices; and the Agricultural Adjustment Administration (AAA), which raised rural incomes by controlling production. Public works were undertaken in order to find jobs for the unemployed (25 percent of the workforce when Roosevelt took office): the Civilian Conservation Corps (CCC) enlisted young men for manual labor on government land, and the Tennessee Valley Authority (TVA) promoted electricity generation and other forms of economic development in the drainage basin of the Tennessee River.

Although the First New Deal helped many find work and restored confidence in the financial system, by 1935 stock prices were still below pre-Depression levels and unemployment still exceeded 20 percent. From 1935 to 1938, the "Second New Deal" introduced further legislation and additional agencies which focused on job creation and on improving the conditions of the elderly, workers, and the poor. The Works Progress Administration (WPA) supervised the construction of bridges, libraries, parks, and other facilities, while also investing in the arts; the National Labor Relations Act guaranteed employees the right to organize trade unions; and the Social Security Act introduced pensions for senior citizens and benefits for the disabled, mothers with dependent children, and the unemployed. The Fair Labor Standards Act prohibited "oppressive" child labor, and enshrined a 40-hour work week and national minimum wage.

In 1938, the Republican Party gained seats in Congress and joined with conservative Democrats to block further New Deal legislation, and some of it was declared unconstitutional by the Supreme Court. The New Deal produced a political realignment, reorienting the Democratic Party's base to the New Deal coalition of labor unions, blue-collar workers, big city machines, racial minorities (most importantly African-Americans), white Southerners, and intellectuals. The realignment crystallized into a powerful liberal coalition which dominated presidential elections into the 1960s, as an opposing conservative coalition largely controlled Congress in domestic affairs from 1937 to 1964. Historians still debate the effectiveness of the New Deal programs, although most accept that full employment was not achieved until World War II began in 1939.

The First New Deal (1933–1934) dealt with the pressing banking crisis through the Emergency Banking Act and the 1933 Banking Act. The Federal Emergency Relief Administration (FERA) provided US$500 million (equivalent to $11.8 billion in 2023) for relief operations by states and cities, and the short-lived CWA gave locals money to operate make-work projects from 1933 to 1934.^[2] The Securities Act of 1933 was enacted to prevent a repeated stock market crash. The controversial work of the National Recovery Administration (NRA) was also part of the First New Deal.

The Second New Deal in 1935–1936 included the National Labor Relations Act to protect labor organizing, the Works Progress Administration (WPA) relief program (which made the federal government the largest employer in the nation),^[3] the Social Security Act and new programs to aid tenant farmers and migrant workers. The final major items of New Deal legislation were the creation of the United States Housing Authority and the FSA, which both occurred in 1937; and the Fair Labor Standards Act of 1938, which set maximum hours and minimum wages for most categories of workers.^[4] The FSA was also one of the oversight authorities of the Puerto Rico Reconstruction Administration, which administered relief efforts to Puerto Rican citizens affected by the Great Depression.^[5]

Roosevelt had built a New Deal coalition, but the economic downturn of 1937–1938 and the bitter split between the American Federation of Labor (AFL) and Congress of Industrial Organizations (CIO) labor unions led to major Republican gains in Congress in 1938.^[6] Conservative Republicans and Democrats in Congress joined the informal conservative coalition, which took control of both Houses of Congress following the 1938 midterm elections.^[7] By 1942–1943, they shut down relief programs such as the WPA and the CCC and blocked major progressive proposals. Noting the composition of the new Congress, one study argued

The Congress that assembled in January 1939 was quite unlike any with which Roosevelt had to contend before.

Since all Democratic losses took place in the North and the West, and particularly in states like Ohio and Pennsylvania, southerners held a much stronger position. The House contained 169 non-southern Democrats, 93 southern Democrats, 169 Republicans, and 4 third-party representatives. For the first time, Roosevelt could not form a majority without the help of some southerners or Republicans. In addition, the president had to contend with several senators who, having successfully resisted the purge, no longer owed him anything. Most observers agreed, therefore, that the president could at best hope to consolidate, but certainly not to extend, the New Deal. James Farley thought that Roosevelt's wisest course would be "to clean up odds and ends, tighten up and improve things [he] already has but not try [to] start anything new."

In any event, Farley predicted that Congress would discard much of Roosevelt's program.^[8]

As noted by another study, "the 1938 elections proved a decisive point in the consolidation of the conservative coalition in Congress. The liberal bloc in the House had been halved, and conservative Democrats had escaped 'relatively untouched'". In the House elected in 1938 there were at least 30 anti-New Deal Democrats and another 50 who were "not at all enthusiastic". In addition, "The new Senate was split about evenly between pro- and anti-New Deal factions."^[9] The Fair Labor Standards Act of 1938 was the last major New Deal legislation that Roosevelt succeeded in enacting into law before the conservative coalition won control of Congress. Though he could usually use the veto to restrain Congress, Congress could block any Roosevelt legislation it disliked.^[10]

Nonetheless, Roosevelt turned his attention to the war effort and won reelection in 1940–1944. Furthermore, the Supreme Court declared the NRA and the first version of the Agricultural Adjustment Act (AAA) unconstitutional, but the AAA was rewritten and then upheld. Republican President Dwight D. Eisenhower (1953–1961) left the New Deal largely intact, even expanding it in some areas. In the 1960s, Lyndon B. Johnson's Great Society used the New Deal as inspiration for a dramatic expansion of progressive programs, which Republican Richard Nixon generally retained. However, after 1974 the call for deregulation of the economy gained bipartisan support.^[11] The New Deal regulation of banking (Glass–Steagall Act) lasted until it was suspended in the 1990s.

Several organizations created by New Deal programs remain active and those operating under the original names include the Federal Deposit Insurance Corporation (FDIC), the Federal Crop Insurance Corporation (FCIC), the Federal Housing Administration (FHA), and the Tennessee Valley Authority (TVA). The largest programs still in existence are the Social Security System and the Securities and Exchange Commission (SEC).