American History
The New Deal

*In 1932, Herbert Hoover had almost no chance of being re-elected, but he ran nonetheless, and lost by the largest margin a president facing re-election has ever suffered (winning only 6 states and 39.7% of the popular vote).  The winner was Franklin Delano Roosevelt, distant cousin of Theodore.

*Franklin Roosevelt was also a distant cousin of his wife, Eleanor.  He had also suffered from polio when he was younger and lost the use of his legs.  He went to great lengths to hide this, though, wearing leg braces and often being propped up by two friends when in public, and the media of the time worked with him to do this.

*FDR was sworn in on 4 March, 1933.  He was the last time a president was sworn in in March, as the XX Amendment moved the inauguration date to 20 January, because waiting almost 4 months between the election and inauguration made it too hard for the new president to respond to crises (partly because FDR refused to work with Hoover on anything substantial, to make sure he got all the credit for any programmes that worked well).

*Roosevelt quickly employed a group of professional and academic experts known as the Brain Trust to help him create his New Deal.  He even put two Republicans in his cabinet and also chose Frances Perkins as Secretary of Labor, the first woman in the cabinet.

*When FDR came into office, there was great enthusiasm for his New Deal, and in the First Hundred Days (a standard against which all subsequent administrations have been measured), Congress passed many of his ideas into law.  Furthermore, he communicated his ideas to the people by radio, in a series of fireside chats that helped keep Americans calm during crises—among other things, he said that the only thing we have to fear is fear itself.

*A new banking panic was gripping the country as people began withdrawing funds again.  To prevent any more banks failing (over 4,000 already had), Roosevelt declared a 4-day Bank Holiday, closing all banks so they could get their affairs in order.  When banks reopened, people did not run on them.

*Other parts of the New Deal included the Federal Deposit Insurance Corporation (FDIC), which insured deposits up to $5,000 (and currently up to $250,000) per person.  Runs on banks largely ended as people felt their money was secure.

*Later, the Securities Exchange Commission (SEC) began to regulate the stock market.

*The Federal Housing Administration (FHA) lent money to homeowners to make mortgage payments.

*The National Recovery Act (NRA) set minimum wages and minimum prices, so both workers and businesses could make money.

*The XXI Amendment ended Prohibition.

*The Agricultural Adjustment Act (AAA) helped farmers with subsidies, paying farmers to limit their production (and even destroy excess produce they had on hand, which many starving Americans saw as immoral).  This led to a rise in farm prices, but farmers have depended on the government for other subsidies ever since.

*The Tennessee Valley Authority (TVA) built dams in the Tennessee River Valley, creating jobs building dams, providing cheap electricity, providing water for irrigation, and controlling floods.  It also replanted forests, taught farmers better farming techniques, and began to bring the South into the modern world, as cheap electricity attracted industry and allowed many people to enjoy the comforts of modern life.  The Rural Electrification Administration (REA) did similar things for other areas.

*The Civilian Conservation Corps (CCC) employed young men in a military style organisation that built parks (including the Appalachian Trail), fought fires, and undertook other outdoor projects.  They had plenty to do, as Roosevelt set aside about 12 million acres of land as National Parks.

*The Civil Works Administration (CWA) and later, the much larger Works Progress Administration (WPA) created many kinds of public works jobs for the unemployed, building dams, bridges, highways, power plants, and government buildings.  The Stone Castle in Bristol was built by the WPA.  The WPA even gave jobs to artists and academics (they painted murals in the WPA buildings and collected the stories of former slaves in their old age).

*The Social Security Act taxed workers, but paid pensions to retired workers who had contributed to it.

*To pay for all these programmes, the government went deeply into debt as the deficit increased nearly 10 times between 1932 and 1936.  The economist John Maynard Keynes, though, said the government needed to do this to prime the pump, as getting money into the hands of the people through government spending would allow people to begin consuming again, thus allowing factories to begin producing again, thus creating jobs, all of which could be taxed to repay the government’s debts eventually.

*Conservatives said that Roosevelt was turning American into a socialist country and that creating a Welfare State in which people depended on the government sapped initiative and removed the need for personal responsibility.  Many also criticised how deeply the government went into debt.  Eventually Congress stopped passing Roosevelt’s ideas so quickly (although a Second New Deal, mostly in 1935, also created important programmes, such as the WPA and Social Security).

*On the other hand, some people criticised Roosevelt for not going far enough.  Father Charles Coughlin criticised Roosevelt in a popular radio programme for not nationalising industry (but he also was fervently anti-Communist and anti-Semitic), although eventually the Catholic Church forced him to stop his broadcasts.  

*Huey Long, governor and senator from Louisiana wanted to Share the Wealth by placing very high taxes on the rich and giving the money to the poor (and skimming some off for himself and his friends).  He was deeply corrupt, and was assassinated in 1935.

*Nonetheless, Roosevelt was easily re-elected in 1936, winning every state but Maine and Vermont.

*During his second term, Roosevelt did more to allow working class people to help themselves.  The Wagner Act recognised the right of workers to join unions and the Fair Labor Standards Act of 1938 outlawed child labour, set a 25-cent per hour minimum wage, and created a 44-hour maximum work week.

*Workers in many unskilled or low-skill jobs (who could not join the skilled craft unions of the AFL) created a new group of unions, the Congress of Industrial Organizations (CIO), which organised a successful strike of the United Auto Workers against General Motors in Flint, Michigan.  Between 1930 and 1940, the number of union members doubled.

*As soon as Roosevelt was sworn into his second term, he confronted the most conservative part of the government, the Supreme Court.  The Court had already overturned some parts of the New Deal, particularly the NRA.  To prevent this happening again, Roosevelt asked Congress to add up to six more justices to the Supreme Court, supposedly to help out the elderly members of the Court.  Opponents said this was a court packing scheme, and it failed.  Nonetheless, the Court did uphold many of his New Deal programmes (often by a 5-4 margin).

*Still, after the Court Packing scheme failed, Roosevelt found less support for continuing the New Deal, partly because the Depression continued to drag on.  Although the New Deal had kept it from getting worse, the economy still had violent ups and downs (including a surge in unemployment to 20% in 1938).  Furthermore, the New Deal had achieved its successes through a vast enlargement of the government and its powers, involving it in far more people’s lives and making many people dependent on the Welfare State.






This page last updated 5 October, 2009.