UNITED STATES 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). His opponent was Franklin Delano
Roosevelt, distant cousin of Theodore.
*Franklin Roosevelt was also a distant cousin of his own wife,
Eleanor (FDR's niece). FRD 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 promised a New Deal for America, although he was deliberately
vague on just what that meant. If Americans wanted to find
out, they would have to elect him.
*FDR was sworn in on 4 March, 1933. This was the last time a
president was inaugurated in March, as the XX Amendment (ratified
in 1933) moved the presidential inauguration date to 20 January,
because waiting almost four 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).
*In his inaugural address, Franklin D. Roosevelt assured Americans
that he and the government would take care of them. He told
America ‘the only thing we have to fear is fear itself.’
*His first vice-president (1932-1940) was John ('Cactus Jack')
Nance Garner IV. His cabinet included a wide range of
-State: Cordell Hull, born in a log cabin in Tennessee,
Spanish-American War veteran and future Nobel Peace Prize winner
-Treasury: Henry Morgenthau, junior, FDR's neighbour, and a
Jewish businessman who (among other things) grew Christmas
trees. Later he would play a large role in trying to rescue
Jews from Europe during WWII and would push for the execution of
Nazi war criminals
-Interior: Harold Ickes, a Progressive Republican
-Agriculture: Henry Wallace, an agricultural scientist,
new-age seeker of religious enlightenment, Freemason, socialist,
and later Vice-President (1940-1944)
-Post-Master General: James Farley, FDR's campaign manager,
a businessman, a Knight of Malta, and one of the first nationally
prominent Roman Catholics
-Labor: Frances Perkins, the first woman to serve in the US
*Roosevelt also employed a group of professional and academic
experts known as the Brain[s] Trust to help him create his New
*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.
*A new banking panic was gripping the country as people began
withdrawing funds again. To prevent any more banks failing
(as 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.
*Banking reform was a major part of the New Deal, and a major part
of that was the Glass-Steagal Act, which, among other things,
forced banks to separate their investment branches from their
commercial branches and from insurance companies, a rule that
broke even the House of Morgan into two banks (which have since
gone on to be two of the largest banks on Earth) and which stood
until 1999 (and whose repeal is sometimes blamed for the recent
*The Glass-Steagal Act also created the Federal Deposit Insurance
Corporation (FDIC), which insured deposits up to $2,500 per person
(soon raised to $5,000; now up to $250,000). Runs on banks
largely ended as people felt their money was secure.
*The Securities and Exchange Commission (SEC) began to regulate
trading on the stock market.
*The Federal Housing Administration (FHA) regulated interest rates
and other rules about home loans and insured mortgages so that
banks would not be afraid to lend money to homebuyers.
*On 5 April, 1933, FDR made it illegal for private citizens
(including foreigners with gold held in the United States) to own
significant amounts of gold (aside from jewellery, collectible
coins, and gold for industrial uses), requiring them to turn it
over to the Federal Reserve by 1 May, 1933 in exchange for paper
money. Some who refused had their assets seized by force.
*On 30 January, 1934, the US was removed from the gold
standard. US dollars were no longer backed by a specific
amount of gold, although US dollars were still convertible to
*The XXI Amendment (December, 1933) ended Prohibition, allowing
alcohol to be manufactured, transported, sold, and taxed.
*The Indian Reorganization Act (or Indian New Deal) reversed the
Dawes Act, preserving tribal lands and encouraging independent
tribal government (with mixed success).
*FDR believed that America could not truly proper again until
American farmers were prosperous, so he often tried to help rural
*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. Although the AAA was declared
unconstitutional in 1937, but was soon replaced by other farm aid
In the South, the AAA made tobacco profitable and stable for the
first time in years, and eventually helped cotton prices improve,
too. However, the drive for efficiency and central planning
meant that many tenant farmers were no longer profitable, either
for themselves or their landowners, and many lost their
livelihoods and left the state, or at least the countryside.
*Some tenant farmers tried to fight this—some, both white and
black, even joined the Southern Tenant Farmers’ Union
(headquartered first in Arkansas, then in Memphis), and organized
sit-down strikes in the cotton fields in 1935, but this did not
work, and Roosevelt largely ignored the tenant farmers. The
New Deal made agriculture profitable again, but mostly for big
business farmers, not for small farmers.
*In 1933 George Norris, a senator from Kansas and FDR visited
Muscle Shoals in 1933, and later that year Congress created
TVA. Its headquarters is in Knoxville.
*The Tennessee Valley Authority (TVA) built dams in the Tennessee
River Valley, creating jobs building dams, providing cheap
electricity, dispensing water for irrigation, and controlling
floods. It also replanted forests, built lakes which
benefited the national park system, 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, and thus encourage them to buy
the modern electric luxuries that America's faltering businesses
hoped to sell.
*There were people who opposed TVA, particularly the utility
companies of Nashville and Memphis, but the Supreme Court upheld
TVA’s right to produce and sell power, and in the end, many
private companies sold their dams and power plants to TVA.
However, there was enough opposition both locally and in Congress
that no other part of the nation got a similar programme, although
George Norris had always hoped that TVA would be a test for a
nation-wide programme, with an Authority for every Valley in the
*The Rural Electrification Administration (REA) helped bring power
to other rural areas.
*The National Recovery Act (NRA) set minimum wages and minimum
prices, so both workers and businesses could make money, or at
least that was the idea. In fact, it created so many
regulations that both business owners and their employees hated
it, and most parts of it were declared unconstitutional in 1935 in
Schechter Poultry Corp. v. United States (known as the Sick
Chicken Case because the government accused the Schechters of
selling sick chickens). The Supreme Court determined while
judging the case that the Schechters did not do enough interstate
commerce to be regulated). Overall, it was viewed as a
failure, although the Public Works Administration (PWA) which it
created hired private contractors to build dams, bridges, tunnels,
and other public works throughout the 1930s.
*After all, if the economy could not create enough employment on
its own, the government could create make-work programmes to do so
*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 Federal Emergency Relief Administration (FERA) lent money to
states to fund make-work programs and even programs of direct
relief through handouts of cash, food, and clothing, although FDR
and Harry Hopkins who was in charge of FERA and later other
make-work programs and even became Secretary of Commerce in 1938
preferred to help Americans work rather than offer direct relief.
*The Civil Works Administration (CWA) and later, the much larger
Works Progress Administration (WPA) (both also led by Harry
Hopkins) 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 Wagner Act of 1935 recognised the right of workers in all
industries to join unions and created the National Labor Relations
Board to help work out disputes between business and labour, in
part to try to solve the problems that the National Recovery
Administration had failed to address.
*The Social Security Act of 1935 taxed workers, but paid pensions
to retired workers who had contributed to it. This was based
in part on ideas put forth by a retired California doctor named
Francis Townsend, who proposed a national sales tax that would
allow the government to pay every American aged 60 or older $200 a
month on the condition that they stop working and spend their
entire check. Instead of a sales tax, FDR chose pay check
withholdings, and at first only paid $20 a month.
*To pay for all these programmes, the government went deeply into
debt as the deficit increased nearly 10 times between 1932 and
1936. This was based on the ideas of the economist John
Maynard Keynes, who said governments needed to do this during
depressions in order 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--and if not, by the
time it mattered, the politicians who had run up the debts and the
economists who had advised them to do so would be dead by then.
*Roosevelt said such drastic action was necessary because the
problems facing America were so numerous and so immediate:
Here is one-third of a nation ill-nourished, ill-clad,
Here are thousands upon thousands of farmers wondering
whether next year's prices will meet their mortgage
Here are thousands upon thousands of men and women laboring
for long hours in factories for inadequate pay--NOW!
Here are thousands upon thousands of children who should be
at school, working in mines and mills--NOW!
I "Here are strikes more far-reaching than we have ever
known, costing millions of dollars--NOW!
Here are spring floods threatening to roll again down our
Here is the Dust Bowl beginning to blow again--NOW!
If we would keep faith with those who had faith in us, if
we would make democracy succeed, I say we must act--NOW!
*Conservatives said that Roosevelt was turning America 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).
*In 1934, Democrats like John Davis (one of Wilson's advisors and
the 1924 presidential candidate) and Al Smith (1928 presidential
candidate) joined up with conservatives--mostly Democratic, but
some Republicans--to form the American Liberty League to oppose
Roosevelt for ending Prohibition and for attacking private
property through his attempts to control industry and redistribute
wealth through taxes that paid for welfare and make-work schemes.
*Many liberals (particularly socialists) also accused Roosevelt of
passing up a chance to truly reform or even replace the capitalist
system. Indeed, Roosevelt insisted that he was undertaking
these relatively moderate reforms so that Americans would turn to
communism out of desperation.
*On the other hand, some people criticised Roosevelt for not going
far enough. The normally conservative Father Charles
Coughlin criticised Roosevelt in a popular radio programme for not
nationalising industry, demanding a program of social justice
based on free silver and nationalization of banks and utilities,
although in most ways he was fervently anti-Communist (and
anti-Semitic). Eventually Roosevelt (with the support of the
Catholic Church) forced him to stop his broadcasts when he moved
beyond just criticising FDR and began to openly support Hitler and
*Among Roosevelt's critics on the left was 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 through a
guaranteed minimum annual income and through building public works
such as schools and roads and free public education. He
promised to make Every Man a King.
*Long had grown up poor and was very popular with many poor people
in Louisiana. He was known as the Kingfish after a character
on the radio program Amos 'n' Andy. As a senator, he
initially supported FDR's New Deal, but later opposed it, partly
because he felt it did not go far enough and partly because he
wanted to control how New Deal money and jobs were handed out in
Louisiana, and, FDR would not allow that. Long considered
running for the presidency in 1936 (if he could get the Democratic
nomination away from FDR) or in 1940.
*Huey Long also shared the wealth by skimming some off for himself
and his friends, as every government employee had to pay into
Long's 'deduct box.' Even once he was in the Senate, he
still tried to control Louisiana politics, and he was assassinated
*Despite opposition from both the left and right wings of American
culture and politics, Roosevelt was easily re-elected in 1936,
defeating Alf Landon by winning every state but Maine and Vermont.
*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).
*During his second term, Roosevelt did more to allow working class
people to help themselves. 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, partly because reducing
the work load of an individual worker would force companies to
hire more workers to perform the same tasks.
*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.
*One of Roosevelt’s most important political assets in the
creation of the Welfare State was his wife. Eleanor traveled
the country (much more easily than her crippled husband) and
visited the homes and workplaces of the working class and the
poor, even African-Americans and American Indians. She was
strongly opposed to sexism and racism, and tried to win greater
equality for women and for blacks.
*The New Deal did help African-Americans in many ways.
Roosevelt had many black advisors—so many that they were known as
the Black Cabinet.
*Under their influence, and that of other Civil Rights activists
(including his wife, Eleanor), Roosevelt did insist that Blacks be
given jobs in New Deal programs such as TVA, although they often
still faced segregation (such as housing in separate work camps)
and other forms of discrimination.
*However, he did not support anti-lynching laws or a number of
other laws against racism because he did not want to turn Southern
Democrats against him. Furthermore, as the AAA and other
government subsidies encouraged farmers to grow fewer crops, many
black sharecroppers and tenant farmers were evicted by landowners
who wanted to produce less.
*Despite this, FDR began to bring African-Americans into the
Democratic Party while strengthening its traditional base among
farmers and industrial workers. This New Deal Coalition was
so powerful that, after 40 years as a minority party, the
Democrats were able to hold the majority in the House of
Representatives for all but four years between 1933 and 1995 and
hold the presidency for all but eight years between 1933 and
1969. This is also described as America’s Fifth Two-Party
system, and would last until at least 1968 and perhaps as late as
*Furthermore, FDR became the most powerful president up to his
time, and set standards that all subsequent presidents have tried
to follow, from measuring the beginning of their terms by how much
they could accomplish in the first Hundred Days to having to not
only be leaders of the Free World but media stars on radio and
later on television.
*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
(probably--there are some historians and economists who disagree)
kept the Great Depression from getting worse, the economy still
had violent ups and downs (including a surge in unemployment to
20% in 1937-1938 sometimes known as the Roosevelt
Recession). 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 4 November, 2020.