New Deal

Alternative meaning: New Deal (United Kingdom)

The New Deal was President Franklin D. Roosevelt's effort to rescue the United States from the Great Depression. It had three parts (the 3-Rs): Relief, Recovery, and Reform. Relief was the immediate effort to help the one-third of the population that was hardest hit by the depression. It included federal jobs in work programs such as the CCC, PWA, and FERA (starting in 1933), and WPA, Social Security and unemployment relief (starting in 1935). Recovery was the goal of restoring the economy to pre-depression levels. It involved "pump priming" (deficit spending), dropping the gold standard, efforts to re-inflate prices that were too low, and efforts to increase foreign trade. Reform was based on the assumption that the depression was caused by the inherent instability of the market and that government intervention was necessary to rationalize and stabilize the economy, and to balance the interests of farmers, business and labor. It included the NRA (1933), regulation of Wall Street (SEC, 1933), insurance of bank deposits (FDIC 1933) and the Wagner Act encouraging labor unions (1935). Only one major program, the TVA (1933) involved government ownership of the means of production, because Roosevelt strongly opposed socialism. How successful the New Deal was in achieving the 3-Rs remains a topic of heated debate. The New Deal is also used to describe the political coalition that Roosevelt created to support his programs, including the Democratic party, big city machines, labor unions, European and African-American minorities or ethnics, and farm groups.

The Origins of the New Deal

On October 24, 1929, the crash of the U.S. stock market—known as "Black Thursday"—reflected a trend of a worldwide economic crisis. In 1929-1933, unemployment in the U.S. soared from 3 percent of the workforce to 25 percent, while manufacturing output collapsed by one-third. Prices declined, especially for farm products. Heavy industry, mining, lumbering and agriculture were badly hit. The impact was much less severe in white collar and service sectors, but every city and state was hit hard.

Upon accepting Democratic nomination for president on July 2, 1932, Roosevelt promised "a new deal for the American people," a phrase that has endured as a label for his administration and its many domestic changes. Meanwhile, other governments worldwide exacerbated economic recovery by continuing protectionist policies (high tariffs, import quotas, and barter agreements)—the very cause of the collapse of world trade in the late 1920s with its resultant job loss. Britain led by the Labour party, was unable to adopt major programs to stop its depression. That led to collapse of Labour and replacement in 1931 by a National coaltion (predominantly Conservative). As a result there was no "new deal" in Britain. In Nazi Germany economic recovery was pursued through wage controls, suppression of unions, and spending programs such as public works programs; large-scale rearmament came later in the 1930s. In Mussolini's Italy the economic controls of his corporate state were tightened. Leftists throughout the world told themselves that Stalin's massive program of economic planning and state ownership in the Soviet Union was the wave of the future.

Roosevelt entered office with no single ideology or plan for dealing with the depression. He was willing to try anything, and indeed in the "First New Deal" (1933-34) virtually every organized group (except Socialists) gained much of what they demanded. This "First New Deal" thus was self-contradictory, pragmatic, and experimental. However it worked, and the economy recovered from the deep pit of 1932, and started heading upward again until 1937.

The New Deal drew heavily on the experiences of its leaders; it reflected the ideas of, and was influenced by, the programs that Roosevelt and most of his original associates had absorbed in the progressive era, while serving in the Wilson administration, especially the emergency of World War I. Some New Dealers, led by Louis Brandeis and Thurmond Arnold tried to revive the Progressive crusade against monopolies, but made little headway. Other New Dealers, such as Hugh Johnson of the NRA harked back to the wartime controls and spending of 1917-1918. Roosevelt brought together the Brain Trust of academic advisors.

The First Hundred Days

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Roosevelt's ebullient public personality, conveyed through his declaration that "the only thing we have to fear is fear itself," and his "fireside chats" on the radio did a great deal alone to help restore the nation's confidence.

Having won a decisive victory in the 1932 presidential election, and with his party having decisively swept Congressional elections across the nation, the new president entered office with considerable influence over Congress. Thus, a large share of the major initiatives of the New Deal (reforming the stock market, aid to the unemployed, and propping up the banking system) took shape during the “first hundred days” of the administration.

The "bank holiday" and the Emergency Banking Act

Upon taking office the administration moved readily to take a series of measures to restore a banking system that was frozen and almost in collapse. On March 6, the president issued an order closing all U.S. banks for four days until Congress could meet in a special session. By demonstrating that the federal government was stepping in to stop the alarming pattern of bank failures, the action created a general sense of relief. (Earlier, many states had already closed down the banks before March 6.)

Three days later, Roosevelt sent to Congress the Emergency Banking Act, drafted in large part by officials appointed by the Hoover administration. The bill provided for Treasury Department to initiate reserve requirements and a federal bailout to large failing institutions. Congress passed the bill within four hours of its introduction. Three-quarters of the banks in the Federal Reserve System reopened within the next three days, and billions of dollars in "hoarded" currency and gold flowed back into them within a month, thus stabilizing the banking system.

The Economy Act

The Economy Act, drafted by Budget Director Lewis Douglas passed on March 20, 1933. The act proposed to balance the "regular" (non-emergency) federal budget by cutting the salaries of government employees and cutting pensions to veterans by as much as 15 percent. It saved $500 million a year and reassured deficit hawks like Douglas that the new president was as fiscally conservative. Roosevelt argued there were two budgets: the "regular" federal budget which he balanced, and the "emergency budget" needed to defeat the depression. It was imbalanced on a temporary basis. Roosevelt thus reflected the classical Democratic party position, dating back to Grover Cleveland, Andrew Jackson, and Thomas Jefferson, that federal deficit spending was economically unwise and morally repugnant, and he redeemed his campaign promises in favor of a balanced budget. Douglas, however, rejecting the distinction between a regular and emergency budget, resigned in 1934, and became an outspoken critic of the New Deal. Roosevevelt strenuously oppposed the [[Bonus Bill] that would give World War One veterans a cash bonus. Finally Congress passed it over his veto in 1935.

The Farm Programs

Roosevelt was keenly interested in farm issues, and emphasized that true prosperity would not return until farming was prosperous. Many different programs were directed at farmers. The first hundred days produced a federal program to protect commercial farmers from the uncertainties of the depression through subsidies and production controls. This program began with the Agricultural Adjustment Act, creating the Agricultural Adjustment Administration (AAA), which Congress passed in May 1933. The Act reflected the desires of leaders of major farm organizations, especially the Farm Bureau, and reflected debates among Roosevelt's farm advisors such as Henry A. Wallace, Rex Tugwell, and George Peek. The AAA implemented a provision for crop reductions known as the "domestic allotment" system of the act. Under this system producers of corn, cotton, dairy products, hogs, rice, tobacco, and wheat would decide on production limits for their crops. The AAA would then pay land owners subsidies for leaving some of their land idle with funds provided by a new tax on food processing. Farm prices were to be subsidized up to the point of parity. The idea was that the less produced, the higher the price, and the farmer would benefit. The government created shortage led to smaller supplies so farm incomes increased significantly in the first three years of the New Deal. The AAA established an important and long-lasting federal role in the planning on the entire agricultural sector of the economy. The AAA did not provide for any sharecroppers or tenants or farm laborers who might become unemployed, but there were other New Deal programs especially for them.

Roosevelt, Eleanor Roosevelt, and many New Dealers were highly sympathetic to the marginal farmers who lived on the land in severe poverty, especially in the South. Major programs addressed to their needs included the Resettlement Administration (RA), the Farm Security Administration (FSA), the Rural Electrification Administration (REA), the Tennessee Valley Authority (TVA) and rural welfare projects sponsored by the WPA, NYA, Forest Service and CCC, including school lunches, building new schools, opening roads in remote areas, reforestation, and purchase of marginal lands to enlarge national forests.

Other initiatives

Also early in Roosevelt's first term, the administration launched a new federal regulatory agency to oversee the stock market dubbed the U.S. Securities and Exchange Commission (SEC). Another agency, the FDIC Federal Deposit Insurance Corporation set out to reform of the banking system by setting up a system of insurance for deposits.

The administration also launched a series of relief measures and welfare agencies to transfer money to unemployed persons. Among these government funded programs were the Civilian Conservation Corps (CCC), the Civil Works Administration (CWA), and the Federal Emergency Relief Administration (FERA).

In 1933 the administration also began the Tennessee Valley Authority (TVA), a project involving state planning on an unprecedented scale in order to curb flooding and generate electricity in the impoverished Tennessee Valley region of the Southern United States.

In a measure that garnered substantial popular support, Roosevelt in his first days supported and signed a bill to legalize the manufacture and sale of beer, an interim measure pending the repeal of Prohibition, for which a constitutional amendment (the Twenty-first) was already in process.

The National Industrial Recovery Act (NIRA)

Business, labor, and government cooperation

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The Roosevelt administration sought to contain and quell the increasing militancy of the trade union movement and the political pressures of radical, dissident challenges such as Louisiana's Huey Long (above). Long broke with the New Deal within six months of Roosevelt's administration and advocated a program of wealth redistribution, a program he ultimately named the Share-Our-Wealth-Plan.

The actions of the "first hundred days" were largely stopgaps. More comprehensive government programs followed later in the Roosevelt administration, designed in large part to deal with deflation. In the roughly three years between the 1929 stock market crash and Roosevelt's first hundred days in office, the economy had been suffering from a cycle of deflation. In response, the Chamber of Commerce, then and now the leading voice of organized business, urged the Hoover and later Roosevelt administration to adopt an anti-deflationary scheme that would permit trade associations to cooperate in stabilizing prices within their industries. The administration was receptive to some of these proposals, despite existing antitrust laws that forbade such practices.

The Roosevelt administration, packed with reformers aspiring to forge all elements of society into a cooperative unit (a reaction to the worldwide specter of "class struggle"), was fairly amenable to the idea of cooperation among producers. Desperate for salvation, many industries even expressed an interest in having the government enforce such trade associate agreements on pricing and production. But the administration insisted on additional provisions that would deal with other economic problems as well. Many, after all, remembered that in the 1920s wages increased at a rate that was a fraction of the rate at which productivity increased, remembering that production costs were falling while wages were rising slowly and prices remained constant.

The Roosevelt administration, under increasing pressure to do more to alleviate unemployment, and alarmed at the increasing militancy of the trade union movement and the political pressures of radical, dissident challenges as Huey Long, Father Charles E. Coughlin, and even the Communist Party, insisted that business would have to ensure that the incomes of workers would rise along with their prices. Against this backdrop, the product of all these impulses and pressures the National Industrial Recovery Act (NIRA), the most important undertaking of the first Hundred Days, which Congress passed in June, 1933.

It guaranteed to workers of the right of collective bargaining and helped spur major union organizing drives in major industries. And responding to business clamor for anti-deflationary trade associate agreements, the NIRA established the most important, but ultimately least successful provision: a new federal agency known as the National Recovery Administration (NRA), which attempted to stabilize prices and wages through cooperative "code authorities" involving government, business, and labor.

In case consumer buying power lagged behind—thereby defeating the administration's initiatives—the NIRA created the Public Works Administration (PWA), a major program of public works. PWA spent $6 billion with private companies to build 34,500 projects, many of them quite large.

The new program was hailed at its inception as a miracle. Indeed, it had something for everyone. Just as business leaders hailed it as the beginning of a new era of cooperation between government and industry, labor leaders hailed it as a "Magna Carta" for trade unions.

The NRA "Blue Eagle" campaign

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Hugh S. Johnson on the cover of Time

At the center of the NIRA was the National Recovery Administration (NRA), headed by former general Hugh Johnson. Johnson called on every business establishment in the nation to accept a stopgap "blanket code": a minimum wage of between 20 and 40 cents an hour, a maximum workweek of 35 to 40 hours, and the abolition of child labor. Johnson and Roosevelt contended that the "blanket code" would raise consumer purchasing power and increase employment.

To mobilize political support for the NRA, and the administrations "blanket code", Johnson launched the "NRA Blue Eagle" campaign. The "Blue Eagle" was to be displayed in commercial establishments by employers who accepted the provisions of the blanket code. Blue Eagle flags, posters, and stickers, with the slogan "We Do Our Part," rapidly became visible in shops and workplaces throughout the country.

Meanwhile, Johnson needed extraordinary public and corporate support for enough bargaining strength to negotiate the codes with both business and labor. Cooperation proved to be a great burden; a firm could, after all, ignore such codes in search for a competitive advantage. In the short run, enough support among key sectors of society was generated. Even so, Johnson won agreements from almost every major industry in the nation.

These and other early initiatives created broad popular support for the Roosevelt administration and halted the rapid unraveling of the financial system. They did not, however, end, or even significantly abate, the Great Depression.

NRA Blue Eagle

The Second New Deal

Legislative successes and failures

In the spring of 1935, responding to the setbacks in the Court, a new skepticism in Congress, and the growing popular clamor for more dramatic action, the administration proposed or endorsed several important new initiatives. Historians refer to them as the "Second New Deal" and note that it was more radical, more pro-labor and anti-business, than the "First New Deal" of 1933-34. The National Labor Relations Act (July 5), also known as the Wagner Act, revived and strengthened the protections of collective bargaining contained in the original (and now unconstitutional) NIRA. The result was a tremendous growth of membership in the labor unions comprising the American Federation of Labor. Labor thus became a major component of the New Deal political coalition. Roosvelt nationalized unemployment relief through the Works Progress Administration (WPA), headed by close friend Harry Hopkins. It created hundreds of thousands of low-skilled blue collar jobs for unemployed men (and some for unemployed women and white collar workers). Applicants for WPA jobs did not have to be Democrats, but their foremen quickly explained that Roosevelt created their paychecks and that conservative Republicans wanted to abolish the program. The National Youth Adminstration was the semi-autonomous WPA program for youth. Its Texas director, Lyndon Baines Johnson, later used the NYA as a model for some of his Great Society programs in the 1960s. But the most important achievement of 1935, and perhaps the New Deal as a whole, was the Social Security Act (August 14), which established a system of insurance against Old Age, unemployment insurance, and welfare benefits for such protected groups as dependent children and the handicapped, establishing a framework for U.S. welfare system.

Roosevelt, however, emboldened by the triumphs of his first term, set out in 1937 to consolidate authority within the government in ways that provoked powerful opposition. Early in the year, he asked Congress to expand the number of justices on the Supreme Court so as to allow him to appoint members sympathetic to his ideas and hence tip the ideological balance of the Court. In one sense the proposal succeeded; Justice Owen Roberts, almost certainly in response to the threat, switched positions and began voting to uphold New Deal measures, effectively creating a liberal majority in West Coast Hotel Co. v. Parrish and National Labor Relations Board v. Jones & Laughlin Steel Corporation. Journalists called this change the "switch in time that saved nine." But the "court packing plan," as it was known, did lasting political damage to Roosevelt and was finally rejected by Congress in July. At about the same time, the administration proposed a plan to reorganize the executive branch in ways that would significantly increase the president's control over the bureaucracy. Like the Court-packing plan, executive reorganization garnered opposition from those who feared a "Roosevelt dictatorship" and failed in Congress; a watered-down version of the bill finally won passage in 1939.

Historical assessment

Historians on the right and left have generally been disappointed with Roosevelt's second term. On the right, there have been charges of an FDR "executive dictatorship" since the 1930s. Historian John T. Flynn, for example, denounced FDR as a socialistic radical and a despot in The Roosevelt Myth (1956).

Conversely, historians on the left have denounced the New Deal as a conservative phenomenon that let slip the opportunity to radically reform capitalism. Since the 1960s, "New Left" historians have been among the New Deal's harsh critics. (For a list of relevant works, see the list of suggested readings appearing toward the bottom of the article.) Barton J. Bernstein, in a 1968 essay, compiled a chronicle of missed opportunities and inadequate responses to problems. The New Deal may have saved capitalism from itself, Bernstein charged, but it had failed to help—and in many cases actually harmed—those groups most in need of assistance. Paul K. Conkin in The New Deal (1967) similarly chastised the government of the 1930s for its policies toward marginal farmers, for its failure to institute sufficiently progressive tax reform, and its excessive generosity toward select business interests. Howard Zinn, in an essay in 1966, criticized the New Deal for working actively to actually preserve the worst evils of capitalism.

Yet, much of the more recent work on the New Deal has been less interested in the question of whether the New Deal was a "conservative" or "revolutionary" phenomenon than in the question of constraints within which it was operating. Political sociologist Theda Skocpol, in an influential series of articles, has emphasized the issue of "state capacity" as an often-crippling constraint. Ambitious reform ideas often failed, she argued because of the absence of a government bureaucracy with significant strength and expertise to administer them. Other more recent works have stressed the political constraints that the New Deal encountered. Both in Congress and among certain segments of the population conservative inhibitions about government remained strong; thus some scholars have stressed that the New Deal was not just a product of its liberal backers, but also a product of the pressures of its conservative opponents.

The New Deal and the "broker state"

The Works Progress Administration (WPA) commissioned a series of public murals from the artists it employed. William Gropper's "Construction of a Dam" (1939), a portion of which is seen here, is characteristic of much of the mural art of the 1930s in its celebration of the working class. Workers are seen in heroic poses, laboring in unison to complete a great public project.

Government, labor, and business arbitration

Despite the dismal record in aiding marginal farmers and African Americans, among others—contrasted with its often frequent generosity toward certain business interests—the effect of the New Deal was to elevate and strengthen new interest groups so as to allow them to compete more effectively for the interests by having the federal government evolve into an arbitrator in competition among all elements and classes of society, acting as a force that could mediate when necessary to help some groups and limit the power of others. By the end of the 1930s, U.S. business found itself competing for influence with an increasingly powerful labor movement, one that was engaged in mass mobilization and sometimes militant action; with an organized agricultural economy, due to decades of agrarian organization and agitation dating back to the farmers associations and formation of the Populist Party in the late nineteenth century; and with aroused consumers. The New Deal accomplished this by creating a series of state institutions that greatly, and permanently, expanded the role of the federal government in U.S. life. The government was now committed to providing at least minimal assistance to the poor and unemployed; to protecting the rights of labor unions; to stabilizing the banking system; to building low-income housing; to regulating financial markets; to subsidizing agricultural production; and to doing many other things that had not previously been federal responsibilities.

Thus, perhaps the strongest legacy of the New Deal, in other words, was to make the federal government a protector of interest groups and a supervisor of competition among them. As a result of the New Deal, U.S. political and economic life became much more competitive than before, with workers, farmers, consumers, and others now able to press their demands upon the government in ways that in the past had been available only to the corporate world. Hence the frequent description of the government the New Deal created as the "broker state," a state brokering the competing claims of numerous groups.

The liberal assumptions that the New Deal acted as the foe of private business interests have been challenged. After all, in many cases New Deal efforts were intended to enhance the position of private entrepreneurs—especially their concerns over inflation—even, at times, at the cost of some of the liberal reform goals that some administration officials espoused. The New Deal also did enhance the positions of some previously disadvantaged groups, but did little or nothing for many others, especially blacks, sharecroppers, and the urban poor.

Thus, it did not transform American capitalism in any genuinely radical way. Except in the field of labor relations, corporate power remained nearly as free from government regulation or control in 1945 as it had been in 1933. But the New Deal did create the rudiments of the American welfare state, through its many relief programs and above all through the Social Security system. The conservative inhibitions New Dealers brought to this task ensured that the welfare system was limited. Even the most progressive New Dealers were somewhat suspicious about federal power, expansive welfare benefits, and large-scale government expenditures.

The "broker state" and marginalized interests

The New Deal improved the position of previously disadvantaged groups with sufficient power and clout to demand assistance from the government, but did little help some groups most in need of assistance. The AAA, for example, led to the eviction of thousands of white and African American tenants and sharecroppers in the Deep South whose landlords hardly needed their services under a system that paid them to grow less. A 1930s Texas sharecropper's house can be seen above.

The New Deal "broker state" would offer much less influence to those groups either too weak to demand assistance or not visible enough to arouse widespread public support.

The most notable group to receive much less influence than others in the broker state was African Americans. The Roosevelt administration did not see American blacks as a potent interest group capable of seriously challenging the discriminatory forces against them. While the Roosevelt administration, unlike that of the previous Democratic president—Woodrow Wilson —did not move to increase government discrimination against African Americans, some criticsd have alleged it did too little to help lift the social standing of African Americans.

To the administration's credit, Roosevelt appointed an unprecedented number of African Americans to second-level positions in his administration, perhaps due to the influence of his wife, Eleanor, a vocal advocate of easing discrimination. And African Americans did benefit in significant though limited ways from New Deal relief programs, due, in large measure, to the efforts of Harold L. Ickes, who sought to ensure that such programs did not exclude blacks. As a result, by 1936 the majority who voted were voting Democratic; this was a sharp realignment from 1932, when the most African Americans prferred the Republican ticket. The New Deal thus established a political alliance between African Americans and the Democratic Party that survives to this day.

However, Roosevelt believed that other matters were far more pressing than racial discrimination. Unwilling to lose the support of Southern Democrats, he declined to support legislation making lynching a federal crime while denouncing lynching in speeches as immoral. He declined to advocate banning the poll tax. Aside from this measure he refused to use the relief agencies to challenge local patterns of discrimination; the NRA tolerated widespread practices of paying blacks less than whites; blacks were largely excluded from employment at the TVA; the FHA refused to provide mortgages to blacks moving into white neighborhoods; and the AAA was ineffectual in protecting the interests of black sharecroppers and tenant farmers. The WPA, NYA, and CCC allocated 10% of their budgets to blacks (who comprised about 10% of the total population, and 20% of the poor), They operated separate all-black units with the same pay and conditions as white units.

Some liberal historians defend the New Deal by arguing it laid the ground work for the "broker state" to be expanded a generation later, mostly through the work of the next wave of liberal reform—the civil rights movement and the Great Society—to embrace groups marginalized in the New Deal coalition, especially racial and ethnic minorities. Many African American historians insist that the Civil Rights movement owed everything to black activists, and very little to the New Deal.

The New Deal and economic relief

The New Deal and Keynesian economics

In the early 1930s, before John Maynard Keynes wrote The General Theory of Employment, Interest, and Money, he advocated public works programs and deficits as a way to recover the British economy from the Depression. Although he never mentioned fiscal policy in The General Theory, and instead advocated the need to socialize investments, Keynes ushered in a theory-driven rather than a policy-driven revolution. In order to keep people fully employed, governments would need to run deficits when the economy was slowing because the private sector would not invest enough, according to Keynes.

Keynes's visit to the White House in 1934 to urge Roosevelt to do more deficit spending was a debacle. The puzzled president complained to Labor Secretary Frances Perkins, "He left a whole rigmarole of figures ... he must be a mathematician rather than a political economist." Keynes, equally frustrated with the encounter, later told Secretary Perkins that he had "supposed the President was more literate, economically speaking."

As the Depression wore on, Roosevelt tried public works, farm subsidies and other devices to restart the economy, but he never completely gave up trying to balance the budget. Unemployment remained high throughout the New Deal years.

The recession of 1937 and recovery

The Roosevelt administration failed to prevent a severe decline in the economy, starting in May of 1937 and continuing through June of 1938, causing unemployment, at 14.3% for 1937, to rise to 19.0% for 1938 (in the United States. The administration reacted by launching a rhetorical campaign against monopoly power, which was cast as the villain. The president appointed an aggressive new director of the antitrust division of the Justice Department, which some economists blame for depressing economic activity further. This antitrust effort ended once the war began because the nation needed all its business executives to expand production, not defend lawsuits.

The administration's other response to the deepening recession of 1937 had more tangible results. Ignoring the protests of the Treasury Department and responding to the urgings of the converts to Keynesian economics and others in his administration, Roosevelt abandoned his efforts to balance the budget and launched a $5 billion spending program in the spring of 1938, an effort to increase mass purchasing power.

At the time, few Americans were much aware yet of the ideas of John Maynard Keynes, the economist whose theories would eventually transform American economic thought. Roosevelt explained his program in a fireside chat in which he argued that it was up to the government to "create an economic upturn" by making "additions to the purchasing power of the nation." Although the New Dealers themselves did not realize it at the time, the administration helped establish the basis for new forms of federal fiscal policy, which would in the postwar years give the government new powers for regulating economic growth.

World War II and the end of the Great Depression

The Depression, however, continued until the U.S. entered the Second World War; Roosevelt, once committed to war in Europe and Asia, then had little choice. Under the special circumstances of war mobilization, massive war spending doubled the GNP. Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output as an expression of patriotism. Patriotism drove most people to voluntarily work overtime and give up leisure activities to make money after so many hard years. Patriotism meant that people accepted rationing and price controls for the first time. Cost-plus pricing in munitions contracts guaranteed that businesses would make a profit no matter how many mediocre workers they employed, no matter how inefficient the techniques they used. The demand was for a vast quantity of war supplies as soon as possible, regardless of cost. Business hired every person in sight, even driving sound trucks up and down city streets begging people to apply for jobs. New workers were needed to replace the 12 million working aged men servining in the military. These events magnified the role of the federal government in the national economy. In 1929 federal expenditures accounted for only 3 percent of GNP. Between 1933 and 1939, federal expenditure tripled, and Roosevelt's critics charged that he was turning America into a socialist state. However, spending on the New Deal was far smaller than on the war effort. In the first peacetime year of 1946, federal spending still amounted to $62 billion, or 30 percent of GNP. Wartime spending and other measures were able to provide an enormous output. Between 1939 and 1944 (the peak of wartime production), the nation's total output almost doubled. This, along with the conscription and removal of soldiers, meant that unemployment plummeted—from 14 percent in 1940 to less than 2 percent in 1943 as the labor force grew by ten million. Millions of farmers left marginal operations, students quit school, and housewives returned to the labor force. The war economy was not run on the basis of free enterprise, but was the result of government/business sectionalism, of government bankrolling business. A major result of the full employment at high wages was a sharp, permanent decrease in the level of inequality. The gap between rich and poor narrowed dramatically in the area of nutrition, because food rationing and price controls guaranteed a reasonably priced diet to everyone. Large families that had been poverty striken in the 1930s had four or five or more workers, and shot to the top one-third income bracket. Overtime made for huge paychecks in the munitions factories; white collar workers were fully employed too, but they did not receive overtime and their salary scale was no longer much higher than the blue collar wage scale.

The legacies of the New Deal

Roosevelt's New Deal influenced later programs like LBJ's Great Society.

Some economists argue that although the New Deal did not end the depression, all in all it helped to prevent the economy from decaying further by increasing the regulatory functions of the federal government in ways that helped stabilize previous trouble areas of the economy: the stock market, the banking system, and others. All analysts agree the New Deal produced a new political coalition that sustained the Democratic Party as the majority party in national politics for more than a generation after its own end.

Roosevelt's 12 years in office saw a dramatic increase in the power of the federal government as a whole. Roosevelt also established the presidency as the preeminent center of authority within the federal government. By creating a large array of agencies protecting various groups of citizens—workers, farmers, and others—who suffered from the crisis, enabling them to challenge the powers of the corporations, the Roosevelt administration generated a set of political ideas—known to later generations as New Deal liberalism—that remained a source of inspiration and controversy for decades and that helped shape the next great experiments in liberal reform, the civil rights movement and Great Society of the 1960s.

A list of New Deal programs

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The "alphabet soup" of New Deal programs included the TVA, CCC, WPA, FDIC, SEC and NRA.

The New Deal was composed of countless programs, labeled an "alphabet soup" by its detractors. Among the New Deal acts were the following, most of them passed within the first 100 days of FDR's administration:

• United States bank holiday, 1933: closed all banks until they became certified by federal reviewers
• Abandonment of gold standard, 1933: allowed more money to be put in circulation to create a mild inflation
• Civilian Conservation Corps (CCC), 1933: employed young adults to perform unskilled work for the federal government
• Tennessee Valley Authority (TVA), 1933: a government program that ran a series of dams built on the Tennessee River
• Federal Emergency Relief Administration (FERA), 1933: provided breadlines and other aid to the unemployed
• Agricultural Adjustment Act (AAA), 1933: paid farmers to not grow crops
• National Recovery Act (NRA), 1933: created standards in favor of labor unions
• Civil Works Administration (CWA), 1933: provided temporary jobs to millions of unemployed
• Public Works Administration (PWA), 1933: employed middle-aged skilled workers to work on public projects, cost $4 billion
• Federal Deposit Insurance Corporation (FDIC) / Glass-Steagall Act: insures deposits in banks in order to restore public confidence in banks
• Securities Act of 1933, created the SEC, 1933: codified standards for sale and purchase of stock, required risk of investments to be accurately disclosed
• Indian Reorganization Act, 1934
• Social Security Act (SSA), 1935: provided financial assistance to: elderly, handicapped, delinquent, unemployed; paid for by employee and employer payroll contributions
• Works Progress Administration (WPA), 1935: a national labor program for 2 million unemployed; created useful construction work for unskilled men; also sewing projects for women and arts projects for unemployed painters, musicians and writers.
• National Labor Relations Act (NLRA) / Wagner Act, 1935: granted right of labor unions to exist
• Judicial Reorganization Bill, 1937: FDR requested power to appoint a new Supreme Court judge for every judge 70 years or older; failed to pass
• Fair Labor Standards Act (FLSA), 1938: established a maximum normal work week of 40 hours, and a minimum pay of 40 cents/hour

See also

• Critics of the New Deal
• Fireside chats
• Great Depression
• Great Society
• World War II
• New Deal coalition

Scholarly Secondary Sources from Different Points of View

• Badger, Anthony J. The New Deal: The Depression Years, 1933-1940. (Chicago: Ivan R. Dee, 2002), a balanced overview.
• Bernstein, Barton J. "The New Deal: The Conservative Achievements of Liberal Reform." In Barton J. Bernstein, ed., Towards a New Past: Dissenting Essays in American History, pp. 263-88. (New York: Knopf, 1968), an influential New Left attack on the New Deal.
• Bernstein, Irving. Turbulent Years: A History of the American Worker, 1933-1941 (Boston: Houghton Mifflin, 1970), the best history of labor in the era.
• Best, Gary Dean. Pride, Prejudice, and Politics. (New York: Praeger, 1990), a conservative critique.
• Brinkley, Alan. The End Of Reform: New Deal Liberalism in Recession and War. (New York: Vintage, 1995)
• Conkin, Paul K. The New Deal. (Arlington Heights, Ill.: AHM, 1967), a brief New Left critique.
• Fraser, Steve and Gary Gerstle, eds., The Rise and Fall of the New Deal Order, (Princeton, N.J.: Princeton University Press, 1989), essays focused on the long-term results.
• Gordon, Colin. New Deals: Business, Labor, and Politics, 1920-1935 (New York: Cambridge University Press, 1994)
• Graham, Otis L. and Meghan Robinson Wander, eds. Franklin D. Roosevelt: His Life and Times. Boston: G. K. Hall, 1985. The best encyclopedic reference.
• Kennedy, David M. Freedom From Fear: The American People in Depression and War, 1929-1945. New York: Oxford UP, 1999, the best recent scholarly narrative.
• Leuchtenberg, William E. Franklin D. Roosevelt and the New Deal, 1932-1940. (1963). A standard interpretive history.
• Patterson, James T. The New Deal and the States: Federalism in Transition (Princeton UP, 1969).
• Powell, Jim. FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression. (New York: Crown Forum, 2003), a stinging atack from the right.
• Rothbard, Murray. America's Great Depression. Princeton, NJ, 1963, an analytic attack from a leading libertarian.
• Saloutos, Theodore. The American Farmer and the New Deal (1982).
• Schlesinger, Arthur M. Jr., The Age of Roosevelt, 3 vols, (1957-1960), the classic narrative history. Online at [1]
• Sitkoff, Harvard. ed. Fifty Years Later: The New Deal Evaluated. (New York; McGraw Hill, 1984). A friendly liberal evaluation.
• Skocpol, Theda, and Kenneth Finegold. "State Capacity and Economic Intervention in the Early New Deal." Political Science Quarterly 97 (1982): 255-78.
• Zinn, Howard, ed. New Deal Thought. (Indianapolis, Ind.: Bobbs-Merrill, 1966), a compilation of highly useful primary sources.

Online Primary Sources

• [2] FDR Cartoon Archive, 2000+ original editorial cartoons
• [3] New Deal Document Library
• [4] New Deal Photo Library
• [5] Fireside Chats of Franklin D. Roosevelt

Online Secondary Sources

• [6] National Youth Administration (in Texas)
• [7] Arthur Schlesigner, Jr. ' ' The Age of Roosevelt ' ' (3 vol, 1957-60).
• The New Deal Debunked (again) by Thomas DiLorenzo