Roosevelt's Depression bargain remade the American state
The New Deal was Franklin D. Roosevelt's suite of economic and social reforms against the Great Depression across his first two terms. He coined the phrase accepting the 1932 Democratic nomination before defeating Herbert Hoover in a landslide.
The collapse Roosevelt inherited was staggering. Between 1929 and 1933 manufacturing output shrank by a third, a slump Milton Friedman later called the Great Contraction; prices dropped 20 per cent, making debts heavier, and joblessness climbed from 4 to 25 per cent. By the time he was sworn in at noon on 4 March 1933, every state governor had closed or restricted banks, farm income had more than halved since 1929, and roughly 844,000 non-farm mortgages had been foreclosed. There was no deposit guarantee, no unemployment insurance and no Social Security.
The slogan itself had a borrowed pedigree: adviser Stuart Chase had used A New Deal as the title of a New Republic article days earlier, and speechwriter Rosenman slipped it into the acceptance speech at the last minute. Roosevelt blamed the crisis on unstable markets and weak demand, and argued that only heavy federal intervention could steady the economy.
The First New Deal, launched in the famous hundred days of 1933, pursued relief, recovery and reform. The Emergency Banking Act and the 1933 Banking Act led to federal deposit insurance through the FDIC, while new bodies included the National Recovery Administration, the Securities and Exchange Commission and the Agricultural Adjustment Administration. Yet by 1935 share prices still sat below pre-crash levels and unemployment topped 20 per cent, so the Second New Deal of 1935–1938 went further: the WPA built bridges, libraries and parks and funded artists, the National Labor Relations Act protected union organising, Social Security created pensions and benefits, and the Fair Labor Standards Act banned child labour and set a 40-hour week.
Momentum stalled in 1938, when Republican gains and conservative Democrats blocked new bills and the Supreme Court struck some down. The lasting effect was political: a coalition of unions, city machines, African Americans, white Southerners and intellectuals dominated presidential races into the 1960s. Historians still argue over how well the programmes worked, though most agree full employment arrived only with entry into the Second World War in 1941.
Source: New Deal
