New Deal

The 32nd president of the USA, Franklin D Roosevelt, at the start of his first term of office, with secretary of the treasury William Woodwin. At a critical time in US history, Roosevelt campaigned and won the 1932 election on the platform of the ‘New Deal’. This was a plan to lift the economy out of the Depression with a series of relief programmes. His first hundred days saw an unprecedented volume of legislation to stimulate employment.

In US history, the programme introduced by President Franklin D Roosevelt in 1933 to tackle the Great Depression, including employment on public works, farm loans at low rates, and social reforms such as old-age and unemployment insurance, prevention of child labour, protection of employees against unfair practices by employers, and loans to local authorities for slum clearance; see United States: history 1918-45, the presidency of Roosevelt and the New Deal.

The centrepiece of the New Deal was the Social Security Act of 1935, which introduced a comprehensive federal system of insurance for the elderly and unemployed. The Public Works Administration was given $3.3 billion to spend on roads, public buildings, and similar developments (the Tennessee Valley Authority was a separate project). The Agricultural Adjustment Administration raised agricultural prices by restriction of output. In 1935 Harry L Hopkins was put in charge of a new agency, the Works Progress Administration (WPA), which in addition to taking over the public works created something of a cultural revolution with its federal theatre, writers', and arts projects. When the WPA was disbanded in 1943 it had found employment for 8.5 million people.

Some of the provisions of the New Deal were declared unconstitutional by the Supreme Court (1935-36). The New Deal encouraged the growth of trade-union membership, brought previously unregulated areas of the US economy under federal control, and revitalized cultural life and community spirit. Although full employment did not come until the military-industrial needs of World War II, the New Deal did bring political stability to the industrial-capitalist system. It also transformed the political landscape, making the Democratic Party the natural majority party and breaking Republican dominance since 1806.

The New Deal programme was largely designed by a body of professors and other expert advisers (nicknamed the Brain Trust) in 1932. Its aims were helped by a devaluation of the dollar by 40%, by the revitalization of the Reconstruction Finance Corporation set up by Roosevelt's predecessor, Herbert Hoover, which granted the necessary loans, and by the abandonment of the gold standard.