The New Deal
The American Depression years
After the calamitous Wall Street Crash in 1929, America plunged into a severe economic crisis. The 1930s would come to be referred to as the Great Depression.
Industries and businesses faced low demand for their products as people tried to save what little money they had. Banks collapsed as loan repayments went unpaid and unemployment reached unprecedented levels. All over America people were living in poverty.
The laissez-faire politics of the Republican Party that had helped create the economic boom of the 1920s no longer seemed relevant. In 1932, the American people elected the Democrat, Franklin D. Roosevelt, because he promised to tackle America's many problems.
A New Deal for America
I pledge you, I pledge myself, to a new deal for the American people
Franklin D. Roosevelt
This statement by Roosevelt during the election campaign of 1932 caught the attention of the American public. The "New Deal" has become the accepted name for the policies followed by the Roosevelt administrations during the 1930s.
What was Roosevelt trying to achieve?
Roosevelt had three basic aims which directed his actions:
- Help the victims of the Depression. Millions of ordinary Americans faced unemployment, hunger, and poverty. Roosevelt was determined to help them.
- Encourage economic recovery. The Depression was a disaster for America. Roosevelt knew that he had to take action to encourage recovery, to get the nation back to work.
- Reform the economic system. The whole economic system would have to be altered so that there would never again be a Depression as bad as the 1930s.
To achieve these objectives, Roosevelt decided that direct action and intervention by the federal government would be necessary. The days of laissez-faire, of the government doing as little as possible, were over.
Despite the best efforts of President Roosevelt and his cabinet, however, the Great Depression continued–the nation’s economy continued to wheeze; unemployment persisted; and people grew angrier and more desperate. So, in the spring of 1935, Roosevelt launched a second, more aggressive series of federal programs, sometimes called the Second New Deal. In April, he created the Works Progress Administration (WPA) to provide jobs for unemployed people. WPA projects weren’t allowed to compete with private industry, so they focused on building things like post offices, bridges, schools, highways and parks. The WPA also gave work to artists, writers, theater directors and musicians. In July 1935, the National Labor Relations Act, also known as the Wagner Act, created the National Labor Relations Board to supervise union elections and prevent businesses from treating their workers unfairly. In August, FDR signed the Social Security Act of 1935, which guaranteed pensions to millions of Americans, set up a system of unemployment insurance and stipulated that the federal government would help care for dependent children and the disabled.
In 1936, while campaigning for a second term, FDR told a roaring crowd at Madison Square Garden that “The forces of ‘organized money’ are unanimous in their hate for me—and I welcome their hatred.” He went on: “I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match, [and] I should like to have it said of my second Administration that in it these forces have met their master.” This FDR had come a long way from his earlier repudiation of class-based politics and was promising a much more aggressive fight against the people who were profiting from the Depression-era troubles of ordinary Americans. He won the election by a landslide.
Still, the Great Depression dragged on. Workers grew more militant: In December 1936, for example, the United Auto Workers started a sit-down strike at a GM plant in Flint, Michigan that lasted for 44 days and spread to some 150,000 autoworkers in 35 cities. By 1937, to the dismay of most corporate leaders, some 8 million workers had joined unions and were loudly demanding their rights.