Roosevelt and The New Deal

Roosevelt and The New Deal

Goodbye Hoover, Hello Roosevelt

GCSE History Revision - Franklin D RooseveltHoover’s failure to deal with the Depression – or even his failure to appear even slightly concerned with the plight of the unemployed – made him incredibly unpopular. Unfortunately, when the crash happened he was less than a year into his presidential term, and so the public had to wait until November 1932 to kick him out of office. In the election of that month he took a severe beating at the hands of a Democrat called Franklin Delano Roosevelt, who took up office at the start of 1933. Unlike Hoover, Roosevelt had a plan. As we’ll see, it didn’t always work, but at least it was a plan.


Once he was President, Roosevelt’s flagship policy was something called the New Deal. It was aimed as much at helping ordinary Americans as it was at dealing with more general economic issues and groups like banks and big businesses. The New Deal included a big package of different measures, many of which were considered quite controversial. The New Deal overall is still controversial. America had recovered from the Depression by 1941, but many argue that this had nothing to do with the New Deal, with some even claiming it made the Depression last longer.

GCSE History Revision - Roosevelt's New DealHere’s the main features of the New Deal and Roosevelt’s way of tackling the Depression:

Taking control of the banking crisis during the First Hundred Days of the Presidency- with over 5,000 banks already having collapsed by the time he was President (banks tended to be much smaller and local than they are today), FDR needed to stop further collapse. The Emergency Banking Relief Act was passed in March 1933, giving the government controls over the banks. For a couple of months, all the banks were closed so that they could have time to sort themselves out. This protected them from the panic, and also gave everyone time to work out which banks were in a position to continue, and which ones would need to close forever. When banks did re-open, they were guaranteed access to money from the US Federal Reserve. All this helped to restore confidence. When the banks did re-open, they found people queuing to re-deposit their savings.

Fireside Chats – this probably wasn’t a heading you were expecting to see. But the Depression had had incredibly damaging psychological effects on people’s faith that the bad times could be overcome. So Roosevelt tried to reassure people with these fireside chats, which were broadcast over the radio and listened to by tens of millions. He told Americans to not fear the crisis, and to be confident that their money would be safe if they left it in banks. His first fireside chat as President was on 12th March 1933, and they would be a feature of all the terms of his presidency.

The immediate psychological and financial problems temporarily dealt with, FDR went on to pass some longer-term reforms aimed at the following groups:

Banks and finance – The Glass-Steagall Act of June 1933 introduced a wide range of controls and regulations into the banking sector, all of which were designed to prevent banks from making the mistakes that had caused the crisis. To help homeowners who were struggling to pay their mortgages, the Home Owners’ Loan Corporation was created in 1933 to reorganize mortgage payments so they were more manageable. Over one million people used the Corporation during the Depression.

Unemployed people – Roosevelt tried several different things to reduce unemployment and make things better for people with no income, but they didn’t all work

The Public Works Administration was created. It was a government agency that had the job of creating construction projects that would be funded by the government for things like bridges, roads, schools and hospitals. In addition to making lots of shiny new things, these projects would all create jobs for people. Several other agencies and organisations were set up with the same basic goal of creating employment through building new infrastructure. They included the Tennessee Valley Authority, which built flood controls in Tennessee.

The biggest project of all was the Works Progress Administration, created in 1935, which, in addition to funding works projects, provided food, housing, schools and other essential support to communities hit by the Depression. The scheme created millions of jobs. The WPA was a much bigger and more ambitious replacement for the Federal Emergency Relief Administration.

GCSE History Revision - Social Security ActThe Social Security Act was passed in 1935, which created for the first time ever government-run pensions, unemployment insurance and other measures to support the unemployed, the sick and the elderly.

Workers – One of the more controversial sides of the New Deal was that FDR passed reforms that gave more powers to trade unions. In the view of businessmen, this was madness, as it would just lead to workers demanding higher wages, which would kill off any recovery. But in 1935 Roosevelt passed the National Labour Relations Act (also known as the Wagner Act). He did this after previous months had seen lots of acrimonious wildcat strikes, which had often ended in violence. The idea was that by making companies have to acknowledge the right of unions to negotiate such disputes could be avoided. Because of this Act and other similar ones there was a significant increase in union activity during the New Deal years, something that annoyed employers no end.

Farmers – A couple of different reforms and agencies were created to stop more farmers having to foreclose (ie. going bust and giving up their land). They included:

Commodity Credit Corporation (CCC), an agency designed to protect farmers from price fluctuations and provide them with loans

Agricultural Adjustment Acts (AAA) of 1933 and 1938 offered money to farmers to only produce a limited level of products to prevent there being an oversupply that would cause prices to fall.

Businesses and industry – The reforms brought in to try and stimulate the economy were not fully accepted by all industrialists and businessmen, who viewed them more as a hindrance than a help.

The National Recovery Administration, which was created by the National Industrial Recovery Act of 1933 was designed to do things like control prices, make sure there was a fair level of competition, and also set minimum wages. This last one especially annoyed businesses, who fought against it. In 1935 the US Supreme Court ruled that he NRA was unconstitutional (no law or government organisation is allowed to infringe the rights set out in the US Constitution, and apparently this one did) and was quickly shut down. However, its labour laws mainly found their way into the National Labor Relations Act anyway.

Roosevelt also raised taxes on the rich to help finance the New Deal, something which infuriated them.

So, those are the main reforms (sorry there were so many, and sorry that in themselves they’re not particularly interesting!). But the key question is: did they work? Well, really it depends on who you ask.