What was the New Deal?

The New Deal was a series of changes put into effect by U.S. President Franklin D. Roosevelt (1882–1945) and the U.S. Congress (the country's law-making body) to alleviate suffering and bring an end to the Great Depression (1929–39), a period of worldwide economic hardship. The crash of the New York Stock Exchange on October 29, 1929 (called Black Tuesday), had marked the beginning of the Great Depression; yet numerous other factors contributed to the severe economic decline. Factories had produced more merchandise than they could sell. The reason being that European countries could not buy American products because they were suffering the after-effects of World War I (1914–19). Banks allowed people to borrow too much money, thus draining cash reserves. People who invested in the stock market were not prepared to lose funds if the market should take a downslide. After Black Tuesday the economic downturn affected most of the nation. Some 16,000,000 Americans (one third of the available work force) lost their jobs. Families were unable to pay mortgages and lost their homes. Hunger and homelessness were harsh realities, and the sight of people waiting in bread lines for food was common.

After Roosevelt took office in 1933, he addressed the American people. He encouraged faith in America's future, saying, "The only thing we have to fear is fear itself." Soon afterward, Roosevelt presented a plan, called the New Deal, in which the federal government organized agriculture and business. With advice from a group of men dubbed the "Brain Trust" and the approval of Congress, Roosevelt set up public works programs to provide jobs for the unemployed. New government agencies were created: the Public Works Administration (PWA), the Civilian Conservation Corps (CCC), the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC), the National Labor Relations Board (NLRB), the Tennessee Valley Authority (TVA), and the National Recovery Administration (NRA). Agencies such as the SEC and FDIC set policies to make banking and financial markets more secure and restore public confidence in banks. The NRA determined and enforced codes of conduct for businesses to ensure they competed fairly. The PWA put people to work constructing public works projects, such as roads, dams, and buildings. The CCC employed 3,000,000 young men who developed state parks, reforested barren areas, built fire-observation towers, and lay telephone lines. The TVA operated the Wilson Dam on the Tennessee River, which produced electricity and provided flood control.

Despite these efforts, the American economy did not fully recover from the Great Depression until the outbreak of World War II (1939–45). To support U.S. allies (Great Britain, France, and the Soviet Union) and increase national security, industry turned to building arms, aircraft, vehicles, and other supplies for the war effort. Soon the economy was booming.

Further Information: Edwards, Cheryl. The New Deal: Hope for the Nation. Carlisle, Mass.: Discovery Enterprises, 1995; Franklin and Eleanor Roosevelt Institute. New Deal Network. [Online] Available http://newdeal.feri.org/, October 30, 2000; Stewart Gail B. The New Deal. Parsippany, N.J.: Silver Burdett, 1993; Tennessee Valley Authority. Tennessee Valley Authority. [Online] Available http://www.tva.gov/, October 30, 2000.