The New Deal: When America Reinvented Its Government

By March 4, 1933, the day Franklin Delano Roosevelt was inaugurated as the thirty-second president of the United States, the American economy was in a state of near-total collapse. Unemployment stood at roughly twenty-five percent. Banks had been closing in cascades across the country. Industrial production had fallen by nearly half from its 1929 peak. Families were living in shantytowns — Hoovervilles, they were called, with bitter naming — in cities across the nation.

Roosevelt's response in the First Hundred Days was a legislative blitz unlike anything the country had seen before. The Emergency Banking Act stabilized the banking system. The Agricultural Adjustment Act attempted to raise farm prices by paying farmers to reduce production. The National Industrial Recovery Act created codes of fair competition for industry and guaranteed workers the right to organize. The Civilian Conservation Corps put young men to work on conservation projects. The Public Works Administration funded bridges, schools, dams, and public buildings. The Federal Deposit Insurance Corporation guaranteed bank deposits.

The New Deal was not ideologically coherent. Roosevelt was a pragmatist who tried things, discarded what did not work, and tried other things. His advisers disagreed sharply about what the problem was and what would fix it. The resulting policies were sometimes contradictory — the AAA raised food prices for urban consumers while trying to help farmers, for instance. The Supreme Court struck down several major New Deal programs as unconstitutional.

What the New Deal did accomplish was a permanent expansion of what Americans expected from the federal government and what the federal government was capable of doing. Before the New Deal, the idea that the federal government was responsible for maintaining employment, supporting agriculture, regulating financial markets, and providing a basic social safety net was not established. After the New Deal, it was difficult to imagine the alternative.

Social Security, created in 1935, was the New Deal's most enduring legacy. The program provided retirement pensions, unemployment insurance, and assistance for dependent children. It was not generous by later standards, and it initially excluded agricultural and domestic workers — exclusions that disproportionately affected Black workers in the South. But it established the principle that the federal government owed its citizens a minimum of economic security in old age and unemployment.

The New Deal did not end the Great Depression. It was the mobilization for World War Two that finally drove unemployment down to minimal levels. But the New Deal built the institutional infrastructure — the regulatory agencies, the safety net programs, the federal capacity — that made postwar prosperity both possible and broadly shared. The America that emerged from World War Two was one in which the federal government played a larger and more permanent role than it ever had before.