Top left: The Tennessee Valley Authority, part of the New Deal, being signed into law in 1933.
Top right: Franklin Delano Roosevelt, who was responsible for initiatives and programs collectively known as the New Deal.
Bottom: A public mural from one of the artists employed by the New Deal.

The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They involved presidential executive orders or laws passed by Congress during the first term of President Franklin D. Roosevelt. The programs were a liberal response to the Great Depression, and focused on what historians call the "3 Rs": Relief, Recovery, and Reform. That is, Relief for the unemployed and poor; Recovery of the economy to normal levels; and Reform of the financial system to prevent a repeat depression.

The New Deal produced a political realignment, making the Democratic Party the majority (as well as the party that held the White House for seven out of nine Presidential terms from 1933 to 1969), with its base in liberal ideas, the white South, traditional Democrats, big city machines, and the newly empowered labor unions and ethnic minorities. The Republicans were split, with conservatives opposing the entire New Deal as an enemy of business and growth, and liberals accepting some of it and promising to make it more efficient. The realignment crystallized into the New Deal Coalition that dominated most presidential elections into the 1960s, while the opposition Conservative Coalition largely controlled Congress from 1937 to 1963.

Many historians distinguish a "First New Deal" (1933–34) and a "Second New Deal" (1935–38), with the second one more liberal and more controversial. It included a national work program, the WPA, that made the federal government by far the largest single employer in the nation.^[1] The "First New Deal" (1933–34) dealt with diverse groups, from banking and railroads to industry and farming, all of which demanded help for economic recovery. A "Second New Deal" in 1935–38 included the Wagner Act to promote labor unions, the Works Progress Administration (WPA) relief program, the Social Security Act, and new programs to aid tenant farmers and migrant workers. The final major items of New Deal legislation were the creation of the United States Housing Authority and Farm Security Administration, both in 1937, and the Fair Labor Standards Act of 1938, which set maximum hours and minimum wages for most categories of workers.^[2] By 1936 the term "liberal" typically was used for supporters of the New Deal, and "conservative" for its opponents.

The economic downturn of 1937–38, and the bitter split between the AFL and CIO labor unions led to major Republican gains in Congress in 1938. Conservative Republicans and Democrats in Congress joined in the informal Conservative Coalition. By 1942–43 they shut down the WPA, CCC and other relief programs and blocked major liberal proposals. Roosevelt himself turned his attention to the war effort, and won reelection in 1940 and 1944. As the first Republican president elected after FDR, Dwight D. Eisenhower (1953–61) left the New Deal largely intact. In the 1960s, Lyndon B. Johnson's Great Society used the New Deal as inspiration for a dramatic expansion of liberal programs, which Republican Richard M. Nixon generally retained. After 1974, however, libertarian views gained bipartisan support, calling for deregulation of the economy and ending New Deal regulation of transportation, banking and communications.^[3] The Supreme Court declared some programs such as the NRA unconstitutional at the time, and others such as the WPA and CCC were closed during World War II. Several New Deal programs remain active, with some still operating under the original names, including the Federal Deposit Insurance Corporation (FDIC), the Federal Crop Insurance Corporation (FCIC), the Federal Housing Administration (FHA), and the Tennessee Valley Authority (TVA). The largest programs still in existence today are the Social Security System and the Securities and Exchange Commission (SEC).

Origins[link]

Economic collapse (1929–1933)[link]

USA annual real GDP from 1910 to 1960, with the years of the Great Depression (1929–1939) highlighted.

Unemployment rate in the US 1910–1960, with the years of the Great Depression (1929–1939) highlighted; accurate data begins in 1939.

From 1929 to 1933 manufacturing output decreased by one third. Prices fell by 20%, causing a deflation which made the repayments of debts much harder. Unemployment in the U.S. increased from 4% to 25%. Additionally one-third of all employed persons were downgraded to working part-time on much smaller paychecks. In the aggregate almost 50% of the nations human work-power was going unused.^[4] Before the New Deal there was no insurance on deposits at banks. When thousands of banks faced bankruptcy many people lost all their savings. At that time there was no national safety net, no public unemployment insurance and no Social Security.^[5] Relief for the poor was the responsibility of families, private charity, and local governments, but as conditions worsened year by year their combined resources increasingly fell far short of demand.^[6]

The depression had devastated the nation. As Roosevelt took the oath of office at noon on March 4, 1933, the state governors had closed every bank in the nation; no one could cash a check or get at their savings.^[7] The unemployment rate was about 25% and higher in major industrial and mining centers. Farm income had fallen by over 50% since 1929. 844,000 nonfarm mortgages had been foreclosed, 1930–33, out of five million in all.^[8] Political and business leaders feared revolution and anarchy. Joseph P. Kennedy, Sr., who remained wealthy during the Depression, stated years later that "in those days I felt and said I would be willing to part with half of what I had if I could be sure of keeping, under law and order, the other half."^[9]

New Deal (1933–1938)[link]

Upon accepting the 1932 Democratic nomination for president, Franklin Roosevelt promised "a new deal for the American people".^[10]

Roosevelt entered office without a specific set of plans for dealing with the Great Depression; so he improvised as Congress listened to a very wide variety of voices.^[12] Among Roosevelt's more famous advisers was an informal "Brain Trust": a group that tended to view pragmatic government intervention in the economy positively.^[13] His choice for Secretary of Labor, Frances Perkins, greatly influenced his initiatives. Her list of what her priorities would be if she took the job illustrates: "a forty-hour workweek, a minimum wage, worker's compensation, unemployment compensation, a federal law banning child labor, direct federal aid for unemployment relief, Social Security, a revitalized public employment service and health insurance."^[14]

The New Deal policies drew from many different ideas proposed earlier in the 20th century. Assistant Attorney General Thurman Arnold led efforts that hearkened back to an anti-monopoly tradition rooted in American politics by figures such as Andrew Jackson and Thomas Jefferson. Supreme Court Justice Louis Brandeis, an influential adviser to many New Dealers, argued that "bigness" (referring, presumably, to corporations) was a negative economic force, producing waste and inefficiency. However, the anti-monopoly group never had a major impact on New Deal policy.^[15] Other leaders such as Hugh Johnson of the NRA took ideas from the Woodrow Wilson Administration, advocating techniques used to mobilize the economy for World War I. They brought ideas and experience from the government controls and spending of 1917–18. Other New Deal planners revived experiments suggested in the 1920s, such as the TVA.

The "First New Deal" (1933–34) encompassed the proposals offered by a wide spectrum of groups. (Not included was the Socialist Party, whose influence was all but destroyed.)^[16] This first phase of the New Deal was also characterized by fiscal conservatism (see Economy Act, below) and experimentation with several different, sometimes contradictory, cures for economic ills. The consequences were uneven. Some programs, especially the National Recovery Administration (NRA) and the silver program, have been widely seen as failures.^[17][18] Other programs lasted about a decade; some became permanent. The economy shot upward, with FDR's first term marking one of the fastest periods of GDP growth in history. However a downturn in 1937–38 raised questions about just how successful the policies were, with the great majority of economists and historians agreeing they were an overall benefit.

The New Deal faced some vocal conservative opposition. The first organized opposition in 1934 came from the American Liberty League led by conservative Democrats such as 1924 and 1928 presidential candidates John W. Davis and Al Smith. There was also a large but loosely affiliated group of New Deal opponents, who are commonly called the Old Right. This group included politicians, intellectuals, writers, and newspaper editors of various philosophical persuasions including classical liberals and conservatives, both Democrats and Republicans.

The New Deal represented a significant shift in politics and domestic policy. It especially led to greatly increased federal regulation of the economy. It also marked the beginning of complex social programs and growing power of labor unions. The effects of the New Deal remain a source of controversy and debate among economists and historians.^[19]

World comparisons[link]

Origins of the Great Depression[link]

The Great Depression in an international perspective

There is no complete agreement between economists on what caused the Great Depression. Recent research by Peter Temin, Barry Eichengreen, David Glasner, Ben Bernanke, and others has led to an emerging consensus that the most important factor was the impact of the international gold standard. There is less agreement on why the contraction phase was longer and more severe in some countries. In the United States, the recession lasted from 1929 to the beginning of 1933. In countries such as Britain, France, Canada, the Netherlands, and the Nordic countries, in contrast, the recession was less severe and shorter, often ending by 1931. Those countries left the gold standard earlier than the United States and did not evolve the banking crises that shattered the economy of the United States.^[20]

International reaction[link]

Europe[link]

• Britain was unable to agree on major programs to stop its depression. This led to the collapse of the Labour Party government and its replacement in 1931 by a National Coalition dominated by Conservatives. However, the Depression affected Britain less than most countries due to Britain's exit from the gold standard in 1931 (which deal crisis and the Third Republic very much contested.^{[clarification needed]})
• In France, the "Front Populaire" government, led by Léon Blum, in power 1936–1938, instigated major social reforms. As the coalition united representatives from the center-left to the communist party, right-wing opposition was very strong and social turmoil marred the Front Populaire term. This division left the country bitterly divided in 1938–1939.
• In Germany during the Weimar Republic, the economy spiraled down, leading to a political crisis and the rise to power of the Nazis in January 1933. Economic recovery was pursued through autarky, pressure on economic partners, wage controls, price controls, and spending programs such as public works and, especially, military spending.
• Spain endured mounting political crises that led in 1936 to civil war.
• In Benito Mussolini's Italy, the economic controls of his corporate state were tightened.
• The Soviet Union was mostly isolated from the world trading system during the 1930s.
• Roosevelt's deal helped foreign economies recover, as well as that of the US.

Canada and the Caribbean[link]

• In Canada, Between 1929 and 1939, the gross national product dropped 40%, compared to 37% in the U.S. Unemployment reached 28% at the depth of the Depression in 1933. Many businesses closed, as corporate profits of C$396 million in 1929 turned into losses of $98 million in 1933. Exports shrank by 50% from 1929 to 1933. Worst hit were areas dependent on primary industries such as farming, mining and logging, as prices fell and there were few alternative jobs. Families saw most or all of their assets disappear and their debts became heavier as prices fell. Local and provincial government set up relief programs but there was no nationwide New-Deal-like program. The Conservative government of Prime Minister R. B. Bennett retaliated against the Smoot–Hawley tariff by raising tariffs against the U.S. but lowered them on British Empire goods. Nevertheless the economy suffered. In 1935, Bennett proposed a series of programs that resembled the New Deal; the proposals were all rejected and led to his defeat in the elections of 1935.^[21]
• The Caribbean saw its greatest unemployment during the 1930s because of a decline in exports to the U.S., and a fall in export prices.

Asia[link]

• China was at war with Japan during most of the 1930s, in addition to internal struggles between Chiang Kai Shek's nationalists and Mao Zedong's communists.
• Japan's economy expanded at the rate of 5% of GDP per year after the years of modernization. Manufacturing and mining came to account for more than 30% of GDP, more than twice the value for the agricultural sector. Most industrial growth, however, was geared toward expanding the nation's military power. Beginning in 1937 with significant land seizures in China, and then to a much greater extent after 1941, which saw annexations and invasions all across Southeast Asia and the Pacific, Japan seized and developed natural resources such as: sugarcane in the Philippines; petroleum from the Dutch East Indies and Burma; tin and bauxite from the Dutch East Indies and Malaya; and coal in China (where production increased from 15,000,000 t (17,000,000 short tons) in 1936, to 58,000,000 t (64,000,000 short tons) in 1942).^{[citation needed]} During the early stages of Japan's expansion, its economy expanded considerably. Iron production rose from 3,355,000 t (3,698,000 short tons) in 1937 to 6,148,000 t (6,777,000 short tons) in 1943.^{[citation needed]} Steel production rose from 6,442,000 t (7,101,000 short tons) to 8,838,000 t (9,742,000 short tons) over the same time period. In 1941, Japanese aircraft industries had capacity to manufacture 10,000 aircraft per year. From 1941 – September 1944, defense production (including airplanes and vessels) rose by 94%.^{[citation needed]}

Australia and New Zealand[link]

• In Australia, 1930s conservative and Labor-led governments concentrated on cutting spending and reducing the national debt. It was not until World War II that the Australian government (first conservative, then Labor) introduced Keynesian policies similar to the New Deal; increasing taxes in order to fund stimulative spending, economic oversight/regulation, and rationing of petroleum products are prominent examples of an evolving view of the role of government in Australia throughout that period. Many progressive policies remained in place after the end of World War II. Labor Prime Minister Ben Chifley outlined these policies in his "The light on the hill" speech.^{[citation needed]}
• In New Zealand, a series of economic and social policies similar to the New Deal were adopted after the election of the first Labour Government in 1935.^[22]

First New Deal (1933–1934)[link]

The First Hundred Days (1933)[link]

Chart 2: Total employment in the U.S. from 1920 to 1940, excluding farms and WPA.

Roosevelt entered office with enormous political capital. Americans of all political persuasions were demanding immediate action, and Roosevelt responded with a remarkable series of new programs in the “first hundred days” of the administration, in which he met with Congress for 100 days. During those 100 days of lawmaking, Congress granted every request Roosevelt asked, and passed a few programs (such as the FDIC to insure bank accounts) that he opposed. Ever since, presidents have been judged against FDR for what they accomplished in their first 100 days. Walter Lippmann famously noted:

At the end of February we were a congeries of disorderly panic-stricken mobs and factions. In the hundred days from March to June we became again an organized nation confident of our power to provide for our own security and to control our own destiny.^[23]

The economy had hit bottom in March 1933 and then started to expand. Economic indicators show the economy reached nadir in the first days of March, then began a steady, sharp upward recovery. Thus the Federal Reserve Index of Industrial Production sank to its lowest point of 52.8 in July 1932 (with 1935–39 = 100) and was practically unchanged at 54.3 in March 1933; however by July 1933, it reached 85.5, a dramatic rebound of 57% in four months. Recovery was steady and strong until 1937. Except for employment, the economy by 1937 surpassed the levels of the late 1920s. The Recession of 1937 was a temporary downturn. Private sector employment, especially in manufacturing, recovered to the level of the 1920s but failed to advance further until the war. Chart 2 shows the growth in employment without adjusting for population growth. The U.S. population was 124,840,471 in 1932 and 128,824,829 in 1937, an increase of 3,984,468.^[24] The ratio of these numbers, times the number of jobs in 1932, means there was a need for 938,000 more 1937 jobs to maintain the same employment level.

Banking reform[link]

File:Franklin-roosevelt.JPG Roosevelt's ebullient public personality, conveyed through his declaration that "the only thing we have to fear is fear itself" and his "fireside chats" on the radio did a great deal to help restore the nation's confidence.	Fireside Chat 1 On the Banking Crisis Roosevelt's first Fireside Chat on the Banking Crisis (March 12, 1933)
Problems listening to this file? See media help.

At the beginning of the Great Depression the economy was destabilized by bank failures followed by credit crunches. The initial reasons were ​​substantial losses in investment banking, followed by bank runs. Bank runs occurred when a large number of customers withdraw their deposits because they believed the bank might become insolvent. As the bank run progressed, it generated a self-fulfilling prophecy: as more people withdraw their deposits, the likelihood of default increased, and this encouraged further withdrawals. It destabilized many banks to the point where they faced bankruptcy. Between 1929 and 1933 40% of all banks (9.490 out of 23.697 banks) went bankrupt.^[25] Much of the Great Depression's economic damage was caused directly by bank runs.^[26]

Herbert Hoover had already considered a bank holiday to prevent further bank runs, but rejected the idea because he was afraid to trip a panic. Roosevelt, however, gave a radio address, held in the atmosphere of a Fireside Chat, and explained to the public in simple terms the causes of the banking crisis, what the government will do and how the population could help. He closed all the banks in the country and kept them all closed until he could pass new legislation.^[27] On March 9, Roosevelt sent to Congress the Emergency Banking Act, drafted in large part by Hoover's top advisors. The act was passed and signed into law the same day. It provided for a system of reopening sound banks under Treasury supervision, with federal loans available if needed. Three-quarters of the banks in the Federal Reserve System reopened within the next three days. Billions of dollars in hoarded currency and gold flowed back into them within a month, thus stabilizing the banking system. By the end of 1933, 4,004 small local banks were permanently closed and merged into larger banks. Their deposits totalled $3.6 billion; depositors lost a total of $540 million, and eventually received on average 85 cents on the dollar of their deposits; it is a common myth that they received nothing back.)^[28] The Glass–Steagall Act limited commercial bank securities activities and affiliations between commercial banks and securities firms to regulate speculations. It also established the Federal Deposit Insurance Corporation (FDIC), which insured deposits for up to $2,500, ending the risk of runs on banks.^[29]

This banking reform offered unprecedented stability: While throughout the 1920s more than five hundred banks failed per year,^[30] it was less than ten banks per year after 1933.^[31]

Monetary reform[link]

Under the gold standard the United States kept the Dollar convertible to gold. If the gold reserves fell, the Federal Reserve System would be forced to reduce the money supply. At the end of the 1920s the United States were confronted with an bigger outflow of gold, thus in 1928 the Federal Reserve System began to raise its discount rate to stem the outflow of American gold. This deflationary policy was successful in containing the gold reserves but restricted economic activity. In the 1970s monetarists like Milton Friedman explored, that the rise of the discount rate in 1931 from 1.5% to 3.5% alone caused a 25% fall in industrial production.^[32]

In March and April in a series of laws and executive orders, the government suspended the gold standard. Roosevelt stopped the outflow of gold by forbidding the export of gold except under licence from the treasury. Anyone holding significant amounts of gold coinage was mandated to exchange it for the existing fixed price of US dollars, after which the US would no longer pay gold on demand for the dollar, and gold would no longer be considered valid legal tender for debts in private and public contracts. The dollar was allowed to float freely on foreign exchange markets with no guaranteed price in gold. With the passage of the Gold Reserve Act in 1934 the nominal price of gold was changed from $20.67 per troy ounce to $35. This measures enabled the FED to increase the amount of money in circulation to the level the economy needed. Markets immediately responded well to the suspension, in the hope that the decline in prices would finally end.^[33] In her work What ended the Great Depression? (1992) Christina Romer argued that this policy raised industrial production by 25% until 1937 and by 50% until 1942.^[34]

Securities regulation[link]

Before the Wall Street Crash of 1929, there was little regulation of securities. Even firms whose securitites were publicly traded published no regular reports or even worse rather misleading reports based on arbitrarily selected data. To avoid another Wall Street Crash the Securities Act of 1933 was enacted. It required the disclosure of the balance sheet, profit and loss statement, the names and compensations of corporate officers, about firms whose securities were traded. Additionally those informations had to be verified by independend auditors. 1934 the U.S. Securities and Exchange Commission was established to regulate the stock market and prevent corporate abuses relating to the sale of securities and corporate reporting.^[35]

Fiscal policy[link]

The Economy Act, drafted by Budget Director Lewis Williams Douglas, was passed on March 14, 1933. The act proposed to balance the "regular" (non-emergency) federal budget by cutting the salaries of government employees and cutting pensions to veterans by fifteen percent. It saved $500 million per year and reassured deficit hawks, such as Douglas, that the new President was fiscally conservative. Roosevelt argued there were two budgets: the "regular" federal budget, which he balanced, and the "emergency budget", which was needed to defeat the depression; it was imbalanced on a temporary basis.^[36]

Roosevelt was initially in favor of balancing the budget, but he soon found himself running spending deficits in order to fund the numerous programs he created. Douglas, however, rejecting the distinction between a regular and emergency budget, resigned in 1934 and became an outspoken critic of the New Deal. Roosevelt strenuously opposed the Bonus Bill that would give World War I veterans a cash bonus. Finally, Congress passed it over his veto in 1936, and the Treasury distributed $1.5 billion in cash as bonus welfare benefits to 4 million veterans just before the 1936 election.^[37]

New Dealers never accepted the Keynesian argument for government spending as a vehicle for recovery. Most economists of the era, along with Henry Morgenthau of the Treasury Department, rejected Keynesian solutions and favored balanced budgets.^[38]

Repeal of Prohibition[link]

In a measure that garnered substantial popular support for his New Deal, Roosevelt, on March 13, 1933, moved to put to rest one of the most divisive cultural issues of the 1920s. Just nine days later he signed the bill to legalize the manufacture and sale of alcohol, an interim measure pending the repeal of Prohibition, for which a constitutional amendment (the 21st) was already in process. The repeal amendment was ratified later in 1933. States and cities gained additional new revenue, and Roosevelt secured his popularity in the cities for supporting or permitting the legal production and sale of alcoholic beverages.^{[39][clarification needed]}

Relief[link]

Public works[link]

To prime the pump and cut unemployment, the NIRA created the Public Works Administration (PWA), a major program of public works. From 1933 to 1935 PWA spent $3.3 billion with private companies to build 34,599 projects, many of them quite large.^[40]

Under Roosevelt, many unemployed persons were put to work on a wide range of government financed public works projects, building bridges, airports, dams, post offices, courthouses, and thousands of kilometres of road. Through reforestation and flood control, they reclaimed millions of hectares of soil from erosion and devastation. As noted by one authority, Roosevelt’s New Deal "was literally stamped on the American landscape".^[41]

Farm and rural programs[link]

Many rural people lived in severe poverty, especially in the South. Major programs addressed to their needs included the Resettlement Administration (RA), the Rural Electrification Administration (REA), rural welfare projects sponsored by the WPA, NYA, Forest Service and Civilian Conservation Corps (CCC), including school lunches, building new schools, opening roads in remote areas, reforestation, and purchase of marginal lands to enlarge national forests. In 1933, the Administration launched the Tennessee Valley Authority, a project involving dam construction planning on an unprecedented scale in order to curb flooding, generate electricity, and modernize the very poor farms in the Tennessee Valley region of the Southern United States.

Roosevelt was keenly interested in farm issues and believed that true prosperity would not return until farming was prosperous. Many different programs were directed at farmers. The first 100 days produced the Farm Security Act to raise farm incomes by raising the prices farmers received, which was achieved by reducing total farm output. The Agricultural Adjustment Act created the Agricultural Adjustment Administration (AAA) in May 1933. The act reflected the demands of leaders of major farm organizations, especially the Farm Bureau, and reflected debates among Roosevelt's farm advisers such as Secretary of Agriculture Henry A. Wallace, M.L. Wilson, Rexford Tugwell, and George Peek.^[42]

The aim of the AAA was to raise prices for commodities through artificial scarcity. The AAA used a system of "domestic allotments", setting total output of corn, cotton, dairy products, hogs, rice, tobacco, and wheat. The farmers themselves had a voice in the process of using government to benefit their incomes. The AAA paid land owners subsidies for leaving some of their land idle with funds provided by a new tax on food processing. The goal was to force up farm prices to the point of "parity", an index based on 1910–1914 prices. To meet 1933 goals, 10 million acres (40,000 km²) of growing cotton was plowed up, bountiful crops were left to rot, and six million piglets were killed and discarded.^[43] The idea was the less produced, the higher the wholesale price and the higher income to the farmer. Farm incomes increased significantly in the first three years of the New Deal, as prices for commodities rose. Food prices remained well below 1929 levels.^[44] A Gallup Poll printed in the Washington Post revealed that a majority of the American public opposed the AAA.^[45]

The AAA established an important and long-lasting federal role in the planning on the entire agricultural sector of the economy and was the first program on such a scale on behalf of the troubled agricultural economy. The original AAA did not provide for any sharecroppers or tenants or farm laborers who might become unemployed, but there were other New Deal programs especially for them.

Young men of the CCC at work, c. 1933, Virginia.

In 1936, the Supreme Court declared the AAA to be unconstitutional, stating that "a statutory plan to regulate and control agricultural production, [is] a matter beyond the powers delegated to the federal government..." The AAA was replaced by a similar program that did win Court approval. Instead of paying farmers for letting fields lie barren, this program instead subsidized them for planting soil enriching crops such as alfalfa that would not be sold on the market. Federal regulation of agricultural production has been modified many times since then, but together with large subsidies it is still in effect in 2010.

The last major New Deal legislation concerning farming was in 1937, when the Farm Tenancy Act was created which in turn created the Farm Security Administration (FSA), replacing the Resettlement Administration.

A major new welfare program was the Food Stamp Plan established in 1939. Although abolished by Congress in 1943, it was restored in 1961 and survives into the 21st century with little controversy because it benefits the urban poor, food producers, grocers and wholesalers, as well as farmers, thereby winning support from both liberal and conservative Congressmen.^[46]

Recovery[link]

NRA "Blue Eagle" campaign[link]

NRA Blue Eagle

Roosevelts advisers believed, that excessive competition and technical progress had led to overproduction and lowered wages and prices, which they believed lowered demand and employment (Deflation).^[20] He argued that government economic planning was necessary to remedy this:

...A mere builder of more industrial plants, a creator of more railroad systems, an organizer of more corporations, is as likely to be a danger as a help. Our task is not ... necessarily producing more goods. It is the soberer, less dramatic business of administering resources and plants already in hand.

From 1929 to 1933, the industrial economy had been suffering from a vicious cycle of deflation. Since 1931, the U.S. Chamber of Commerce, the voice of the nation's organized business, promoted an anti-deflationary scheme that would permit trade associations to cooperate in government-instigated^[20] cartels to stabilize prices within their industries. While existing antitrust laws clearly forbade such practices, organized business found a receptive ear in the Roosevelt Administration.^[47] New Deal economists argued that cut-throat competition had hurt many businesses and that with prices having fallen 20% and more, "deflation" exacerbated the burden of debt and would delay recovery. They rejected a strong move in Congress to limit the workweek to 30 hours. Instead their remedy, designed in cooperation with big business, was the NIRA. It included stimulus funds for the WPA to spend, and sought to raise prices, give more bargaining power for unions (so the workers could purchase more) and reduce harmful competition. At the center of the NIRA was the National Recovery Administration (NRA), headed by former General Hugh Johnson, who had been a senior economic official in World War I. Johnson called on every business establishment in the nation to accept a stopgap "blanket code": a minimum wage of between 20 and 45 cents per hour, a maximum workweek of 35–45 hours, and the abolition of child labor. Johnson and Roosevelt contended that the "blanket code" would raise consumer purchasing power and increase employment.^[48]

To mobilize political support for the NRA, Johnson launched the "NRA Blue Eagle" publicity campaign to boost what he called "industrial self-government". The NRA brought together leaders in each industry to design specific sets of codes for that industry; the most important provisions were anti-deflationary floors below which no company would lower prices or wages, and agreements on maintaining employment and production. In a remarkably short time, the NRA announced agreements from almost every major industry in the nation. By March 1934, industrial production was 45% higher than in March 1933.^[49] Donald Richberg, who soon replaced Johnson as the head of the NRA said:

There is no choice presented to American business between intelligently planned and uncontrolled industrial operations and a return to the gold-plated anarchy that masqueraded as "rugged individualism" ... Unless industry is sufficiently socialized by its private owners and managers so that great essential industries are operated under public obligation appropriate to the public interest in them, the advance of political control over private industry is inevitable.^[50]

By the time NRA ended in May 1935, industrial production was 55% higher than in May 1933. On May 27, 1935, the NRA was found to be unconstitutional by a unanimous decision of the U.S. Supreme Court in the case of Schechter v. United States. On that same day, the Court unanimously struck down the Frazier-Lemke Act portion of the New Deal as unconstitutional. Libertarian Richard Ebeling believes these and other rulings striking down portions of the New Deal prevented the U.S. economic system from becoming a planned economy corporate state.^[51] Governor Huey Long of Louisiana said, "I raise my hand in reverence to the Supreme Court that saved this nation from fascism."^[52]

Chart 3: Manufacturing employment in the United States from 1920 to 1940^[53]

Employment in private sector factories recovered to the level of the late 1920s by 1937 but did not grow much bigger until the war came and manufacturing employment leaped from 11 million in 1940 to 18 million in 1943.

Housing Sector[link]

The New Deal had an important impact in the housing field. The New Deal followed and increased President Hoover's lead and seek measures. The New Deal sought to stimulate the private home building industry and increase the number of individuals who owned homes.^[54] The New Deal implemented two new housing agencies; Home Owners' Loan Corporation (HOLC) and the Federal Housing Administration (FHA). HOLC “facilitated nation-wide lending and encouraged uniform national appraisal methods”.^[54] The Federal Housing Administration (FHA) created national standards for home construction. The New Deal helped increase the number of Americans who owned homes. Before the New Deal only four out of 10 Americans owned homes; this was because the standard mortgage lasted only five to 10 years and had interest as high as 8%. These conditions severely limited the accessibility to housing for most Americans. Under the New Deal, Americans had access to 30-year mortgages, the standardized appraisal and construction standards helped open up the housing market to more Americans. Forty years after the implementation of the New Deal, ⅔ of Americans were home owners.^[54]

Reform[link]

Trade liberalization[link]

There is consensus amongst economic historians that protectionist policies, culminating in the Smoot-Hawley Act of 1930 worsened the Depression.^[55] Franklin D. Roosevelt already spoke against the act while campaigning for president during 1932.^[56] In 1934 the Reciprocal Tariff Act was drafted by Cordell Hull. It gave the president power to negotiate bilateral, reciprocal trade agreements with other countries. The act enabled Roosevelt to liberalize American trade policy around the globe. It is widely credited with ushering in the era of liberal trade policy that persists to this day.^[57]

Puerto Rico[link]

A separate set of programs operated in Puerto Rico, headed by the Puerto Rico Reconstruction Administration. It promoted land reform and helped small farms; it set up farm cooperatives, promoted crop diversification, and helped local industry. The Puerto Rico Reconstruction Administration was directed by Juan Pablo Montoya Sr. from 1935 to 1937.

Second New Deal (1935–1938)[link]

In the spring of 1935, responding to the setbacks in the Court, a new skepticism in Congress, and the growing popular clamor for more dramatic action, the Administration proposed or endorsed several important new initiatives. Historians refer to them as the "Second New Deal" and note that it was more liberal and more controversial than the "First New Deal" of 1933–34.

Social Security Act[link]

A poster for the expansion of the Social Security Act

Until 1935 there were just a dozen states that had old age insurance laws but these programs were woefully underfunded and threfore almost worthless. Just one state (Wisconsin) had an uninsurance program. The United States were the only modern industrial country, where people faced the Depression without any national system of social security.^[58] Even the work programs of the "First New Deal" were just meant as immediate relief, destined to run less than a decade.^[59]

The most important program of 1935, and perhaps the New Deal as a whole, was the Social Security Act, drafted by Francis Perkins. It established a permanent system of universal retirement pensions (Social Security), unemployment insurance, and welfare benefits for the handicapped and needy children in families without father present.^[60] It established the framework for the U.S. welfare system. Roosevelt insisted that it should be funded by payroll taxes rather than from the general fund; he said, "We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program."

Compared with the social security systems in western European countries, the Social Security Act of 1935 was rather conservative. But for the first time the federal government took responsibility for the economic security of the aged, the temporarily unemployed, dependent children and the handicapped.^[61]

Labor relations[link]

The National Labor Relations Act of 1935, also known as the Wagner Act, finally guaranteed workers the rights to collective bargaining through unions of their own choice. The Act also established the National Labor Relations Board (NLRB) to facilitate wage agreements and to suppress the repeated labor disturbances. The Wagner Act totally did not compel employers to reach agreement with their employees. But it opened possibilities for American labor.^[62] The result was a tremendous growth of membership in the labor unions, especially in the mass-production sector,^[63] composing the American Federation of Labor. Labor thus became a major component of the New Deal political coalition.

The Fair Labor Standards Act of 1938 set maximum hours (44 per week) and minimum wages (25 cents per hour) for most categories of workers. Child labour of children under the age of 16 was forbidden, children under 18 years were forbidden to work in hazardous employment. As a result the wages of 300,000 people were increased and the hours of 1.3 million were reduced.^[32]

Works Progress Administration[link]

Roosevelt nationalized unemployment relief through the Works Progress Administration (WPA), headed by close friend Harry Hopkins. Roosevelt had insisted that the projects had to be costly in terms of labor, long-term beneficial, and the WPA was forbidden to compete with private enterprises (therefore the workers had to be paid smaller wages).^[64] The WPA employed more than 8.5 Million workers who build 650,000 miles of highways and roads, 125,000 public buildings, as well as bridges, reservoirs, irrigation systems, parks, playgrounds and so on.^[65] Prominent projects were the Lincoln Tunnel, the Robert F. Kennedy Bridge, the LaGuardia Airport, the Overseas Highway and the San Francisco – Oakland Bay Bridge.^[66] The Rural Electrification Administration used co-ops to bring electricity to rural areas, many of which still operate.^[67] The National Youth Administration was another the semi-autonomous WPA program for youth. Its Texas director, Lyndon Baines Johnson, later used the NYA as a model for some of his Great Society programs in the 1960s. An unusual branch of the WPA, Federal One, gave jobs to writers, musicians, artists, and theater personnel. Under the Federal Writer’s Project, a detailed guide book was prepared for every state, local archives were catalogued, and writers such as Margaret Walker, Zora Neale Hurston, and Anzia Yezierska were hired to document folklore. Other writers interviewed elderly ex-slaves and recorded their stories. Under the Federal Theater Project, headed by charismatic Hallie Flanagan, actresses and actors, technicians, writers, and directors put on stage productions. The tickets were inexpensive or sometimes free, making theater available to audiences unaccustomed to attending plays.^[68] One Federal Art Project paid 162 trained woman artists on relief to paint murals or create statues for newly built post offices and courthouses. Many of these works of art can still be seen in public buildings around the country, along with murals sponsored by the Treasury Relief Art Project of the Treasury Department.^[69][70]

Tax policy[link]

In 1935, Roosevelt called for a tax program called the Wealth Tax Act (Revenue Act of 1935) to redistribute wealth. But there was more rhetoric than revenue in that proposal. The bill imposed an income tax of 79% on incomes over $ 5 million. Since that was a extraordinary high income in the 1930s the highest tax rate actually covered just one individual – John D. Rockefeller. The bill was expected to raise only about $ 250 million in additional funds, so revenue was not the primary goal. Morgenthau called it “more or less a campaign document”. In a private conversation with Raymond Moley Roosevelt admitted that the purpose of the bill was “stealing Huey Long´s thunder” by making Long´s supporters his own. At the same time it raised the bitterness of the rich who called Roosevelt “a traitor to his class” and the wealth tax act a “Soak the rich tax”.^[71]

A tax called the Undistributed profits tax was enacted in 1936. This time the primary purpose was revenue since congress had enacted the Adjusted Compensation Payment Act, calling for payments to World War I veterans of $ 2 billion. The bill established the persisting principle that retained corporate earnings could be taxed. Paid dividends were tax deductible by corporations. The bill was designed to replace all other corporation taxes. The purpose was to stimulate corporations to distribute earnings and thus put more cash and spending power in the hands of individuals.^[72] In the end Congress watered down the bill setting the tax rates at 7 to 27% and largely exemting small enterprises.^[73] Facing widespread and fierce criticism,^[74] the tax deduction of paid dividends was repealed in 1938.^[75]

Housing Act of 1937[link]

One of the last New Deal agencies was the United States Housing Authority, created in 1937 with some Republican support to abolish slums.

Court-packing plan and jurisprudential shift[link]

Roosevelt, however, emboldened by the triumphs of his first term, set out in 1937 to consolidate authority within the government in ways that provoked powerful opposition. Early in the year, he asked Congress to expand the number of justices on the Supreme Court so as to allow him to appoint members sympathetic to his ideas and hence tip the ideological balance of the Court. This proposal provoked a storm of protest.

In one sense, however, it succeeded: Justice Owen Roberts switched positions and began voting to uphold New Deal measures, effectively creating a liberal majority in West Coast Hotel Co. v. Parrish and National Labor Relations Board v. Jones & Laughlin Steel Corporation, thus departing from the Lochner v. New York era and giving the government more power in questions of economic policies. Journalists called this change "the switch in time that saved nine". Recent scholars have noted that since the vote in Parrish took place several months before the court-packing plan was announced, other factors, like evolving jurisprudence, must have contributed to the Court's swing. The opinions handed down in the spring of 1937, favorable to the government, also contributed to the downfall of the plan. In any case, the "court packing plan", as it was known, did lasting political damage to Roosevelt^[76] and was finally rejected by Congress in July.

Recession of 1937 and recovery[link]

The Roosevelt Administration was under assault during FDR's second term, which presided over a new dip in the Great Depression in the fall of 1937 that continued through most of 1938. Production declined sharply, as did profits and employment. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938. Keynesian economists speculated that this was a result of a premature effort to curb government spending and balance the budget, while conservatives said it was caused by attacks on business and by the huge strikes caused by the organizing activities of the Congress of Industrial Organizations (CIO) and the American Federation of Labor (AFL).^[77]

Roosevelt rejected the advice of Morgenthau to cut spending and decided big business were trying to ruin the New Deal by causing another depression that voters would react against by voting Republican.^[78] It was a "capital strike" said Roosevelt, and he ordered the Federal Bureau of Investigation to look for a criminal conspiracy (they found none).^[78] Roosevelt moved left and unleashed a rhetorical campaign against monopoly power, which was cast as the cause of the new crisis.^[78] Ickes attacked automaker Henry Ford, steelmaker Tom Girdler, and the superrich "Sixty Families" who supposedly comprised "the living center of the modern industrial oligarchy which dominates the United States".^[78] Left unchecked, Ickes warned, they would create "big-business Fascist America—an enslaved America". The President appointed Robert Jackson as the aggressive new director of the antitrust division of the Justice Department, but this effort lost its effectiveness once World War II began and big business was urgently needed to produce war supplies.^[78]

But the Administration's other response to the 1937 dip that stalled recovery from of the Great Depression had more tangible results.^[79] Ignoring the requests of the Treasury Department and responding to the urgings of the converts to Keynesian economics and others in his Administration, Roosevelt embarked on an antidote to the depression, reluctantly abandoning his efforts to balance the budget and launching a $5 billion spending program in the spring of 1938, an effort to increase mass purchasing power.^[80] The New Deal had in fact engaged in deficit spending since 1933. Now they had a theory to justify what they were doing. Roosevelt explained his program in a fireside chat in which he told the American people that it was up to the government to "create an economic upturn" by making "additions to the purchasing power of the nation".

Business-oriented observers explained the recession and recovery in very different terms from the Keynesians. They argued that the New Deal had been very hostile to business expansion in 1935–37, had encouraged massive strikes which had a negative impact on major industries such as automobiles, and had threatened massive anti-trust legal attacks on big corporations. All those threats diminished sharply after 1938. For example, the antitrust efforts fizzled out without major cases. The CIO and AFL unions started battling each other more than corporations, and tax policy became more favorable to long-term growth.^[81]

"When the Gallup poll in 1939 asked, 'Do you think the attitude of the Roosevelt administration toward business is delaying business recovery?' the American people responded 'yes' by a margin of more than two-to-one. The business community felt even more strongly so."^[82] Treasury Secretary Henry Morgenthau, angry at the Keynesian spenders, confided to his diary May 1939: "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started.^[83] And enormous debt to boot."

World War II and the end of the Great Depression[link]

The Depression continued with decreasing effect until the U.S. entered World War II in December 1941. Under the special circumstances of war mobilization, massive war spending doubled the GNP (Gross National Product).^[84] Civilian unemployment was reduced from 14% in 1940 to less than 2% in 1943 as the labor force grew by ten million. Millions of farmers left marginal operations, students quit school, and housewives joined the labor force. The effect continued into 1946, the first postwar year, where federal spending remained high at $62 billion (30% of GNP).^[85]

The emphasis was for war supplies as soon as possible, regardless of cost and efficiencies. Industry quickly absorbed the slack in the labor force, and the tables turned such that employers needed to actively and aggressively recruit workers. As the military grew, new labor sources were needed to replace the 12 million men serving in the military. These events magnified the role of the federal government in the national economy. In 1929, federal expenditures accounted for only 3% of GNP. Between 1933 and 1939, federal expenditure tripled, but the national debt as percent of GNP hardly changed. However, spending on the New Deal was far smaller than spending on the war effort, which passed 40% of GNP in 1944. The war economy grew so fast after deemphasizing free enterprise and imposing strict controls on prices and wages, as a result of government/business cooperation, with government subsidizing business, directly and indirectly.^[86]

Despite conservative domination of Congress during the early 1940s, a number of progressive measures akin to the New Deal were carried out. The Coal Mines Inspection and Investigation Act of 1941 significantly reduced fatality rates in the coal-mining industry,^[87] while the Coal Mining Coverage Act of 1940 provided for more uniform coverage of certain workers in coal mining operations in regards to social insurance benefits under the Social Security Act. The Servicemen's Dependents Allowance Act of 1942 provided family allowances for dependents of enlisted men of the Army, Navy, Marine Corps, and the Coast Guard, while emergency grants to States were authorized that same year for programs for day care for children of working mothers. In 1944, pensions were authorized for all physically or mentally helpless children of deceased veterans regardless of the age of the child at the date the claim was filed or at the time of the veteran's death, provided the child was disabled at the age of sixteen and that the disability continued to the date of the claim. The Public Health Service Act, which was passed that same year, expanded Federal-State public health programs, and increased the annual amount for grants for public health services.^[88] A landmark piece of legislation, the Servicemen's Readjustment Act of 1944, provided millions of returning veterans with benefits such as housing, educational, and unemployment assistance, and played a major role in the postwar expansion of the American middle class.^[89]

A major result of the full employment at high wages was a sharp, permanent decrease in the level of income inequality. The gap between rich and poor narrowed dramatically in the area of nutrition, because food rationing and price controls provided a reasonably priced diet to everyone. White collar workers did not typically receive overtime thus the gap between white collar and blue collar income narrowed. Large families that had been poor during the 1930s had four or more wage earners, and these families shot to the top one-third income bracket. Overtime provided large paychecks in war industries,^[90] and average living standards rose steadily, with real wages rising by 44% in the four years of war, while the percentage of families with an annual income of less than $2,000 fell from 75% to 25% of the population.^[91]

Government role: balance labor, business, and farming[link]

The federal government commissioned a series of public murals from the artists it employed. William Gropper's "Construction of a Dam" (1939), is characteristic of much of the art of the 1930s, with workers seen in heroic poses, laboring in unison to complete a great public project.

The number of unemployed in 1929 was estimated at less than 4%, but by 1933 the unemployment rate had jumped up to approximately 25%. The New Deal did not achieve full employment until 1940–41. Many historians distinguish two periods of great activity with different policy objectives: the first New Deal (1933 to 1934) built on a broad consensus, while the second New Deal of 1935–36 strengthened unions, built a national jobs program, and created Social Security, all over strenuous opposition from big business. The Works Progress Administration (WPA), which was created to return the unemployed to the work force.^[92]

During the New Deal period, the federal government set itself up as the main arbitrator in the competition among elements and classes of society, acting as a force to help some groups (such as farmers and union members) and limit the power of others.

By the end of the 1930s, business found itself competing for influence with an increasingly powerful labor movement, with an organized agricultural economy, and occasionally with aroused consumers. This was accomplished by creating a series of government institutions that greatly and permanently expanded the role of the federal government. Thus, perhaps the strongest legacy of the New Deal was to make the federal government a protector of interest groups and a supervisor of competition among them.

As a result of the New Deal, political and economic life became more competitive than before, with workers, farmers, consumers, and others now able to press their demands upon the government in ways that in the past had been available only to the corporate world. Hence the frequent description of the government the New Deal created as the "broker state", a state brokering the competing claims of numerous groups.^{[citation needed]} If there was more political competition, there was less market competition. Farmers were not allowed to sell for less than the official price. The transportation industry was tightly regulated so that every firm had a guaranteed market and management and labor had high profits and high wages, all at the cost of high prices and much inefficiency.^{[citation needed]} Quotas in the oil industry were fixed by the Railroad Commission of Texas with Tom Connally's federal Hot Oil Act of 1935, which guaranteed that illegal "hot oil" would not be sold.^[93] To the New Dealers, the free market meant "cut-throat competition" and they considered that evil.^{[citation needed]} It was not until the 1970s and 1980s that most of the New Deal regulations were relaxed.

African Americans[link]

The New Deal set up numerous agencies to help impoverished farmers, but in the long run moving to the cities was the trend. This is an FSA photo of a Texas sharecropper's shack.

Although many Americans suffered economically during the Great Depression, African Americans also had to deal with social ills, such as racism, discrimination, and segregation.

Many leading New Dealers, including Eleanor Roosevelt, Harold Ickes, Aubrey Williams, and John Flores Sr. worked to ensure blacks received at least 10% of welfare assistance payments.^[94] There was no attempt whatsoever to end segregation, or to increase black rights in the South. Roosevelt appointed an unprecedented number of blacks to second-level positions in his administration; these appointees were collectively called the Black Cabinet. Roosevelt and Hopkins worked with several big city mayors to encourage the transition of black political organizations from the Republican Party to the Democratic Party from 1934 to 1936, most notably in Chicago. The black community responded favorably, so that by 1936 the majority who voted (usually in the North) were voting Democratic. This was a sharp realignment from 1932, when most African Americans voted the Republican ticket. New Deal policies helped establish a political alliance between blacks and the Democratic Party that survives into the 21st century.^[95]

The WPA, NYA, and CCC relief programs allocated 10% of their budgets to blacks (who comprised about 10% of the total population, and 20% of the poor). They operated separate all-black units with the same pay and conditions as white units.^[94]

However, these benefits were small in comparison to the economic and political advantages that whites received. Social Security was denied to blacks, and most unions excluded blacks from joining. Enforcement of anti-discrimination laws in the South was virtually impossible, especially since most blacks worked in hospitality and agricultural sectors.^[96] The Farm Service Agency (FSA), a government relief agency for tenant farmers, created in 1937, made efforts to empower African Americans by appointing them to agency committees in the South. Senator James F. Byrnes of South Carolina raised opposition to the appointments because he stood for white farmers who were threatened by an agency that could organize and empower tenant farmers.

Initially, the FSA stood behind their appointments, but after feeling national pressure FSA was forced to release the African Americans of their positions. The goals of the FSA were notoriously liberal and not cohesive with the southern voting elite.

The wartime FEPC executive orders that forbade job discrimination against African Americans, women, and ethnic groups was a major breakthrough that brought better jobs and pay to millions of minority Americans. Historians usually treat FEPC as part of the war effort and not part of the New Deal itself.

Women and the New Deal[link]

At first the New Deal created programs primarily for men. It was assumed that the husband was the "breadwinner" (the provider) and if they had jobs, whole families would benefit. It was the social norm for women to give up jobs when they married; in many states there were laws that prevented both husband and wife holding regular jobs with the government. So too in the relief world, it was rare for both husband and wife to have a relief job on FERA or the WPA.^[97] This prevailing social norm of the breadwinner failed to take into account the numerous households headed by women, but it soon became clear that the government needed to help women as well.^[98]

FERA camp for unemployed women, Maine, 1934

WPA employed 2 to 3 million unemployed at unskilled labor

Pumping water by hand from sole water supply in this section of Wilder, Tennessee (Tennessee Valley Authority, 1942)

Many women were employed on FERA projects run by the states with federal funds. The first New Deal program to directly assist women was the Works Progress Administration (WPA), begun in 1935. It hired single women, widows, or women with disabled or absent husbands. While men were given unskilled manual labor jobs, usually on construction projects, women were assigned mostly to sewing projects. They made clothing and bedding to be given away to charities and hospitals. Women also were hired for the WPA's school lunch program. Both men and women were hired for the arts programs (such as music, theater and writing). The Social Security program was designed to help retired workers and widows, but did not include domestic workers, farmers or farm laborers, the jobs most often held by blacks. Social Security however was not a relief program and it was not designed for short-term needs, as very few people received benefits before 1942.

Critical interpretations of New Deal economic recovery policies[link]

Many historians argue that Roosevelt restored hope and self-respect to tens of millions of desperate people, built labor unions, upgraded the national infrastructure and saved capitalism in his first term when he could have destroyed it and easily nationalized the banks and the railroads.^[99] Some critics from the left, however, have denounced Roosevelt for rescuing capitalism when the opportunity was at hand to nationalize banking, railroads and other industries.^[100] Still others have complained that he enlarged the powers of the federal government,^[101] built up labor unions, slowed long-term economic growth, and weakened the business community. In his 1968 memoir The Brains Trust, Rexford Tugwell (a member of Roosevelt's Brain Trust) wrote that many New Deal laws “were tortured interpretations of a document intended to prevent them.”^[102]

Keynesian and monetarist interpretations[link]

national debt/ GNP climbs from 20% to 40% under Hoover; levels off under FDR; soars during WW2 from Historical States US (1976).

The New Deal tried public works, farm subsidies, and other devices to reduce unemployment, but Roosevelt never completely gave up trying to balance the budget. Unemployment remained high throughout the New Deal years though greatly reduced from the much higher rates before the New Deal; business simply would not hire more people, especially the low skilled and supposedly "untrainable" men who had been unemployed for years and lost any job skill they once had. Keynesians later argued that by spending vastly more money – using fiscal policy — the government could provide the needed stimulus through the multiplier effect. Critics of Keynesian economic theories said that government spending would "crowd out" private investment and spending and thus not have any effect on the economy, a proposition known as the Treasury view, which Keynesian economics reject.

In recent years more influential among economists has been the monetarist interpretation of Milton Friedman, which did include a full-scale monetary history of what he calls the "Great Contraction". Friedman concentrated on the failures before 1933, particularly those of the Federal Reserve, and in his memoirs said the relief programs were an appropriate response.

Historians generally agree that, apart from building up labor unions, the New Deal did not substantially alter the distribution of power within American capitalism. "The New Deal brought about limited change in the nation's power structure."^[103]

Keynes visited the White House in 1934 to urge President Roosevelt to increase deficit spending. Roosevelt afterwards complained that, "he left a whole rigmarole of figures – he must be a mathematician rather than a political economist."^[104]

Fiscal conservatism[link]

Julian Zelizer (2000) has argued that fiscal conservatism was a key component of the New Deal.^[105] A fiscally conservative approach was supported by Wall Street and local investors and most of the business community; mainstream academic economists believed in it, as apparently did the majority of the public. Conservative southern Democrats, who favored balanced budgets and opposed new taxes, controlled Congress and its major committees. Even liberal Democrats at the time regarded balanced budgets as essential to economic stability in the long run, although they were more willing to accept short-term deficits. As Zelizer notes, public opinion polls consistently showed public opposition to deficits and debt. Throughout his terms, Roosevelt recruited fiscal conservatives to serve in his Administration, most notably Lewis Douglas the Director of Budget in 1933–1934, and Henry Morgenthau Jr., Secretary of the Treasury from 1934 to 1945. They defined policy in terms of budgetary cost and tax burdens rather than needs, rights, obligations, or political benefits. Personally the President embraced their fiscal conservatism. Politically, he realized that fiscal conservatism enjoyed a strong wide base of support among voters, leading Democrats, and businessmen. On the other hand, there was enormous pressure to act – and spending money on high visibility work programs with millions of paychecks a week.^[106]

Douglas proved too inflexible, and he quit in 1934. Morgenthau made it his highest priority to stay close to Roosevelt, no matter what. Douglas's position, like many of the Old Right, was grounded in a basic distrust of politicians and the deeply ingrained fear that government spending always involved a degree of patronage and corruption that offended his Progressive sense of efficiency. The Economy Act of 1933, passed early in the Hundred Days, was Douglas's great achievement. It reduced federal expenditures by $500 million, to be achieved by reducing veterans’ payments and federal salaries. Douglas cut government spending through executive orders that cut the military budget by $125 million, $75 million from the Post Office, $12 million from Commerce, $75 million from government salaries, and $100 million from staff layoffs. As Freidel concludes, "The economy program was not a minor aberration of the spring of 1933, or a hypocritical concession to delighted conservatives. Rather it was an integral part of Roosevelt's overall New Deal."^[107] Revenues were so low that borrowing was necessary (only the richest 3% paid any income tax between 1926 and 1940).^[108] Douglas therefore hated the relief programs, which he said reduced business confidence, threatened the government’s future credit, and had the "destructive psychological effects of making mendicants of self-respecting American citizens".^[109] Roosevelt was pulled toward greater spending by Hopkins and Ickes, and as the 1936 election approached he decided to gain votes by attacking big business.

Morgenthau shifted with FDR, but at all times tried to inject fiscal responsibility; he deeply believed in balanced budgets, stable currency, reduction of the national debt, and the need for more private investment. The Wagner Act met Morgenthau’s requirement because it strengthened the party’s political base and involved no new spending. In contrast to Douglas, Morgenthau accepted Roosevelt’s double budget as legitimate – that is a balanced regular budget, and an “emergency” budget for agencies, like the WPA, PWA and CCC, that would be temporary until full recovery was at hand. He fought against the veterans’ bonus until Congress finally overrode Roosevelt’s veto and gave out $2.2 billion in 1936. His biggest success was the new Social Security program; he managed to reverse the proposals to fund it from general revenue and insisted it be funded by new taxes on employees. It was Morgenthau who insisted on excluding farm workers and domestic servants from Social Security because workers outside industry would not be paying their way.^[110]

Effect on the Depression[link]

Anti-relief protest sign, near Davenport, Iowa, 1940, Arthur Rothstein.

In a survey of economic historians conducted by Robert Whaples, Professor of Economics at Wake Forest University, anonymous questionnaires were sent to members of the Economic History Association. Members were asked to either disagree, agree, or agree with provisos with the statement that read: "Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression." While only 6% of economic historians who worked in the history department of their universities agreed with the statement, 27% of those that work in the economics department agreed. Almost an identical percent of the two groups (21% and 22%) agreed with the statement "with provisos" (a conditional stipulation), while 74% of those who worked in the history department, and 51% in the economic department disagreed with the statement outright.^[111]

UCLA economists Harold L. Cole and Lee E. Ohanian are among those who believe the New Deal caused the Depression to persist longer than it would otherwise have, concluding in a study that the "New Deal labor and industrial policies did not lift the economy out of the Depression as President Roosevelt and his economic planners had hoped," but that the "New Deal policies are an important contributing factor to the persistence of the Great Depression." They claim that the New Deal "cartelization policies are a key factor behind the weak recovery". They say that the "abandonment of these policies coincided with the strong economic recovery of the 1940s".^[112] Cole and Ohanian claimed that FDR's policies prolonged the Depression by 7 years.^[113] However, Cole and Ohanian's argument relies on hypotheticals, including an unprecedented growth rate necessary to end the Depression by 1936,^[114][115] and by not counting workers employed through New Deal programs. Such programs built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles (1,100,000 km) of roads, 1,000 airfields and employed 50,000 teachers through programs that rebuilt the country's entire rural school system.^[116][117]

Lowell E. Gallaway and Richard K. Vedder argue that the "Great Depression was very significantly prolonged in both its duration and its magnitude by the impact of New Deal programs." They suggest that without Social Security, work relief, unemployment insurance, mandatory minimum wages, and without special government-granted privileges for labor unions, business would have hired more workers and the unemployment rate during the New Deal years would have been 6.7% instead of 17.2%.^[118] In reply, economic historian Brad DeLong wrote that there is "literally nothing" to the arguments made by Gallaway and Vedder, and the duo made "flawed conclusions" based on "flawed foundations", and the entire foundation "is made out of mud".^[119]

Contemporary public and business views about the economic effects of the New Deal were mixed and varied. In The Gallup Organization's May 1936 and March 1939 American Institute of Public Opinion (AIPO) polls, more than half of Americans reported that they felt the administration's policies were aiding recovery overall. Fortune's Roper poll found in May 1939 that 39% of Americans thought the administration had been delaying recovery by undermining business confidence, while 37% thought it had not. But it also found that opinions on the issue were highly polarized by economic status and occupation. In addition, AIPO found in the same time that 57% believed that business attitudes toward the administration were delaying recovery, while 26% thought they were not, emphasizing that fairly subtle differences in wording can evoke substantially different polling responses.^[120]

Left-wing criticism[link]

For decades the New Deal was generally held in very high regard in the scholarship and the textbooks. That changed in the 1960s when New Left historians began a revisionist critique that said the New Deal was a bandaid for a patient that needed radical surgery to reform capitalism, put private property in its place, and lift up workers, women and minorities. The New Left believed in participatory democracy and therefore rejected the autocratic machine politics typical of the big city Democratic organizations.^[121] In the 1960s, "New Left" historians have been among the New Deal's harsh critics.^[122] Barton J. Bernstein, in a 1968 essay, compiled a chronicle of missed opportunities and inadequate responses to problems. The New Deal may have saved capitalism from itself, Bernstein charged, but it had failed to help – and in many cases actually harmed – those groups most in need of assistance. Paul K. Conkin in The New Deal (1967) similarly chastised the government of the 1930s for its weak policies toward marginal farmers, for its failure to institute sufficiently progressive tax reform, and its excessive generosity toward select business interests. Howard Zinn, in 1966, criticized the New Deal for working actively to actually preserve the worst evils of capitalism.

By the 1970s liberal historians were responding with a defense of the New Deal based on numerous local and microscopic studies. They praise increasingly focused on Eleanor Roosevelt, seen as a more appropriate crusading reformer than her husband.^[123] Since then research on the New Deal has been less interested in the question of whether the New Deal was a "conservative", "liberal", or "revolutionary" phenomenon than in the question of constraints within which it was operating. Political sociologist Theda Skocpol, in a series of articles, has emphasized the issue of "state capacity" as an often-crippling constraint. Ambitious reform ideas often failed, she argued, because of the absence of a government bureaucracy with significant strength and expertise to administer them. Other more recent works have stressed the political constraints that the New Deal encountered. Conservative skepticism about the efficacy of government was strong both in Congress and among many citizens. Thus some scholars have stressed that the New Deal was not just a product of its liberal backers, but also a product of the pressures of its conservative opponents.

Charges of communism[link]

Certain critics have complained that the New Deal was infiltrated with communists. The most influential group was in the Department of Agriculture; its leaders fired in 1934, but one of them Alger Hiss went on to senior positions in foreign policy, while spying for the Soviet Union.^[124][125] Outside government, the far-left was exerting considerable influence in the labor movement (it dominated parts of the new Congress of Industrial Organizations) and appealed to activists and intellectuals in building a network of front organizations that advocated policies approved by the Kremlin. Thus the American League Against War and Fascism was formed in 1933 and, in 1937, became the American League for Peace and Democracy. There followed the America Youth Congress, 1934; League of American Writers, 1935; National Negro Congress, 1936; and the American Congress for Democracy and Intellectual Freedom, 1939. All had significant Communist elements, and fought furious battles with the anti-communist left.^[126]

Charges of fascism[link]

In the 1930s fascism was considered a legitimate political ideology, combining an intense, authoritarian nationalism with a planned economy and corporativism exemplified by the economic plans of Benito Mussolini in Italy. Enemies of the New Deal sometimes called it "fascist", but meant very different things. Communists, for example, meant control of the New Deal by big business. Classical liberals and conservatives meant control of big business by bureaucrats (also labeled with the term of "socialism," as in Ludwig von Mises' book, The Free and Prosperous Commonwealth).

Former President Herbert Hoover argued that some (but not all) New Deal programs were "fascist":^[127]

"Among the early Roosevelt fascist measures was the National Industry Recovery Act (NRA) of June 16, 1933 .... These ideas were first suggested by Gerald Swope (of the General Electric Company)... [and] the United States Chamber of Commerce. During the campaign of 1932, Henry I. Harriman, president of that body, urged that I agree to support these proposals, informing me that Mr. Roosevelt had agreed to do so. I tried to show him that this stuff was pure fascism; that it was a remaking of Mussolini's "corporate state" and refused to agree to any of it. He informed me that in view of my attitude, the business world would support Roosevelt with money and influence. That for the most part proved true."

In 1934, Roosevelt defended himself against his critics, and attacked them in his "fireside chat" radio audiences. Some people, he said:

will try to give you new and strange names for what we are doing. Sometimes they will call it 'Fascism,' sometimes 'Communism,' sometimes 'Regimentation,' sometimes 'Socialism.' But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.... Plausible self-seekers and theoretical die-hards will tell you of the loss of individual liberty. Answer this question out of the facts of your own life. Have you lost any of your rights or liberty or constitutional freedom of action and choice?^[128]

In September 1934, Roosevelt defended a more powerful national government which he believed was necessary to control the economy, by quoting conservative Republican Elihu Root:

The tremendous power of organization [Root had said] has combined great aggregations of capital in enormous industrial establishments... so great in the mass that each individual concerned in them is quite helpless by himself.... The old reliance upon the free action of individual wills appears quite inadequate.... The intervention of that organized control we call government seems necessary.... Men may differ as to the particular form of governmental activity with respect to industry or business, but nearly all are agreed that private enterprise in times such as these cannot be left without assistance and without reasonable safeguards lest it destroy not only itself but also our process of civilization.^[128]

Scholars reject linking the New Deal to fascism. As a leading historian of fascism explains, "What Fascist corporatism and the New Deal had in common was a certain amount of state intervention in the economy. Beyond that, the only figure who seemed to look on Fascist corporatism as a kind of model was Hugh Johnson, head of the National Recovery Administration",^[129] Johnson had been distributing copies of a Fascist tract called "The Corporate State" by one of Mussolini's favorite economists, including giving one to Labor Secretary Frances Perkins and asking her give copies to her cabinet.^[130] Johnson strenuously denied any association with Mussolini, saying the NRA "is being organized almost as you would organize a business. I want to avoid any Mussolini appearance—the President calls this Act industrial self-government."^[131] Donald Richberg eventually replaced Johnson as head of NRA, and speaking before a Senate committee said "A nationally planned economy is the only salvation of our present situation and the only hope for the future."^[13] Historians such as Hawley (1966) have examined the origins of the NRA in detail, showing the main inspiration came from Senators Hugo Black and Robert F. Wagner and from American business leaders such as the Chamber of Commerce. The model for the NRA was Woodrow Wilson's War Industries Board, in which Johnson had been involved.^[132]

Evaluation of New Deal economic reform policies[link]

The economic reforms were mainly intended to rescue the capitalist system by providing a more rational framework in which it could operate. The banking system was made less vulnerable. The regulation of the stock market and the prevention of some corporate abuses relating to the sale of securities and corporate reporting addressed the worst excesses. Roosevelt allowed trade unions to take their place in labor relations and created the triangular partnership between employers, employees and government.^[32]

David M. Kennedy wrote that "the achievements of the New Deal years surely played a role in determining the degree and the duration of the postwar prosperity".^[133]

Legacy and historiography[link]

The New Deal was the inspiration for President Lyndon B. Johnson's Great Society in 1960s. Johnson (on right) headed the Texas NYA and was elected to Congress in 1938.

Analysts agree the New Deal produced a new political coalition that sustained the Democratic Party as the majority party in national politics for more than a generation after its own end.^[134]

However there is disagreement about whether it marked a permanent change in values. Cowie and Salvatore in 2008 argued that it was a response to depression and did not mark a commitment to a welfare state because America has always been too individualistic.^[135] MacLean rejected the idea of a definitve political culture. She says they overemphasized individualism and ignored the enormous power of big capital wields, the Constitutional restraints on radicalism, and the role of racism, antifeminism, and homophobia. She warns that accepting Cowie and Salvatore's argument that conservatism's ascendancy is inevitable would dismay and discourage activists on the left.^[136] Klein responds that the New Deal did not die a natural death; it was killed off in the 1970s by a business coalition mobilized by such groups as the Business Roundtable, the Chamber of Commerce, trade organizations, conservative think tanks, and decades of sustained legal and political attacks.^[137]

Historians generally agree that during Roosevelt's 12 years in office, there was a dramatic increase in the power of the federal government as a whole. Roosevelt also established the presidency as the prominent center of authority within the federal government. Roosevelt created a large array of agencies protecting various groups of citizens – workers, farmers, and others – who suffered from the crisis, and thus enabled them to challenge the powers of the corporations. In this way, the Roosevelt Administration generated a set of political ideas – known as New Deal liberalism — that remained a source of inspiration and controversy for decades. New Deal liberalism lay the foundation of a new consensus. Between 1940 and 1980 there was the liberal consensus about the prospects for the widespread distribution of prosperity within an expanding capitalist economy.^[134] Especially Harry S. Trumans Fair Deal and in the 1960s, Lyndon B. Johnson's Great Society used the New Deal as inspiration for a dramatic expansion of liberal programs.

The New Deals enduring appeal on voters fostered its acceptance by moderate and liberal Republicans.^[138] In a letter to his conservative brother Edgar, Dwight D. Eisenhower wrote:

Should any party attempt to abolish social security and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group of course, that believes you can do these things ... Their number is negligible and they are stupid.^[139]

As the first Republican president elected after FDR, Dwight D. Eisenhower (1953–61) build on the New Deal in a manner that embodied his thoughts on efficiency and cost-effectiveness. He sanctioned a major expansion of Social Security by a self-financed programm.^[140]

In 1964 libertarian Barry Goldwater, an unreconstructed anti-New Dealer, was the republican presidential candidate. The Democrats won the election with the largest share of the popular vote in history but the supporters of Goldwater formed the New Right which helped to bring Ronald Reagan into the White House in the 1980 presidential election.^[141] This marked the end of the liberal consensus. Since the 1980s there is a political discourse about Supply-side economics and a strict rejection of Keynesian economic policy.

Political metaphor[link]

Since 1933, politicians and pundits have often called for a "new deal" regarding an object. That is, they demand a completely new, large-scale approach to a project. As Arthur A. Ekirch Jr. (1971) has shown, the New Deal stimulated utopianism in American political and social thought on a wide range of issues. In Canada, Conservative Prime Minister Richard B. Bennett in 1935 proposed a "new deal" of regulation, taxation, and social insurance that was a copy of the American program; Bennett's proposals were not enacted, and he was defeated for reelection in October 1935. In accordance with the rise of the use of U.S. political phraseology in Britain, the Labour Government of Tony Blair has termed some of its employment programs "new deal", in contrast to the Conservative Party's promise of the 'British Dream'.

The works of art and music[link]

The Works Progress Administration subsidized artists, musicians, painters and writers on relief with a group of projects called Federal One. While the WPA program was by the most widespread, it was preceded by three programs administered by the US Treasury which hired commercial artists at usual commissions to add murals and sculptures to federal buildings. The first of these efforts was the short-lived Public Works of Art Project, organized by Edward Bruce, an American businessman and artist. Bruce also led the Treasury Department's Section of Painting and Sculpture (later renamed the Section of Fine Arts) and the Treasury Relief Art Project (TRAP). The Resettlement Administration (RA) and Farm Security Administration (FSA) had major photography programs. The New Deal arts programs emphasized regionalism, social realism, class conflict, proletarian interpretations, and audience participation. The unstoppable collective powers of common man, contrasted to the failure of individualism, was a favorite theme.^[142][143]

"Created Equal": Act I Scene 3 "Spirit of 1776": Boston (Federal Theater Project, 1935).

Post Office murals and other public art, painted by artists in this time, can still be found at many locations around the U.S.^[144] The New Deal particularly helped American novelists. For journalists, and the novelists who wrote non-fiction, the agencies and programs that the New Deal provided, allowed these writers to describe about what they really saw around the country.^[145]

Many writers chose to write about the New Deal, and whether they were for or against it, and if it was helping the country out. Some of these writers were Ruth McKenney, Edmund Wilson, and Scott Fitzgerald.^[146] Another subject that was very popular for novelists was the condition of labor. They ranged from subjects on social protest, to strikes.^[147]

Under the WPA, the Federal Theatre project flourished. Countless theatre productions around the country were staged. This allowed thousands of actors and directors to be employed, among them were Orson Welles, and John Huston.^[144]

The FSA photography project is most responsible for creating the image of the Depression in the U.S. Many of the images appeared in popular magazines. The photographers were under instruction from Washington as to what overall impression the New Deal wanted to give out. Director Roy Stryker's agenda focused on his faith in social engineering, the poor conditions among cotton tenant farmers, and the very poor conditions among migrant farm workers; above all he was committed to social reform through New Deal intervention in people's lives. Stryker demanded photographs that "related people to the land and vice versa" because these photographs reinforced the RA's position that poverty could be controlled by "changing land practices". Though Stryker did not dictate to his photographers how they should compose the shots, he did send them lists of desirable themes, such as "church", "court day", "barns".^[148] Films of the late New Deal era such as Citizen Kane (1941) ridiculed so-called "great men", while the heroism of the common man appeared in numerous movies, such as The Grapes of Wrath (1940). Thus in Frank Capra's famous films, including Mr. Smith Goes to Washington (1939), Meet John Doe (1941) and It's a Wonderful Life (1946), the common people come together to battle and overcome villains who are corrupt politicians controlled by very rich, greedy capitalists.^[149]

By contrast there was also a smaller but influential stream of anti-New Deal art. Thus Gutzon Borglum's sculptures on Mount Rushmore emphasized great men in history (his designs had the approval of Calvin Coolidge). Gertrude Stein and Ernest Hemingway disliked the New Deal and celebrated the organic autonomy of perfected written work in opposition to the New Deal trope of writing as performative labor. The Southern Agrarians celebrated a premodern regionalism and opposed the TVA as a modernizing, disruptive force. Cass Gilbert, a conservative who believed architecture should reflect historic traditions and the established social order, designed the new Supreme Court building (1935). Its classical lines and small size contrasted sharply with the gargantuan modernistic federal buildings going up in the Washington Mall that he detested.^[150] Hollywood managed to synthesize liberal and conservative streams, as in Busby Berkeley's Gold Digger musicals, where the storylines exalt individual autonomy while the spectacular musical numbers show abstract populations of interchangeable dancers securely contained within patterns beyond their control.^[151]

New Deal Programs[link]

The New Deal had many programs and new agencies, most of which were universally known by their initials. Most were abolished during World War II; others remain in operation today. They included the following:

• Reconstruction Finance Corporation (RFC) a Hoover agency expanded under Jesse Holman Jones to make large loans to big business. Ended in 1954.
  

  

  The WPA hired unemployed teachers to provide free adult education programs.
• Federal Emergency Relief Administration (FERA) a Hoover program to create unskilled jobs for relief; expanded by FDR and Harry Hopkins; replaced by WPA in 1935.
• United States bank holiday, 1933: closed all banks until they became certified by federal reviewers
• Abandonment of gold standard, 1933: gold reserves no longer backed currency; still exists
• Civilian Conservation Corps (CCC), 1933–1942: employed young men to perform unskilled work in rural areas; under United States Army supervision; separate program for Native Americans
• Homeowners Loan Corporation (HOLC) helped people keep their homes, the government bought properties from the bank allowing people to pay the government instead of the banks in installments they could afford, keeping people in their homes and banks afloat.
• Tennessee Valley Authority (TVA), 1933: effort to modernize very poor region (most of Tennessee), centered on dams that generated electricity on the Tennessee River; still exists
• Agricultural Adjustment Act (AAA), 1933: raised farm prices by cutting total farm output of major crops and livestock; replaced by a new AAA because the Supreme Court ruled it unconstitutional.
• National Industrial Recovery Act (NIRA), 1933: industries set up codes to reduce unfair competition, raise wages and prices; ended 1935. The US Supreme Court ruled the NIRA unconstitutional
• Public Works Administration (PWA), 1933: built large public works projects; used private contractors (did not directly hire unemployed). Ended 1938.
• Federal Deposit Insurance Corporation (FDIC) insures bank deposits and supervises state banks; still exists
• Glass–Steagall Act regulates investment banking; repealed 1999
• Securities Act of 1933, created the SEC, 1933: codified standards for sale and purchase of stock, required awareness of investments to be accurately disclosed; still exists
  

  

  FERA camp for unemployed black women, Atlanta, 1934
• Civil Works Administration (CWA), 1933–34: provided temporary jobs to millions of unemployed
• Indian Reorganization Act, 1934: moved away from assimilation; policy dropped
• Social Security Act (SSA), 1935: provided financial assistance to: elderly, handicapped, paid for by employee and employer payroll contributions; required 7 years contributions, so first payouts were in 1942; still exists
• Works Progress Administration (WPA), 1935: a national labor program for more than 2 million unemployed; created useful construction work for unskilled men; also sewing projects for women and arts projects for unemployed artists, musicians and writers; ended 1943.
• National Labor Relations Act (NLRA) / Wagner Act, 1935: set up National Labor Relations Board to supervise labor-management relations; In the 1930s, it strongly favored labor unions. Modified by the Taft-Hartley Act (1947); still exists
• Judicial Reorganization Bill, 1937: gave the President power to appoint a new Supreme Court judge for every judge 70 years or older; failed to pass Congress
• Federal Crop Insurance Corporation (FCIC), 1938: Insures crops and livestock against loss of production or revenue. Was restructured during the creation of the Risk Management Agency in 1996 but continues to exist.
• Surplus Commodities Program (1936); gives away food to poor; still exists as Food Stamp Program
• Fair Labor Standards Act 1938: established a maximum normal work week of 44 hours and a minimum wage of 40 cents/hour and outlawed most forms of child labor; still exists, hours have been lowered to 40 hours over the years.
  

  

  Surplus Commodities Program, 1936
• Rural Electrification Administration, (REA)one of the federal executive departments of the United States government charged with providing public utilities (electricity, telephone, water, sewer) to rural areas in the U.S. via public-private partnerships. still exists.
• Resettlement Administration (RA), Resettled poor tenant farmers; replaced by Farm Security Administration in 1935.
• Farm Security Administration (FSA), Helped poor farmers by a variety of economic and educational programs; still exists as Farmers Home Administration.

Depression statistics[link]

"Most indexes worsened until the summer of 1932, which may be called the low point of the depression economically and psychologically."^[152] Economic indicators show the American economy reached nadir in summer 1932 to February 1933, then began recovering until the recession of 1937–1938. Thus the Federal Reserve Industrial Production Index hit its low of 52.8 on 1932-07-01 and was practically unchanged at 54.3 on 1933-03-01; however by 1933-07-01, it reached 85.5 (with 1935–39 = 100, and for comparison 2005 = 1,342).^[153] In Roosevelt's 12 years in office, the economy had an 8.5% compound annual growth of GDP,^[154] the highest growth rate in the history of any industrial country,^[155] however, recovery was slow; by 1939, Gross Domestic Product (GDP) per adult was still 27% below trend.^[112]

• (1) in 1929 dollars
• (2) 1935–39 = 100

• Darby counts WPA workers as employed; Lebergott as unemployed
• Source: Historical Statistics US (1976) series D-86; Smiley 1983^[157]

Relief statistics[link]

See also[link]

	Book: Great Depression
Wikipedia books are collections of articles that can be downloaded or ordered in print.

• Arthurdale, West Virginia, New Deal planned community.
• Interest group democracy
• Liberalism
• Liberalism in the United States
• Mixed economy
• Modern liberalism in the United States
• Social liberalism
• Social safety net
• The New Deal and the arts in New Mexico
• Timeline of the Great Depression
• United States welfare state
• Welfare
• Welfare economics
• Welfare state

References[link]