DEFINITION of 'The New Deal'

The New Deal is a series of domestic programs designed to help the United States economy emerge from the Great Depression. It launched in the early 1930's, and was designed to bolster the United States economy, reduce unemployment, and instill confidence in the government’s ability to protect its citizens.

BREAKING DOWN 'The New Deal'

The stock market crash on October 29, 1929 – known as Black Tuesday – brought a period of roaring growth to a sudden halt. Companies and banks across the United States started failing, and the unemployment rate skyrocketed to the point that nearly a quarter of the workforce was unemployed.

Domestic Programs

President Franklin Roosevelt launched The New Deal after taking office in 1933. The New Deal consisted of a variety of government-funded programs aimed at getting people back to work, as well as legislation and executive orders that propped up farmers and stimulate business activity.

The New Deal is often broken into two segments. The “first” New Deal was launched during the first two years of the Roosevelt presidency, and focused on measures to stabilize the banking system (Emergency Banking Act), ensure bank deposit security (Banking Act of 1933), increase confidence in the stock market (Securities Act of 1933), as well as the more controversial National Recovery Administration, which was designed to set working conditions, minimum wages and maximum hours, and guarantee the right of labor to bargain collectively. The “second” New Deal introduced government-sponsored retirement plans (Social Security Act), increased government employment (Works Progress Administration), and minimum wages (Fair Labor Standards Act).

While The New Deal is credited with helping to end the Great Depression, it remains controversial in that it introduced a number of liberal reforms as well as an increasing government's role in guiding the economy. Several New Deal programs were ultimately declared unconstitutional, and Roosevelt threatened to increase the number of Supreme Court justices in order to prevent future programs from being shuttered.

For all the programs and policies enacted to get the economy moving again, historians are divided as to the effectiveness of the measures. The economy did slowly recover during the 1930s and confidence was restored to the banking system through federal deposit insurance. 

It was World War II, however, that provided the impetus to get America fully back to work as the so-called arsenal of democracy. The unprecedented spending worldwide on ships, arms and planes propelled America into full employment much more than any of the New Deal programs.

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