What Is the New Deal?

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

Key Takeaways

  • The New Deal was a series of domestic programs introduced by President Franklin D. Roosevelt in an attempt to end the economic ravages of the Great Depression.
  • The New Deal also attempted to curb the excesses of untrammeled capitalism through such policies as setting minimum wages, regulating working conditions, promoting labor unions, and bolstering retirement security.
  • The New Deal made the government’s role in steering the economy more important.

Understanding 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. President Franklin Roosevelt launched the New Deal after taking office in 1933. It 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 stimulated business activity.

The New Deal engendered controversy by introducing a number of liberal reforms and increasing government’s role in guiding the economy. Several of its programs were ultimately declared unconstitutional by the U.S. Supreme Court, including two pillars: the National Recovery Administration (NRA)—which set working conditions, minimum wages, and maximum hours, while guaranteeing the right of labor to bargain collectively—and the Agricultural Adjustment Administration (AAA), which provided subsidies to farmers.

Public opinion was for the New Deal, though, and, as a result, in February of 1937 Roosevelt tried to increase the number of Supreme Court justices in order to prevent future programs from being shuttered. Though he failed in this court-packing attempt, he succeeded in his objective. In May 1937, the Supreme Court declared the Social Security Act to be constitutional by a five-to-four vote when one its justices changed his anti–New Deal stance. No other New Deal program was ever again judicially invalidated by the court.

The New Deal was enacted in two parts: the first in 1933 and the second in 1935.

History of the New Deal

The New Deal is often broken into two segments. The “first” New Deal was launched in 1933 during the initial two years of the Roosevelt presidency. In addition to the NRA and AAA, it consisted of measures to stabilize the banking system (Emergency Banking Act), ensure bank deposit security (Banking Act of 1933, known as the Glass-Steagall Act), and increase confidence in the stock market (Securities Act of 1933).

The “second” New Deal, in 1935, introduced perhaps the program’s greatest and most enduring legacy: government-sponsored retirement plans in the form of Social Security. It also increased government employment (Works Progress Administration) and minimum wages (Fair Labor Standards Act).

Historians credit the New Deal with some success in reviving the country’s fortunes. The economy did slowly recover during the 1930s, confidence was restored to the banking system through federal deposit insurance, working conditions were improved, and labor unions strengthened the hand of workers. It was World War II, however, that ultimately provided the impetus to get America fully back to work. The unprecedented spending worldwide on ships, arms, and planes propelled the country into a full employment that the New Deal programs were not able to achieve on their own.