The New Deal, 1933–1939

By the end of this lesson, students will be able to:

• Account for the legislative scale and political logic of the Hundred Days, March through June 1933.
• Set the First New Deal of 1933 and 1934 side by side with the Second New Deal of 1935 and explain what the comparison reveals about the changing aims of Roosevelt's program.
• Identify the major alphabet agencies and the specific economic problems each was created to address.
• Account for the populist critics who pushed Roosevelt leftward in 1934 and 1935 and the conservative judges and southern Democrats who pushed back.
• Describe the New Deal coalition and account for the shift of African American voters from the Republican Party into the Democratic Party.
• Identify three structural limits of New Deal coverage and explain why agricultural workers, domestic workers, women, and African Americans were excluded from many of its protections.
• Use Skill 5 (Sourcing and Situation) to read a New Deal-era primary source against the political moment that produced it, and use the Continuity and Change reasoning process to argue whether the New Deal is best read as the fulfillment of the Progressive project or as a new departure.

Franklin Roosevelt was sworn in on March 4, 1933, at the worst moment of the worst depression in American history. Roughly one in four working Americans had no job. Industrial production had fallen by half from its 1929 peak. Stock prices had lost about nine-tenths of their 1929 value. Every bank in thirty-two states had been ordered closed by their governors to stop the run, and the New York and Illinois governors closed theirs the morning of the inauguration. There was no federal deposit insurance, no federal unemployment system, no federal pension for old age, and no federal floor under wages or hours. Herbert Hoover's voluntarist response had failed and the country had voted him out by the largest margin in eighty years. Within ninety-nine days Roosevelt and a Democratic Congress would push fifteen major bills into law, and within six years the United States would have a permanent regulatory and welfare-state architecture that no peacetime American government had ever attempted (KC-7.1.III.A).

The Hundred Days, running from the inauguration through June 16, 1933, produced the spine of the First New Deal. Roosevelt opened with a four-day national bank holiday and rushed the Emergency Banking Act through Congress in eight hours. The act let the Treasury reopen solvent banks under federal supervision and shut the rest. When the public was reassured by Roosevelt's first fireside chat on March 12, deposits flowed back in and the panic ended. Three months later the Glass-Steagall Banking Act separated commercial from investment banking and created the Federal Deposit Insurance Corporation, guaranteeing deposits up to twenty-five hundred dollars. The same legislative session produced the Civilian Conservation Corps, which put roughly three million unmarried young men into reforestation, soil conservation, and park work; the Tennessee Valley Authority, a federal corporation that built dams, generated electricity, and developed an entire river basin across seven states; the Federal Emergency Relief Administration, which channeled federal cash to state and local relief agencies; the Agricultural Adjustment Act, which paid farmers to plow under crops and slaughter livestock to drive farm prices back up; and the National Industrial Recovery Act, which authorized the National Recovery Administration to set industry-wide codes governing prices, wages, and hours under its Blue Eagle banner.

The First New Deal was emergency improvisation more than coherent policy, and parts of it did not survive. In Schechter Poultry Corporation v. United States (1935), a unanimous Supreme Court struck down the National Industrial Recovery Act as an unconstitutional delegation of legislative power and a violation of the Commerce Clause, ending the Blue Eagle. A year later United States v. Butler struck down the Agricultural Adjustment Act's processing tax. The fact that core parts of his program were being voided by an aging conservative bloc on the Court would become one of the central political problems of Roosevelt's second term, and would push him toward the disastrous court-packing plan of 1937 (KC-7.1.III.B).

By the spring of 1935 a different problem had emerged. Recovery was slow, unemployment remained above twenty percent, and Roosevelt was being pushed leftward by an increasingly noisy populist opposition. Senator Huey Long of Louisiana had built a national following with his Share Our Wealth program, which proposed to cap personal fortunes at five million dollars, guarantee every family a five-thousand-dollar homestead and a twenty-five-hundred-dollar annual income, and provide free college tuition. Father Charles Coughlin, a Catholic priest with a national radio audience estimated at thirty million listeners, attacked the banks and the gold standard from a populist Christian platform that drifted over time into open antisemitism. Doctor Francis Townsend, a retired California physician, campaigned for a flat two-hundred-dollar monthly pension for every American over sixty, on the condition that the recipient spend the entire amount within thirty days. Together the three figures had assembled a constituency too large to ignore. Roosevelt, who had said in private that he wanted to "steal Long's thunder," responded with the Second New Deal of the summer of 1935.

The Second New Deal turned from emergency relief to long-term structural reform. The Wagner Act, formally the National Labor Relations Act of 1935, guaranteed private-sector workers the right to organize unions, bargain collectively, and strike, and created the National Labor Relations Board to enforce those rights. The Social Security Act of 1935 created old-age pensions funded by a payroll tax, a federal-state unemployment-insurance system, and a means-tested program of Aid to Dependent Children that became the spine of American welfare for the next sixty years. The Works Progress Administration, headed by Harry Hopkins, employed roughly eight and a half million Americans over its eight-year run on public projects ranging from bridges and post offices to murals, theater productions, oral histories of formerly enslaved people, and the WPA Guides to every state. The Rural Electrification Administration extended the electric grid into the open country, where in 1935 only one farm in ten had access to it. The Public Utility Holding Company Act broke up the giant power-utility pyramids. A revenue act sharply raised the top marginal tax rate. By the time Roosevelt stood for re-election in November 1936, the architecture of the modern American regulatory and welfare state had been set in place (KC-7.1.III.A).

Roosevelt won the 1936 election by 523 electoral votes to 8, the most lopsided electoral landslide of the twentieth century. He carried every state but Maine and Vermont. The result certified the realignment of American politics around what would later be called the New Deal coalition: the urban Democratic North, organized labor, southern and eastern European immigrant communities and their American-born children, intellectuals and university-trained policy professionals, the white South, and African American voters who in 1936 broke from the party of Lincoln to vote Democratic for the first time since Reconstruction. The Black shift was decisive and lasting. The coalition would deliver Democratic majorities in Congress almost continuously through 1980 and would define national politics until civil-rights legislation in the 1960s broke the white South away (KC-7.1.III.C).

Re-election emboldened Roosevelt to attack the conservative bloc on the Supreme Court. In February 1937 he proposed the Judicial Procedures Reform Bill, which would have allowed him to appoint a new Justice for every sitting Justice over seventy. The bill would have let him add up to six new Justices to a Court that had been striking down core parts of his program. The plan was widely read as an attack on judicial independence and stalled in the Senate, where conservative southern Democrats joined Republicans to kill it. The fight cost Roosevelt much of his political capital and revealed the conservative-Democrat-plus-Republican coalition that would block further New Deal expansion through 1938 and beyond. At roughly the same time, the so-called Roosevelt recession of 1937 to 1938, triggered partly by an effort to balance the federal budget by cutting WPA spending, drove unemployment back up and damaged Roosevelt's reputation for economic competence. After the 1938 midterms returned a Republican gain of seventy-two House seats, no further significant New Deal legislation would pass (KC-7.1.III.B).

The New Deal's significance is not that it ended the Depression. It did not. Unemployment fell from roughly twenty-five percent in 1933 to about fourteen percent by 1937, then climbed back as the Roosevelt recession bit. Full employment did not return until war production began in 1940 and 1941. The New Deal's significance is that it transformed the relationship among the federal government, the states, and the individual American. The federal government would now insure bank deposits, pay an old-age pension, regulate the stock market, license union elections, set a minimum wage and a maximum work week through the 1938 Fair Labor Standards Act, and intervene in the rural economy to support farm prices. None of those functions had existed at the federal level before 1933, and almost none of them have been removed since (KC-7.1.III.C).

Equally important are the limits of what the New Deal did. The Wagner Act and the Fair Labor Standards Act expressly excluded agricultural workers and domestic workers from their protections, exclusions that southern Democrats demanded as the price of supporting the legislation, and that fell heaviest on African Americans, Mexican Americans, and women, who were concentrated in those occupations. Social Security as originally enacted excluded the same categories of work and contained no provision for health insurance. The Federal Housing Administration, established in 1934, baked the racial covenants of the time into its underwriting standards and helped institutionalize the residential segregation that defined twentieth-century American cities. Agricultural Adjustment Administration payments were funneled through landowners rather than tenants, which let many southern landlords pocket the federal money and evict their Black sharecroppers. None of these exclusions were rhetorical accidents. They were the structural cost of building a New Deal coalition that depended on the votes of southern Democrats who would not pass legislation that disturbed the racial order of the Jim Crow South (KC-7.1.III.C).

The New Deal generated so many federal acronyms that contemporaries simply called them the alphabet agencies. The table below summarizes the most consequential, grouped by whether they belonged to the First or the Second New Deal.

Four sources frame the political arc of the New Deal: Roosevelt's first inaugural call for action, the Supreme Court's Schechter rejection of the National Industrial Recovery Act, Huey Long's populist counter-program, and a Works Progress Administration photograph documenting the visible federal presence the New Deal produced on the American landscape.

1. (Continuity and Change) Set the Progressive Era reform agenda from Lesson 4 alongside the New Deal program. Identify two continuities and two significant shifts. Was the New Deal best understood as the fulfillment of the Progressive project or as a new departure?
2. (Causation) Trace the causal chain from the Schechter decision of May 1935 to the court-packing plan of February 1937. At which step in the chain do you think a different decision could have produced a different outcome, and why?
3. (Comparison) Compare the First New Deal of 1933 and 1934 with the Second New Deal of 1935. What does the comparison reveal about the changing aims of Roosevelt's program and the populist pressure being applied from outside the administration?
4. (Continuity and Change) The Wagner Act, Social Security, and the Fair Labor Standards Act all excluded agricultural and domestic workers from their protections. Account for the political reasons for those exclusions and explain what they reveal about the price of building the New Deal coalition.
5. (Causation) Account for the shift of African American voters from the Republican Party into the Democratic Party between 1932 and 1936. Was the shift driven primarily by New Deal economic programs, by the symbolic role of Eleanor Roosevelt and the Black Cabinet, or by the failure of Republican alternatives, and how would you weigh these factors?

Draft alignment — pending educator review. AP USH codes correspond to the official College Board Course and Exam Description (Effective Fall 2023, Version 1). Statements below are paraphrased in the CountryReports voice; refer to the College Board's published CED for verbatim wording.