The First and Second New Deals
Roosevelt Takes Office
Franklin D. Roosevelt was inaugurated as the 32nd President of the United States on 4 March 1933. In his famous opening address, he told the American people that “the only thing we have to fear is fear itself” — framing the Depression as a crisis of confidence that decisive action could break. Within the first hundred days of his presidency, he and Congress passed a remarkable series of laws that transformed the relationship between the federal government and the American economy. The scale of intervention was without peacetime precedent.
The Hundred Days (March–June 1933) produced the core of the First New Deal. Key agencies created included: the AAA (Agricultural Adjustment Agency), which paid farmers to reduce production in order to raise food prices; the CCC (Civilian Conservation Corps), which employed young men in national parks and forests; the FERA (Federal Emergency Relief Administration), which gave half a billion dollars in grants to states for direct relief; the NRA (National Recovery Administration), which set codes of fair competition across industries; and the TVA (Tennessee Valley Authority), which built dams and provided electricity to seven previously impoverished Southern states.
The Scale of Federal Expansion
The New Deal represented an unprecedented expansion of federal government. Before 1933, Washington spent a tiny fraction of national income and employed a small workforce. By 1936, federal spending had roughly doubled as a share of the economy. Millions of Americans experienced the federal government directly for the first time — through a CCC paycheck, a FERA relief cheque, or a TVA electricity connection in a home that had never had power. The Glass-Steagall Act (June 1933) separated commercial and investment banking and created the Federal Deposit Insurance Corporation, guaranteeing bank deposits and halting the bank-run panics that had destroyed savings in 1930–33.
The Second New Deal
By 1935, the Supreme Court had declared the NRA unconstitutional in the Schechter Poultry case (May 1935) and the AAA was also struck down the following year. Roosevelt responded with a second wave of legislation in 1935 — often called the Second New Deal — that shifted emphasis from economic co-ordination to workers’ rights and social security.
The Wagner Act (National Labor Relations Act, 1935) guaranteed workers the right to join trade unions and bargain collectively with employers. It was the most important piece of labour legislation in American history to that point. The Social Security Act (August 1935) established old-age pensions for workers over 65 and a system of unemployment insurance — the first federal social safety net in American history. The Works Progress Administration (WPA), under Harry Hopkins, employed over 8 million people in building projects and arts programmes.
The New Deal was not a single person’s work. Frances Perkins, Roosevelt’s Labor Secretary and the first woman to serve in a US Cabinet, was the principal architect of the Social Security Act and the federal minimum wage. Harry Hopkins, who ran FERA and later the WPA, was Roosevelt’s closest adviser on relief policy and spent money on direct help faster and more effectively than Hoover had ever contemplated. Senator Robert Wagner of New York championed the labour rights act that bears his name against fierce business opposition. Eleanor Roosevelt pressed her husband to do more for African Americans, women workers, and the poor.
The Wagner Act (1935) guaranteed the right to organise trade unions and established the National Labor Relations Board to enforce those rights and investigate unfair employer practices. Trade union membership surged: the CIO (Congress of Industrial Organisations), a new federation for industrial workers, grew rapidly. The Social Security Act (1935) provided old-age pensions for workers over 65, funded by payroll taxes shared between employers and employees, and created a federal-state unemployment insurance system — the first federal safety net in American history.
After the Supreme Court struck down the NRA and AAA, Roosevelt proposed in February 1937 to appoint up to six additional justices — one for each sitting justice over 70. The plan was widely seen as an attempt to pack the Court with New Deal supporters and was defeated even in the Democrat-controlled Congress. The episode damaged Roosevelt’s political standing. Nevertheless, the Court’s composition changed naturally through retirement in 1937–39, and it became substantially more sympathetic to New Deal legislation without the packing plan ever being enacted.