Economics and Business
What was the New Deal?
While the Great Depression began with the stock market crash on Black Tuesday, October 29, 1929, many factors contributed to the financial crisis, including overproduction, limited foreign markets (due to war debts that prevented trading), and overexpansion of credit, as well as stock market speculation. Soon the country was in the grips of a severe economic downturn that affected most every American. Some were harder hit than others: many lost their jobs (16 million people were unemployed at the depth of the crisis, accounting for about a third of the workforce); families were unable to make their mortgage payments and lost their homes; hunger was widespread, since there was no money to buy food. The sight of people waiting in bread lines was a common one.
It was amidst this crisis, which was soon felt overseas, that Franklin D. Roosevelt (1882–1945) took office as president in 1933. In his inaugural address, he called for faith in America’s future, saying, “The only thing we have to fear is fear itself.” Roosevelt soon rolled out a program of domestic reforms called the New Deal. For the first time in American history, the federal government took a central role in organizing business and agriculture. Roosevelt initiated aid programs and directed relief in the form of public works programs that would put people back to work. The new government agencies that were set up included the Public Works Administration, Federal Deposit Insurance Corporation, Security and Exchange Commission, National Labor Relations Board, Tennessee Valley Association, the National Recovery Administration, and the Civilian Conservation Corps. These government organizations soon become known by their initials (PWA, FDIC, SEC, NLRB, TVA, NRA, CCC). Roosevelt’s critics charged him with giving the federal government too much power and began calling his New Deal “alphabet soup.” The president became widely known as FDR.
Though the New Deal measures alleviated the situation and did put some Americans back to work, the country did not pull out of the Depression until industry was called upon to step up production in order to provide arms, aircraft, vehicles, and supplies for the war effort. It was during the early days of World War II (1939–45), the economy buoyed by military spending, that the nation finally recovered. Many New Deal agencies are still part of the federal government today.