How One Man Shaped America: Franklin D. Roosevelt and the New Deal

By Audrey W. | Arcadia Staff
Today, the Great Depression is remembered as a time of unprecedented financial and social loss in American history. The country was three years into the Depression when President Franklin D. Roosevelt was elected into office in 1933. He immediately set to introducing sweeping changes, establishing programs to create jobs and boost financial security as part of his New Deal. Roosevelt would employ these practices over the next eight years, some longer, as a comprehensive plan to provide relief for struggling Americans.

The Economy Crashes

Throughout the 1920s, the American economy experienced rapid growth. The nation’s wealth more than doubled over the course of ten years. Everyone from financiers to cooks were investing in the stock market. But by early 1929, unemployment had again started to rise, and production rates in the US were hitting an all-time decade low. Meanwhile, interest rates and the price of stocks remained high. The country entered a mild recession that summer, but it never recovered. On October 24, 1929, a day that history has named “Black Thursday,” people began rapidly selling stock, sending the economy into a downward spiral. Five days later, millions of dollars in invested shares were rendered worthless. 
 
Many Americans had been living primarily off credit. During the crash, they fell into devastating debt causing them to lose their jobs and homes. The crash created a domino effect that impacted economies of countries around the world, primarily in Europe. President Herbert Hoover tried to reassure the public that the economy would heal itself, but after three years of little pay and work, Americans had lost their confidence. Soup kitchens were crowded, thousands of banks were forced to close their doors, and millions of Americans were without work and hope. 

Roosevelt Elected President

Franklin D. Roosevelt (also commonly known as FDR) swept the 1932 presidential election. He presented a calm self - one that reassured the majority of Americans. He came to be known for his famous line, “The only thing we have to fear is fear itself.” After being elected, FDR’s first step toward healing the nation was to declare a four-day bank “holiday” in which every bank nationwide would close its doors. Congress could then pass the Emergency Banking Act to determine banks that were foundational enough to be reopened. He asked Americans to put their savings back into the banks and many did.

The New York Stock Exchange..By the end of the month, nearly 75 percent of the banks had reopened. His next aim was to reform the financial system of the United States. He created the Federal Deposit Insurance Corporation (FDIC) and Securities and Exchange Commission (SEC) to help regulate the stock market. Roosevelt also became known for his “fireside chats.” He was the first president to enact such a method of communication with the American public. The chats were his way of staying in touch with Americans, updating them on new financial policies, and helped reestablish faith in the government. 

The New Deal

The New Deal focused on the “3 Rs”: relief, recovery, and reform. Roosevelt recognized the need for comprehensive change in the country’s financial sector to prevent another disaster like the Great Depression. Three days after Roosevelt employed the Emergency Banking Act, the Federal Reserve System was indoctrinated as a central banking system for the country. It still stands as such today. The Federal Deposit Insurance Federation insured monetary withdraws up to $2,500, with the hopes of avoiding another stretch of banks runs, which had caused the economic crash in the first place. 
 
There had been no serious regulations on Wall Street prior to the 1929 crash. The Securities Act of 1933 required banks to make their profit and losses, balance sheets, and a list of companies they traded with open knowledge. This was done in an effort to limit abuses to an unregulated stock market. Roosevelt asked that Congress abolish Prohibition, citing it as an area of contention throughout the 1920s, and one that had caused a rift in the economy. Congress obliged and ratified the 21st Amendment, ridding the country of Prohibition for good. 
 
The Public Works Administration (PWA) was an attempt by Roosevelt and Congress to provide steady work for Americans. Many of the projects under the PWA were the construction of bridges, hospitals, schools, airports, and roads. FDR signed the Tennessee Valley Act (TVA) in May 1933. This gave permission for the construction of dams along the Tennessee River, which created jobs and generated hydroelectric power for people living around the river. In June, Congress passed the National Industrial Recovery Act (NIRA), which guaranteed workers the right to unionize for higher pay and better working conditions. The Civilian Conservation Corps (CCC), Civil Works Administration (CWA), and the Farm Security Administration (FSA) also put Americans back to work. These were comprised of methods that offered unemployed Americans not only work, but also security in their jobs with a livable pay. 

President Franklin D. Roosevelt.Turning their attention to agriculture, FDR and Congress used the Agricultural Adjustment Act (AAA) to pay farmers to halt production of staple crops like wheat, corn, and dairy to decrease the surplus of those goods. This would increase the prices of those products already on the market. It was one of the few of FDR’s new policies that received public pushback. Critics claimed the government had no place to regulate the quantity of goods farms produced, however, the program persisted. The Resettlement Administration (RA) and Rural Electrification Administration (REA) offered welfare to families in rural communities deplete from resources. Food stamps were also introduced to help poor urban communities and many American families took advantage of the newfound support.
 
Among the second round of the New Deal was the Social Security Act, establishing support for the unemployed, retired, and people with disabilities, and the Works Progress Administration, which was responsible for building structures like the Lincoln Tunnel, the Overseas Highway, and LaGuardia Airport. The Federal Writers’ Project employed writers of every state to chronicle the stories and folklore in their state’s heritage, effectively creating a guide to their home. 

Results of FDR’s New Deal

During his 12 years in office, Roosevelt successfully restored faith in the federal government. Many of the systems he put into action are still embedded in our society today. While many believe it didn’t change Americans mindset toward being a welfare state, it did grant the democratic party increased support for the next several election cycles. Critics then and now cite it as having too openly favored capitalism thus doing little for minorities. The New Deal increased national debt substantially, increased the power of the federal government, and regulated free business practices where it might have otherwise not been allowed. It also forced Americans to become more aware of their social standing - class consciousness rose in the public eye. 
 
Despite these critiques, the New Deal offered the country a wealth of benefits. It preserved capitalism and the nation’s democracy when it was on the verge of collapse. Likewise, it can be argued that the economy and the stock market were made more effective by adding regulations, providing increased financial security. A more equal distribution of wealth was established as people from low and middle class families were given work and pay that allowed them to live comfortably. 
 
While it might not have been perfect, the New Deal offered Americans what they most needed at the time. Along with the financial and social implications, the deal provided people with hope. It helped restore faith in their government and got the country back on its feet.