Key facts and dates

Franklin D Roosevelt's First New Deal was a series of emergency measures introduced between 1933 and 1934 to combat the devastating effects of the Great Depression. These initiatives marked a significant shift in federal government involvement in the economy and society, aiming to provide relief, recovery, and reform.

Timeline of key events

• 4 March 1933 – FDR's inauguration, delivering the famous "the only thing we have to fear is fear itself" speech.
• 9 March - 16 June 1933 – The 'Hundred Days', a period of intense legislative activity to address the crisis.
• 9 March 1933 – Emergency Banking Act passed, closing banks for inspection to restore confidence.
• May 1933 – Agricultural Adjustment Administration (AAA) established to boost farm prices.
• June 1933 – National Recovery Administration (NRA) created to regulate industry and labour.
• 1933-1934 – Civilian Conservation Corps (CCC) and Civil Works Administration (CWA) provide work relief.
• 1934 – Securities and Exchange Commission (SEC) formed to regulate financial markets.

Franklin D Roosevelt's inauguration and initial response

Franklin D Roosevelt (FDR) took office on 4 March 1933, at the height of the Great Depression, with the United States facing unprecedented economic collapse. His inauguration marked a turning point, offering hope and a stark contrast to the perceived inaction of his predecessor, Herbert Hoover. FDR's approach was immediate and decisive, setting the tone for his administration.

Key aspects of FDR's inauguration

• Inspirational rhetoric - In his inaugural address, FDR famously declared, "the only thing we have to fear is fear itself," urging Americans to overcome panic and despair with collective action.
• Promise of action - He committed to "action and action now," rejecting Hoover's passive reliance on market recovery and promising bold government intervention.
• Congressional special session - Immediately after taking office, FDR called a special session of Congress to tackle the crisis, demonstrating his urgency and determination to enact sweeping reforms.

The 'Hundred Days' legislative period

Between 9 March and 16 June 1933, known as the 'Hundred Days', FDR and Congress unleashed a flood of legislation to address the immediate economic emergency. This period was crucial in stabilising the banking system and laying the groundwork for broader reforms.

Major legislative measures of the Hundred Days

• Emergency Banking Act (9 March 1933) - This act closed all banks for a brief inspection period, allowing only financially sound institutions to reopen. It aimed to restore public confidence in the banking system, supported by FDR's first "fireside chat" radio address, where he explained the measures directly to Americans.
• Economy Act - This reduced government spending and veterans' benefits, reflecting a contradictory move to appease orthodox economic opinion despite the need for relief. It showed FDR's willingness to balance competing pressures.
• Beer-Wine Revenue Act - By legalising the sale of beer and wine, this act anticipated the full repeal of Prohibition (via the 21st Amendment in December 1933), generating revenue and responding to public demand for change.

Key programs of the First New Deal for relief, recovery, and reform

The First New Deal introduced a range of programs targeting relief for the unemployed, recovery for the economy, and reform to prevent future crises. These initiatives, often referred to as the "alphabet soup" of agencies, addressed various sectors of society and the economy.

Agricultural and industrial recovery programs

• Agricultural Adjustment Administration (AAA) - Established in May 1933, the AAA paid farmers to reduce production, aiming to raise crop prices through processing taxes. This controversial measure led to the destruction of crops and livestock while many Americans faced hunger, and it was later declared unconstitutional in 1936.
• National Recovery Administration (NRA) - Launched in June 1933, the NRA set industry-wide codes for prices, wages, production, and labour standards. It included Section 7(a), which guaranteed workers' right to organise, and used the Blue Eagle symbol in a massive public relations campaign. However, its voluntary compliance model proved ineffective, and it was ruled unconstitutional in 1935.

Relief programs for the unemployed

• Civilian Conservation Corps (CCC) - This program employed 2.5 million young men in conservation projects such as reforestation and park development. Operating in military-style camps, it provided environmental benefits but was limited to young men, excluding other demographics.
• Federal Emergency Relief Administration (FERA) - Led by Harry Hopkins, FERA provided grants to states for direct relief, assisting around 20 million people. It marked an important precedent for federal responsibility in welfare provision.
• Civil Works Administration (CWA) - Active during the winter of 1933-34, the CWA employed 4 million people on public works projects. Though expensive, it offered immediate help to those in desperate need during the harsh winter months.

Financial and regional development initiatives

Alongside relief and recovery, the First New Deal included significant reforms to stabilise the financial system and transform underdeveloped regions. These measures aimed to prevent future economic disasters and improve living conditions.

Financial reforms to restore trust

• Glass-Steagall Act (1933) - This act separated commercial and investment banking to reduce risky speculation. It also created the Federal Deposit Insurance Corporation (FDIC), insuring bank deposits to prevent panic during future crises.
• Securities and Exchange Commission (SEC) - Established in 1934, the SEC regulated the stock market by requiring disclosure of financial information and preventing fraudulent practices, aiming to protect investors and stabilise markets.

Regional transformation through the Tennessee Valley Authority

The Tennessee Valley Authority (TVA) was a comprehensive regional development project that built dams for flood control and electricity generation. It also focused on soil conservation, reforestation, and bringing electricity to rural areas of the Tennessee Valley.

Impact and criticism of the TVA:

• Impact - It transformed one of the poorest regions in the U.S., improving living standards and economic opportunities.
• Criticism - Opponents labelled it as "socialism" due to its government-led nature, highlighting ideological tensions over federal intervention.

Philosophy and overall impact of the First New Deal

The First New Deal was underpinned by a distinct philosophy that shaped its approach to tackling the Great Depression. While it achieved notable successes, it also faced limitations and criticism, reflecting the complexity of the crisis.

Core philosophy of the First New Deal

• Pragmatic experimentation - FDR adopted a "try something and if it fails, try something else" mindset, prioritising action over rigid ideology. This led to a wide array of programs and agencies.
• Expansion of federal power - The New Deal significantly increased the role of the federal government in economic and social life, moving away from traditional laissez-faire policies.
• Deficit spending - Although not yet theoretically accepted, the government engaged in deficit spending to fund programs, marking a shift towards active economic intervention.

Results and limitations

• Partial recovery - By 1934, GDP was growing, and unemployment had fallen from 25% to approximately 22%. The banking crisis was resolved, restoring public confidence in financial institutions.
• Persistent challenges - Despite these gains, the Depression continued, with millions still out of work and economic hardship widespread.
• Criticism from left and right - The First New Deal faced opposition from both sides of the political spectrum. The left argued it did not go far enough in addressing inequality, while the right criticised the expansion of government as excessive and un-American.
• Legacy - While not a complete solution, the First New Deal laid the foundation for further reforms and established a precedent for federal responsibility in times of crisis, reshaping American governance.