New Deal

The New Deal refers to a series of economic, social, and political reforms in response to the Great Depression in the United States under the first and second administrations of President Franklin D. Roosevelt. Following a demand-side economic theory, Roosevelt sought to utilize the authority of the federal government to increase spending and introduce programs to spur growth and combat issues specific to the depression, such as unemployment, labor relations, financial reform, and social welfare. Roosevelt introduced the phrase when accepting the Democratic Party presidential nomination in the 1932 United States presidential election, winning in a landslide over incumbent Herbert Hoover, whose administration was widely viewed as ineffective. Roosevelt attributed the Depression to inherent market instability and inadequate aggregate demand (based on the Keynesian economic model), and argued that stabilizing and rationalizing the economy required massive government intervention. During Roosevelt's first hundred days in office in 1933 until 1935, Roosevelt introduced what historians refer to as the "First New Deal", which focused on the "3 R's": relief for the unemployed and for the poor, recovery of the economy back to normal levels, and reforms of the financial system to prevent a repeat depression. Roosevelt signed the Emergency Banking Act, which authorized the Federal Reserve to insure deposits to restore confidence, and the 1933 Banking Act made this permanent with the Federal Deposit Insurance Corporation (FDIC). Other laws created the National Recovery Administration (NRA), which allowed industries to create "codes of fair competition"; the Securities and Exchange Commission (SEC), which protected investors from abusive stock market practices; and the Agricultural Adjustment Administration (AAA), which raised rural incomes by controlling production. Public works were undertaken in order to find jobs for the unemployed (25 percent of the workforce when Roosevelt took office): the Civilian Conservation Corps (CCC) enlisted young men for manual...