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The New Deal When Franklin D. Roosevelt assumed the presidency of the United States in 1933, the nation’s economy was in a state of turmoil. Following the stock market crash of 1929 that signaled the onset of the Great Depression, the Dow Jones Industrial Average went on to lose an additional 80 percent of its value through the early 1930s. Industrial production slowed to about half its pre-depression level, agricultural and other commodity prices tumbled to half of their previous value, and unemployment soared to 25 percent.

Roosevelt responded to the nation’s state of panic by immediately putting into action an aggressive recovery agenda known as the New Deal. In March 1933 Roosevelt outlined a set of measures designed to curb deflation and foreclosures and to put millions of people to work through government programs. Most historians consider the New Deal as having two parts. The first included emergency policies and programs aimed at stabilizing the national economy. This phase of the New Deal included legislation enacted within the first three months of Roosevelt’s presidency, which became known as the Hundred Days.

The second part, begun in the mid1930s, was a set of broader social welfare measures designed to combat poverty and provide an economic safety net. This phase was sometimes called the “Second New Deal.” One of the first New Deal measures to be enacted was the National Industrial Recovery Act, which created the National Recovery Administration (NRA). The law enabled businesses to work together to fix prices and quotas while protecting labor by setting minimum wages and allowing collective bargaining. Its effect on the economy was arguable, however, and both businesses and labor chafed at its regulations.

The Supreme Court declared the NRA unconstitutional in 1935. One of the more effective programs in the early years of the New Deal was the Agricultural Adjustment Act (AAA), which subsidized farmers for producing less and thereby raised commodity prices. Two other early programs, the Civilian Conservation Corps and the Public Works Administration, employed many people while helping to improve the nation’s infrastructure.

The Tennessee Valley Authority (TVA) built dams and other projects to harness the power of the Tennessee River for the first time. It helped to lift the region out of poverty. The TVA would cover a seven-state area and supply cheap electricity, prevent floods, and improve navigation. While the early measures went some distance toward stabilizing prices and raising production levels and employment, the United States was still mired in the depression in the mid-1930s.

With the broad support of the American public, Roosevelt launched the second phase of the New Deal, which would build the foundation for the modern welfare state. Most importantly, perhaps, was the passage of the Social Security Act in 1935, which provided a pension system for the aged and the disabled. The Works Progress Administration (WPA) employed some 8.5 million Americans between 1935 and 1942 in building roads, schools, airports, and other public works. The second phase of the New Deal also saw programs designed to employ artists and students, to bring electricity to rural areas, and to improve public infrastructure in general.