The New Deal
The New Deal was a series of economic programs enacted in the U.S. between 1933 and 1936 that involved presidential executive orders passed by Congress during the first term of President Franklin D. Roosevelt. The programs were a response to the Great Depression. They focused on the "3 Rs": relief, recovery, and reform. Relief was offered to the unemployed and poor; recovery was intended to bring the economy to normal levels; and system reform was hoped would prevent a repeat depression.
Before the New Deal, deposits at banks were not insured against loss. When thousands of banks faced bankruptcy, many people lost all their savings. There was no national safety net, no public unemployment insurance, and no Social Security. Franklin D. Roosevelt entered office with no specific set of plans for dealing with the Great Depression. Faced with the catastrophe he established an informal brain trust: a group of advisers who tended to hold positive views of pragmatic government intervention in the economy.
The First and Second New Deals
Many historians distinguish between a First New Deal (1933–34) and a Second New Deal (1935–38). The First New Deal dealt with diverse groups that needed help for economic survival, from banking and railroads to industry and farming. The Federal Emergency Relief Association (FERA), for instance, provided $500 million for relief operations by states and cities, while the Civil Works Administration (CWA) gave localities money to operate make-work projects. The second was more liberal and more controversial.
The Second New Deal was begun in the spring of 1935 . The Administration proposed or endorsed several important new initiatives in response to setbacks in the Court, a new skepticism in Congress, and growing popular clamor for more dramatic action. It included a national work program, the Works Progress Administration (WPA), that made the federal government the largest single employer in the nation. The other major innovations of New Deal legislation were the creation of the U.S. Housing Authority and Farm Security Administration, both begun in 1937, and the Fair Labor Standards Act of 1938, which set maximum hours and minimum wages for most categories of workers.
Political Realignment
The New Deal produced a political realignment. The Democratic Party became the majority party, with its base in liberal idealists, the white South, traditional Democrats, big city political machines and the newly empowered labor unions and ethnic minorities. The Republican Party was split. Conservatives opposed the entire New Deal as an enemy of business and growth; liberals accepted some of it but promised to make it more efficient. This realignment crystallized into the New Deal Coalition that dominated most presidential elections into the 1960s, while the opposition Conservative Coalition largely controlled Congress from 1937 to 1963.
This realignment represented a significant shift in politics and domestic policy. It led to greatly increased federal regulation of the economy. It also marked the beginning of complex social programs and the growing power of labor unions. The effects of the New Deal remain a source of controversy and debate among economists and historians.