The New Deal was a set of domestic policies enacted under President Franklin D. Roosevelt that dramatically expanded the federal government’s role in the economy in response to the Great Depression.
Historians commonly speak of a First New Deal (1933-1934), with the “alphabet soup” of relief, recovery, and reform agencies it created, and a Second New Deal (1935-1938) that offered further legislative reforms and created the groundwork for today’s modern social welfare system.
It was the massive military expenditures of World War II, not the New Deal, that eventually pulled the United States out of the Great Depression.
Origins of the New Deal
The term New Deal derives from Franklin Roosevelt’s 1932 speech accepting the Democratic Party’s nomination for president. At the convention Roosevelt declared, “I pledge you, I pledge myself, to a new deal for the American people.” Though Roosevelt did not have concrete policy proposals in mind at the time, the phrase "New Deal" came to encompass his many programs designed to lift the United States out of the Great Depression.^1
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The New Deal created a broad range of federal government programs that sought to offer economic relief to the suffering, regulate private industry, and grow the economy. The New Deal is often summed up by the “Three Rs”:
relief (for the unemployed)
recovery (of the economy through federal spending and job creation), and
reform (of capitalism, by means of regulatory legislation and the creation of new social welfare programs).^2
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Roosevelt’s New Deal expanded the size and scope of the federal government considerably, and in doing so fundamentally reshaped American political culture around the principle that the government is responsible for the welfare of its citizens. As one historian has put it: “Before the 1930s, national political debate often revolved around the question of whether the federal government should intervene in the economy. After the New Deal, debate rested on how it should intervene.”^3
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The First New Deal (1933-1934)
At the time of Roosevelt’s inauguration on March 4, 1933 the nation had been spiraling downward into the worst economic crisis in its history. Industrial output was only half of what it had been three years earlier, the stock market had recovered only slightly from its catastrophic losses, and unemployment stood at a staggering 25 percent.^4
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