1929 crisis

• Roosevelt's actions


  • Took immediate action
  • Relied on a skilled team of advisers and secretaries (the "brain trust")
  • Appointed Frances Perkins as the first woman in a US Cabinet, as Secretary of Labor
  • Showed pragmatism and a will to improve the condition of every citizen
• New Deal


  A set of domestic policies that expanded the federal government's role in the economy in response to the Great Depression
• New Deal periods


  • First New Deal (1933-1934)
  • Second New Deal (1935-1938)
• FDR's political communication


  • Spoke directly to Americans to explain his policies, through fireside chats
  • Redefined the relationship between the American people and the President
• The First New Deal (1933-1934): Making the economy recover

  1. Relief (for the unemployed)

  2. Recovery (of the economy through federal spending and job creation)

  3. Reform (of capitalism, by means of regulatory legislation and the creation of new social welfare programmes)
• The dollar was devaluated in 1934 by 41%: this helped exports and reduced the burden of debts and credit
• The Federal Government took over the payment of some loans or gave farmers access to cheaper credit
• New Deal actions


  1. Stage 1: Pump priming (injecting credit and funding using a temporary public deficit)

  2. Stage 2: Structural reforms (the federal government publicly chose to help the companies that followed optional economic interests, doing their civic duty)
• Alphabet Agencies


  • Agricultural Adjustment Act (AAA)
  • Federal Emergency Relief Act (FERA)
  • National Industrial Recovery Act (NIRA)
  • Federal Deposit Insurance Corporation (FDIC)
  • Securities and Exchange Commission (SEC)
  • Indian Reorganization Act
• Tennessee Valley Authority (TVA)


  • Federally owned corporation to provide safe navigation, flood control, better agricultural practices, manufacturing hydroelectricity and global economic development to the Tennessee Valley
  • Brought electricity to rural remote areas that were not powered up then
  • Improved agriculture using crop rotation and fertilisers, and replanting trees reduced erosion and topsoil loss
  • Faced some opposition due to forced relocation of 15,000 families, but seen as a success and an opportunity for the area
  • Now mainly an energy producer and provider, using non-renewable and renewable sources, for about 10 million people
• Opposition groups and unions (now protected by the NIRA Act) launched strikes and put pressure on the federal administration


  1935
• Opposition groups and unions wanted more action from the US government


  To protect workers and improve social issues in the country
• Some industrialists and politicians grew weary of the New Deal

  Blamed Roosevelt for socialist inspirations
• The NIRA and AAA were repealed by the Supreme Court

  1935-1936
• Roosevelt had to adapt and launched new programs
• The second phase of the New Deal focused on increasing workers' protection and building long-lasting financial security for Americans
• Eleanor Roosevelt


  FDR's wife, played an active role in the New Deal: she wrote a monthly magazine column and argued in favor of increasing women's and African Americans' protection
• Works Progress Administration (WPA)

  Employed millions of Americans (men and women) in public works projects, from constructing bridges and roads to painting murals and writing plays
• Rural Electrification Administration


  Formed to build plants and power lines in rural areas
• Revenue Act


  Increased the taxes on the richest: the maximum tax on income of over $50,000 was increased from 59% to 75%
• Wagner Labor Relations Act

  Guaranteed workers the right to form unions and bargain collectively
• Social Security Act


  Required workers and employers to contribute-through a payroll tax-to the Social Security trust fund, which makes monthly payments to retirees over the age of 65, as well as to the long-term disabled
• National Youth Administration


  Employed 750,000 young graduates out of a job
• Fair Labor Standards Act

  Mandated a 40-hour work week (with time-and-a-half for overtime), set an hourly minimum wage, and restricted child labor
• Around 10 million people were employed by federally funded programs
• The Social Security Act created for the first time in the US social rights (in case of unemployment or disabilities)
• This came at the cost of a high budget deficit
• Roosevelt was triumphantly reelected

  1936
• After another economic slump in 1937


  The government decided to reduce its help and funding in order to avoid uncontrolled inflation
• As the government reduced help and funding

  Unemployed numbers rose
• Even if figures showed improvement before the cuts, the country's economy was not strong enough without state help
• The last measures are even more Keynesian, with a bigger budget deficit, state funding to accommodation so that people could buy their own houses, push towards higher wages
• This will be interrupted by the war
• Even if the US joined after Pearl Harbor on December 7th 1941, they had started to invest in military equipment before that
• National income in the US was not back to its 1929 level yet and the industrial production was just equal to the 1929 figures


  1939
• The New Deal policies seem to have stabilised the economy and brought some structural change
• Structural changes brought by the New Deal

  • Better infrastructures (electricity and the TVA being an example)
  • Better work productivity (+22% between 1929 and 1939)
  • More efficiency in the organisation of work, with a closer cooperation between private and public sectors
• Those factors would prove decisive after 1941
• Roosevelt faced heavy criticism from the Republicans and some industrialists, but he managed to rebuild the nation's confidence
• The achievements of the Roosevelt administration rank among the most important of any presidency in American history