The First New Deal was FDR's bold response to the Great Depression. It introduced sweeping legislation to stabilize banks, provide relief, and stimulate economic recovery. Key programs like the CCC and PWA created jobs, while agencies like the FDIC restored confidence in the financial system.

Roosevelt's approach emphasized "bold, persistent experimentation" and expanded the federal government's role. While not fully resolving the Depression, the First New Deal provided immediate relief, laid the groundwork for future reforms, and reshaped the relationship between government and the economy.

The First New Deal: Legislation, Impact, and Roosevelt's Approach

Major legislation of First New Deal

• Banking and Finance
  • Emergency Banking Act (1933) closed all banks for a four-day "bank holiday" and only allowed them to reopen once deemed solvent, restoring public confidence in the banking system and preventing further bank runs
  • Glass-Steagall Act (1933) separated commercial and investment banking to prevent risky speculation, created the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits up to a certain amount (e.g., $2,500 in 1933)
  • Securities Act (1933) required full disclosure of information on stocks being sold and prohibited fraud in the sale of securities, protecting investors from deceptive practices (pump and dump schemes)
• Relief and Welfare
  • Federal Emergency Relief Administration (FERA) provided direct relief to the unemployed through grants to states and localities, offering assistance to millions of Americans (20% of families)
  • Civil Works Administration (CWA) employed millions in public works projects during the winter of 1933-1934, constructing or repairing infrastructure (roads, bridges, schools)
  • Civilian Conservation Corps (CCC) employed young men aged 18-25 in conservation projects such as planting trees, building parks, and improving infrastructure, providing work for over 3 million
• Agriculture
  • Agricultural Adjustment Act (AAA) paid farmers to reduce crop production in order to raise prices and provided subsidies to farmers, improving farm incomes but leading to some controversial practices (destroying crops and livestock)
  • Efforts to address the devastating effects of the Dust Bowl on agricultural communities
• Industry and Labor
  • National Industrial Recovery Act (NIRA) created the National Recovery Administration (NRA) to establish codes of fair competition and minimum wages, guaranteed the right of workers to organize unions, though it was later ruled unconstitutional
  • Public Works Administration (PWA) funded large-scale public works projects to create jobs and stimulate the economy, building major infrastructure (Hoover Dam, LaGuardia Airport)
• Other Initiatives
  • Tennessee Valley Authority (TVA) provided navigation, flood control, electricity, fertilizer, and economic development to the impoverished Tennessee Valley region, serving as a model for regional planning and development

Impact of First New Deal recovery

• Mixed success in stimulating economic recovery
  • GDP increased and unemployment decreased from 1933-1937, but the economy did not fully recover to pre-Depression levels (1929 GDP not reached until 1936)
  • Programs like the CCC and PWA provided immediate relief and employment, improving lives and stimulating demand
  • Agricultural and industrial policies had limited success in raising prices and wages due to overproduction and labor unrest
• Criticisms and challenges
  • Some argued the New Deal did not go far enough in addressing root causes of the Depression (income inequality, underconsumption)
  • Others criticized the increased role of the federal government in the economy as a threat to free enterprise and individual liberty
  • The Supreme Court declared some programs unconstitutional (NRA, AAA), limiting Roosevelt's ability to implement reforms
• Long-term impact
  • Established precedent for greater federal involvement in the economy and social welfare, reshaping role of government
  • Introduced concept of a social safety net through programs like Social Security and unemployment insurance
  • Laid foundation for future economic reforms and regulations (Fair Labor Standards Act, GI Bill)

Roosevelt's economic reform approach

• "Bold, persistent experimentation"
  • Willingness to try new and innovative solutions to address the economic crisis, even if they challenged conventional wisdom (deficit spending)
  • Openness to learning from failures and adjusting policies as needed, demonstrating flexibility and pragmatism
• Increased role of federal government
  • Believed government had a responsibility to intervene in the economy to promote recovery and stability, a departure from laissez-faire policies
  • Expanded powers and reach of executive branch through various agencies and programs (Alphabet Agencies)
• Focus on relief, recovery, and reform (Three Rs)
  1. Prioritized providing immediate relief to those most affected by the Depression (direct aid, employment)
  2. Implemented policies aimed at stimulating economic recovery in the short term (public works, agricultural and industrial policies)
  3. Introduced long-term structural reforms to prevent future economic crises (banking regulations, social safety net)
• Pragmatism and political compromise
  • Worked with a diverse coalition of Democrats and Republicans to pass legislation, building broad support
  • Balanced competing interests and demands from various groups, including business (Chamber of Commerce), labor (AFL), and agriculture (Farm Bureau)
• Communication and public support
  • Used fireside chats and other forms of public communication to explain policies and build support among the American people
  • Maintained high levels of popularity and political capital throughout early years of presidency, enabling him to pursue ambitious agenda

Roosevelt's Advisors and Economic Theory

• Brain Trust: A group of academic advisers who helped shape New Deal policies, providing expertise in various fields
• Keynesianism: Economic theory that influenced some New Deal policies, advocating for government intervention to stimulate demand during economic downturns
• Second New Deal: Later phase of New Deal programs that focused more on social welfare and labor rights
• Court-packing plan: Roosevelt's controversial attempt to add justices to the Supreme Court to overcome opposition to New Deal legislation