New Deal

The New Deal was a federally funded initiative implemented by Franklin Delano Roosevelt that was designed to reverse the impact of the Great Depression of the 1930s. Roosevelt became president of the United States in 1933, at the height of the greatest economic disaster that has ever devastated the nation. He recognized that the hands-off policy adopted by his predecessor, Herbert Hoover, was not helping to revitalize the economy, provide jobs, or boost morale of the American people. Because of this, he saw the necessity of federal intervention in the economy on an unprecedented scale. Roosevelt kept the American public informed of his goals, objectives, and progress through his now-famous Fireside Chats. These informative messages were delivered via the radio and helped to keep up people's morale and maintain their trust in their president.

The New Deal was three-pronged: It focused on enacting regulatory legislation for banking practices and the stock market, it dedicated significant monies to relief agencies and securing fair labor practices, and it sought to boost the economy by creating employment. Roosevelt was not timid in his approach to any of these spheres, and within 2 months of taking office, he shut down all of the banks in the United States through the Emergency Banking Act. He took this step to determine how all of the banks in the country were faring. This drastic step led to the creation of the Federal Deposit Insurance Corporation, or FDIC, which insured the deposits of participating banks for up to $5,000. For the first time since the rush on the banks in 1929, which had left many without their life savings and contributed to the Great Depression, Americans again entrusted their money to banks.

Another major piece of regulatory legislation was the Federal Securities Act of May 1933, which was accompanied by the establishment of the Securities Exchange Commission. The Federal Securities Act required the disclosure of information on stocks that were being sold, while the SEC's function was, and continues to be, to ensure that the laws were being followed. These innovations leveled the stock market playing field so that those interested in investing in the stock market could do so as informed consumers.

The second aspect of the New Deal, the commitment of federal money to relief agencies, was significant in that up to this point in history, America had not committed itself to the aid of the needy. However, as the majority of the country fell into the category of “the needy,” it was clear that action was required by the government. Therefore, the Social Securities Commission, which was dedicated to providing pensions for retired workers and those who had been victims of work accidents, was established. Also, the Federal Emergency Relief Administration (FERA) was founded to administer funds to a variety of relief agencies.