The ‘New Deal’ - The Beginning of FDR's Presidency

This section explores the beginning of Franklin D. Roosevelt’s presidency in 1933. When Franklin D. Roosevelt (FDR) assumed the presidency in March 1933, the United States was gripped by the Great Depression. Millions of Americans were unemployed, banks were failing, and businesses were closing. In his first inaugural address, Roosevelt sought to reassure the nation, famously declaring, “The only thing we have to fear, is fear itself”. This speech marked the beginning of a radical shift in American government policy and the start of Roosevelt’s ambitious programme, known as the New Deal, aimed at bringing the nation out of economic despair.

The first 100 days of Roosevelt’s presidency were crucial in setting the direction for his administration. During this period, Roosevelt swiftly passed a series of groundbreaking laws and introduced sweeping reforms, signalling the end of the Republican Party’s laissez-faire approach to economics and governance. The New Deal sought to tackle the root causes of the Great Depression by providing relief, promoting recovery, and enacting reform.

The New Deal’s Aims and Objectives

The central aim of the New Deal was to save American capitalism and restore faith in the economic system. Roosevelt recognised that while capitalism had caused the depression, it was also the key to recovery, as it would provide jobs and stimulate demand. To achieve this, he introduced a variety of policies that represented a fundamental shift in how the federal government engaged with the economy.

Roosevelt’s administration worked closely with Congress, which passed 15 major bills addressing the most urgent problems caused by the depression. These policies targeted various aspects of the American economy, including the banking sector, agriculture, and industry. The government’s role in economic affairs grew dramatically, with federal intervention seen as essential for stabilising the nation.

Key New Deal Policies and Actions

The first actions taken by Roosevelt and his administration were aimed at restoring confidence in the government and the economy. Below are some of the early measures introduced during Roosevelt’s presidency:

Banking Reform and Restoring Confidence

The Emergency Banking Act of 1933 was one of the first and most crucial pieces of legislation passed during Roosevelt’s first days in office. With banks collapsing across the nation, millions of Americans had lost their life savings and were unwilling to trust the banking system. Roosevelt’s solution was to close all banks temporarily, giving them time to be inspected and restructured. Only the banks that were deemed stable and well-managed were allowed to reopen. This swift action helped restore confidence in the banking system, and within weeks, Americans began returning their savings to the banks, revitalising the financial system.

Government Spending and Fiscal Policy

The Economy Act was another early measure that reflected Roosevelt’s determination to balance the federal budget, at least in the short term. Although it was a difficult decision, Roosevelt’s administration implemented pay cuts for government employees and veterans, saving nearly $1 billion in the process. While the act was unpopular, it helped generate immediate funds to support the New Deal's various relief efforts, such as public works and social security programmes.

Ending Prohibition and Tackling Organised Crime

One of the more symbolic actions of Roosevelt’s first months in office was the Beer and Wine Revenue Act, which effectively ended Prohibition. The national ban on alcohol, which had been implemented in 1920, had led to a rise in organised crime, as bootleggers and criminal syndicates capitalised on the illegal demand for alcohol. Roosevelt recognised that the ban was both unpopular and ineffective. The decision to legalise the sale of alcohol not only reduced the power of organised crime but also enabled the government to tax alcohol, generating much-needed revenue for the New Deal’s initiatives. The tax on alcohol helped fund various public works programmes, while also providing an economic boost to the alcohol industry.

Further Reforms and Initiatives

As Roosevelt’s presidency continued, the New Deal evolved into a comprehensive series of programmes that sought to tackle the long-term structural problems facing the American economy. These included the Agricultural Adjustment Act (AAA), which aimed to stabilise agricultural prices, and the Civilian Conservation Corps (CCC), which employed young men in public works projects, such as planting trees and building infrastructure.

Additionally, Roosevelt created the Social Security Act in 1935, which established the foundation for the modern welfare state in the United States. This act provided financial assistance to the elderly, disabled, and unemployed, marking a significant shift towards a more supportive role for the federal government in addressing poverty and social inequality.

The Legacy of the New Deal

The New Deal fundamentally reshaped the relationship between the American government and its citizens. For the first time, the federal government played a direct role in regulating the economy, providing relief to those in need, and investing in long-term recovery. Roosevelt’s New Deal programmes provided much-needed relief to millions of Americans suffering from the effects of the Great Depression and laid the groundwork for the recovery that followed. Although not all the policies were successful, and some were controversial, the New Deal represented a bold and unprecedented response to an unprecedented crisis.

Roosevelt’s leadership during the early years of his presidency, particularly through his first 100 days and the introduction of the New Deal, helped restore Americans’ faith in their government and in the possibility of economic recovery. His policies would continue to evolve throughout his presidency, but the New Deal’s core principles of government intervention and social support would shape American politics for decades to come.