What was the New Deal and what were some of its programs did this help with recovery?

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Updated on April 07, 2020

The New Deal was a sweeping package of public works projects, federal regulations, and financial system reforms enacted by the United States federal government in an effort to help the nation survive and recover from the Great Depression of the 1930s. The New Deal programs created jobs and provided financial support for the unemployed, the young, and the elderly, and added safeguards and constraints to the banking industry and monetary system.

Purposes of the New Deal Programs

Mostly enacted during the first term of President Franklin D. Roosevelt between 1933 and 1938, the New Deal was implemented through legislation enacted by Congress and presidential executive orders. The programs addressed what historians call the “3 Rs” of dealing with the depression, Relief, Recovery, and Reform—relief for the poor and jobless, recovery of the economy, and reform of the nation’s financial system to safeguard against future depressions.

The Great Depression, which lasted from 1929 to 1939, was the largest and most significant economic depression to affect both the United States and all Western countries. The stock market crash on Oct. 29, 1929, is infamously known as Black Tuesday, when stocks fell 13.5%. The next day's drop of 11.7% and a total decline of 55% between 1929 and 1933 made it the worst stock market decline in the history of the United States. Heavy speculation during the rising economy of the 1920s combined with widespread buying on margin (borrowing a large percentage of the cost of investment) were factors in the crash. It marked the beginning of the Great Depression.

To Act or Not to Act

Herbert Hoover was the sitting U.S. president when the stock market crash occurred in 1929, but he felt that the government should not take stringent action to deal with heavy losses by investors and the subsequent effects that rippled throughout the economy.

Franklin D. Roosevelt was elected in 1932, and he had other ideas. He worked to create numerous federal programs through his New Deal to help those who were suffering the most from the Depression. Besides programs built to directly help those affected by the Great Depression, the New Deal included legislation intended to correct the situations that led to the stock market crash of 1929. Two prominent actions were the Glass-Steagall Act of 1933, which created the Federal Deposit Insurance Corporation (FDIC), and the creation of the Securities and Exchange Commission (SEC) in 1934 to be a watchdog over the stock market and police dishonest practices. The following are the top 10 programs of the New Deal.

Civilian Conservation Corps (CCC)

The Civilian Conservation Corps was created in 1933 by FDR to combat unemployment. This work relief program had the desired effect, providing jobs for many thousands of Americans during the Great Depression. The CCC was responsible for building many public works projects and created structures and trails in parks across the nation that are still in use today.

Civil Works Administration (CWA)

The Civil Works Administration was also formed in 1933 to create jobs for the unemployed. Its focus on high-paying jobs in the construction sector resulted in a much greater expense to the federal government than originally anticipated. The CWA ended in 1934 in large part because of opposition to its cost.

Federal Housing Administration (FHA)

The Federal Housing Administration is a government agency that FDR established in 1934 to combat the housing crisis of the Great Depression. A large number of unemployed workers combined with the banking crisis resulted in a situation in which banks recalled loans and people lost their houses. The FHA was designed to regulate mortgages and housing conditions; today, it still plays a major role in the financing of houses for Americans.

Federal Security Agency (FSA)

The Federal Security Agency, established in 1939, was responsible for oversight of several important government entities. Until it was abolished in 1953, it oversaw Social Security, federal education funding, and the Food and Drug Administration, which was created in 1938 with the Food, Drug and Cosmetic Act.

Home Owners' Loan Corporation (HOLC)

The Home Owners' Loan Corporation was created in 1933 to assist in the refinancing of homes. The housing crisis created a great many foreclosures, and FDR hoped this new agency would stem the tide. In fact, between 1933 and 1935, 1 million people received long-term, low-interest loans through the agency, which saved their homes from foreclosure.

National Industrial Recovery Act (NIRA)

The National Industrial Recovery Act was designed to bring together the interests of working-class Americans and businesses. Through hearings and government intervention, the hope was to balance the needs of all involved in the economy. However, the NIRA was declared unconstitutional in the landmark Supreme Court case Schechter Poultry Corp. v. the United State. The court ruled that the NIRA violated the separation of powers.

Public Works Administration (PWA)

The Public Works Administration was a program created to provide economic stimulus and jobs during the Great Depression. The PWA was designed to create public works projects and continued until the U.S. ramped up wartime production for ​World War II. It ended in 1941.

Social Security Act (SSA)

The Social Security Act of 1935 was designed to combat widespread poverty among senior citizens and to aid the disabled. The government program, one of the few parts of the New Deal still in existence, provides income to retired wage earners and the disabled who have paid into the program throughout their working lives via a payroll deduction. The program has become one of the most popular government programs ever and is funded by current wage earners and their employers. The Social Security Act evolved from the Townsend Plan, an effort to establish government-funded pensions for the elderly led by Dr. Francis Townsend.

Tennessee Valley Authority (TVA)

The Tennessee Valley Authority was established in 1933 to develop the economy in the Tennessee Valley region, which had been hit extremely hard by the Great Depression. The TVA was and is a federally owned corporation that still works in this region. It is the largest public provider of electricity in the United States.

Works Progress Administration (WPA)

The Works Progress Administration was created in 1935. As the largest New Deal agency, the WPA affected millions of Americans and provided jobs across the nation. Because of it, numerous roads, buildings, and other projects were built. It was renamed the Works Projects Administration in 1939, and it officially ended in 1943.

Updated by Robert Longley

Sources and Further Information

• Barro, Robert J. and José F. Ursúa. "Stock-Market Crashes and Depressions." Research in Economics, vol. 71, no. 3, 2017, pp. 384-398, doi:10.1016/j.rie.2017.04.001.
• Fishback, Price V. "New Deal." Banking Crises: Perspectives from the New Palgrave Dictionary, edited by Garett Jones, Palgrave Macmillan UK, 2016, pp. 241-250, doi:10.1057/9781137553799_26.
• Mitchell, Broadus. "The Depression Decade: From New Era through New Deal, 1929-1941." vol. 9, Routledge, 2015. The Economic History of the United States.
• Siokis, Fotios M. "Stock Market Dynamics: Before and after Stock Market Crashes." Physica A: Statistical Mechanics and its Applications, vol. 391, no. 4, 2012, pp. 1315-1322, doi:10.1016/j.physa.2011.08.068.
• Skocpol, Theda and Kenneth Finegold. "State Capacity and Economic Intervention in the Early New Deal." Political Science Quarterly, vol. 97, no. 2, 1982, pp. 255-278, JSTOR, doi:10.2307/2149478.
• Tridico, Pasquale. "Financial Crisis and Global Imbalances: Its Labour Market Origins and the Aftermath." Cambridge Journal of Economics, vol. 36, no. 1, 2012, pp. 17-42, doi:10.1093/cje/ber031.